Recent court rulings illustrate how Kenya’s bid protest regime relies on the Public Procurement Administrative Review Board (Procurement Review Board) as the country’s primary bid protest forum, with the courts serving a more limited judicial review oversight role.
For example, in its February 2020 decision in Republic v. Public Procurement Administrative Review Board; Principles Styles Limited & another (Interested Parties) Ex Parte Accounting Officer, the High Court of Kenya’s Judicial Review Division upheld the government’s post-evaluation due diligence review process as procedurally defensible. The dispute dealt with a tendering process for the provision of water tower ecological restoration works. After scoring the bid submissions, a government due diligence review of the top-scoring bidder revealed that the top bidder had submitted an invalid tax compliance certificate in a prior procurement process and had been recommended for debarment. The bidder was therefore not recommended for award and then challenged the due diligence process. The Procurement Review Board upheld this due diligence process. The bidder appealed. The Court upheld the Procurement Review Board decision and ruled that the government was permitted to conduct due diligence processes prior to making any award decision.
In its May 2020 decision in Petro Oil Kenya Limited v. Public Procurement Administrative Review Board, the High Court of Kenya confirmed the judicial reviewability of Procurement Review Board decisions. The dispute dealt with a tender call for the supply of fuel. The Procurement Review Board dismissed the complainant’s bid protest and the complainant appealed. In granting the complainant’s request to seek a judicial review of the Procurement Review Board decision, the Court summarized the Procurement Review Board’s review powers and the limited scope of judicial review of those decisions by the courts:
In JR No. 89 of 2012 Republic vs. Public Procurement Administrative Review Board & 2 others [2013] eKLR the court declined to grant certiorari orders. The learned Judges of Appeal held as follows:
I agree with the respondent’s submission that in light of the powers granted to the Board under section 98 of the Act, the Board is entitled to conduct a review not only the allegations made in the application for review before it but also review of the entire procurement process to see that it complies with the prescribed procedures and ensure that the objects of the Act are fulfilled.
The reliefs set out in section 98 are within the discretion of the Board. The Court will be reluctant to interfere unless the decision is irrational, illegal or lacks propriety. As observed in by the Court of Appeal in Kenya Pipeline Company Limited v Hyosung Ebara Company Limited & 2 Others (supra),
“[21] Moreover, where the proceedings are regular upon their face and the inferior tribunal has jurisdiction in the original narrow sense (that is, to say, it has power to adjudicate upon the dispute) and does not commit any of the errors which go to jurisdiction in the wider sense, the quashing order (certiorari) will not be ordinarily granted on the ground that its decision is considered to be wrong either because it misconceived a point of law or misconstrued a statute (except misconstruction of a statute relating to its own jurisdiction) or that its decision is wrong in matters of fact or that it misdirects itself in some matter.” The court further noted that, “Lastly, it is important to appreciate that judicial review orders of certiorari, mandamus and prohibition are public law remedies and the court has the ultimate discretion to either grant or not to grant the remedies to the successful applicant.
Thus, the Court confirmed that the Procurement Review Board is given broad review powers over government procurement decisions and that the courts will limit their reviews of those decisions to matter of jurisdiction, errors in law, or errors in fact.
Similarly, in its January 2020 decision in Republic v. Public Procurement Administrative Review Board & another Ex parte Tropical Technology Limited, the High Court of Kenya’s Judicial Review Division found no grounds to overturn a Procurement Review Board decision after noting that the Board is a specialized tribunal and enjoys a high degree of deference from the courts. The dispute dealt with a tendering process for raw materials used in the production of licence plates. An incumbent contractor, who was awarded a prior contract for the provision of motor vehicle number plate blanks, took issue with the government’s new tendering process, arguing that it amounted to an infringement of its rights under its current contract.
