MPs probe Sh844m JOOUST hostel project as audit queries contract variations, payments

 MPs on the Public Investments Committee on Governance and Education cited what they called glaring inconsistencies in contract variations and payments amounting to Sh844 million for the project in Bondo, Siaya county.

 There is also a pending court battle involving the contractor.

 The project was initially awarded to Sasah General Merchants in February 2010 at a contract sum of Sh663.9 million. It was supposed to have been completed within three years, but it eventually attracted certified payments amounting to Sh844.1 million.

 The Auditor General's report for the 2023-24 and 2024-25 indicated the university could not produce documents supporting contract variations amounting to Sh180.1 million.

 The audits also indicated that completion and handover certificates were also unavailable to auditors, although the hostel was already occupied.

 The committee also learned that the contractor has sued the university in Civil Case No. E002 of 2023, seeking payment of outstanding dues.

 The case has raised concerns that taxpayers could be required to shoulder additional legal costs and penalties if the dispute is not resolved.

The Auditor General’s Kisumu regional office warned that the litigation could expose public funds to unnecessary losses.

 “Where a contractor takes a public institution to court demanding payment, it means the institution risks paying legal fees and penalties,” CPA Kennedy Ongoi said on behalf of the auditor.

 “These are avoidable expenses if projects are managed prudently,” Ongoi told the committee.

Chairman Dick Maungu (Luanda MP) questioned why payments had exceeded the statutory threshold for contract variations provided under the Public Procurement and Asset Disposal Act.

 Committee documents indicated the project costs had been increased a number of times.

 They included additional amounts of Sh19.8 million, Sh38.1 million, Sh44.1 million and Sh528,000 alongside another Sh79.6 million classified as "fluctuations."

 Maungu said the committee was struggling to understand the legal basis of the additional payments.

 "There is something unique called fluctuations amounting to Sh79.6 million. We need to understand where this falls under procurement law because fluctuations and variations are different. There is a lot of grey area here," he said.

 Former Vice Chancellor Prof Stephen Agong, who appeared before MPs alongside current VC Emily Achieng' Akuno, distanced himself from the disputed Sh79.6 million. He said it did not form part of the final accounts he approved.

 "The Sh79.6 million was not in the picture,” he said. “If at all it existed, then it was disputed. The final account signed by the contractor, the university and the consultants was only Sh4.8 million, not Sh79 million."

 The former VC said part of the overall expenditure reflected maintenance works carried out after students had already occupied the hostel.

 "The hostel has been accommodating over 1,000 students,” Agong said.

“Maintenance had to continue, including after a fire incident damaged part of the roof. Some of those costs may have been captured in the global figure."

 The former VC also awarded additional maintenance works to the same contractor, saying bringing in new contractors while students occupied the hostel would have been impractical.

 "What would happen is that if a contractor is already on site and understands the project, they remain competitive,” he said. “It was not necessarily direct procurement"

 The committee was not convinced.

 Kilome MP Thaddeus Nzambia said the matter had become too complex to conclude without hearing all parties involved.

 “We need another meeting bringing together the former Vice Chancellor, the current one, the auditor and the contractor because clearly we are not on the same page,” he said.

 Lunga Lunga MP Chiforomodo Mangale Munga demanded all project documents be produced for scrutiny.

 “We need all documentation on this project so we can verify whether due process was followed in the contract variations and any extensions,” he said.

 “The auditor says variations exceeded the legal threshold, while the former Vice Chancellor disputes that. We must establish the truth.”

 Akuno appealed to the committee to help resolve the long-running matter.

 “I appreciate Prof Agong for shedding light on this issue,” she said. “We would like to be free of this matter. Although there is a court case, if the committee can clear up what is within its mandate, we shall appreciate it.”

 Maungu said that many questions remain unresolved.

 “It is clear that the amount paid exceeded the 25 per cent threshold for variations,” he said.

 “It is also clear there are issues surrounding the so-called fluctuations and maintenance costs. The contractor says the university still owes him money, while from the university's position, there are claims that payment may already have exceeded what was due. These are serious matters.”

 The chairman directed that Agong be supplied with all project documents before the next hearing, after the former VC complained he had been asked to defend himself without access to the relevant records.

 “I requested these documents before appearing, but I never received them. It becomes difficult to assist the committee without seeing the documents because some of these records could even have been generated after I left office,” Agong said.