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Taxpayers face Sh3.9bn loss in hospitals ICT deal

Seven Seas Technologies CEO Michael Macharia
Seven Seas Technologies CEO Michael Macharia when he appeared before Parliament last year. FILE PHOTO | NMG 

The Attorney-General’s office was not involved in the drafting, clearance and signing of a Sh4.9 billion contract that the Ministry of Health and Seven Seas Technologies entered into in 2017, putting taxpayers at risk of losing billions of shillings in compensation following termination of the contract.

Seven Seas is likely to demand Sh3.9 billion or 80 percent of the Sh4.9 billion contract as compensation for the termination of the contract.

Attorney-General Kihara Kariuki told Parliament that the contract signed between the ministry and Seven Seas for provision of information communication technology (ICT) services contract covering all 98 hospitals under the Government’s managed equipment service (MES) plan, was highly skewed against the Government.

Through Solicitor-General Kennedy Ogeto, Mr Kihara told the Senate ad-hoc committee investigating the MES contracts that the Attorney General Act mandates the AG to negotiate, draft documents and contracts. vet and interpret agreements for and on behalf of government before they are signed.

“The Attorney- General must be involved in drafting of agreements. On MES contract, the office of the Attorney- General was not involved in drafting of the contract prior to signature as required by law and the circulars we have issued to State agencies,” Mr Ogeto told the committee chaired by Senator Fatuma Dullo.

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The ministry and Seven Seas Technologies signed the contract on October 7, 2017 and the Attorney General became aware of it through a letter of December 2017 from the Treasury asking for approval for issuance of a government Letter of Support to the firm to secure financing from banks to undertake the project.

“As we received letter from the National Treasury, a copy of the signed contract was not provided. It was not until September 21, 2018, a year after the contract had been signed that the AG received a copy of the signed contract,” he said.

The scope of the contract entailed provision of healthcare information technology solutions including software and hardware interfaces, training, ongoing maintenance, including changes required to support managed equipment services at county, sub-county and referral health facilities.

The Attorney General, on the request by the ministry of Health has given authority to the ministry to cancel the contract on grounds that it included clauses that exposed taxpayers to loss, failure to conduct due diligence on the company, the requirement for government Letter of Support and value for money aspect.

Mr Ogeto said the contract as signed erodes procuring entity right to terminate the contract as contemplated in the bid documents and compels the government to pay contractor additional amount equivalent of 80 per cent of remaining contractor fees at the time of termination.

The Health ministry had written to the AG seeking approval to terminate the contract and guidance on the implication of termination. The ministry indicated that the contract had failed to take off.

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