Health Cabinet Secretary (CS) Deborah Barasa has acknowledged Auditor General Nancy Gathungu report on Social Health Authority (SHA) discrepancies of at least Ksh104 billion.

CS Barasa said the issues will be addressed in Parliament if she is given a chance.

On his part, SHA acting CEO Robert Ingasira stated that SHIF collections are deposited to six banks, with outgoing funds directed toward hospital payments.

This comes after Gathungu’s report revealed that the State Department procured the Healthcare Information Technology Digitization system of Ksh 104,808,136,478.

However, the review of tender documents, contract agreement and financial proposal indicated unsatisfactory matters.

“During the year under audit, the State Department initiated procurement for the provision of Healthcare Information Technology Digitization for Universal Health Care,” Gathungu said in the report.

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“The system was procured at a cost Ksh. 104,808,136,478 through Specially Permitted Procurement Procedure but was not included in the procurement plan nor the medium-term budgetary expenditure framework.”

Health CS Admits Ksh104B SHA Irregular Payment

According to the Auditor General, this was contrary to Section 53 (7) of the Public Procurement and Asset Disposal Act, 2015, which states that ‘multi-year procurement plans may be prepared in a format set out in the Regulations.

The act also stated that this shall be consistent with the medium-term budgetary expenditure framework for projects or contracts that go beyond one year.  

Gathungu further disclosed that the system was procured through a Specially Permitted Procurement Procedure pursuant to Section 114(A)(2)(d) by directly sourcing a partner at a cost of Ksh 104 billion.

“However, this process was contrary to Article 227(1) of the Kenya Constitution 2010 which requires a fair, equitable, transparent, competitive and cost-effective ways of acquiring goods and services,” she said.

SHA Lacked Payment Arrangement Agreement- Auditor General

According to the financial proposal, the consortium proposed the adoption of a funding model that entails charging fees from member contributions to SHA.

Financing relied on projected revenues of Ksh 111,019,068,754 from SHA contributions, health facility claims, and track & trace fees (2.5%, 5%, 1.5%) over 10 years. However, no feasibility study or baseline survey was conducted to confirm its viability.

According to Clause 12.4 of the general conditions of the contract, these funds are to be transferred to an Escrow account daily or at a frequency of not less than once a week.

However, details on the signatories to the account were not disclosed in the contract agreement.

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In addition, the projected revenues include 5% to be deducted from claims made by health facilities, which would increase healthcare costs, indicating a 5% service charge to citizens every time they access healthcare services.

The contract also prohibits the State Department from developing another system or product with similar functionalities to compete with the system being procured, putting the Government at risk in the event of growing needs or technological changes.

Furthermore, contract disputes were to be resolved by arbitration under the rules of the London Court of International Arbitration.