A Senate committee wants EACC to investigate how the Health ministry contracted a consortium that guided it to take an expensive route in acquiring medical kits.
Audit firm PKF Kenya and Spa Infosuv East Africa Limited were ‘handpicked’ by the ministry to provide financial services advice prior to the roll-out of the multi-billion shilling project.
The consortium was awarded a contract through restricted tendering at a contract sum of Sh9.6 million to carry out value for money assessment assessment (VfM).
A report by the Senate ad hoc committee investigating the medical Managed Equipment Services (MES) programme recommends the Ethics and Anti-Corruption Commission probe the circumstances under which PKF was awarded the contract for the assignment.
The firm was paid Sh9 million for completing the work and submitted its findings in a record “unrealistic” period of three days, the committee said.
The value for money assessment assignment was supposed to last as long as 45 days and was to include visiting the counties.
In addition, the team chaired by Isiolo Senator Fatuma Dullo (Isiolo) has asked the Institute of Certified Public Accountants of Kenya (ICPAK) to conduct disciplinary proceedings against PKF Kenya under the Accountants Act for what it called unethical and unprofessional conduct.
The firm, in its VfM report, advised that the government would spend less money by adopting the MES leasing model as opposed to direct purchase.
“The OAG [Office of Auditor General] further noted the financial advisory services provided by PKF Kenya had guided the decision by MoH to opt for the MES model rather than outright purchase of equipment,” the committee report reads.
“This position was in accordance with the testimonies given by the MoH, Mr James Macharia and Dr Nicholas Muraguri, who all testified that the value for money assessment conducted by PKF had informed the decision by the MoH to opt for a MES procurement [leasing] model rather than outright purchase,” it reads.
However, PKF in its submissions to the committee denied any role or involvement in the decision by the MoH to undertake MES as a model for acquiring the equipment.
The committee, however, observed that far from PKF providing a proper value for money assessment report, the cost of the equipment supplied under the MES project was ‘grossly exaggerated.’
“Common basic equipment was supplied at several times the normal market price,” the committee said.
For instance, a stitching removal set that typically comprises a suture tray, a pair of scissors and a pair of tongs, was supplied to counties at the cost of Sh398,849 – more than 80 times the average cost of similar equipment in the market.
“Simple instrument trolleys were supplied at Sh269,922.50 which was 18 times the average cost of similar equipment in the market. Spotlights were supplied at Sh1,419,514.60 each, a price at least 1,774 times the average market price. Washing basins were priced at Kh1,302,935.00, which is at least 1,667 times the normal market price,” the report reads.
Further, the report said independent investigations by counties had similarly revealed evidence to suggest the value of equipment supplied to counties under the project was grossly exaggerated.
For instance, Kitui county conducted an Internal Inventory and Market Survey on the MES equipment supplied to the county. It found its total value amounted to Sh331, 542,230.00, at least 2.5 times less than the estimates provided by the MoH, which indicated equipment supplied to Kitui was worth Sh811,309,770.