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Court Rejects Finnish Firm Kalmar’s Bid to Stop KSh947 Million KPA Reachstacker Deal
Sometimes, the fate of a multimillion-dollar public contract rests not on millions of dollars, but on a single digit.
That was the lesson from the Court of Appeal on Friday, after it dismissed Finnish equipment manufacturer Kalmar Finland OY’s challenge against the award of a lucrative Kenya Ports Authority (KPA) tender for 14 new reachstackers, delivering one of the clearest judicial statements yet on the limits of flexibility in Kenya’s procurement system.
In a unanimous judgement, Justices Wanjiru Karanja, Hellen Amollo Omondi, and Lucy Njuguna upheld decisions by both the High Court and the Public Procurement Administrative Review Board (PPARB), ruling that a bid that fails mandatory responsiveness requirements cannot be rescued simply because it offers the lowest price.
The decision cements an increasingly consistent judicial philosophy that public procurement is governed first by compliance, then by cost.
The Costly Typo
The dispute originated from KPA’s restricted tender for the supply, testing, and commissioning of 14 reachstackers, specialised machines that form the backbone of container handling at the Port of Mombasa.
Only four Original Equipment Manufacturers already supplying such equipment at the port were invited to participate, either directly or through duly authorised representatives.
Kalmar submitted the cheapest financial proposal at USD 5.83 million (KSh 687 million), almost USD 1.48 million (KSh 192 million) below the winning bid submitted by Amberton Holdings FZC on behalf of Chinese manufacturer ZPMC. Amberton Holdings FZC submitted a USD7,314,142.00 (KSh 947 million) bid.
Ordinarily, such a price difference would command attention.
Instead, it became legally irrelevant.
During evaluation, procurement officers discovered that Kalmar had altered one mandatory entry in its pricing schedule, changing the quantity from 14 reachstackers to one.
Kalmar maintained throughout the litigation that the change was nothing more than a typographical mistake because the overall tender price still represented the supply of all fourteen machines.
The Court disagreed.
“The deviation by the appellant was material, and the disqualification was lawful,” the judges held, adding that clarification powers “cannot be weaponised to allow a non-responsive bidder to rewrite a defective bid.”
Why the Courts Refused to Overlook the Mistake
At first glance, Kalmar’s argument appeared commercially sensible.
If everyone understood the company intended to supply fourteen machines, why not simply ask for clarification?
The judges answered that question by returning to the purpose of procurement law itself.
Public tenders are deliberately designed to eliminate opportunities for bidders to alter commercial terms after envelopes have been opened and competitors’ prices have become known.
Correcting Kalmar’s pricing schedule would inevitably have required changing part of its financial proposal after bid opening, something the Public Procurement and Asset Disposal Act expressly seeks to prevent.
The Court warned that allowing such corrections would erode transparency and create room for unfair competitive advantage, even where the original mistake appeared innocent.
In procurement law, certainty often matters more than intention.
The Cheapest Bidder
Perhaps the most striking aspect of the judgement was its rejection of Kalmar’s repeated argument that taxpayers stood to lose nearly USD 1.48 million because the cheaper bid was rejected.
The Court acknowledged the arithmetic.
It rejected the conclusion.
“Value for money cannot be extracted from a non-responsive bid,” the judges said.
The statement neatly captures a principle that has steadily emerged from Kenya’s procurement jurisprudence over recent years.
Article 227 of the Constitution requires public procurement to be fair, equitable, transparent, competitive, and cost-effective.
Yet cost-effectiveness is not measured solely by the lowest figure on a spreadsheet.
The court reasoned that compliance with mandatory legal requirements is itself part of protecting public money because predictable procurement rules inspire confidence, discourage manipulation, and preserve equal treatment for every bidder.
Only bids that first satisfy responsiveness requirements earn the right to compete on price.
Amberton’s Eligibility
Kalmar also mounted an aggressive challenge against the successful bidder.
It argued that Amberton Holdings FZC, a company incorporated in the United Arab Emirates, should never have been allowed into a tender allegedly restricted to four named original equipment manufacturers.
Again, the Court found otherwise.
The judges pointed to Clause 16.2 of the tender documents, which expressly permitted invited manufacturers to participate through authorised agents.
Shanghai Port Machinery Heavy Industries Company Limited, the manufacturer behind the ZPMC brand, had issued exactly such an authorisation.
This meant that Amberton was legally acting on behalf of the invited manufacturer itself.
The judges therefore concluded that evaluating Amberton was legally equivalent to evaluating ZPMC.
That finding effectively closed another major avenue through which Kalmar hoped to overturn the procurement.
Judicial Restraint
Beyond the tender itself, the judgement carries wider implications for litigation involving public procurement.
Kalmar had argued that the High Court should have undertaken a fresh examination of the merits instead of largely respecting the findings of the specialist procurement tribunal.
The Court of Appeal rejected that invitation.
While acknowledging that judicial review has evolved under Article 47 of the Constitution, the judges emphasised that courts should remain cautious before substituting their own technical assessments for those of specialised statutory bodies.
The PPARB, they observed, enjoys statutory access to confidential procurement records and possesses expertise that ordinary courts generally lack.
Judicial review, therefore, is not an opportunity to conduct a second procurement evaluation.
Its role is to ensure decisions remain lawful, rational, and procedurally fair.
Public Procurement
The ruling arrives as procurement disputes continue to occupy a growing share of Kenya’s commercial litigation, particularly in high-value infrastructure and equipment contracts.
For procuring entities, the judgement offers reassurance that courts will protect evaluation decisions grounded in the statutory concept of responsiveness.
For contractors, however, the message is considerably harsher.
Minor-looking alterations within mandatory tender documents may carry consequences far beyond what bidders anticipate.
Even a seemingly isolated entry can become fatal where it changes the legal or commercial structure of a bid.
Having now lost before the Review Board, the High Court, and the Court of Appeal, Kalmar’s challenge appears to have exhausted every major argument advanced throughout the litigation.
Meanwhile, KPA’s procurement of fourteen new reachstackers proceeds with firm judicial backing, under a judgement likely to become an important reference point whenever future bidders ask courts to excuse mistakes in multimillion-shilling public tenders.
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