The Procurement Review Board ultimately rejected the challenge, finding that the new tendering process was a stop-gap measure to purchase raw materials for the production of older-design licence plates under the old licence plate production program that was being phased out by the government, whereas the complainant’s contract was for the production of digital licence plates under the government’s new licence plate production program. The complaint appealed, but the Court saw no reason to overturn the Procurement Review Board decision. The Court noted that applicable judicial review rules afforded the Board a high degree of deference as a specialized procurement tribunal so that its decisions would only be overturned in instances of illegality, irrationality, or procedural impropriety, as defined by the Wednesbury principles of administrative law:
Reasonableness, as a ground for the review of an administrative action is dealt with in Section 7 (2) (k) of the Fair Administrative Action Act. A court or tribunal has the power to review an administrative action if the exercise of the power or the performance of the function authorised by the empowering provision, in pursuance of which the administrative action was purportedly taken, is so unreasonable that no reasonable person could have so exercised the power or performed the function. In Bato Star Fishing (Pty) Ltd v Minister of Environmental Affairs and Others O’Regan J approved the reasonableness test which was stated as follows by Lord Cooke in R v Chief Constable of Sussex, ex parte International Trader’s Ferry Ltd.:
The simple test used throughout was whether the decision in question was one which a reasonable authority could reach. The converse was described by Lord Diplock… as ‘conduct which no sensible authority acting with due appreciation of its responsibilities would have decided to adopt’. These unexaggerated criteria give the administrator ample and rightful rein, consistently with the constitutional separation of powers. … Whatever the rubric under which the case is placed, the question here reduces, as I see it, to whether the chief constable has struck a balance fairly and reasonably open to him.
The test of Wednesbury unreasonableness has been stated to be that the impugned decision must be “objectively so devoid of any plausible justification that no reasonable body of persons could have reached it and that the impugned decision had to be “verging on absurdity” in order for it to be vitiated. In Prasad v Minister for Immigration, the Federal Court of Australia held that in order for invalidity to be determined, the decision must be one which no reasonable person could have reached and to prove such a case required “something overwhelming.” It must have been conduct which no sensible authority acting with due appreciation of its responsibilities would have decided to adopt, and when “looked at objectively… so devoid of any plausible justification that no reasonable body of persons could have reached them”.
A decision which fails to give proper weight to a relevant factors may also be challenged as being unreasonable. It is a well established principle that if an administrative or quasi-judicial body takes into account any reason for its decision which is bad, or irrelevant, then the whole decision, even if there are other good reasons for it, is vitiated. Review by a court of the reasonableness of decision made by another repository of power is concerned mostly with the existence of justification, transparency and intelligibility within the decision-making process but also with weather the decision falls within a range of possible, acceptable outcomes which are defensible with respect to the facts and law. Differently stated, the following propositions can offer guidance on what constitutes unreasonableness:
i. Wednesbury unreasonableness is the reflex of the implied legislative intention that statutory powers be exercised reasonably;
ii. This ground of review will be made out when the Court concludes that the decision fell outside the area of decisional freedom which that legislative assumption authorizes, that is, outside the “range” within which reasonable minds may differ;
iii. The test of unreasonableness is whether the decision was reasonably open to the decision-maker in the circumstances of the case. To say that the decision was “not reasonably open” is the same as saying that “no reasonable decision maker” could have made it;
The Court also stressed that the role of the courts in these situations should be strictly supervisory, rather than serving as a forum to relitigate matters that were already adjudicated in administrative tribunal proceedings:
The court’s role remains strictly supervisory. It is concerned with determining whether there has been a lawful exercise of power having regard, in particular, to the terms, scope and purpose of the statute conferring the power. In circumstances where reasonable minds might differ about the outcome of, or justification for, the exercise of power, or where the outcome falls within the range of legally and factually justifiable outcomes, the exercise of power is not legally unreasonable simply because the Court disagrees, even emphatically, with the outcome or justification. If there is an evident, transparent and intelligible justification for the decision or if the decision is within the ‘area of decisional freedom’ of the decision-maker, it would be an error for the court to overturn the decision simply on the basis that it would have decided the matter differently.
I have carefully examined the impugned decision. I have also considered the final orders made. There is nothing to show that a reasonable Tribunal, faced with the same set of facts and the law would have arrived at a different conclusion. In other words, applying the above tests of unreasonableness and irrationality, I find that the applicant has not demonstrated that the decision is tainted with unreasonableness or irrationality.
