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KEMSA Scandal: Procurement Authority Pokes Holes Into COVID-19 Tenders, Faults Suspended CEO Manjari

The Public Procurement Regulatory Authority has confirmed irregularities at the state-run Kenya Medical Supplies Authority (KEMSA) regarding the procurement of Personal Protective Equipment (PPEs) during the COVID-19 pandemic.

KEMSA is accused of bungling a Sh7.7 billion tender for the emergency procurement of COVID-19 protective gear.

In an investigation report seen by Kahawa Tungu, the authority established that some of the PPE tenders were marred by irregularities and contravened sections of the Public Procurement and Asset Disposal Act, 2015.

The authority, that conducted the probe following a request by Parliament, established that some COVID-19 related items were procured in excess quantities contrary to the quantities specified in the requisitions from the user, thereby contravening Section 53 (3) of the PPADA,2015.

The section states: “Any public officer who knowingly recommends to the accounting officer excessive procurement of items beyond a reasonable consumption of the procuring entity commits an offence under this Act.”

Read: DPP Haji Declines To Charge 6 Kemsa Officials, Returns File To EACC For Further Probe

The authority notes that then-director of commercials Eliud Muriithi through an unreferenced memo dated March 18, 2020, requested the CEO Joan Manjari to approve procurement of 100,000 N95 masks despite letter Ref. MOH/ADM/1/1/2 dated March 18, 2020, from Health Principal Secretary Susan N. Mochache requesting urgent procurement of 10,000 N95 pieces of masks.

This, the authority says, was contrary to Section 53(3) of the PPADA,2015.

Further, the tender documents, which were retrospectively issued, were not prepared in the Standard Format as prescribed by the procurement authority. This was contrary to Section 58 and 70 of the PPADA, 2015.

“In most of the tenders reviewed, the invitations to tender were sent to bidders after commitment letters and deliveries. The commitment letters did not contain specific requirement contrary to Section 60(1) and 104 of the Act,” the report reads.

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According to the authority, suppliers were identified as strategic partners to KEMSA without evidence of qualification criteria used for identification contrary to section to 55 of PPADA, 2015.

It was established that a commitment letter was issued to M/s Zebra Investments Ltd on June 3, 2020, to Tender No. KEMSA/DP160/2019-2020 Supply of Viral Transport Media. However, based on the incorporation details from the business registration services the company was registered on June 14, 2020, contrary to Section 55 of PPADA, 2015.

The investigators found out that some of the negotiated prices were not as per the prices as proposed in the form of tenders by the suppliers.

“For instance, tender No. KEMSA/DP61/2019/2020. The price schedule for the supply of N95 masks (Packet of 10) was Ksh.7000.00 and the evaluation committee indicated that the price schedule was Ksh. 8,120 then negotiated to Kshs. 7000. This was a violation of Section 82 of the PPADA,2015,” the report reads.

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The authority says no evidence was provided to verify whether the price negotiation was based on market survey as provided in Regulation 8(3)(z) of PPDR 2006.

On termination of tenders, the authority notes that some were terminated after negotiation and evaluation. However, there was no evidence of the submission of the Termination report pursuant to section 63(2) of the Act.

The investigators also established that the decision by Manjari to issue commitment letters without professional opinion from the Head of Procurement Function was in violation of Section 84 (3) of PPDA, 2015 which states that “In making a decision to award a tender, the accounting officer shall take into account the views of the head of procurement in the signed professional opinion referred to in subsection (1).”

“Dr. Jonah Manjari Mwangi, the Chief Executive Officer’s (CEO) issue of commitment letters instead of tender documents in response to the letters of intent from Bidders was contrary to Section 104 (a) of PPADA, 2015,” the report adds.

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The section states: “An accounting officer of a procuring entity shall adhere to the following procedures with respect to direct procurement- (a) issue a tender document which shall be the basis of tender preparation by tenderer and subsequent negotiations.”

Following the flaws detected, the authority has recommended further investigations into the processes through which the subject tenders were initiated by the Ministry of Health and KEMSA

“There is need for investigations of the receiving and distribution of all the COVID 19 related goods by KEMSA specifically the Warehouse Management at Embakasi Warehouse,” the report reads.

The authority further faulted the agency over failure to submit the tender documents for the tenders for Financial Years 2017-2018, 2018-2019, 2019-2020 and part of Covid-19 related tenders, an Act that contravened the provisions of Section 176 (1) (m) of the PPADA, 2015.

It recommends further interrogation into the issuance of the commitment letters by the CEO and amendment of the Public Procurement and Asset Disposal Act, 2015 for clarity on how the procedure for retrospective approval should be executed by public procuring entities in Kenya.

“The Authority further recommends an amending of Section 104 to provide a procedure for the implementation of Section 103 (2) (b & c) of the Public Procurement and Asset Disposal Act, 2015,” it added.

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It further recommends that the procurement entity should ensure that the stock records are updated urgently to address the variances in the records and The ERP system that is utilized by the KEMSA should be aligned to procurement processes.

Manjari and Muriithi were suspended in August 2020 to pave way for investigations into the scandal that allegedly led to the misappropriation of billions of taxpayers money.

Also suspended was Procurement Director Charles Jume. Investigations into the scandal by the Ethics and Anti-corruption Commission (EACC) are ongoing.

You can find the 380-page investigation report HERE.

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