Senate wants firm embroiled in medical deal scam probed

Monday, September 14th, 2020 23:22 |
Lands Principal Secretary Dr Nicholas Muraguri.

Hillary Mageka @hillarymageka

A company that supplied radiology equipment in the controversial Sh38 billion Managed Equipment Services (MES) project is on the spot for delivering machines that have reportedly broken down or remain unutilised in hospitals across the country.

General East Africa Services Limited, a wholly owned subsidiary of the General Electric (GE) Company, was awarded the contract to supply Lot 7 (Radiological) equipment at a contract value of Sh26 billion.

This was equivalent to at least 52 per cent of the total contract value of the MES project.

At the same time, Lands Principal Secretary Dr Nicholas Muraguri is on the spot for signing the contract which the Senate says was illegal because the supplier did not meet all requirements set out by the Ministry of Health. 

Muraguri was the Director of Medical Services when he first signed the supply agreement on behalf of the Principal Secretary for Health at the time, Julius Korir.

The Senate ad hoc committee, which investigated how the MES project was procured and termed it a criminal enterprise shrouded in opaqueness, has indicted GE saying the maintenance cost of the faulty equipment could significantly raise the investment in the contract relating to Lot 7.

Likewise, the committee chaired by Isiolo Senator Fatuma Dullo established that the bulk of radiology equipment supplied under Lot 7 remains non-functional due to lack of infrastructure and specialists required to ensure optimal use of the machines.

“In view of the foregoing, the committee has established that the cost of Lot 7 may not represent value for money,” report reads. 

MES Service Level Monitoring Final Quarterly Report (January, 2019) by consulting firm PKF Kenya says out of all the MES equipment, radiology equipment under lot 7 of the contract awarded to GE East Africa, had logged the highest number of equipment breakdowns with a total of 550 faults reported in 2017, and 663 in 2018.

Of these, the most affected equipment were digital General X-Ray machines, ultrasound units and mobile X-Ray units.

Documents received from the Ministry of Health and presented before the committee during the grilling sessions, digital general X-Ray machines were installed but were non-functional in 16 hospitals including Bondo, Chebiemit, Garbatulla, Garsen, Gucha, Kacheliba, Kapenguria, Kehancha, Keroka, Likoni, Makindu, Mwingi, Ndanai, Nyambene, Tharaka, and Endebess.

Partially installed

Furthermore, during the committee’s site visit to Garbatulla Sub-District Hospital in Isiolo County, for instance, the General X-Ray machine was found only partially installed with parts of it lying on the floor of the radiology department in its original polythene packaging.

In addition, in the same facility, the ultrasound machine and C-Arm and mobile X-Ray units were evidently not in use and still in their original packaging.

“No equipment supplied under the MES scheme is working in Garbatulla Sub-District Hospital.

All Equipment are still in its original packaging boxes. This is a big problem, that six years later Isiolo residents are yet to benefit from these equipment,” Dullo, who doubles as the Deputy Majority Leader, told People Daily yesterday.

The report, which is scheduled to be debated in the House this afternoon, has recommended the Ethics and Anti-Corruption Commission to investigate the circumstances under which an unqualified contractor, GE East Africa Services Limited, was awarded the contract to supply radiology equipment.

Dullo’s committee established that the company was not an Original Equipment Manufacturer and further, it did not possess a valid power of attorney at the time of executing the contract. 

The committee noted that the tender document issued by MoH invited only original manufacturers of medical equipment to bid under the MES project.

MES invitation to tender stated: “The Ministry of Health now invites sealed tenders from original equipment manufacturers who can also undertake managed equipment services.”

The contract was subsequently executed on March 31, 2016. Signatories to the contract included Muraguri, who had been promoted to Health PS and Felix Okwenda, for GE East Africa Services Limited.

Not qualified

To this effect, the committee observed that GE lacked the authorisation to tender and subsequently execute the Lot 7 contract as all MES contracts were specifically reserved for original manufacturers.

“As such, the Ministry of Health illegally awarded the Lot 7 MES contract and violated Section 64 of Public Procurement and Disposal Act (PPDA) 2005 (now repealed), which stated that “a tender is responsive if it conforms to all the mandatory requirements in the tender documents”.

“In doing so, the Ministry of Health violated procurement laws in particular, Section 48 of the PPDA that states that procuring entities shall reject all tenders which are not responsive in accordance with Section 64 of the Act and regulation 16 of the Public Procurement and Disposal Regulations, 2006,” it adds.

Moreover, in allowing a party that was not qualified for the tender nor an original equipment manufacturer for the machinery being purchased, the senators observed that the ministry exposed the Government of Kenya to potential risk of loss.

“This is due to the fact that Kenyan law holds that subsidiary companies are separate entities from their parent companies, therefore, any liabilities falling on the subsidiary will not be borne by the parent company,” they held.

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