It has been said repeatedly that The Review Board is a specialized statutory tribunal established to deal with all complains of breach of duty by the procuring entity. From the nature of powers given to the Review Board including annulling, anything done by the procurement entity and substituting its decision for that of the procuring entity that the administrative review envisaged by the Act is indeed an appeal. From its nature the Review Board is obviously better equipped than the High Court to handle disputes relating to breach of duty by procurement entity. It follows that its decision in matters within its jurisdiction should not be lightly interfered with.
Furthermore, the Court warned that the courts should not interfere with the discretion that has been entrusted by statute to specialized tribunals, particularly where there is no evidence that the specialized tribunal abused its discretion or acted outside of its permissible range of discretion:
An administrative functionary that is vested by statute with the power to consider and make a decision is generally best equipped by the variety of its composition, by experience, and its access to sources of relevant information and expertise to make the right decision. The Court is slow to assume a discretion which has by statute been entrusted to another tribunal or functionary.
The essence of a discretion in the true sense is that, if the repository of the power follows any one of the available courses, he would be acting within his powers, and his exercise of power could not be set aside merely because a court would have preferred him to have followed a different course among those available to him. A discretion in the true sense is found where the functionary has a wide range of equally permissible options available to it. There is no argument before me that the Respondent abused its discretion or acted outside its permissible range of discretion. In contrast, where a body has a discretion in the loose sense it does not necessarily have a choice between equally permissible options. Instead, a discretion in the loose sense – means no more than that the body is entitled to have regard to a number of disparate and incommensurable features in coming to a decision.
The Court also stressed that the courts should not exercise judicial review powers to overturn a decision simply because they disagreed with the permissible option chosen by the tribunal, but should only interfere where a complainant can show that the tribunal decision was flawed by illegality, irrationality, or procedural impropriety:
When a tribunal exercises a discretion in the true sense, it would ordinarily be inappropriate for a Review court to interfere unless it is satisfied that this discretion was not exercised – “judicially, or that it had been influenced by wrong principles or a misdirection on the facts, or that it had reached a decision which in the result could not reasonably have been made by a body or tribunal properly directing itself to all the relevant facts and principles.
A Judicial Review court ought to be slow to substitute its own decision solely because it does not agree with the permissible option chosen by the tribunal court. Where a tribunal is granted wide decision-making powers with a number of options or variables, a judicial review court may not interfere unless it is clear that the choice the tribunal has preferred is at odds with the law. If the impugned decision lies within a range of permissible decisions, a Judicial Review court may not interfere only because it favours a different option within the range.
Judicial intervention in Judicial Review matters is limited to cases where the decision was arrived at arbitrarily, capriciously or mala fide or as a result of unwarranted adherence to a fixed principle or in order to further an ulterior or improper purpose, or where the functionary misconceived the nature of the discretion conferred upon him and took into account irrelevant considerations or ignored relevant ones; or where the decision of the functionary was so grossly unreasonable as to warrant the inference that he had failed to apply his mind to the matter. No illegality, irrationality or procedural impropriety has been established in the manner in which the Board approached and determined the issues before it. An administrative decision can only be challenged for illegality, irrationality and procedural impropriety. A close look at the material presented before me does not demonstrate any of the above.
The Court therefore dismissed the case after finding that “the applicant has not demonstrated any grounds for this court to grant the orders sought.”
Similarly, in its January 2020 decision in Republic v. Public Procurement Administrative Review Board; Principal Secretary, State Department of Interior, Ministry of Interior and Co-ordination of National Government, the High Court of Kenya’s Judicial Review Division refused to conduct a rehearing of a tender cancellation decision that was upheld by the Procurement Review Board after noting that the scope of a judicial review should be limited and should not be used to reconsider the merits of a prior decision. The dispute dealt with the cancellation of a tendering process for the leasing of motor vehicles due to budgetary constraints and the government’s decision to retender for that requirement. One of the bidders challenged those government decisions at the Procurement Review Board, but the Board upheld the government’s decisions. The bidder sought a judicial review of the Board’s decision.
In considering the judicial review application, the Court offered the following guidance on distinguishing between an appeal of the merits and the narrower scope that would apply to the judicial review of a prior tribunal decision:
However, Mr. Oganda proceeded to persuade the court that the changing character of judicial review now permits this court to venture into a merit review. Lucky for me, the Court of Appeal has had the opportunity to address the issue and this leads me to the next point.
