Investigations, Debarment

& Administrative Review

by
Isaac Simiyu Kuloba
LLB (Hons), LLM (UoN), PG Dip Law (KSL)
Principal Lecturer
The Kenya School of Law

6/22/2015 Isaac Kuloba/ Kenya School of Law 1

Presentation Outline
 INTRODUCTION
oDefinitions and context
oInvestigations, debarment & due process
 INVESTIGATIONS
oLegal framework
oKey issues in investigations
oPowers of the investigator
oResults of investigations

6/22/2015 Isaac Kuloba/ Kenya School of Law 2

Presentation Outline (2)
 DEBARMENT
oIntroduction
oObjectives of debarment
oDebarment process in Kenya
oGrounds for debarment
oRegulation of debarment process

6/22/2015 Isaac Kuloba/ Kenya School of Law 3

Presentation Outline (3)
 ADMINISTRATIVE REVIEW OF
INVESTIGATORY & DEBARMENT ORDERS
o Review of orders arising from investigations
o Review of debarment orders
 DEBARMENT IN OTHER JURISDICTIONS
o The USA
o World Bank
o European Union: England

6/22/2015 Isaac Kuloba/ Kenya School of Law 4

Introduction
 Investigations and debarment in relation to
public procurement are matters that may result
in actions or orders that affect a person’s rights
 Whenever the rights of a citizen are likely to be
affected by an administrative or a judicial
process, the law requires observance of due
process
 Due process means that the affected person
should not be deprived of his “life, liberty and
property” without a hearing

6/22/2015 Isaac Kuloba/ Kenya School of Law 5

Introduction (2)
 Art. 47 of the Constitution provides that
“[e]very person has the right to
administrative action that is expeditious,
efficient, lawful, reasonable and procedurally
fair”
 “…any action to be taken must be justified by
positive law. A public body has no heritage of
legal rights which it enjoys for its own sake at
every turn, all its dealing constitutes the
fulfillment of duties which it owes to others;
indeed it exists for no other purpose.”
[House of Lords in R v Somerset [1995] QBD 513]

6/22/2015 Isaac Kuloba/ Kenya School of Law 6

Introduction (3)
 So at the heart of investigations and debarment,
one of the themes running through is due process
 Due process may be divided into two categories:
osubstantive due process
oprocedural due process
 Substantive due process deals with violations of
substantive law, e.g., the compulsory acquisition of
property from a citizen without compensation
constitutes a violation of a substantive right of an
individual (right to own property)

6/22/2015 Isaac Kuloba/ Kenya School of Law 7

Introduction (4)
 Procedural due process relates to such
processes as the arrest and trial of a person
(criminal law), right to be heard before a
decision affecting a person is made, giving of
notice to an affected person, right to
challenge a decision before an independent
and impartial body (Art. 50), right of appeal,
etc.
 Due process limits the Government’s power
by requiring that certain procedures be
followed where an act is likely to affect the
rights of a person

6/22/2015 Isaac Kuloba/ Kenya School of Law 8

Introduction (5)
 The Constitution has mechanisms of
protecting the right to due process:
procedural fairness (Art 47), double
jeopardy, freedom from self-incrimination (or
testifying against oneself), the right to speedy
and public trial by an impartial court or
other body (see Art 50), the right to be
informed of the crime one is accused of
committing, the right to be represented by a
legal representative, the right to appeal to a
higher body, etc.

6/22/2015 Isaac Kuloba/ Kenya School of Law 9

Introduction (6)
 When a government or its agency harms a
person without following the course prescribed
by law, the act constitutes a due process violation
 If a law fails to provide mechanisms that
constitute due process, it may be declared by
court to be unconstitutional
 The concept of due process originated in England
but it is in the US that the right has robustly
developed over the years. In England, the
concepts of natural justice and rule of law are the
key components under due process

6/22/2015 Isaac Kuloba/ Kenya School of Law 10

Introduction (7)
 Under the English Common law, it is a well-
established principle that no individual
should be deprived of life, liberty or
property without notice and an opportunity
to defend themselves
 The Magna Carta (Latin for ‘Great Charter’)
of 1215 AD provided that no “free man shall
be seized, or imprisoned…except by the
lawful judgement of his peers, or by the law
of the land”
6/22/2015 Isaac Kuloba/ Kenya School of Law 11
Introduction (8)
 The above clause of the Magna Carta is what
was later transformed into due process
requirement and by the 17th century, it was
well established in England and North
American colonies (US, Canada)
 In the US, the requirement for due process
is part of the Constitution [the Fifth
Amendment of 1791 & Fourteenth
Amendment of 1868 (limitation of power of
the states]
6/22/2015 Isaac Kuloba/ Kenya School of Law 12
Introduction (9)
 In Kenya, provisions on due process are found
in various parts of the Bill of Rights (Chapter 4)
such as articles 26 (right to life), 40 (right to
own property) 47 (right to fair administrative
action), 49 (rights of an arrested person),50
(fair hearing - both civil and criminal trials), 51
(rights of persons held in custody)
 Most Acts of Parliament provide for
procedures that an aggrieved person should
follow if the exercise of a statutory power
leads to an infringement of his/her rights
6/22/2015 Isaac Kuloba/ Kenya School of Law 13
Introduction (10)
 Investigation and debarment under
procurement law are actions that may affect
the rights of an individual and hence both
require the observance of due process
 The power to investigate a contractor in
procurement proceeding is vested in the
Director-General (the DG) of the Public
Procurement Oversight Authority (PPOA)
[s.102 of PPDA] (but this does not mean
investigatory institutions such as EACC
cannot independently investigate the same
matter)

