The Ministry of Education has written to M Oriental Bank seeking to revoke performance guarantees that eight firms used to secure multi-billion shillings contracts to supply assorted equipment to public universities.
The Ministry says it has written to the bank to cash the performance bonds in its favour. The eight supplies used the performance guarantees to secure contracts but failed to deliver or supplied faulty equipment.
The ministry entered into Sh2.88 billion contracts with various firms for supply of engineering equipment for selected public universities with funding from the African Development Bank (ADB).
Ministry of Education Chief Administrative Secretary (CAS) and Principal Secretary Collette Suda told Parliament the eight suppliers had failed to deliver the equipment four and a half years after they won the tender.
The affected suppliers include Madujey Global Services, Beta Trading Company, Rockey Africa, Aerospace Aviation, Evatop Agencies, Sonny Commercial Agencies, Redline Ltd and Sciencescope Limited.
“I have written to the bank to withdraw the performance bond and the performance agreement. There is no loss to the government because we have the performance guarantee in hand and we have not paid the remaining 20 per cent of the contract. We are going to withdraw performance bonds and thereafter see if we will terminate the contracts,” Ms Suda said.
She said an advisory opinion from the Attorney General advised the ministry to pursue mediation processes with the defaulting contractors.
According to the contracts, the suppliers were to be paid an advance of 20 per cent upon signing of the contracts and submission of a bank guarantee of an equivalent amount.
A further 60 per cent of the contract sum was payable upon shipment of the equipment and submission of shipping documents and a final 20 per cent was payable upon receipt and acceptance of the equipment by the universities.
As at June 2017, the cumulative amount on purchase of goods and services was at Sh2.89 billion, but various omissions were noted on the equipment.