Sixth the Court of Appeal has had the opportunity to address the same issue in several decisions. In OJSC Power Machines Limited, Transcentrury Limited & Civicon Limited (Consortium) vs. Public Procurement Administrative Review Board & Others it was stated that:
Save for a limited scope, which we shall return to later, the court, considering a judicial review application, must never consider its role as appellate court and must avoid any temptation to go into the substance of the impugned decision itself or to ask questions, whether there was or there was no sufficient evidence to support the decision of the public body concerned. It is not for the court or individual judges to substitute their opinion for that of the public body constituted by law to decide the matter in question. See Republic vs. Kenya Revenue Authority ex parte Yaya Towers Limited (2008) Misc. Civil Appl. No. 374 of 2006. In judicial review proceedings, the mere fact that the public body’s decision was based on insufficient evidence, or on misapplication of evidence, cannot be a ground granting judicial review remedies. Whether that decision was right or not, the affected party ought to challenge it on appeal. In reaching its determination, it must, however, be recognized that a tribunal or statutory body or authority has jurisdiction to err and the mere fact that in the course of its inquiry it errs on the merits is not a ground for quashing the decision by way of judicial review as opposed to an appeal. It is only an appellate tribunal which is empowered and in fact enjoined in cases of the first appeal to re-evaluate the evidence presented at the first instance and arrive at its own decision on facts. Whereas a decision may properly be overturned on an appeal, it does not necessarily qualify as a candidate for juridical review. See East African Railways Corp. vs. Anthony Sefu Far-Es-Salaam (1973) EA 327.” (See also the Court of Appeal decisions in Biren Amritlal Shah & Anor v Republic & 3 Others and Energy Regulatory Commission v SGS Kenya Limited & 2 Others)
The above excerpt explains in clear terms that it is only limited cases where a judicial review court can venture into merits as explained later. There is a long-established and fundamental distinction between an appeal and review. A court of appeal makes a finding on the merits of the case before it; if it decides that the decision of the lower court or tribunal was wrong, then it sets that decision aside and hands down what it believes to be the correct judgment. By contrast, in judicial review the reviewing court cannot set aside a decision merely because it believes that the decision was wrong on the merits. A court of review is concerned only with the lawfulness of the process by which the decision was arrived at, and can set it aside only if that process was flawed in certain defined and limited respects.
Judicial review is about the decision making process, not the decision itself. The role of the court in judicial review is supervisory. It is not an appeal and should not attempt to adopt the ‘forbidden appellate approach’ Judicial review is the review by a judge of the High Court of a decision; proposed decision; or refusal to exercise a power of decision to determine whether that decision or action is unauthorized or invalid. It is referred to as supervisory jurisdiction – reflecting the role of the courts to supervise the exercise of power by those who hold it to ensure that it has been lawfully exercised.
Judicial review is more concerned with the manner in which a decision is made than the merits or otherwise of the ultimate decision. As long as the processes followed by the decision-maker are proper, and the decision is within the confines of the law, a court will not interfere. This position was best explained in Republic vs Attorney General & 4 others ex-parte Diamond Hashim Lalji and Ahmed Hasham Lalji:
“Judicial review applications do not deal with the merits of the case but only with the process. In other words judicial review only determines whether the decision makers had the jurisdiction, whether the persons affected by the decision were heard before it was made and whether in making the decision the decision maker took into account relevant matters or did take into account irrelevant matters. It follows that where an applicant brings judicial review proceedings with a view to determining contested matters of facts and in effect urges the Court to determine the merits of two or more different versions presented by the parties the Court would not have jurisdiction in a judicial review proceeding to determine such a matter and will leave the parties to resort to the normal forums where such matters ought to be resolved. Therefore judicial review proceedings are not the proper forum in which the innocence or otherwise of the applicant is to be determined and a party ought not to institute judicial review proceedings with a view to having the Court determine his innocence or otherwise. To do so in my view amounts to abuse of the judicial process.”
