The public procurement watchdog has faulted Kenya Power for restricting an insurance tender to underwriters without unsettled claims or those with clients listed on the Nairobi Securities Exchange (NSE).

The Public Procurement Administrative Review Board (PPARB) said several requirements in Kenya Power’s 2026–2027 insurance prequalification tender breached the law on fairness, competition and transparency.

The contested conditions included disqualifying insurance firms over unsettled claims beyond 90 days, requiring experience with NSE-listed companies, and imposing unclear audited accounts certification rules.

PPARB said the requirements were discriminatory, irrational and in breach of procurement law.

While ruling on a review application filed by insurance broker Benron Insurance Agency, the board found that key conditions in the tender document were “ambiguous, discriminatory, and restrictive”, effectively limiting participation by qualified insurers and brokers.

“The tender document for the subject tender imposes restrictions that prohibit the participation of eligible candidates, contrary to the Act and best practices,” said the PPARB.

Tender flaws

At the centre of the dispute was Kenya Power’s requirement that bidders submit audited accounts for 2023 and 2024, certified within three months of the tender closing date.

The board said the clause was unclear and open to conflicting interpretation, noting the document failed to state who should certify the accounts or when certification should occur.

It backed the applicant’s argument that it was not clear whether the audited books were to be certified by an advocate, a commissioner of oaths or the issuing auditor.

“This provision ought to be amended and rephrased so as to categorically and explicitly state who is to undertake the certification of the audited accounts and when this is to be done, so as to leave no room for disparity of opinion during evaluation of submitted bids,” the PPARB ruled.

Benron had argued that the condition forced firms to incur unnecessary costs by re-certifying already audited accounts. The board agreed that the ambiguity could unfairly disqualify bidders.

Claims burden

The regulator also struck down a requirement disqualifying brokers linked to insurance claims outstanding for more than 90 days.

Kenya Power had argued the rule was necessary to enforce accountability and avoid exposure to unpaid claims, but the board found the condition misplaced.

“It is not for the brokers to settle the insurance claim. This responsibility falls squarely on the insurance company that has issued the policy document. Outstanding claims are better imposed on an insurance underwriter and not the insurance broker,” the board said.

It termed the requirement “disproportionate and irrational”, noting it punished intermediaries for obligations legally borne by insurers.

Further, the board ruled that tying eligibility to experience with NSE-listed companies unfairly narrowed competition.

Kenya Power required bidders to show prior work with NSE-listed firms or large energy sector clients with annual premiums of at least Sh50 million, excluding motor and medical insurance policies for the last two years.

But the board said this excluded many capable firms, noting that NSE-listed companies are few and not necessarily a measure of complexity.

The requirement, it said, “is restrictive, contrary to the principle of competition.”

“Given that NSE-listed companies in Kenya are few compared to the volume of insurance business, the board is of the considered view that this requirement excludes experience in various major entities and is therefore restrictive, contrary to the principle of competition stipulated under Article 227 (1) of the Constitution,” it ruled.

Unfair scoring

Another contested clause penalised current brokers who had not offered “value addition” such as training or risk assessments.

The board found this unfair, saying such obligations should be governed by existing contracts rather than used to score bidders in a new tender.

It ruled that the provision imposed retrospective penalties and distorted fair evaluation.

However, the PPARB upheld some conditions, including a requirement that underwriters have at least 10 years’ experience.

It said experience thresholds can be justified as indicators of capacity and do not automatically amount to discrimination, finding the requirement proper and lawful.

“A firm’s number of years of experience in a particular field is critical and often demonstrates competency in a particular industry and on similar past projects,” said the board.

The dispute arose after Kenya Power invited bids in February 2026 for prequalification of insurance service providers ahead of the expiry of current contracts in July.

Benron challenged the tender before the board, arguing the conditions violated procurement law and constitutional principles requiring fairness, equity and open competition.

Kenya Power defended the rules, saying they were designed to protect public funds and ensure insurers recommended by brokers could meet claims obligations.

The board affirmed Benron’s right to file the case, finding it had locus standi after obtaining tender documents from Kenya Power’s website.

It concluded that several provisions in the tender document failed to meet legal standards.

The PPARB directed Kenya Power to amend the tender document to remove or revise the unlawful and restrictive provisions, aligning it with procurement law and constitutional standards on fairness and competition.

→ jwangui@ke.nationmedia.com

Follow our WhatsApp channel for the latest business and markets updates.