6/22/2015 Isaac Kuloba/ Kenya School of Law 14

Introduction (11)
 Article 227 of the Constitution sets out the
policy guidelines for procurement by public
entities by requiring that it must be “in
accordance with a system that is fair,
equitable, transparent, competitive and cost-
effective”
 The same provision provides that Parliament
shall enact a law that provides for sanctions
against contractors who have failed to
perform according to “professionally
regulated procedures, contractual
agreements or legislation”

6/22/2015 Isaac Kuloba/ Kenya School of Law 15

Introduction (12)
 The PPDA is the statute that is
contemplated by Art 227, although it pre-
existed the Constitution
 The Act, however, must be construed with
necessary modifications in order to
conform with the Constitution and,
where it is not properly aligned, it has to
be amended by Parliament directly or
through delegation (regulations) – see
Section 7 of the Sixth Schedule

6/22/2015 Isaac Kuloba/ Kenya School of Law 16

Introduction (13)
 The power to investigate and debar a
contractor is therefore broadly
sanctioned by the Constitution in Art 227
(2) (c) & (d)
 The rights of the bidder affected by an
action relating to investigation and
debarment (like other rights recognised
under the law) are protected under the
Constitution through the due process
provisions in the Bill of Rights

6/22/2015 Isaac Kuloba/ Kenya School of Law 17

INVESTIGATIONS
 ‘Investigation’ is a fact-finding process that seeks to
obtain evidence to support the relevant
contemplated action
 Investigations are undertaken by an independent
person appointed by the DG; the rationale is
clear: the DG is a decision-maker and he is not
expected to become partisan by investigating the
matter. The DG exercises quasi-judicial powers in
making decisions on investigations
 It is an important aspect of the requirement of
justice & fairness that the accuser should not be at
the same time the investigator

6/22/2015 Isaac Kuloba/ Kenya School of Law 18

Investigations (2)
 The scope of the investigation is delimited by the
law: it is confined to cases of breach of the
provisions of the Act (PPDA), the regulations
made under the Act, and the directions of the
Authority (circulars, guidelines and specific
directions given to a procuring entity or a party
to procurement proceedings, including a
bidder/contractor [see s.9(c)(iv) of the PPDA])
 An investigation cannot be undertaken in relation
to an issue that has been a subject of a review or
is pending before the PPARB under Part VII, unless
it is a new matter (s.114)

6/22/2015 Isaac Kuloba/ Kenya School of Law 19

Investigations (3)
 Acts that are breaches of the Act and which may
lead to an investigation being ordered include:
o Failure to establish and use committees (s. 26)
o Improper use of procurement methods (s.29)
o Entering into contract with an unqualified
person(s.31)
o Entering into contract with a prohibited person
(s.33)
o Designing unclear, non-objective specifications or
terms of reference, which may be intended to
disadvantage certain contractors in favour of
others (s.34)
6/22/2015 Isaac Kuloba/ Kenya School of Law 20
Investigations (4)
oCorrupt practices (s.40)
oCollusion, including bid rigging (s.42)
oBreach of confidentiality , e.g. improper
communication with bidders (s.44)
oFailing to notify PPOA in relation to certain
matters, e.g. termination of procurement
proceedings, restricted tendering, disposal to
employees, procurement of value exceeding
shillings 5,000,000/=, submission of list of pre-
qualified suppliers, etc.

6/22/2015 Isaac Kuloba/ Kenya School of Law 21

Investigations (5)
oInfluencing the evaluation of tenders
oDisregarding the provisions on preferences
oParticipation in tenders by persons who
have pecuniary or other interests in the
tender
oBidder giving false information on eligibility
to tender (currently, there are two entities
that have been debarred by the DG on this
ground)

6/22/2015 Isaac Kuloba/ Kenya School of Law 22

Investigations (6)
Key legal issues to be considered
during investigations
 An investigation upon a procuring entity
or a contractor lays the basis for possible
sanction by the DG and therefore must
observe certain standards that ensure
fairness and objectivity
 Procedure of investigations – must be by
the person so appointed by the DG
6/22/2015 Isaac Kuloba/ Kenya School of Law 23
Investigations (7)
 Rights of the person or entity investigated –
the person or entity investigated has certain
rights, including right not to incriminate
oneself – cannot be compelled to record
statement; the constitutional right to privacy
should be observed because certain things
may not be accessible on investigations
 Time for investigations – must be
undertaken during reasonable hours
 Respondent should be given opportunity to
provide evidence which may mitigate the
results by the investigator
6/22/2015 Isaac Kuloba/ Kenya School of Law 24
Investigations (8)
 The DG’s power to investigate does not extend
to criminal investigations – High Court Misc. Civil
Appl. No. 123 of 2009: R. v Kenya Anti-Corruption
Commission & Others [2010]eKLR (see also High
Court Petition No. 376 of 2011: Hon James
Gesami v the A-G, KACC & Commissioner of Police
[2012]eKLR
 The discretion whether or not the DG is to
exercise power to investigate is discretionary but
must be exercised judicially – High Court Misc.
Civil Appl. No. 261 of 2010: R. v The PPOA &
Another ex parte Getrio Insurance Brokers Ltd
[2011]eKLR

6/22/2015 Isaac Kuloba/ Kenya School of Law 25

Investigations (9)
Powers of an Investigator:
(1)Has access to all books, records, returns,
reports and other documents, including electronic
documents, of the procuring entity or a person
who participated in the procurement
proceedings,
(2)May remove or make copies of the documents
(3)May require information and assistance from
an employee or official of a PE or a bidder (the
law does not mention a bidder who colluded but
did not participate in the bid)
6/22/2015 Isaac Kuloba/ Kenya School of Law 26
Investigations (10)
 The law allows the granting of additional
powers to the investigator through the
regulations; the regulations may also limit
the powers or make the exercise thereof
conditional [s. 103(2) & (3)]
 An investigator is not authorise to give or
to purport to give advice to a PE on
procurement issues [reg. 89 of the PPDR,
2006]