The Court found no reason to interfere with the governments’ decision to cancel the tendering process for budgetary constraints, or the Board’s decision to dismiss the complainant’s challenge to that decision:
The reason given for the termination of the tender is provided for in section 63(d) which provides that there is evidence that prices of the bids are above market prices. The Interested Party terminated the procurement process citing this provision.
I have severally in my determinations argued that there is a need to appreciate the difference between formal shortcomings which go to the heart of the process and the elevation of matters of subsidiary importance to a level which determines the fate of the tender. I am conscious of the ever-flexible duty of a procurement entity to act fairly, and that fairness must be decided on the circumstances of each case. In the instant, there is evidence of price difference. A significant amount has been cited. The applicant invites us to find that the price difference is not rationally connected to the purpose and that it is unreasonable. Unfortunately, this invitation is in my view a ground for appeal as opposed to judicial review. It will require as merit review which is outside the scope of judicial review jurisdiction. The concern of this case is simple, whether the reason given falls within the ambit of section 63 (d) of the act.
The Respondent had no power or discretion to substitute the proof of price difference. On the contrary, it was for the applicant to prove that its prices were not above the market prices. Instead of proving the foregoing, it dwelt on discrediting the price different tendered by the Procuring Entity and forgot to prove its prices were actually not above the market prices. The set bar cannot be lowered to enable a tenderer to jump over.
However, the Court found that the government’s retender decision was procedurally irregular since it was initiated prior to the statutory challenge period. The retender was therefore quashed and the government was ordered to issue a new tender.
As this case illustrates, while the scope of judicial review will not typically include a reconsideration of government procurement decisions, or of a tribunal’s review of those decisions, the courts are more likely to intervene in judicial reviews to correct an obvious procedural irregularity committed during a procurement process or tribunal adjudication. In this instance, the government’s failure to wait the prescribed period after the cancellation decision to initiate a new tendering process constituted a reviewable procedural irregularity and that irregularity was quashed by the Court. As this decision illustrates, judicial deference to government procurement decisions or to tribunal adjudication decisions is not absolute. Those decisions remain subject to review and reversal in appropriate circumstances.
By way of another recent example, in its January 2020 decision in Republic v. Public Procurement Administrative Review Board Consortium of GBM Projects Limited and ERG Insaat Ticaret Ve Sanayi A.S, the High Court of Kenya’s Judicial Review Division quashed four re-evaluation orders issued by the Procurement Review Board after finding that the Board committed an error in jurisdiction. The Court found that the Board ordered the re-evaluations after the bid irrevocability period had already lapsed and the bids were no longer eligible for award. This constituted a jurisdictional error by the Board and was therefore quashed by the Court.
The dispute dealt with a tendering process for the construction of the High Grand Falls Dam Project, which was subject to multiple bid protests that resulted in multiple re-evaluation orders by the Board. The government ultimately challenged those re-evaluation orders, arguing that they were invalid since the bid irrevocability period had expired and the bids were no longer capable of acceptance. In considering the impact of bid expiry, the Court referred to the governing principles from South Africa, which recognize that a bid is no longer capable of acceptance after the expiry of the irrevocability period:
Our Constitution and the procurement laws are heavily borrowed from the South African model. Accordingly, jurisprudence from South African Courts interpreting similar situation can offer useful guidance. Where the validity period of a tender had lapsed before the award of the tender, Southwood J held in Telkom SA Limited v Merid Training (Pty) Ltd and Others, Bihati Solutions (Pty) Ltd v Telkom SA Limited and Others that:
As soon as the validity period of the proposals had expired without the applicant awarding a tender the tender process was complete – albeit unsuccessfully – and the applicant was no longer free to negotiate with the respondents as if they were simply attempting to enter into a contract. The process was no longer transparent, equitable or competitive. All the tenderers were entitled to expect the applicant to apply its own procedure and either award or not award a tender within the validity period of the proposals. If it failed to award a tender within the validity period of the proposals it received it had to offer all interested parties a further opportunity to tender.
