The Immigration Department has terminated a controversial multi-billion shilling tender for the newly introduced compulsory medical insurance for foreigners visiting Kenya after local insurers complained of discrimination.
Immigration Principal Secretary Julius Bitok said in a letter to bidders, dated January 17, 2025, that the restricted tender floated last month had been cancelled.
“This is to inform you that the above-mentioned tender for the provision of inbound health insurance cover services that was invited on December 20, 2024, and closed/opened on January 17, 2025, has been terminated pursuant to Section 63 of the Public Procurement and Asset Disposal Act, 2015,” the PS said in the letter.
“We appreciate your participation in the said tender and regret any inconvenience caused.”
A restricted tender meant only the insurers handpicked by the State Department would have been allowed to bid for the lucrative business given that the number of international visitors to the country has been rising, growing by 35.4 percent to 2.08 million in 2023.
Kenya introduced compulsory medical cover for foreigners travelling to Kenya for a short stay under the Social Health Insurance Act 2024, which also makes it compulsory for all locals to be registered for healthcare services.
Section 63 of the Public Procurement and Asset Disposal Act, 2015 states that an accounting officer of a procuring entity, may, at any time, prior to notification of tender award, terminate or cancel procurement or asset disposal proceedings without entering into a contract where some issues have been detected.
They include instances where the subject procurement has been overtaken by operation of law; or substantial technological change; there is inadequate budgetary provision; no tender was received; there is evidence that prices of the bids are above market prices or material governance issues have been detected.
Others are if all evaluated tenders are non-responsive, force majeure, civil commotion, hostilities, or an act of war or upon receiving subsequent evidence of engagement in fraudulent or corrupt practices by the tenderer.
The termination follows a protest by insurers against the government, which was backed by the procurement watchdog, over the restricted tender.
The insurers through their lobby, the Association of Kenya Insurers (AKI), said that the Immigration Department had not disclosed those it had contacted to bid for the cover.
The Public Procurement Regulatory Authority (PPRA) in a letter to the State Department had warned that the tender for the tourist insurance cover violates several procurement regulations and should not proceed in its form.
“It is our considered view that the subject tender cannot be progressed to its logical conclusion in its current form and you are therefore required to take due regard of our observations,” PPRA Director-General Patrick Wanjiku said in the letter dated January 9, 2025 and copied to the Insurance Regulatory Authority (IRA).
The PPRA chief executive said the department did not clarify the conditions that it used to decide on floating a restricted tender for the services.
“It is not clear to us which of the conditions provided for the use of restricted tendering method under section 102 (1) of the Public Procurement and Asset Disposal Act 2015 was satisfied,” Mr Wanjiku said.
The Act allows an accounting officer of a procuring entity to use restricted tendering if the goods or services being procured are of a complex or specialised nature and therefore require prequalified tenderers or when the time and cost required to evaluate a large number of tenders would be disproportionate to the value of what is being procured.
The entity opting for restricted tendering is also required to prove that there are only a few known suppliers of the goods, works, or services it is seeking and put up a notice of the intention to procure through this method.
The PPRA’s concerns came in the wake of similar apprehensions by underwriters over the tender.
AKI in a letter to the State Department requested for the cancellation of the tender to allow for consultations with them and the IRA.
“The insurers’ position is that this amounts to discrimination and that the tender should be opened to all insurance companies licensed to underwrite this class of business by IRA,” the letter signed by AKI chief executive officer Tom Gichuhi said.
AKI said that it was surprising that the tender states that registration with the IRA is not a condition for tenderers yet the Insurance Act requires that for an entity to carry out underwriting business in Kenya, it should be duly licensed by the IRA.