6/22/2015 Isaac Kuloba/ Kenya School of Law 27

Investigations (11)
 The law does not set out the
qualifications of the person to be
appointed to investigate but it is clear that
such a person must have knowledge &
experience related to procurement
processes, and not necessarily knowledge
of the general law

6/22/2015 Isaac Kuloba/ Kenya School of Law 28

Investigations (12)
 Because of the potential of the investigation
report being used by the DG to take certain
actions, the investigator must have some
understanding of evidence issues
 The report by the investigator should
disclose that the entity or person
investigated might have committed the
wrong set out in the Act or that there is no
sufficient evidence to believe that there is
culpable conduct
6/22/2015 Isaac Kuloba/ Kenya School of Law 29
Investigations (13)
What results from investigations?
 There is no direct link between investigations
and debarment under the PPDA
 The PPDA (s. 105) provides that the DG has a
number of options upon receiving the
investigation report, and if he is satisfied that
there has been a breach of the Act or
directions, he may take a number of actions at
his discretion:
oDirect the relevant PE to take such actions as
are necessary to rectify the contravention

6/22/2015 Isaac Kuloba/ Kenya School of Law 30

Investigations (14)
o Cancel the procurement contract, if any
o Terminate the procurement proceedings
o Prepare and submit a summary of the
investigator’s findings and recommendations
to the procuring entity and to the Ethics and
Anti-Corruption Commission (EACC) – this
is obviously meant to activate the
Commission to carry out further
investigations with a view to prosecuting the
culprit(s): see R. v Kenya Anti-Corruption
Commission & Others [2010]eKLR (supra)

6/22/2015 Isaac Kuloba/ Kenya School of Law 31

Investigations (15)
 Before any of the actions that the DG
may take is undertaken, due process
requires that the PE and all entities or
persons likely to be affected by the DG’s
action are given opportunity to be heard
(“make representations”) [s. 105 (2)]
 This will involve notifying the parties of
the findings and the action proposed to
be taken, and giving them reasonable time
to make written responses

6/22/2015 Isaac Kuloba/ Kenya School of Law 32

DEBARMENT
Introduction
 Debarment is the exclusion of an individual,
business or entity from participating in public
procurement for a certain period of time
 The basis of the exclusion is conduct by a
contractor that is either illegal or unethical as
may be set out in legislation
 Because of the seriousness of debarment, the
law provides safeguards against the arbitrary
exercise of this power

6/22/2015 Isaac Kuloba/ Kenya School of Law 33

Debarment (2)
Introduction (2)
 The seriousness of debarment is well-captured
thus:
“If you go about your representation attending
to the criminal and civil interests of your client
only to run into a suspension or debarment as
an afterthought, you may find the criminal and
civil matters pale in comparison to this
administrative sanction. Debarment is, in fact,
the tail that wags the dog,” - John Pavlick (1947-
2007)

6/22/2015 Isaac Kuloba/ Kenya School of Law 34

Debarment (3)
Introduction (3)
 Debarment is a tool established by law to
protect the public financial interest from
unethical, dishonest, or otherwise
irresponsible entities, and to reduce fraud,
waste, and abuse in activities of Government
 In some countries, there is suspension of a
contractor when debarment process is
pending
 The period for debarment varies from one
jurisdiction to another, e.g. US (3 years);
India (2 years); Kenya (5 years)
6/22/2015 Isaac Kuloba/ Kenya School of Law 35
Debarment (4)
Introduction (4)
 Some forms of debarment are mandatory, and
require a procuring entity to exclude from
tendering any bidder who has engaged in certain
acts, such as a conviction for corruption (e.g.,
exclusion under the EU Procurement Directives)
 Other forms of debarment are discretionary, and
do not rely on conviction (e.g., debarment by the
World Bank)
 The decision to debar is often discretionary on
the part of the debarring agency (e.g. in Kenya)

6/22/2015 Isaac Kuloba/ Kenya School of Law 36

Debarment (5)
Objectives of a debarment system
 To deter entities from committing corrupt acts
 To punish entities that commit corrupt, unethical
or fraudulent acts
 To ensure integrity in the procurement process
 To promote competition and fairness in the
process
 To promote the principles of governance, which
include fairness, accountability, transparency, etc.
 To enforce good practices and observance of laws
related to public procurement.

6/22/2015 Isaac Kuloba/ Kenya School of Law 37

Debarment (6)
Debarment process in Kenya
 The power to debar is part of the functions of
the PPOA to ensure compliance with the PPDA
[s.9(a)]
 The debarment process under the Kenyan law
begins when the DG becomes aware of an act
that may constitute a ground for debarring a
contractor
 The PPDA provides that the DG “may order an
investigation of procurement proceedings for the
purpose of determining whether there has been a
breach of this Act, the regulations or any
directions of the Authority” [s.102(1)]

6/22/2015 Isaac Kuloba/ Kenya School of Law 38

Debarment (7)
Debarment process in Kenya (2)
 The law does not make the process
mandatory; the process is discretionary (in
the US & EU, some debarment processes are
mandatory)
 ‘procurement proceedings’ refers to the
entire spectrum of the process of acquisition
of goods, services and works, right from the
determination of the needs to procure to
the acquisition and subsequent processes,
including contract administration
6/22/2015 Isaac Kuloba/ Kenya School of Law 39
Debarment (8)
Debarment process in Kenya (3)
Debarment under the PPDA (s.115) may be made
where the DG is satisfied that a person –
 has committed an offence under the Act
 has committed an offence relating to
procurement under any Act
 has breached a procurement contract
 has given false information in procurement
proceedings about his qualifications
 has refused to enter into a written contract
 Any other ground set out in the regulations:
breach of a code of ethics by PPOA (Reg.90)