The judgment of Southwood J cited above was followed in Joubert Galpin Searle and Others v Road Accident Fund and Others where the central issues to be decided were the effect on the tender process of the expiry of the tender validity period and whether, if the expiry of the tender validity period put an end to the process, it could subsequently be revived. The court held that once the tender validity period had expired, the tender process had been completed, albeit unsuccessfully. There were then no valid bids to accept, so the Respondent had no power to accept the expired bids. There is therefore nothing to extend and any award subsequent to the expiry date would be unlawful.
I am alive to the established jurisprudence that the tender validity period remains in abeyance until the request for review and judicial review applications are determined. This proposition of the law was authoritatively stated in the South African case of Trencon Construction (Pty) Limited v Industrial Development Corporation of South Africa Limited and Another. However, cases are context sensitive. The facts in this case are distinguishable. Request for Review No. 115 of 2018 was concluded and final orders were issued. For all purposes, the Respondent was functus officio. The proceedings before it had been concluded, hence, the proposition that the tender validity period remains in abeyance during the pendency of court proceedings cannot apply. Time continued to run the moment the Respondent pronounced its decision.
The Applicant who was the Respondent in the said Request for Review was unable to comply with the orders within the time directed by the Respondent and or during the tender validity period. The applicant long after the expiry of the tender validity period approached the court for extension of time and the Respondent entertained the application and granted the extension, thereby extending a tender validity period that had lapsed.
The Court adopted those South African precedents and determined that the bidding process under review had expired at the end of the irrevocability period and that the Procurement Review Board no longer had jurisdiction to order a re-evaluation of those bids:
I am in agreement with the reasoning in the above South African decisions. As a result, it is my view that, in this case, once the tender validity period expired, the tender process was completed, albeit unsuccessfully. There was no valid tender process to extent as the time the Respondent purported to extent it. In any event, section 88 of the act provides that before the expiry of the period during which tenders shall remain valid the accounting officer of a procuring entity may extend that period. A reading of this provision leaves no doubt that it is for the accounting officer to extent the tender validity period and this can only be done prior to the expiry of the tender validity period.
Recognizing the persuasive nature of the above decisions, I find no cause to deviate from them. Because the applicant is an organ of State it is required in terms of Article 227 of the Constitution, when it contracts for goods and services, to do so in accordance with a system that is “fair, equitable, transparent, competitive and cost effective.” These core principles of public procurement are given effect by a range of statutes, such as the Public Procurement and Asset Disposal Act, the Regulations made thereunder and the Public Finance Management Act, policies and guidelines. Compliance with the requirements for a valid tender process, issued in accordance with the constitutional and legislative procurement framework is thus legally required and that they are not merely internal prescripts that may be disregarded at whim. I am unable to fathom how both parties in this case and the Respondent failed to appreciate this basic requirement and necessity of a tender validity period and purport to extent an already expired tender. By so doing, the Respondent allowed itself to be driven by the parties to commit an illegality.
An “acceptable tender” is any tender which in all respects, complies with the specification and conditions of tender as set out in the tender document. The procurement process including the award of the tender must be completed during the tender validity period. Once the tender validity period lapses, it cannot be resuscitated, not even by consent, or an order by the Respondent. A reading of the bid documents and the act leaves me with no doubt that it cannot be revived once it expires. In addition, the Bid document does not provide for extension to be granted retrospectively, that is, an extension that will operate to revive an expired tender. This means that, objectively, the bid had expired as at 5th February 2019 when the order was made. Irrespective of the intention of the parties to extend the bid after its expiry as they purported to do so, such an extension could not breathe life into a dead procurement process.
Once the validity period of the proposals had expired with no extension of the period being made before the expiry of the validity period, there were no valid bid in existence either for the Procuring Entity to extent in accordance with the above section or for the Respondent to extend as it purported to do. I am of the view that this issue is dispositive of the whole case before me, and, on this ground, this application succeeds.
The Court therefore struck down the re-evaluation orders and ruled that the government would have to initiate a new tendering process for the project.
As these cases illustrate, Kenya’s procurement regime offers a model for other jurisdictions in establishing specialized procurement review boards while limiting the role of the courts to a more limited oversight function. These tribunal regimes help to avoid gridlocking bid disputes in already overloaded court systems, while also enabling the relatively speedy adjudication of those disputes by specialized bodies.
