•Audit exposes glaring gaps in initial contract awarded to Israeli company
•Project collapsed after contract abandoned it despite being paid Sh5.9 billion
The Sh7.2 billion Galala-Kulalu food security project in Tana River and Kilifi counties could have been designed to fail.
This is according to an audit report which exposes glaring gaps and weakness in the initial contract awarded to an Israeli company, Green Arava Limited.
The National Irrigation Board, the implementing agency, awarded the contract to the firm in 2014 for the construction of a 10, 000-acre model farm, a Jubilee government flagship project.
Auditor General Edward Ouko’s report for the 2017-18 financial year was tabled in Parliament last Wednesday.
Ouko pokes holes in the contract and reveals weaknesses in the implementation that could possibly explain why the much-hyped project failed.
Ouko reveals that the financing agreement for the project was tied to the contractor, thus all proceeds due to the contract could only be channelled through the contractor.
This, according to the auditor, gave the contractor an upper hand and left the government at the mercy of the contractor.
“[There was also] single sourcing of the contractor which favoured the contractor against competitive bidding, pricing, capacity and competence,” he says.
The auditor notes that the provision for advance payment to the experts under the operation and maintenance of the project in the contract was detrimental as it could lead to under-performance.
Ouko further says exclusion of operation and maintenance bills from the performance bond exposed the government to risk.
“[There was] conflict of interest as the designing firm is associated with the implementing firm (contractor) which could lead to poor designs requiring frequent reviews and interpretations,” reads the report.
“The report also noted that the production component of the contract was pegged on an area without emphasizing on production output targets which have sometimes led to under-performance.”
The contract, according to the auditor, did not provide for transfer of knowledge of manning the infrastructure installed after the contractor exited the site.
The report said that the contractor had a low capacity to implement the contract as per the work programme resulting in the construction works lagging behind schedule.
The project collapsed early this year after the contract abandoned it despite being paid Sh5.9 billion or approximately 80 per cent of the total cost.
Green Arava Limited is said to have accused NIB of failing to honour requests for payments before threatening to stop further work until all its requests were addressed.
NIB, on the other hand, accused the contractor of being rogue and demobilizing from the construction site contrary to the contractual obligations. It also faulted the firm of failing to adhere to the instructions on completion of works within reasonable time.
On May 24, NIB officials and the contractor appeared before the Senate Agriculture committee to answer to queries about delayed payments.
The contractor said the NIB owed them Sh1 billion but the board claimed it only owed Green Avara Sh200 million.
The construction work started on September 11, 2014 and was to be completed within 30 months, by March 9, 2017.
However, the contractor failed to meet the deadline, citing payment delays and submitted a revised programme to complete the works by April 2019. The contractor abandoned the work in February.