The PPDA tribunal has cancelled a Shs 5.7 bn insurance deal that the National Medical Stores (NMS) had awarded to Sanlam General Insurance after a competitor, UAP Old Mutual Insurance, proved it had been eliminated unfairly.
UAP Old Mutual had appealed to the tribunal challenging NMS’s decision to award the contract for comprehensive insurance for specialized oxygen transportation trucks.
UAP Old Mutual was eliminated because it said it would provide the service at a rate of 6%, yet the Insurance Regulatory Authority (IRA) had guided that it should not be below 7.5%.
Sanlam quoted 7.5%, beating UAP Old Mutual, Goldstar Insurance, Britam Insurance, NIC General Insurance, and Jubilee Allianz General Insurance.
On March 17, Old Mutual filed for administrative review before a PPDA tribunal chaired by Francis Gimara.
Upon examination of the matter by the tribunal, it resolved that the contract be set aside because NMS did not strictly follow the procurement guidelines.
For instance, Old Mutual said that in the bid document, NMS did not specify the technical details of the type of trucks or tankers they were seeking insurance cover for. The tribunal also noted that NMS did not elaborate whether they were seeking lorries or tankers.
“The photographs annexed as “G” to the application and to which the respondent (NMS) admitted at the hearing show that the trucks were modified to carry LPG and O2 (oxygen) cylinders. The trucks clearly have no tanks for carrying LPG and O2. In the absence of the tanks on the trucks, there is no factual basis to categorize them as tankers,” the tribunal said.
The tribunal thus said it would be contrary to the principles of transparency for NMS to disqualify a bidder who quoted a rate applicable to lorries in respect of vehicles which were categorized as trucks.
The tribunal ordered NMS to re-evaluate the bids in a manner consistent with the law. It also ordered NMS to refund the administrative review fees paid by UAP Old Mutual Insurance.
