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In a high-stakes procurement dispute, APA Insurance Limited has contested the Ministry of Defence's decision to award a lucrative Sh49.9 million aircraft insurance contract to Britam General Insurance.
The dispute centers around the ministry’s tender process for insuring President William Ruto’s official jet, with APA Insurance alleging procedural irregularities that it claims violate public procurement laws.
Key Points of Dispute
Britam General Insurance emerged as the lowest bidder in the restricted tender process for the VVIP Fokker aircraft insurance, quoting Sh49.9 million.
This competitive bid beat out APA Insurance’s quote of Sh50.8 million and MUA Insurance’s bid of Sh62.2 million, positioning Britam as the ministry's preferred vendor.
However, APA Insurance, which previously held the contract for the aircraft's coverage, contends that the Ministry of Defence failed to adhere to proper notification procedures in awarding the contract.
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Allegations of Irregularities in Notification
APA Insurance claims that it was not promptly notified of the tender outcome and that the notification letter it received lacked crucial details, such as the reason for its disqualification and specifics of the winning bid.
This, APA argues, violates Section 87 of the Public Procurement and Asset Disposal Act, which mandates that unsuccessful bidders be informed of the results and reasons behind the selection of the successful bid.
According to APA’s legal counsel, the ministry’s notification letter was “defective,” as it did not specify the awardee’s details, contract amount, or any rationale for APA's disqualification.
APA asserted that these omissions deprived it of an opportunity to challenge the decision in a timely manner.
Ministry of Defence’s response
In response, the Ministry of Defence argues that all notifications were dispatched to the bidders on August 28, 2024.
The ministry maintained that the 14-day standstill period—during which bidders could challenge the decision—passed without any complaints, thus affirming Britam’s selection as the insurance provider.
The ministry also emphasised the sensitive nature of the contract, which covers a critical aircraft used by the Commander-in-Chief of the Defence Forces.
Ensuring that the VVIP Fokker aircraft was insured promptly was a matter of national security, the ministry argued, and it acted within its authority to avoid any gaps in coverage.
Public Procurement Board’s Findings and Decision
After reviewing the submissions, the Public Procurement Administrative Review Board (PPARB) ruled in favor of APA Insurance on certain procedural grounds.
The board found that the Ministry of Defence failed to provide sufficient evidence of prompt notification to APA Insurance.
Specifically, the board noted a lack of proof that the notification letter was sent simultaneously to all bidders, a requirement under Kenyan procurement laws designed to ensure transparency and accountability.
As a result, the PPARB nullified APA’s disqualification notice and ordered the ministry to re-issue the notification letter with all legally mandated details.
This decision does not overturn the contract awarded to Britam but requires the ministry to clarify its decision-making process.
The dispute between APA Insurance and the Ministry of Defence over the Sh49.9 million insurance tender for the official presidential jet highlights the critical role of procedural transparency in public procurement.