6/22/2015 Isaac Kuloba/ Kenya School of Law 40

Debarment (9)
Commission of an offence under the Act
 The Act creates offences such as corrupt
practices, fraud, collusion, conflict of interest,
breach of confidentiality, splitting or inflating
tender, making unsolicited communication to a PE
after close of deadline for submission of tender,
contravening an order of PPARB, etc.
 A person can only be said to have committed an
offence if that person has been convicted of the
offence by a court of law and has exhausted all
channels available for appeal or review or has
failed to exercise those rights and the time to do
so has lapsed

6/22/2015 Isaac Kuloba/ Kenya School of Law 41

Debarment (10)
 In (Nbi) Judicial Review Case No 88 of 2013:
R v Kenya Power & Lighting Company Ltd,
PPARB & 2 others [2013]eKLR, one of the
prayers in the application was that
debarment proceedings be instituted (by the
PPARB!) against one of the participants in
the procurement process “for misleading a
public body in order to influence the
procurement process”
 The Board rightly argued that it had no
power to do so and the Court never dealt
with the issue in its findings

6/22/2015 Isaac Kuloba/ Kenya School of Law 42

Debarment (11)
Commission of an offence under other
Acts
 Other laws create offences that may relate
to procurement:
 For example, the Penal Code (Chapter 63 of
the Laws of Kenya) provides for the offence
of fraud (s. 127); abuse of office (s. 101); false
written statement (s.112A); destroying
evidence (s.116); reckless or negligent act (s.
243)

6/22/2015 Isaac Kuloba/ Kenya School of Law 43

Debarment (12)
Commission of an offence under other
Acts (2)
 Public Officer Ethics Act also creates
offences, such as acting in situations of
conflict of interests; and offences under
various codes of conduct
 If a person is convicted of an offence under
any such Acts, it may form a basis for
debarment of the person under s. 115 of the
PPDA
 A conviction is the basis of debarment

6/22/2015 Isaac Kuloba/ Kenya School of Law 44

Debarment (13)
Breach of procurement contract
 Breach entails failure to meet the obligation
imposed mutually in a contract
 Breach may be very clear – for instance,
where a person has abandoned a contract
midway or has written to the PE that he is
unable to perform the contract
 Unlike in the cases of committing an offence,
a court finding is not a pre-condition before
a breach of contract can be established
 The standard for measurement of breach is
the terms and conditions in the contract
6/22/2015 Isaac Kuloba/ Kenya School of Law 45
Debarment (14)
Giving false information in procurement
 A bidder may provide false information
relating to eligibility to be awarded contract
(s. 31)
 The information may relate to the tenderer’s
eligibility and qualification to bid, e.g. past
experience, business turn-over, existing
contractual load; giving false supporting
documentation such as PIN, tax compliance,
age of the bidder (youth tenders); giving
misleading and false information sought by a
PE on his qualification; etc.
6/22/2015 Isaac Kuloba/ Kenya School of Law 46
Debarment (15)
Giving false information (2)
 The contractors who are currently
debarred by the DG (only two are listed
by PPOA) were barred on the ground of
giving false information to PE’s as to their
eligibility or qualification to bid

6/22/2015 Isaac Kuloba/ Kenya School of Law 47

Debarment (16)
Refusing to enter into a written contract
 S. 68 requires a successful bidder to enter
into a written contract with a PE as per the
notice of award, any time after the expiry of
14 days
 A refusal to enter into a written contract
may be because a contractor takes
advantage of s. 68(3) which provides that no
contract exists until a written contract is
executed, hence a suit may not be pursued
for breach of s. 68(1)
6/22/2015 Isaac Kuloba/ Kenya School of Law 48
Debarment (17)
Refusing to enter into a written contract
(2)
 The evidence required by the DG to
support a debarment under this ground is
the notification of the award, duly issued and
delivered to the bidder, and upon evidence
that the bidder has failed to execute a
contract despite notification to do so
 Like in the case for breach of contract, a
court order is not necessary for the
determination of this question
6/22/2015 Isaac Kuloba/ Kenya School of Law 49
Debarment (18)
Other grounds: Breach of Code of
ethics
 S. 139 of the PPDA gives PPOA powers to
issue codes of ethics to be observed in
procurement and disposal activities
 So far, the PPOA has issued the Public
Procurement Code of Ethics for Procuring
Entities, 2011that sets out the standard of
conduct for all those involved in
procurement and disposal within a PE
6/22/2015 Isaac Kuloba/ Kenya School of Law 50
Debarment (19)
Other grounds: Breach of Code of
ethics (2)
 The decision to debar a person/entity on
this ground does not require a court
order but the DG need only be satisfied
that there has been a breach of the Code
by the bidder, including breach by senior
officials of those entities
 The discretion by the DG must, like any
similar discretion, be exercised judicially
6/22/2015 Isaac Kuloba/ Kenya School of Law 51
Debarment (20)
Debarment procedures
 The PPDA sets out broad outline on the
procedure for debarment – Part IX (ss. 115-125)
 Debarment may be made based on an act that
was committed before the PPDA came into force:
Paragraph 14 of the Third Schedule to the Act
(Transition provides that the grounds for
debarring a person under s. 115 of the Act
includes “anything done before this Act comes
into operation that would constitute a ground
under that section”

