Reserve Bank appeals Judge Kenyatta’s ruling to re-tender ICT contracts awarded irregularly

The Reserve Bank of Malawi (RBM) has appealed to the Supreme Court against the judgment made by Judge Kenyatta Nyirenda in August that ordered the Central Bank to re-tender contracts which were dubiously awarded to a company that did not qualify for bidding in the first place.

Justice Kenyatta’s ruling followed an earlier determination from Public Procurement and Disposal of Public Assets Authority (PPDA) Review Committee which ordered RBM to retender the disputed tenders after one for the bidders, Sparc Systems, had lodged a complaint to PPDA having noticed serious irregularities done by RBM in favour of another bidder, Mitra Systems.

The appeal seems to be a desperate attempt by the Central Bank to still award the tenders to Mitra to supply and deliver ICT hardware for Flexcube Upgrade and ICT hardware for Automated Transfer System.

Mitra, which is the second interested party in the case, was faulted by Justice Kenyatta in his ruling that it is a company which does not have required experience and expertise to execute such tenders.

This was also verified by RBM’s forensic audit done by Deloitte — which was sanctioned by the Bank itself for its internal use — that the company failed to me one crucial criteria of 5 years of experience to supply office equipment of that nature.

It also came to light that Mitra is an acronym for Market Insights Tracking and its owner, Malawian Albert Chigoga, distanced himself from Mitra Systems and our findings are that it is a Zimbabwean-owned

Chigoga contended in August that the company needed to be investigated on how it got registered in the same name as his and just adding Systems to it.

He had said his Market Insights Tracking (Mitra) was formed in 2009 initially as a sole proprietorship until 2014 when it was incorporated as a limited liability company with first directors who were registered from then to date.

Chigoga said there is no partnership with the said Mitra System Company and that he wanted to sue the owners for ‘tort of passing off’ after he discovered it was registered after his Mitra was already registered but had thought then that the move would be inconsequential.

Mitra Systems, a non-incorporated ICT company owned by Zimbabwean Martin Masawi and Robert Benimana from Rwanda, did not have experience to execute such tender as they have only executed contracts of average MK40 million and they also demanded 60% advance payment despite the tender specifically mentioning that they will disqualify any bidder that request for advance payment.

After the PPDA’s determination, RBM proceeded to the High Court suing Sparc Systems Ltd seeking nullification of the decision by PPDA and challenging the legality of the said decision ordering it to retender — which Justice Kenyatta maintained it should be re-tendered.

In its application for the stay of the decision to the Supreme Court of Appeal, RBM is now using new external lawyers — Mbendera & Nkhono Asociates — which will likely cost more to the tax payer.

The Central Bank contends that the Judge erred in law when making the decision for the bank to re-tender, arguing that re-tendering of the said contracts will not be possible due to the fact that the delays in procurement of the ICT equipment needs to be revised to match with time to which Mitra submits in support.

“Such that if the re-tender was to proceed, the Bank runs the risk of acquiring a software that may not be compatible with the hardware, which in the end, might result into performance challenges,” reads part of the arguments raised in the sworn statement.

The Bank also argues that although they need the equipment and might add some specifications, they are against the court decision which restricted the re-tender to only qualified bidders who bid last time.

The Bank wants the re-tender to be open to everyone which can allow them to change technical specifications and the evaluation criteria.

General Manager for Mitra, who is the second respondent supports RBM’s application for a Stay Order, saying they duly submitted what was required of them during the bidding process and came out successful because they met all the requirements.

He also concurs with RBM that Justice Nyirenda erred in delivering the judgment, saying he believes that when the balance all competing interests, “it is fair and just to consider granting the prayer for stay and/or a suspension of enforcement of judgement pending appeal”.

However, both the PPDA and Sparc Systems Limited is advising the Supreme Court to dismiss the case with costs.

PPDA, through its director of capacity development, Advisory Services and Reforms, Timothy Kalembo questioned why RBM would seek for a stay order when the High Court had only asked for a re-tender and not making any procurement decision on behalf of RBM.

“The Court is not making any procurement decision by ordering the re-tender since the process will commence again with the user department by submitting a requisition and properly revise and modify the specifications which will be drafted in the bidding document to be issued to the bidders.”

“It is therefore erroneous to say the Court has usurped the decision making role of the Claimant in this procurement as demonstrated in the entire sworn statement.”

Kalombo contends that under the Public Procurement law, every procurement process can be cancelled if there is need to substantially modify the bidding document by revising the specifications.

He also questioned the presence of the new lawyers when they were not on record as representing the Bank as shown by the notice of Appointment of Legal Practitioners.

He argued that at the time of filing the said notice of Appeal, Mbendera & Nkhono Associates were not on record as representing RBM as indicated by the Notice of Appointment of the Legal Practitioners, filed on 19 October, 2021 and served on the defendant’s lawyers on 20 October, 2021.

Sparc Systems’ Managing Director, Wisely Phiri said the application for the Stay Order is a deliberate move by RMB to ignore the Court ruling so that it still awards the tenders to Mitra Systems at all cost to suit it’s own interests.

He argues that this is RBM’s attempt “to evade the outcome of a court process that was initiated by itself so that eventually it does what it has always wanted to do” — to award the procurement contract to Mitra Systems “despite the process having been severely faulted by the Court” as well as by RBM through the independent forensic auditors it appointed.

He maintains that what Sparc System is asking for is a “fair and transparent opportunity to participate in a public procurement”.

“The suggestion that the Court has all but granted the 1st Interested Party procurement contract is unfounded and ill advised. Should the Claimant re-tender, the 1st Interested Party along with the rest of the other bidders who were not declared as unqualified by the Court, namely Oranux and Move Secure, will have to decide whether they want to participate in the fresh procurement proceeding,” he said.

He also faults the the Bank that it did not abide to the High Court’s order to re-tender the two tenders at the reduced period of 21 days but has been elusive and only came back to the Court 57 days later — thereby risking contempt of court.

He also refuted claims by RBM that re-tendering would lead to purchasing a obsolete equipment, saying for Flexicube, RBM specified the following equipment:

• IBM Enterprise Server E950 (Server 1:9040 Model MR9);
• IBM Networking switch – 8960-F24 (IBM Storage Networking SAN24B-6);
• Dell EMC Unity storage 380F model; “all these being current models that are being sold on the market.

“The forecast shows that these equipment will be supported by the manufacturers and warranty centers, to which we are in Malawi, for up to or beyond year 2030,” Phiri said.

“As the foregoing demonstrates, there is no credible or legitimate reason why the tender of the procurement of the Flexicube equipment cannot be proceed with. It certainly is not correct that if a fresh tender is floated, the Claimant will procure obsolete or useless ICT equipment.”

For the ATS equipment, the IBM Networking switch – 8960-F24 is currently still in sale. In its bid documents, RBM specified version SAN24B-5 for this switch.

“IBM has produced a new model SAN24B-6 as a replacement model for the switch that the Claimant had specified. This cannot stop the Claimant from buying it or using it, therefore. Even if it specified the latest version of the switch, however, I believe that it would not be changing the nature of the procurement or the ICT equipment to be procured.

“The Claimant is well able to procure equipment that will still be fit for purpose. The specifications can be changed to provide for what is currently available on the market without at all changing the nature of the procurement.

“It behoves any bidder who know what he is doing to make sure that he offers to supply equipment which represents the state of the technology and is not obsolete,” he said.

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