Audit shows big hole in the Health ministry’s vaccine tendering process

An audit by a global organisation has laid bare a multimillion-shilling hole in Kenya’s vaccine procurement.

This is contained in a report that shows the country’s vaccine procurement is dogged by ineffective control systems, questionable bid documents and lack of transparency.

A report released in May by Gavi, the vaccine alliance, shows “there were inconsistencies and incomplete information” relating to the selection of suppliers, bid evaluation, award of contracts and delivery of goods.

The Geneva-based non-profit organisation revealed that the Ministry of Health did not provide complete documentation for the procurement and delivery of goods and services worth Sh97,234,030.

Nearly Sh160 million is set to be refunded by the ministry, which, however, says it has put in place measures to prevent future losses.

The auditors flagged this process as “unsatisfactory”, stating that its internal controls were ineffective, bid documents were not credible, conflict of interest in the procuring entity was not checked and officials did not provide assurance on transparency and value for money.

In particular, some of the documents submitted by the winning bidders did not appear genuine.

Interestingly, when this was pointed out to the individuals from Community Health Services — who were involved in the procurement — they “concurred and agreed that some of the documents presented were likely to be false”.

The report states that they “explained that at the time of the procurement they had not noticed the inconsistencies in the bidding documentation”.

For instance, a supplier presented separate bid documentation with two different PINs, another did not have the PIN details while yet another did not have their certificate’s serial number, effectively undermining its credibility.

The companies were all, however, awarded the tenders nonetheless, despite the risk that they might not have had the experience and competency to fulfil the contracts.

When asked, ministry officials said they should not have allowed the lapses to occur, adding that “members appointed for the evaluation of bids are well-versed with regular tender documents”.

TENDERING NOT TRANSPARENT

The auditors further showed that the tendering was not transparent and the Public Procurement and Disposal Act was not adhered to.

For instance, a tender, “MPHS/DPHS/021/2011-2012”, worth Sh34 million was allowed under ‘restricted tendering’ yet Section 73(2)(b) of the Act barred this method for tenders above Sh20 million; then, the open tendering method must be followed.

This was one of four tenders that used restricted tendering but did not fully met the eligibility criteria set out in the law because either they did not have reasons to use the method or approval by the Ministerial Tender Committee.

The 41-page report added: “The use of restricted tendering without meeting the criteria prescribed by the Procurement Act has the risk of excluding qualified vendors that may be willing to offer competitive pricing.”

The auditors added that the frequent use of restricted tendering presents a risk that selected vendors may “have been favoured, undermining competition”.

In response to these queries, the ministry said it had acquired qualified procurement personnel and all procurement committees are “appointed by the Principal Secretary on advice of this able team”.

In addition, Gavi felt there was no procurement planning in place for the nearly Sh500 million Health Systems Strengthening (HSS) programme. HSS was meant to cater for immunisation delivery as well as improve the capacity of the country’s health system.

The audit report shows some items were requested, paid for and delivered but similar items were bought barely three months later.

“For example, a 2010 tender procured data reporting tools which were delivered in December 2010 but was followed only two months later by a separate tender process for similar items — such as data reporting tools, motorcycles, and bicycles — launched in February 2011,” says the report.

In response, the ministry said it was aware of the shortfall, adding: “This is highly regrettable and in future the ministry will prepare and adhere to a well-structured procurement plan.”

The ministry further said it would use the Integrated Financial Management Information System (Ifmis), which integrates procurement plans, budgets and actual spending of resources under one platform.

However, it is through this similar system that over Sh5 billion was lost through the recently reported suspected corruption at the ministry and through the National Youth Service project under the Devolution ministry.

Section 45(1) of the procurement law requires that the procuring entity keeps records for each procurement for at least six years after contracts are entered into. However, the report shows that was not adhered to.

UNRELATED PROCUREMENT DOCUMENTS

The procurement-related supporting documentation, the audit team says, was incomplete. Also, documents were stored in multiple locations and mixed with other unrelated procurement documents. This raises the concern of whether some of the tendered items were actually delivered as there was no evidence to show for it.

For instance, in a tender, “Contract #S/69109”, the following items were missing: Delivery note from the vendor, acknowledgement of receipt of motorcycles by Ministry of Roads, inspection report upon receiving goods, evidence of the registration of the motorcycles as well as evidence of distribution of the motorcycles to the provinces.

It is on this particular contract that the Health ministry, in a statement to media houses in October, said it was “working on modalities” to refund about Sh160 million to Gavi, which was for motorcycles, bicycles and cash sent to support the then-districts. But there were no documents to support expenditure, hence the refund.

These were from $9,903,000 (Sh990,300,000) given by the global entity following Kenya’s application for the HSS programme.
Five other tenders were flagged for missing key documents.

The ministry acknowledged failure to do proper documentation, arguing that it was because “all ministries’ procurement documents were stored in a common warehouse, hence making it difficult to locate documents relating Gavi HSS”.

Gavi was founded by the Bill & Melinda Gates Foundation in January 2000.

The ministry had not commented on the report by press time.