6/22/2015 Isaac Kuloba/ Kenya School of Law 52

Debarment (21)
Debarment procedures (2)
 Only the DG has powers to debar
 A procuring entity in Kenya has no jurisdiction to
debar a contractor (in countries like the US, it is
possible). In High Court Misc. Appl. No. 386 of 2008:
R v The P.S. Ministry of State for Defence & Another
[2008]eKLR, the court held that P.S. had no
powers to debar the applicant from participating
in procurement. Also held (orbita) that the DG
can only cancel a procurement contract after
investigations under s. 102 of the PPDA

6/22/2015 Isaac Kuloba/ Kenya School of Law 53

Debarment (22)
Debarment procedures (3)
 The PPDA does not provide for suspension
 Audi alteram partem – the right to be heard
is fundamental to any decision that will, or is
likely to, affect the rights of a person
 S.116 of the PPDA makes it mandatory for
the DG to hear representations from a
person who is proposed to be debarred
 NB: the law does not suggest that affiliates
should also be heard – see reg. 91 of the
PPDR, 2006

6/22/2015 Isaac Kuloba/ Kenya School of Law 54

Debarment (23)
Debarment procedures (4)
 The person who is proposed to be debarred
must be notified of the intention to do so with
sufficient details and particulars of the wrong the
person is alleged to have committed, including,
where applicable, the legal provisions contravened
 The notice must clearly specify the steps that the
person is entitled to take, including the right to
submit written representations, the date and time
to submit, the place to submit, together with the
evidence that the person may wish to provide to
rebut the allegations
6/22/2015 Isaac Kuloba/ Kenya School of Law 55
Debarment (24)
Debarment procedures (5)
 The period given within which to respond must
be sufficient to enable the person to prepare his
replies, otherwise the resultant action may be
challenged by way of judicial review or appeal
 Under reg. 91 of the PPDR, all persons or
entities with a controlling interest in the
debarred entity are similarly barred
 It is important to involve these affiliates, as far
as they may be known, in the debarment
proceedings, otherwise the debarment may be
challenged on constitutional grounds
6/22/2015 Isaac Kuloba/ (e.g.
Kenya School of Law Art.56
Debarment (25)
Debarment procedures (6)
 In the US system, the Federal Acquisition
Regulations (FAR) expressly authorize
agencies to extend debarment or suspension
decisions to “affiliates” of the contractor if
the affiliates are specifically named, and are
given written notice of the exclusion and an
opportunity to respond
 Under the regulations, the due process
protections with suspension are not as
extensive as those with debarment because
suspension is “less serious” than debarment
6/22/2015 Isaac Kuloba/ Kenya School of Law 57
Debarment (26)
Debarment procedures (7)
 The standard of proof of culpable conduct that may
lead to debarment is not provided under the law
 Under the World Bank Guidelines – which may be
useful guide - debarment may be made on the basis
of a “preponderance of evidence”; it is not on the
basis of the criminal law standard of “proof beyond
reasonable doubt”
 Where the debarment is based on a conviction,
there is no difficulty in determining the question; a
certified copy of the conviction (or final order on
appeal or review) from court is conclusive of the
fact of conviction

6/22/2015 Isaac Kuloba/ Kenya School of Law 58

Regulations of Debarment Process

Debarment procedures (8)

 The PPDA and the Regulations are deficient in
providing for debarment process
 A person wishing to initiate the debarment
process should have guidelines on how to go
about it
 Some countries have detailed procedures on
suspension and debarment, e.g. Mauritius
 It is necessary to have procedures on:
oWho can initiate the debarment process
oForm of documents to make the application
6/22/2015 Isaac Kuloba/ Kenya School of Law 59
Regulations of Debarment Process (2)

Debarment procedures (9)

oWhether or not fees is payable, if any
oThe form and content of notice of intended
debarment
oThe form and content of response
oThe duration for submitting response
oThe type and nature of evidence to be
submitted
oDiscovery
oThe hearing of the process and the duration,
etc.

6/22/2015 Isaac Kuloba/ Kenya School of Law 60

Administrative review of investigatory
and debarment orders
Review of DG’s investigatory orders
 The orders that may arise out of investigations and
debarment are reviewable by the PPARB
 As stated earlier, the right to a review is a
constitutional right, provided under the concept of
due process
 S. 106 of the PPDA provides for the right of a PE or a
person “who was entitled to be given an opportunity
to make representations” to apply to the Board for a
review within 21 days
 The Board can allow other parties to participate in
the request for review (s. 109)
 NB: The DG or PPOA is not shown as a party to the
review
6/22/2015 Isaac Kuloba/ Kenya School of Law 61
Administrative review of investigatory and
debarment orders (2)
Review of DG’s investigatory orders (2)
 The Board is required to sit and to hear the
request for review within 21 days of lodgement of
the review
 The Board is empowered to dismiss a “frivolous
or vexatious” application (s.107)
 The dismissal order under S. 107 should ideally
have been part of the orders the Board may make
under s. 111
 The meanings of ‘frivolous’ and ‘vexatious’ are not
given in the Act, but from judicial
pronouncements in courts of justice, the
expressions are well-settled:

6/22/2015 Isaac Kuloba/ Kenya School of Law 62

Administrative review of investigatory and
debarment orders (3)
Review of DG’s investigatory orders (3)
 Ringera J, as he then was, in Trust Bank Limited v
Amin Company Ltd & Another (2000) KLR 164
defined the expressions as follows:
 “A pleading or an action is frivolous when it is
without substance or groundless or fanciful and is
vexatious when it lacks bona fides and is hopeless
or offensive and tends to cause the opposite party
unnecessary anxiety, trouble or expenses. A pleading
which tends to embarrass or delay fair trial is a
pleading which is ambiguous or unintelligible or
which states immaterial matters and raises irrelevant
issues which may involve expenses which will
prejudice the fair trial of the action”

6/22/2015 Isaac Kuloba/ Kenya School of Law 63

Administrative review of investigatory and
debarment orders (4)
Review of DG’s investigatory orders (4)
 Ringera, J (again!) in Mpaka Road Development
Limited v Kana (2004) 1 E.A. 24, stated as follows
at page 165 -
“A pleading is frivolous if it lacks seriousness. If it is
not serious then it would be unsustainable in court.
A pleading would be vexatious if it annoys or tends
to annoy. Obviously it would annoy or tend to
annoy if it was not serious or it contained
scandalous matters which are irrelevant to the
action or defence. In short, it is my discernment
that a scandalous, frivolous or vexatious pleading is
ipso facto vexatious.”

