The High Court has reaffirmed the principles governing procurement, particularly regarding fairness, transparency, and accountability.
Facts
The plaintiff sued the defendant for unfairly disqualifying their bid, alleging a breach of fairness and transparency, resulting in financial loss. The suit was based on Sections 48 and 46(b) of the Public Procurement and Disposal of Public Assets (PPDA) Act, which mandate fairness and transparency in procurement.
The Defendant contended that the Plaintiff should have exhausted alternative remedies under the PPDA Act, including complaints to the Accounting Officer and the PPDA Tribunal, before filing the suit.
The Plaintiff’s director admitted in cross-examination that they had not followed these procedures.
The Defendant further argued that courts do not entertain claims for breach of statutory duty when alternative remedies exist and sought dismissal of the suit with costs.
Holding
The Court examined whether the Plaintiff had a valid claim for breach of statutory duty. A claim for breach of statutory duty requires proof that:
📍A statute imposes a duty on the Defendant.
📍The Defendant breached that duty.
📍The breach caused damage to the Plaintiff.
📍The damage falls within the scope of the statute’s protection.
The Defendant acknowledged its statutory duty under Sections 48 and 46(b) of the PPDA Act but denied any breach. It asserted that its actions were driven by due diligence and concerns over suspected procurement misconduct.
The Defendant further argued that the Plaintiff’s failure to win tenders resulted from non-compliant samples and high bid prices rather than its actions.
However, the Court found that the Defendant had failed to conduct its own due diligence before recommending the Plaintiff’s suspension from public procurement. Instead, the Defendant referred the matter to the PPDA Authority, which found no merit in the allegations against the Plaintiff.
The Court held that the Defendant’s actions breached its statutory duty of fairness and transparency.
The Court ruled in favor of the Plaintiff, holding that:
📍The Defendant breached its statutory duty by unfairly disqualifying the Plaintiff’s bid without proper justification.
📍The Plaintiff was entitled to general damages for lost earnings due to the Defendant’s wrongful actions.
📍The Plaintiff’s claim for UGX 8.2 billion in lost business was speculative and unsupported by evidence. However, the Court awarded UGX 200 million in general damages, with an interest rate of 15% per annum from the date of judgment.
📍The Plaintiff was awarded costs of the suit.
Key Takeaways
This decision highlights the importance of fairness and due diligence in public procurement. Procuring entities must ensure that any disqualification or adverse action against a bidder is based on proper investigations and justifiable reasons. The ruling also reaffirms that statutory duties in procurement must be exercised in strict adherence to principles of transparency and accountability.
Read the full case below
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