Taxpayers risk losing Sh3.9bn in Health IT contract

Auditor-General Nancy Gathungu has warned that the government risks losing at least Sh3.92 billion in breach of agreement after the Ministry of Health cancelled the Health Care Information Technology (HCIT) solutions contract for the Managed Equipment Service (MES).

The Sh4.9 billion HCIT project, part of the Sh62 billion MES contracts, was awarded to Seven Seas Technologies Limited, a local ICT firm on October 2, 2017.

It entailed provision of software and hardware interfaces, training and maintenance.

The latest revelations coming even before the multibillion shilling Covid-19 scandal at the Kenya Medical Supplies Authority (Kemsa) is settled, are contained in the Auditor’s report for the 2018/19 financial year.

The HCIT project whose cancellation by the Health Principal Secretary Susan Mochache remains a controversy, was to take five years and cover 98 public hospitals.

“Information available indicates that, although the project had not commenced as at June 30, 2019, the ministry vide letter dated November 18, 2019, terminated the contract without notice, thereby exposing the government to the risk of litigation and damages,” the report signed by Ms Gathungu warns.

Clause 39.2 of the HCIT contract provides that in the event of termination by the procuring entity (Ministry of Health), the entity shall pay to the contractor for all the services undertaken and an additional amount equivalent to 80 percent of the remaining outstanding contractor’s fees. This translates to at least Sh3.92 billion. The clause is also detailed under schedule 13 of the HCIT contract.

However, the ministry cited the clause as unrealistic and the reason it terminated the contract with Seven Seas Technologies.

“The management has not explained why the contract was signed with the unfavorable clauses and why the input of the Attorney-General was not sought before the contract was signed,” Ms Gathungu says.