6/22/2015 Isaac Kuloba/ Kenya School of Law 64

Administrative review of investigatory and
debarment orders (5)
Review of DG’s investigatory orders (5)
 Upon hearing a request for review, the
Board is empowered to make certain orders
 The Board may:
o Confirm (not to disturb the order) (this means
dismissing the request for review); or
o Vary (make changes to the order); or
o Overturn (reverse the decision)
o Order costs to be paid by a party to the review

6/22/2015 Isaac Kuloba/ Kenya School of Law 65

Administrative review of investigatory and
debarment orders (6)
Review of DG’s investigatory orders (6)
 The Board is required to decide the request for
review within 30 days from the date the request for
review is lodged
 A person aggrieved by an order on review may appeal
to the High Court within 14 days
 The right for a review does not take away the right to
pursue other remedies available under the law (e.g.
seeking judicial review, or filing a civil claim,
constitutional reference, etc.) (ss. 112 & 113), but one
cannot file judicial review application and argue
grounds that are only suitable for appeal-HC JR Appl.
No. 92/2011: R v the PPARB, Kenya Railways Corp ex
parte Gibb Africa Ltd & Another [2011]eKLR

6/22/2015 Isaac Kuloba/ Kenya School of Law 66

Administrative review of investigatory and
debarment orders (7)
Review of Debarment orders
 Like an order arising from the exercise of the
investigatory powers of the DG, a party who is
aggrieved by an order of debarment may, within
21 days, request for a review by the Board (s.
117)
 Only the person debarred and the DG are parties
to the review
 The Board is required to sit to consider the
request for review within 21 days after the
request is lodged, and conclude the review within
30 days from the date the review was lodged
6/22/2015 Isaac Kuloba/ Kenya School of Law 67
Administrative review of investigatory and
debarment orders (8)
Review of Debarment orders (2)
 Upon hearing a request for review, the Board is
empowered to make certain orders
 The Board may:
oConfirm (not to disturb the order) (this means
dismissing the request for review); or
oVary (make changes to the order, e.g. varying
the period of debarment from 7 to 5 years); or
oOverturn (reverse the decision – remove the
debarment order)
oOrder costs to be paid by a party to the review

6/22/2015 Isaac Kuloba/ Kenya School of Law 68

Administrative review of investigatory and
debarment orders (9)
Review of Debarment orders (3)
 A person who is aggrieved by an order of
the Board on review may appeal to the
High Court within 14 days (s.123)
 The right for a review does not take away
the right of a debarred person to pursue
other remedies available under the law
(e.g. seeking judicial review, or filing a civil
claim, constitutional reference, etc.) (s.
124)
6/22/2015 Isaac Kuloba/ Kenya School of Law 69
Role of the PPOA Advisory Board in
Investigations & Debarment
Review of Debarment orders (4)
 The Advisory Board is established under s.
23 of the Act as an unincorporated body
 Its functions include “to advise the Authority
generally on the exercise of its powers and the
performance of its functions” [s. 23(a)]
 The Board does not take responsibility for
the decision taken by the DG in relation to
investigations and debarment proceedings;
that is why the Board is unincorporated and
cannot be a party to proceedings under the
Act
6/22/2015 Isaac Kuloba/ Kenya School of Law 70
Role of the PPOA Advisory Board in
Investigations & Debarment (3)
Review of Debarment orders (5)
 Under s.115 (1), the approval of the
Advisory Board is required before the DG
debars a person
 It is important that the approval is clearly
and specifically minuted in the Board
minutes as failure to do so may form part of
the grounds for attacking the debarment
order should the aggrieved bidder move to
court with knowledge of the of the omission
 The approval is ex ante, not ex post

6/22/2015 Isaac Kuloba/ Kenya School of Law 71

Debarment in other jurisdictions: the USA

 The US has both suspension and debarment

 Suspension is made pending some further action,
e.g. pending investigations or debarment
proceedings
 The procedures required to debar or suspend an
individual or organization vary depending upon
whether the basis is statutory or administrative
 For statutory suspensions or debarments, the
statute itself provides the applicable procedural
requirements, subject only to the constitutional
limits of due process as defined by the courts

6/22/2015 Isaac Kuloba/ Kenya School of Law 72

Debarment in other jurisdictions: the USA
(2)
 To initiate a suspension or debarment, an
agency must first become aware of the
existence of possible grounds for such action
 The Federal Acquisition Regulations (FAR)
accomplish this by requiring agencies to
establish procedures for prompt reporting,
investigation, and referral to the applicable
debarring official of any “matters appropriate
for that official’s consideration”

6/22/2015 Isaac Kuloba/ Kenya School of Law 73

Debarment in other jurisdictions: the USA
(3)
 Arraignment in court, convictions, and civil
judgments are the types of “matters” most
commonly referred to debarring officials
 However, an arraignment in court or similar
official action is not necessary to initiate a
suspension action; a suspension may be
initiated by an agency that has developed the
facts independent of or even in the absence
of a parallel judicial proceeding

