HomeEDUCATIONMbarara University to lose over 4B on illegal contract bidding.

Mbarara University to lose over 4B on illegal contract bidding.

By Joshua Nahamya,

Mbarara.

A local construction company in Mbarara demands Mbarara University of Science and Technology (MUST) compensation worth 4.1billion over the illegal manner in which the university awarded a construction contract to Steam Investments Ltd in Kihumuro campus.

Background

Mbarara University of Science and Technology (the Appellant) initiated the procurement for the construction of the Faculty of Computing and Informatics Block Phase 2 at its Kihumuro main campus. On 4th June 2020, the Appellant’s contracts Committee awarded the contract for the construction of the Faculty of Computing and Informatics Block Phase 2 to Steam Investments Ltd at a contract sum of UGX. 6,294,863,880.

Being dissatisfied with the reasons given by the Appellant for the elimination of its bid, the 2nd Respondent applied for administrative review to the Appellant’s Accounting Officer on 19th June 2020. The application for administrative review was accompanied by a bank transfer form of UGX. 5,000,000/= as administrative review fees to Mbarara University of Science and Technology’s Bank of Baroda Bank Account No. 95050200000293.

On 25th June 2020, the Accounting Officer dismissed the application on the ground that the Appellant did not receive the payment of the administrative review fees since the 2nd Respondent made the payment on an account that had been closed on 4th July 2019 on the instructions of the Ministry of Finance Planning and Economic Development to all commercial banks.

On 2nd July 2020, the 2nd respondent filed for an administrative review to PPDA (the 1st respondent) on the ground that the accounting officer of the applicant had wrongfully dismissed its application for administrative review for payment of administrative review fees to a non-existent bank account.

On 3rd August 2020, the 1st respondent upheld the administrative review application filed by the 2nd respondent and directed the accounting officer of the applicant to guide the 2nd respondent on which account to pay the administrative review fees and thereafter handle the application on merit.

The applicant (MUST), being dissatisfied with the decision of the authority (1st respondent) lodged an application before the PPDA Appeals Tribunal on 6th October 2020.

The tribunal held an oral hearing on 20th October 2020 appeared by 7 people including; Timothy Mugumya who represented the applicant, Sheila Abamu representing the 1st respondent, Emmanuel Kigenyi represented the 2nd respondent, Collins Nuwagaba (the interested party), Melchior Byaruhanga (the University Secretary MUST), Kyeyune Twaha Adams (Director, Steam Investments) and Timothy Kihangukawo, the administrator, Block Technical Services.

And on 21st October 2020, the Tribunal dismissed the Appellant’s appeal affirming the decision of the 1st Respondent with regard to the issue of payment of administrative review fees and set aside the illegal contract executed between the Appellant and Block Technical Services.

A Letter demanding compensation fees

Dissatisfied by the judgment of the Public Procurement and Disposal of Public Assets Appeals Tribunal dated 22nd October 2020, delivered at Kampala in Application No. 10 of 2020 that awarded the Respondent the reliefs and remedies, the applicant (MUST) again challenged the ruling in High Court Kampala on November 2020.

The Appellant was represented by Timothy Mugumya, the 1st Respondent represented by Mary Akiror, and the 2nd Respondent was represented by Emmanuel Kigenyi.

Counsel for the Appellant defined administrative review as the process of handling complaints arising out of alleged breaches of the procurement law.

While Counsel for the 2nd Respondent submitted that this issue was determined by the Authority in the 2nd Respondent’s application of the 17th June 2020 and the authority gave its decision in respect of the same.

In his ruling, judge Musa Ssekaana upheld the judgment of the earlier PPDA Appeals Tribunal.

“The Appellant has failed to prove the grounds he premised his appeal on and the decision of the Tribunal is upheld. I therefore dismiss this Appeal with costs” Judge Ssekaana ruled on 30th July 2021

It is from this background that Steam Investments Ltd through Anguria & CO. Advocates issued a letter dated 22 August 2021 intending to sue Mbarara University of Science and Technology should it remain adamant to pay compensation of the loss caused to the company after the High Court ruling.

“Our client placed orders for construction materials and moreover the orders for materials were made using credit lines from banks. To this end, our client demands that you compensate it to the tune of Uganda shillings three billion only” letter reads in part

“Our client obtained guarantees from the bank and dutifully submitted them to the employer but the advance payment security expired under your watch. Please be reminded that this amounts to a compensation event under the contract. And for this inconvenience, our client demands that you pay it Uganda shillings one billion, two hundred ninety-four million eight hundred sixty-three thousand eight hundred eighty only (Ushs. 1,294,863,880/=)” the letter adds

However, Block Technical Services Ltd is ready for dialogue if the university is willing for negotiations before the expiry of 7 days from the date of receipt of the letter.

“Our client is a patriotic construction firm, is open to a discussion on how to salvage this project and save the government of Uganda unnecessary financial loss arising from litigation which will paralyze and further delay the project.

We however tried to contact the University Secretary Melchior Byaruhanga but could not pick our repeated calls about the progress of resolving the financially related matter.

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