The National Social Security Fund (NSSF) has escalated a protracted legal battle over a contentious CCTV systems tender to the highest judicial level, following a ruling that ordered the fund to pay Ksh 103.4 million to Micro City Computers Ltd for wrongful contract termination.
The dispute dates back to a contract for design, supply, installation and commissioning of a closed-circuit television (CCTV) and access control system at NSSF’s Social Security House, which Micro City Computers Ltd secured in 2011, only to have the agreement abruptly terminated by NSSF allegedly due to budget constraints.
Micro City Computers Ltd initially sued for breach of contract, seeking Ksh 16 million in general damages and expenses.
In 2020, the High Court awarded general damages and costs, but denied the full claim for anticipated profits. On appeal, a majority decision by the Court of Appeal in April 2024 overturned the High Court’s ruling on special damages, awarding Micro City Ksh 103.4 million for loss of anticipated profit, loss of business and associated costs, citing the breach was wrongful and lacked contractual basis.
NSSF management, however, has maintained that the contract was lawfully terminated in compliance with public procurement rules and due to funding limitations as the Fund reportedly lacked budgetary allocation at the time the award was made.
Officials have continued to dispute the Court of Appeal findings, arguing the termination was lawful under the Public Procurement and Disposal Act since the necessary funding had not been secured before the tender was floated.
As a result, NSSF is now challenging the appellate court’s judgment at the Supreme Court, citing jurisdictional overreach and errors in legal interpretation, and aiming to overturn the multi-million-shilling compensation is required.
The move reflects growing tension between the Fund’s leadership and the judiciary at a time when public scrutiny over NSSF’s procurement practices is intensifying.
These tensions come against a backdrop of wider criticism leveled against NSSF over handling of high-value tenders and contracts, including allegations of inflated costs and procurement breaches in its real estate investments and infrastructure development projects involving Chinese firms, particularly China Jiangxi International, which has reportedly overcharged in several multi-billion-shilling projects and drawn parliamentary censure.
Analysts warn that unless judicial clarity is offered, ongoing legal battles may erode contributor confidence and expose the Fund to heightened financial risk.
The dispute also underscores the importance of strict adherence to procurement laws and contracting discipline at state entities managing public retirement funds.
The looming Supreme Court hearing represents a critical test of both NSSF governance and the judiciary’s resolve in enforcing contract sanctity. For Micro City Computers, the outcome could shape their ability to recover anticipated losses.
For NSSF, it may determine whether procedural failings in procurement can be reversed or will be affirmed, with implications for future contracting and financial accountability.
As Kenya’s highest court prepares to hear the case, stakeholders across public finance, pension fund governance, and legal sectors await a resolution that could resonate through state contracting practices for years to come.
Written By Ian Maleve