6/22/2015 Isaac Kuloba/ Kenya School of Law 74

Debarment in other jurisdictions: the USA
(4)
 Upon deciding to take action, an agency is
required under the FAR to either issue a
notice of suspension or a notice of proposed
debarment
 A notice of suspension can be (and usually
is) provided with the suspension effective
immediately
 Notice of proposed debarment does not
affect the contractor until after hearing the
contractor

6/22/2015 Isaac Kuloba/ Kenya School of Law 75

Debarment in other jurisdictions: the USA
(5)
 The agency must provide certain information
in the notice, including that the entity has
either been suspended or is being
considered for debarment, the basis for the
agency’s action, and the Government-wide
effect of the suspension or proposal to
debar
 In the case of a suspension, the notice also
states that the suspension is for a temporary
period pending completion of an
investigation or resulting proceedings
6/22/2015 Isaac Kuloba/ Kenya School of Law 76
Debarment in other jurisdictions: the USA
(6)
 A suspended entity has 30 days after
receipt of the notice to submit
information and argument in opposition
to the suspension, including specific facts
that contradict statements contained in
the notice
 Similarly, an entity has 30 days to contest
a proposed debarment by providing
specific facts contradicting the basis for
the debarment

6/22/2015 Isaac Kuloba/ Kenya School of Law 77

Debarment in other jurisdictions: the USA
(7)
 The contesting entity will only be entitled
to a hearing where:
omaterial facts are in dispute
othe action was not based on an
indictment, conviction, or civil judgment
osubstantial interests of the Government
in pending or contemplated legal
proceedings will not be prejudiced by a
hearing
6/22/2015 Isaac Kuloba/ Kenya School of Law 78
Debarment in other jurisdictions: the USA
(8)
 If the debarring official determines that
the above conditions are met, the issue is
referred to a fact-finder who conducts an
independent proceeding
 At the conclusion of the proceeding, the
fact-finder submits written findings of fact
to the debarring official, which are binding
unless determined by the official to be
arbitrary and capricious or clearly
erroneous

6/22/2015 Isaac Kuloba/ Kenya School of Law 79

Debarment in other jurisdictions: the USA
(9)
 The debarring official makes decision on
whether or not to debar
 Notice of the decision must be promptly
provided to any debarred entity and
involved affiliates, and if debarment is
imposed, the notice must state the
reasons for debarment, the period of
debarment, and explain that the
debarment is effective & Government-
wide

6/22/2015 Isaac Kuloba/ Kenya School of Law 80

Debarment in other jurisdictions: the USA
(10)
 In considering suspension or debarment
under the FAR, agency officials should
consider remedial or mitigating factors
such as -
othe presence of effective standards of conduct
and internal control systems in place when
the misconduct occurred or adopted before
any Government investigation
owhether the contractor timely brought the
misconduct to the agency’s attention
6/22/2015 Isaac Kuloba/ Kenya School of Law 81
Debarment in other jurisdictions: the USA
(11)
owhether the contractor fully investigated the
misconduct and provided the results of the
investigation to the agency
othe contractor’s cooperation
opayment of fines, restitution, and
reimbursement of the Government’s
investigation costs by the contractor
owhether the contractor has taken appropriate
disciplinary action against the responsible
individuals

6/22/2015 Isaac Kuloba/ Kenya School of Law 82

Debarment in other jurisdictions: the USA
(12)
oimplementation of remedial measures
oinstitution of a new or revised review and
control process and ethics training
programmes
owhether adequate time has passed to
eliminate the cause of the misconduct
omanagement’s recognition of the
seriousness of the misconduct and role in
implementing programmes to prevent
recurrence.

6/22/2015 Isaac Kuloba/ Kenya School of Law 83

Debarment in other jurisdictions: the USA
(13)
 Suspension or debarment is prospective; an
agency may continue contracts or
subcontracts in existence at the time the
contractor was debarred, suspended, or
proposed for debarment, unless the
agency’s head directs otherwise
 In extreme cases, the agency may
terminate the contract

6/22/2015 Isaac Kuloba/ Kenya School of Law 84

Debarment in other jurisdictions: the USA
(14)
 When an entity is suspended or debarred
that entity is placed on the Excluded
Parties List System (EPLS), centrally kept
by a federal agency
 Once an entity’s name is on the EPLS, that
entity is excluded from receiving
Government contracts or subcontracts
and participating in non-procurement
transactions with the Government

6/22/2015 Isaac Kuloba/ Kenya School of Law 85

Debarment in other jurisdictions: the USA
(15)
Judicial Review
 An agency suspension or debarment
decision is reviewable in federal district
court.
 A court will not set aside an agency decision
unless it finds that decision to be “arbitrary,
capricious, an abuse of discretion, or
otherwise not in accordance with law.”
 Before judicial review is granted, an excluded
entity must have exhausted all available
administrative remedies

6/22/2015 Isaac Kuloba/ Kenya School of Law 86

Debarment in other jurisdictions: the USA
(16)
Judicial Review (2)
 However, the only remedy available to an
excluded entity is an injunction against
the suspension or debarment
 A claimant is not, however, required to
exhaust an agency appeal process unless
the governing statute or regulations
explicitly requires such exhaustion

