How Health ministry officials manipulated Sh4.9bn HCIT tender
Seven Seas wants arbitration in Sh4.9bn health project dispute Senior Health ministry officials are on the spot over claims of manipulating a Sh4.9 billion ICT tender under the leased medical equipment scheme (MES). The lot is accused of introducing a clause in the contract – now terminated, which has subjected taxpayers to the risk of paying about Sh4 billion for breach.
THE INSPECTION: President Uhuru Kenyatta and Deputy President William Ruto inspect medical equipment procured through the Managed Equipment Services project at State House, Nairobi
The tender committee is accused of skewing the ICT contract in favour of Seven Seas Technologies – the firm that was later awarded the contract at a meeting in Naivasha in September 2017. Minutes tabled at the Senate Ad Hoc Committee chaired by Fatuma Dullo (Isiolo) show that seven Health ministry officials attended the meeting where the contract was manipulated.
They were Morang’a Morekwa (coordinator), Laban Thiga, Ken Iloka, Apollo Muchilwa, Peter Mwangi, Betty Soi, and Samuel Kariuki. Seven Seas was represented by Michael Macharia (CEO), Rufus Marundu, Mary Chege, Mark Wachira, Jonah Chege, and Violet Mwangi.
The claim is that the clause for paying the contractor 80 per cent of the contract in the event of termination was not in the original tender document. Outgoing Health CS Sicily Kariuki told senators probing the Sh63 billion medical equipment scheme that the tender was not subject to negotiations as the same was competitive. She held that the officials would bear any costs should Seven Seas raise any claim following the termination.
Solicitor General Kennedy Ogeto – in an appearance before the Senate committee on Thursday last week said the original tender had an exit clause without costs. The DCI is probing the intricacies in the tender marred with claims of irregularities and illegalities. Some of the involved officials have recorded statements with the police following a December 6, 2019, letter from the DCI.
“Negotiations only work for direct procurement or request for proposals. No appointment letter exists to show how the negotiators were identified,” she said. Sicily invited the committee to probe Morekwa, saying he was a ‘person of immense interest in the investigation.’
“There is a likelihood tampering with information is part of this. The probe should check the movement of tender documents.” The CS said it was “perplexing that the contract was handled at the lower level.”
“The fact that the correspondences were at a level below the accounting officer tells a lot,” the CS added. The ministry in July 2017 floated an international tender for the supply of specialised medical equipment at Sh63 billion.
General Electric- one of the bidders in the five lots, quoted an ICT component at Sh11 billion besides its Sh24 billion bid for equipment. However, the ministry opted for a local supplier – citing high costs by GE, of which it settled on Seven Seas which quoted Sh4.9 billion. The firm would then run into funding challenges and sought a letter of support from the government to enable it to engage external funders. It lost the bid.
Having abandoned the site for months, the Attorney General acceded to the MoH request for termination. Other reasons were lack of funds and no due diligence. “MoH had no option but to terminate as the contractor proved to be technically and financially deficient. They had a sense of entitlement and mischief,” Kariuki said. Senators are questioning why the contract of this magnitude was handled by the head of procurement, further questioning the interests behind the project. Bungoma’s Moses Wetang’ula, Enoch Wambua (Kitui), Christopher Lang’at (Bomet), Millicent Omanga (nominated) and Mary Seneta (nominated) were present. Wetang’ula sought answers on why the tender document in their possession had clauses which the ministry and AG have denied. “Doesn’t it cast a heavy cloud on the ministry on the conception and execution of MMES programme?” he asked. But Kariuki maintained that the Naivasha team couldn’t have introduced the harmful clause if it was in the tender document. “It was inserted after the negotiations. Evidence shows the minutes from the Naivasha meeting introduced the clause.” However, the committee says the tender document tabled by Seven Seas showed that there was provision for a letter of support. Wetang’ula accused the ministry of readily supporting foreign firms at the expense of local entities, a claim that the CS refuted.