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.
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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