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Sunday, January 12, 2014

Procurement controversies - Kenya Airport

With the still unresolved protests involving the concessions for the Guam International Airport pending for the last several months, this is another case of what appears to be standard fare in the world of airport concession bids and protests.

Kenya Airports Authority annuls Nuance award, calls for fresh tender
The master concession had been designed to cover duty free retail, food & beverage and a variety of communication services. As a result Kenya Airports Authority’s evaluation committee recommended that Nuance be awarded the master concession with a minimum annual guarantee (MAG) of US$120,000 and a concession rate of 12.5% on sales. The contract was subsequently awarded.

The tender closed on 25 October, attracting ten enterprises: World Duty Free Group (of Spain); Silver Duty Free; Maritime & Mercantile International; Flemingo International; SIA Kenya Holdings; Belgian Sky Shops; Tiger’s Eye Retail (Tourvest); Dufry. The tender process was the subject of a major protest by four of the other bidders, namely Unifree Duty Free, Suzan General Trading (joint venture partner with World Duty Free Group of Spain – not the former incumbent of the same name), Flemingo International and Dufry International.

As we reported, based on the concession fee percentage committed, Belgian Sky Shops (not one of the applicants for a review of the tender, though it did align with the protesting parties through legal counsel and attended the Board hearing) was the highest bidder, offering 33% of sales, just ahead of Flemingo with 32.48% and Gebr Heinemann-controlled Unifree’s 32.20%. Nuance offered just 12% of sales.

The Republic of Kenya Public Procurement Administrative Review Board has annulled Kenya Airports Authority’s award of a duty free retail master concession at Nairobi Jomo Kenyatta International Airport to The Nuance Group and ordered a fresh tender.

At the hearing in early December the Public Procurement Administrative Review Board was critical of the process, noting with alarm that only one of the ten bidders had met the preliminary mandatory requirements of the tender document. “What this means is that either the tender document was set out in such a way as it was not clear to most of the bidders, or extrinsic evaluation criteria not provided for in the tender document was introduced at evaluation stage,” it said.

Damningly, it concluded: “The Board notes that this indeed was a missed opportunity by the people of Kenya when a public entity chose to accept a bid with a concession of 12.5% when it was possible to get a higher concession of 33% and above.”

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