6/22/2015 Isaac Kuloba/ Kenya School of Law 87

Debarment in other jurisdictions: the USA
(17)
Judicial Review (3)
 A claimant usually desires to have the exclusion
lifted pending resolution of the suit (JR)
 Four factors will be considered by the court:
◦ whether the claimant has a substantial
likelihood of success on the merits,
◦ whether the claimant would suffer irreparable
harm without the injunction,
◦ whether the claimant’s need for an injunction
outweighs any harm that would result, and
◦ whether the preliminary relief would serve the
public interest 6/22/2015 Isaac Kuloba/ Kenya School of Law 88
SUSPENSION & DEBARMENT: WORLD
BANK
 The World Bank Group (WB) has in the
last two decades been concerned with
corrupt practices relating to the use of
funds sourced from WB
 The WB has identified “sanctionable
practices” that may attract its coercive
power to suspend and debar a contractor
 On the WB list there are many
institutions that have been debarred for
varying periods of time.
6/22/2015 Isaac Kuloba/ Kenya School of Law 89
Suspension & Debarment: World Bank (2)

 Under the Guidelines, the Office of

Suspension & Debarment (OSD) issues
Notice of Sanctions Proceedings to the
person
 The Respondent has 30 days to respond to
the OSD by submitting written explanation
 OSD evaluates the evidence in sanctions
cases submitted by respondent, deciding if
there is sufficient evidence that the
Respondent(s) engaged in the alleged
sanctionable practice(s)
6/22/2015 Isaac Kuloba/ Kenya School of Law 90
Suspension & Debarment: World Bank (3)

 In cases with sufficient evidence, OSD

issues a Notice of Sanctions Proceedings
to the Respondent and recommends an
appropriate sanction
 In most situations where a Notice of
Sanctions Proceedings is issued, OSD also
imposes a temporary suspension on the
Respondent

6/22/2015 Isaac Kuloba/ Kenya School of Law 91

Suspension & Debarment: World Bank (4)

 OSD considers any “Explanation” submitted

by a Respondent in response to the Notice
of Sanctions Proceedings issued by OSD,
deciding if there is a basis to withdraw the
case or revise the recommended sanction
 In the event that the Respondent does not
appeal to the Sanctions Board, (has 90 days
from service of Notice) OSD imposes the
recommended sanction on the Respondent
and posts a Notice of Uncontested
Sanctions Proceedings on the World Bank’s
sanctions website

6/22/2015 Isaac Kuloba/ Kenya School of Law 92

Suspension & Debarment: World Bank (5)

 Where the respondent appeals to the

Sanctions Board on receipt of the Notice of
Sanctions Proceedings, the matter will be
out the hand of the OSD
 Upon considering the response, the
Sanctions Board may impose the sanctions
that are specified in the Notice if satisfied
that the grounds for the action are well-
founded
 There is no right of appeal from the
decisions of the Board
6/22/2015 Isaac Kuloba/ Kenya School of Law 93
Suspension & Debarment: World Bank (6)

 In most cases, a debarment or suspension by the

WB is recognised and acted upon by a number of
other multilateral development banks – AfDB,
ADB, European Bank for Reconstruction &
Development, Inter-American Development Bank
 These financial institutions entered into a Cross
Debarment Agreement in 2010 to mutually
enforce each other’s debarment actions, with
respect to the four harmonized sanctionable
practices, i.e. corruption, fraud, coercion, and
collusion
6/22/2015 Isaac Kuloba/ Kenya School of Law 94
Suspension & Debarment: World Bank (7)

 The sanctionable practices are:

o Corrupt practices
o Fraudulent practices
o Collusive practices
o Coercive practices
o Obstructive practices
 Each of them is specifically defined on what it
entails
 Most cases where suspension and debarment have
been imposed related top fraudulent practices

6/22/2015 Isaac Kuloba/ Kenya School of Law 95

SUSPENSION & DEBARMENT: THE EU

 The Union began in 1956 as European

Economic Community
 The European Union is made up of 28
countries; the most recent member being
Croatia, which acceded on 1st July 2013
 The Public Procurement Directive 2004/18
issued by the the European Parliament and
the Council of the European Union, has
provisions (Art. 45) requiring member states
to exclude firms convicted of participation in
criminal organization, corruption, fraud and
money laundering (mandatory)
6/22/2015 Isaac Kuloba/ Kenya School of Law 96
Suspension & Debarment: the EU (2)

 It is not clear how the Directive can be

extended to the ‘associated firms’
 The Directive does not provide whether
investigations should be conducted before
excluding a supplier
 The effect is to give member countries
leeway to determine the procedures and
details of exclusion

6/22/2015 Isaac Kuloba/ Kenya School of Law 97

Suspension & Debarment: the EU (3)

 In the UK, debarment applies automatically

where an economic entity has been
convicted of bribery, fraud and money
laundering
 In England, public authorities also have a
discretionary right to debar a contractor
from bidding for a public contract when the
contractor:
◦ Is bankrupt
◦ Has been convicted of a criminal offence relating
to the conduct of its business or profession

6/22/2015 Isaac Kuloba/ Kenya School of Law 98

Suspension & Debarment: the EU (4)

o Has committed an act of grave misconduct in the

course of its business or profession
o Has not fulfilled obligations relating to the
payment of social security contributions or taxes
o Is not registered or licensed where the law
requires that to be done
 England has made Public Contracts Regulations
2006 and passed the Bribery Act 2010 that give
contracting authorities power (mandatory) to
debar provided the requirements of the relevant
laws are met

6/22/2015 Isaac Kuloba/ Kenya School of Law 99

CONCLUDING ISSUES & QNS

 Need for some clear law on investigations and

debarment?
 Should certain PE’s have powers to suspend and
debar?
 More regulations on debarment?
 Need to make provisions for suspension of a
contractor?
 Should PE be required to have internal
procedures for investigating and reporting
matters relevant to debarment?
 Should there be possibility of settlement in lieu of
debarment?

6/22/2015 Isaac Kuloba/ Kenya School of Law 100

THANK YOU FOR YOUR PATIENCE!

6/22/2015 Isaac Kuloba/ Kenya School of Law 101