The Auditor General has revealed widespread procurement irregularities in Nairobi County, uncovering billions of shillings potentially mismanaged due to lack of oversight, transparency, and failure to follow due process. The findings in the 2023-24 report on County Governments: County Executives have raised alarms over the county’s financial discipline, specifically highlighting issues in the procurement of services, goods, construction works, and even insurance cover.
Irregularities in Affordable Housing Projects
One of the most concerning findings involved Nairobi County’s ambitious affordable housing program. The county has been planning to construct thousands of housing units in various estates, including 9,000 units in Bahati, 3,400 in Woodley, 2,500 in Ziwani, and 2,000 in Kariobangi North.
However, the Auditor General’s report revealed significant flaws in the procurement process related to these projects, including irregularities concerning land ownership, compliance, and value for money. In total, the housing projects were valued at a staggering Sh31 billion, but the county could not provide assurances that proper financial oversight had been followed.
The report also flagged concerns over the renovation of flats in Uhuru Estate, which cost Sh39.8 million over six months. Despite the budget being set at only Sh17.75 million, the county proceeded with the work, violating procurement laws by not adhering to the required budget provisions.
Furthermore, contractors completed just 74% of the paintwork, leaving the project unfinished. The Auditor General noted that the contract had expired, and no extension had been granted. The incomplete project raised serious doubts about whether the county had received value for money spent.
“There was no evidence of extension of contract period and the project had stalled. In the circumstances, the county was in breach of the law and value for money spent on the renovation works could not be confirmed,” the auditor said.
Procurement Issues in Construction and Road Works
The county’s construction and civil works projects also faced scrutiny. These included a perimeter wall for the elderly at Mji wa Huruma, road rehabilitation projects in Eastleigh and the Industrial Area, and street lighting initiatives. In particular, the county awarded Sh26.2 million for road rehabilitation in Eastleigh but failed to provide necessary procurement documents to support the payments.
Similarly, the Industrial Area road works, which cost Sh140.3 million, were marred by delays of over two years and a lack of proper documentation. Inspection reports were found to be incomplete, and there were discrepancies in hours worked and payments made. According to Section 68(1) of the Public Procurement and Asset Disposal Act, 2015, the county is required to maintain procurement records for at least six years after a contract’s completion, but this was not adhered to.
Questions Over Insurance Contracts
The Nairobi County Executive also attracted attention for awarding a contract for medical insurance to cover 7,521 former Nairobi Metropolitan Services staff members for a period of just four months. At the time, the county had already signed an active contract with the same insurance company for Sh648.9 million in November 2022.
The Auditor General questioned why the county entered into a new contract with the same insurer when the initial one was still valid. Furthermore, the county failed to provide procurement records for either of the contracts, leaving the auditor unable to confirm whether the county received value for money from its insurance expenditure.
Concerns Over Tourism Policy Development
Irregularities were also found in the county’s payment of Sh5 million for consultancy services to develop the County Tourism Policy. The county failed to advertise the tender for the services and issued several key procurement documents on the same day, violating transparency regulations. This rushed process led the Auditor General to question the legitimacy of the Sh4.99 million expenditure.
Legal Services Procurement
The county’s procurement of legal services also came under scrutiny. During the review period, Nairobi County paid Sh483.8 million to various law firms, but the process lacked transparency. The county directly appointed advocates from a list of prequalified legal firms without holding a mini-competition.
A total of 159 court cases were assigned to only eight advocates, with some of them handling as many as 20 cases. The Auditor General was unable to confirm the fairness of the case allocations or the legitimacy of the expenditure.
Major Issues with Public Events Procurement
The report also exposed irregularities in the procurement process for events management. The county awarded contracts worth Sh25 million and Sh27 million for managing the Nairobi City Festival at Uhuru Central Park.
However, the evaluation committee failed to sign the scoring sheets, and neither of the contracted bidders provided the required performance bonds. Furthermore, the county did not advertise the Sh7.99 million tender for communication and public relations services for the event, breaching the procurement law.
Another event, the Battle of Choirs Second Edition at the Kenyatta International Conference Centre (KICC), cost the county Sh49.96 million for events management. KICC already provides event planning services, including audio-visual equipment, yet the county outsourced the same services to a third-party contractor without clear justification.
Discrepancies in Equipment and Vehicle Procurement
Nairobi County also encountered issues with procurement of garbage skips and skip loaders, which cost Sh51.6 million. The county failed to conduct a market survey to justify the price, and by October 2024, only 41 of the 120 skips had been delivered, despite the contract period expiring. The Auditor General was unable to confirm whether the Sh425,750 spent on each skip was justified.
Additionally, the county paid Sh175 million for the hire of heavy machinery, with one notable discrepancy being an overpayment of Sh2.68 million due to the county paying a higher hourly rate than agreed. The Auditor General also found discrepancies between the actual hours worked and those listed in invoices, leading to an excess payment of Sh6.56 million.
Anomalies in Routine Vehicle Maintenance
Finally, the Auditor General raised concerns over payments for routine vehicle maintenance, totaling Sh7.28 million. The county made these payments without providing the necessary procurement documents or supporting evidence that the work had been completed as per contractual terms. There were no records of goods received or spare parts returned after vehicle repairs, further compounding the procurement issues.
The Auditor General’s report paints a troubling picture of procurement mismanagement in Nairobi County. The failure to follow proper procurement procedures, lack of transparency, and irregular payments undermine public trust and raise questions about financial accountability.
