20 June 2018

Kenya: Firms Rigging State Tenders Face Sh10 Million Fine in Contracts Probe

Competition watchdog and the procurement regulator Wednesday signed a deal to stump out collusion among businessmen seeking public sector contracts in a rising trend that has seen the State overpay for goods and services.

Competition Authority of Kenya (CAK) and Public Procurement Regulatory Authority will review all major past tender documents to identify rogue traders that have been playing the system to lock out competitors from State tenders. The two firms will focus on bid rigging and collusive tendering as they seek to break down cartels that dominate multi-billion shilling public procurement.

"The committee's first assignment will be poring through all major tender documents stored with government entities to seek out any red flags that may point to collusive tendering and thereafter apply the law accordingly," said Wang'ombe Kariuki, CAK's director-general.

Bid rigging is a vice where suppliers, who are meant to compete for tenders, collude.

In some cases, suppliers take turns to win contracts by agreeing that only one will bid while the party abstaining often gets a kickback, says the competition watchdog.

In others, suppliers submit unreasonably inflated bids for a contract with the intention of securing disqualification to the prearranged advantage of another supplier.

The net effect of this illegal practice is that national and county governments end up paying more than the value for money for goods and services whose quality is also not guaranteed. Collusion also stifles innovation, a statement from the two agencies said.

Those found in breach risk a fine of Sh10 million or a jail-term of five years or both. Companies in breach face a financial penalty of up to 10 per cent of their sales.

The partnership comes amid a renewed fight to stamp out wastage and corruption.

President Uhuru Kenyatta has ordered all government entities to publish details of tenders and winning bids from July 1.

The move followed a public outcry on discovering a scam of about Sh8 billion at the National Youth Service through fictitious invoices for goods such as firewood and stationery and multiple payments on one invoice.

Dozens of government officials and business people are facing charges over the graft case.

The CAK recently boosted its investigative operations against restrictive trade practices, dominance abuses and consumer protection.


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