Turkish firm wins Sh31.6 billion Bomas renovation tender row

The Ministry of Defence has suffered a major blow after the Court of Appeal dismissed its case challenging a Sh31.6 billion lucrative tender for the ="https://www.standardmedia.co.ke/health/national/article/2001478959/cabinet-approves-construction-of-bomas-convention-centre"> renovation of the Bomas International Convention Complex <(BICC) in Nairobi.

In a ruling delivered on Friday, a three-judge bench comprising Justices Gatembu Kairu, Fred Ochieng, and Aggrey Muchelule declined to uphold the Defence Ministry’s decision to terminate the award of the tender to Summa Turizm Yatirimciligi Anonim Sirketi, a Turkish firm.

The appellant judges however upheld a High Court decision that struck out the ministry’s application after finding that it had ="https://www.standardmedia.co.ke/politics/article/2001513476/government-dismisses-claims-bomas-of-kenya-has-been-sold">filed its case late against the Turkish firm< outside the 14-day window prescribed under Section 175(1) of the Public Procurement and Asset Disposal Act.

"The learned Judge was right that the appellants’ (the Ministry of Defence) action was time barred and the decision to strike out the same is sound in law and cannot be faulted," Justice Kairu led bench ruled.

The case stemmed from the government decision through the Ministry of Defence of November 2023 to award a ="https://www.standardmedia.co.ke/national/article/2001513578/cabinet-approves-bomas-convention-complex-key-infrastructure-projects">Sh31.6 billion direct tender to the Turkish firm< for the reconstruction of the state-of-the-art convention center in the city.

The multi-billion tender for the construction of the complex was approved on August 8, 2023, during a Cabinet meeting held at the Sagana State Lodge in Nyeri County.

The tender had been awarded to Turkish firm Summa Turizm Yatirimciligi Anonim Sirketi for the design, construction, and equipping of the proposed Bomas Convention Centre.

The company had proposed to build and equip the BICC at a cost of $245 million (about Sh31.6 billion).

The center was expected to host facilities like a conference center, a presidential pavilion, and at least five hotels to make it a world-class facility.

However, in October 2024, the Ministry of Defence abruptly terminated the tender 329 days after the award and without signing a procurement contract.

According to the court documents, the Defence Ministry had invited the firm via Direct Tender No. DHQINFRAS/004/23-24, and awarded the contract on November 22, 2023.
 
"But after nearly a year of silence and no signed contract, the ministry wrote to the firm on October 16, 2024, to terminate the award," the court papers state.

This is after the construction firm had on November 6, 2024, informed the ministry that it had secured financing for up to 80 percent of the contract and was waiting for confirmation.

The Ministry of Defence disclosed that it was undertaking the procurement process on behalf of the Ministry of Gender, Culture, the Arts and Heritage.

Aggrieved by the decision to terminate its contract, the contractor moved to the Public Procurement Administrative Review Board (PPARB) which on December 23, 2024, ruled in its favour and directed the Ministry to conclude the procurement within 90 days.

In its decision, the Board faulted PS Ministry of Defence Patrick Mariru for stalling the completion of the tender and later terminating it over claims of lack of funds and change of scope of works.

"From the above, the Board finds it appropriate in the current circumstances to extend the tender validity period that had already lapsed to avail an opportunity to the procuring entity to write the wrongs it has committed against the Applicant.

"This will afford an opportunity to the Respondents to proceed with the subject procurement proceedings to their logical conclusion in accordance with our findings herein," the board said.

The board added that under the Procurement Act, a public tender can only be terminated prior to an award being made.

In its ruling, the board, however, said it would be unfair for the ministry to purport to shift liability for the procurement proceedings to a party who for all intents and purposes had not been revealed to the contractor.

The board added that any procuring entity is forbidden from commencing any procurement process without satisfying itself that there is adequate budget to finance the subject of procurement.

"The Act goes a step further in imposing criminal liability on the part of an Accounting Officer who breaches this requirement," said the board.

The board noted that the general conduct of the ministry spoke of a deliberate attempt to frustrate the conclusion of the tender.

"Absent evidence of inadequate budgetary allocation for the subject tender, the Board finds great difficulty finding that there were no funds to finance the subject tender. It was the responsibility of the Respondent to lead evidence on the alleged inadequate budgetary allocation but they failed to discharge this burden," said the board.

Unhappy with that decision, the Defence Ministry through the Attorney General filed for judicial review at the High Court on January 14, 2025, seeking to overturn the Review Board’s ruling.

 However, both the Review Board and the Turkish firm raised preliminary objections, arguing that the application by the Defence PS and the Ministry was filed 8 days late.  

High Court Judge John Chigiti on January 20, 2025, dismissed the application by the Defense ministry agreeing with preliminary objections that it was time-barred.

The Defence PS lodged an appeal challenging both the Review Board and the High Court's decision declining to uphold the cancellation of the tender to the Turkish firm.

On appeal, the Defence Ministry and the PS represented by Mr. Githu Kabi from the Attorney General’s office argued the late filling of its appeal was not intentional as it was occasioned by the 2024 Christmas court recess which kicked of from December 21–January 13 and thus should have been excluded from the deadline count,, citing Order 50 Rule 4 of the Civil Procedure Rules.

“Had the learned Judge properly considered the matter with those provisions in mind, the preliminary objections would have been dismissed,” Kabi submitted.

But the Court of Appeal firmly disagreed, stating that the strict timelines of 14 days under Section 175(1) are “cast in stone” and meant to safeguard the integrity and speed of public procurement dispute resolution.

"Order 50 Rule 4 is subordinate legislation and cannot override express statutory provisions,” the judges held

The Court also rejected the Ministry’s claim that it had a constitutional right to “fair timing,” noting that procurement law timelines are designed for efficiency and public interest, not flexibility.

“In a constitutional dispensation that guarantees citizens that justice shall not be delayed, it is not readily apparent how expeditious timelines can be unconstitutional,” the Court noted.

The judges also dismissed the Ministry’s objection to the award of legal costs to Summa Turizm, saying there was no abuse of discretion by the High Court judge.