Irregular procurement robs counties of billions

Fresh details have emerged of how taxpayers could be losing billions of shillings in irregular procurements and payments in the counties.

Auditor General Gathungu in a new report has exposed how county administrations are dishing out tenders worth millions in disregard of the law.

The audit reports for county executives for the period ending June 30, 2024 reveal that counties routinely violate, ignore or manipulate public finance and procurement laws.

The report exposes what appears to be systemic omissions and commissions by the procurement and finance officers, thereby putting public money at risk of loss.

In revelations that put the governors in the spotlight, the counties exploit provisions on restricted tendering to dish out awards to specific firms.

In addition, procurement and finance officers vary contracts, ballooning the value beyond the required percentage.

In Kiambu, the auditor exposed how the county awarded one supplier 70 per cent of contacts for motor vehicle routine maintenance.

“It was noted from the review of sampled payment vouchers amounting to Sh12.86 million that one supplier was awarded almost 70 per cent of the work, although the executive had a pre-qualified list of suppliers under the category,” the report reads.

Further, the same company was awarded contracts totaling Sh4.43 million by the health services department.

In all instances, the report shows only three bidders were requested to submit quotations with the awarded supplier consistently emerging as the lowest bidder and therefore the winner.

This indicated a lack of bidder rotation in a request for quotations.

Further, the county has been fingered for varying contracts for the construction of drainage channels at St Joseph the Worker Catholic Church Mwihoko and construction of Mwenjera slopes at Mwenjera Kambi Ya Pili shopping centre Road at a contract sum of Sh8.32 million.

“The contract was varied upwards by an amount of Sh6.44 million within 12 months of signing, which resulted in an increment of the contract price by more than 25 per cent and such variations were not tendered for separately as required by law,” the report says.

In Kwale, the auditor flagged irregular procurement for the construction of roads.

The government incurred Sh46.42 million on grading and upgrading of roads.

However, the agreement did not show the procurement number, which is a crucial reference for tracking and auditing the procurement process.

Further, the road drawings issued during the procurement process were similar to those used in other road projects.

“This was contrary to section 149 of the Public Finance Management Act, 2012.”

The act stipulates that the responsibility of an accounting officer is to ensure the resources of the entity for which the officer is designated are used in a way that is lawful and authorised.

Gathungu also flagged irregular procurement for consultancy services, where the county paid out Sh6.50 million to three companies.

However, the reports show that a review of the procurement records revealed that all the tender opening committee members were involved in the tender evaluation.

This is contrary to section 78(1) of the Public Procurement and Asset Disposal Act, 2015, which states that at least one of the members shall not be directly involved in the processing or evaluation of the tenders.

Further, Gathungu flagged irregular procurement for internet services for Sh6.46 million as well as procurement and payment of Sh71.57 million to six law firms.

In Tana River, Gathungu spotlighted irregular procurement of non-pharmaceuticals valued at Sh26.2 million.

The items were procured from suppliers not registered with the Pharmacy and Poisons Board.

There was no value-for-money assessment for framework agreements exceeding one carried out, professional opinion was not dated or stamped by the head of procurements.

“In the circumstances, the purchase of non-pharmaceuticals amounting to Sh26.2 million may not have met the required quality standards,” the report states.

In addition, the auditor exposed the irregular purchase of Sh5.89 million in animal vaccines and drugs.

The vaccines were procured from an unregistered supplier. Other irregularities involved the rehabilitation of Sera road in Garsen North ward for Sh17.2 million and Makerere road at Kinakomba ward for Sh14.57 million.

Also flagged is the procurement for consultancy services valued at Sh36.8 million.

This related to professional services for boundary surveys for community land and preparation for a land use advisory plan.

The revelations expose procurement as one of the key departments where corruption thrives in the devolved units.

Indeed, a 2021 finding by the Ethics and Anti-Corruption Commission identified human resource and procurement departments as the areas most rocked by corruption.

The cases in which former governors Ferdinand Waititu (Kiambu) and Moses Lenolkulal (Samburu) were convicted of graft involved procurement.

Lenolkulal was convicted of pocketing more than Sh83 million from the county for the supply of fuel and oil products through proxies.

Waititu, on the other hand, was found guilty in a Sh588 million corruption case involving procurement.

In Bomet, Gathungu found irregularities in procurements for the construction of the 1.9km Magiger-Kipkelei-Cheramogi road for Sh3.23 million and the Kiswahili-Njerian bridge for Sh4.97 million.

Others were the Nyatembe-Tilanik Fashion Road for Sh2.95 million, the 2.6km Mocheiket road and the rehabilitation of Zero Two steel footbridge for Sh3.82 million.

The auditor also flagged irregularities in the procurement of Crawler excavators, motor grades and a drum roller for Sh244.42 million and tippers and a prime mover for Sh61 million.

This was the case in Vihiga where the county was agged for irregularly procuring motor vehicle insurance for Sh30.64 million and the purchase of non-perishable foodstuffs for Sh108.71 million.

In Lamu, the auditor exposed various irregularities in the procurement of goods and services valued at Sh635.38 million.

They include the purchase of fuel, oil and lubricants for Sh81.59 million, foodstuffs for Sh136.68 million and consultancy services for Sh66.71 million.

The auditor exposed irregular variations of the contract on the construction of the Faza desalination plant.

The county paid Sh7.52 million, out of which Sh3.97 million was in respect of price variation.

Gathungu also highlighted anomalies in the procurement of Sh19.77 million computers, laptops, printers and photocopiers and certified seeds, breeding stock and live animals for Sh31.93 million.

In Uasin Gishu, the auditor found irregular procurement of employees’ insurance covers for Sh297.39 million. Out of the amount, the county executive paid Sh36.95 million to two companies.

One of the firms had not paid any claims 10 months after the contract was signed.

“In the circumstances, the value for money paid for insurance policies and the effectiveness of the insurance policies could not be confirmed,” the report reads.

Further, Gathungu flagged irregularities in the rehabilitation of civil works, the purchase of mobile phones and laptops and consultancy services.

In Nakuru, there were irregular purchases of drugs and medical supplies for Sh51.60 million while in Narok, the county irregularly hired ambulance services for Sh63.26 million.

In Kajiado, the government irregularly paid Sh79.13 million to law firms that were directly procured without prior approval of the accounting officer and no proof of urgency was provided.

The county also paid Sh5.62 million for an undelivered motor vehicle, contrary to provisions of the PPAD Act.