Mailu defends role in bungled health project

Former Health Cabinet Secretary Dr Cleopa Mailu yesterday defended the Health Cover Information Technology (HCIT) contract cancelled by the ministry […]

News & Updates

FEATURED PRESS RELEASE

SST HCIT Contract Fact Sheet

Mailu defends role in bungled health project

- July 24, 2020

Former Health Cabinet Secretary Dr Cleopa Mailu yesterday defended the Health Cover Information Technology (HCIT) contract cancelled by the ministry saying it was crucial to the success of the controversial Sh63 billion Managed Equipment Service (MES) project.

Mailu, now Kenya’s permanent representative to the UN in Geneva, Switzerland argued that had the project proceeded prudently as conceptualised by the government to connect 98 hospitals, it would have saved the taxpayer Sh6.8 billion.

The Sh4.9 billion HCIT contract had been awarded to Seven Seas Technologies Limited, a local company, on October 2, 2017, but it was cancelled by the Ministry of Health last year.

HCIT project entailed installation of an information system to inter-connect public hospitals nationwide with a view to accelerating the achievement of the e-Health Strategy.

Appearing before the Senate ad hoc committee investigating the controversial project, the former CS said the project was at the conception stage awarded to GE East Africa Services Limited.

He, however, noted that during the execution of the initial contract, HCIT was not implemented but was advertised and awarded during his tenure.

“If I recall, it was first given to GE but upon request to give the cost of implementing the project, it was realised that it was to cost Sh11.4 billion; it was at this point (that) the PS went ahead and advised that it could be costly and the ministry needed to float a new tender,” Mailu told the committee chaired by Isiolo Senator Fatuma Dullo, insisting it was done and awarded at a cost of Sh4.7 billion.

Prudent expectation

“Indeed, if that project proceeded prudently to meet the expectations of the document and government, then it would have saved the exchequer Sh6.8 billion,” he maintained.

“I want to say that the contract was awarded towards the end of 2017 and I left in January 2018 when the project was being implemented,” he added, maintaining the project began well and was supposed to connect various hospitals that had benefitted from the MES scheme.

In cancelling the contract on November 18, 2019, Health Principal Secretary Susan Mochache said, in a termination letter to Seven Seas Technologies Limited chief executive Michael Macharia, the contract contains several clauses, which “impose obligations that do not conform to the tender documents”.

The bone of contention was a requirement in the documents that the government, through the National Treasury, provides Seven Seas with an original Government of Kenya support letter.

The support letter was to act as collateral — to allow Seven Seas to engage with financial institutions for the funding of the project.

Disputed explanation 

During his appearance before the ad hoc committee in January, Macharia disputed the explanation advanced by Ms Mochache on account that the requirement of the support letter was an integral part of the tender documents.

Mailu wondered why the government would go on to provide the letter to the other five foreign MES vendors and leave out Seven Seas.

“Did the government issue letters of support issued to contractors? Senator Dullo posed to Mailu.

“Letters of support were issued to the contractors of MES projects,” Mailu replied.

Mailu disclosed that during his tenure, he signed two letters issued to General Electric East Africa Services Limited and Philips of Netherlands “letters I executed together with Treasury CS and witnessed by PS on March 8, 2016”.

“I’m not sure that the rest of the contractors were issued with the letters, which were signed by my predecessor,” he further explained.

“Were there material differences in these letters?”wondered Bungoma Senator Moses Wetang’ula to which Mailu responded: “I want to state that these letters were generic and contained no material differences between them particularly if I speak on the two letters which I had the privilege to see and handle.

“There were no material differences except the content which was really supplied by contractors in terms of assignees and trustees whom they nominated. The rest of the clauses were similar.”

“Did you come across any letter from the AG saying that letters of support written to other contractors were actually different from those written to GE and Philips?

And the two letters you knew about amounted to sovereign guarantees?” Wetang’ula prodded.

“I never saw the other letters and therefore I cannot vouch for the content,” Mailu said.

“When you came to the ministry to replace CS Macharia, he had started engaging in this contractual process, you acquainted yourself with all the correspondence available, were you briefed fully by the PS and other officers who were handling MES?” Wetang’ula asked.

Mailu responded: “I came to the ministry on December 23, 2015 and left on January 31, 2018. I was not privy and I never saw the letters which were written before that period.”

 

By Hillary Matheka