Kemsa tenders: Firms that received Covid-19 millions

 

When Covid-19 reached Kenya in March, government agencies went into overdrive to prepare to manage the emerging health crisis.

The Kenya Medical Supplies Authority (Kemsa), being the sole agency mandated to procure essential commodities for government and county health facilities, hurriedly went into “emergency procurement of Covid-19 items”.

Then companies started scrambling for the tenders in the multi-billion plan as cash flowed into government coffers to deal with the novel coronavirus.

Kemsa is now accused of breaking procurement laws, ordering goods worth billions of shillings in bulk from little-known companies and briefcase entities, some of which had no capacity to deliver.

The agency went ahead and approved tenders worth Sh7.7 billion. But, as per Kemsa’s approved budget, only Sh4.7 billion should have gone into procurement, meaning the commitment letter issued by Kemsa exceeded the budget by Sh3 billion.

Apart from the companies like Kilig Limited, whose tender was cancelled after queries were raised, and another one that has since obtained court orders barring publishing of the details of its involvement, a dozen small firms, some briefcase outfits, made a beeline for a piece of the multi-billion-shilling pie.

Kilig Limited was awarded a Sh4 billion tender for the procurement of 450,000 kits each valued at Sh9,000, through a direct procurement, and questions were raised about the tender.

Direct procurement

In a letter by the suspended chief executive Dr Jonah Manjari, which the Saturday Nation has seen, the company was granted three months to deliver the supplies despite procurement director, Charles Juma, in a letter to the CEO, questioning why the firm was chosen through a direct procurement in a tender that should be opened for a competition given its size.

Mr Juma in his letter stated that at the time the agency was doing the direct procurement, there were up to 160,000 kits while more than 200,000 were expected to be delivered. He raised questions as to why there was a procurement of 450,000 more kits as an emergency, yet the company was given three months to supply them.

Mr Juma further observed that there was no emergency and advised that the tender be revoked.

His letter pointed to the reality that commitment letters were being issued by Kemsa to prospective suppliers against recommended procurement procedures. He advised the CEO to stop further evaluation of any samples from prospective suppliers.

“Evaluation is giving false impression that Kemsa was still involved in the emergency procurement of Covid-19 response items,” said Mr Juma.

It is at this point that the CEO took a hasty retreat to cancel the deal after it became clear that Kilig had bitten more than it could chew.

Twelve firms were awarded contracts worth Sh3 billion by Kemsa to deliver items that were not covered in the 2019/20 approved budget as at June 4, with some multimillion-shilling irregular bids going to well-connected individuals.

Little-known Shop ‘N’ Buy was registered on February 14 and, like the gifts that people born on Valentine’s Day receive, went ahead to be one of the big beneficiaries of the flawed procurement system at Kemsa.

 It was handed Sh970 million contract to supply 100,000 PPE kits, each at an approximate price of Sh9,000, earning it Sh900 million. The company was also allowed to supply another 100,000 pieces of KN95 masks at Sh700 a piece. A search at the company registry shows that Shop ‘N’ Buy Limited is owned by Mr James Kipketer Chululey. Mr Kipketer told the Nation that his company had done nothing wrong. It was like a dozen others hand-picked by the government and invited to supply the kits.

 He explained that the prices were high at the time because he had flown in most of the items, paying excessive cargo fees of about Sh2,000 for every kilogramme of imports.

“We quoted the Sh9,000 per kit because we were importing by air and a kilo of any import was going for about $20 in March,” he said. “Today, it might look inflated, but at that time, that was the price. Kemsa is now at a loss because the prices of some of those kits have dropped since we are now importing by sea.”

Another company was awarded Sh1 billion to supply various items, including 55 ventilators at Sh3 million each, with a total cost of Sh165 million. The company also supplied 85,000 PPE at Sh9,000 each, earning Sh765 million, and 60,000 KN95s at Sh700 each, earning Sh42 million.

The firm further won a tender to supply 50,000 KN99 face masks at Sh700 each, getting Sh35 million. It supplied 9,500 thermometers at Sh10,000 each earning Sh95 million.

It is not clear what type of thermometers cost Sh10,000 each since it is not indicated on the tender sheet. The most likely type for Covid-19 would be the gun thermometer, which goes at roughly Sh3,000 in the market.

Buying Covid items

This means that Kemsa was buying some Covid items at prices that were inflated by up to three times after going against its own internal procurement advice not to buy en masse at the time.

Since it procures on behalf of public facilities, Kemsa forced these expensive supplies on county governments and other public hospitals, when they can get the items at half the price on the open market.

Angelica Medical Supplies Ltd got Sh310 million from supplying 32,000 PPE at Sh9,000 each, 20 syringe pumps at Sh174,000 and 1,900 thermometers at Sh10,000 each.

While some companies had their tenders cancelled without any explanations from the agency, others were winning in every section.

Dominion Supplies Limited supplied 40,000 surgical gloves (50 per pair) at Sh2,100 totalling Sh84,000 and 500,000 disposable surgical masks at Sh4,500 each, earning Sh45 million. The company was also awarded Sh90 million to supply 10,000 PPE at Sh9,000 each.

Komtel Kenya Limited got four tenders: to supply 1,000 surgical face masks in packs of 50 at Sh4,500 each, earning Sh90 million and an additional 200,000 NK95 face masks at Sh700 each, totalling Sh140 million. The company was given another tender of supplying 20 ventilators at Sh3 million each, earning Sh60million

In total, the innovation company would supply goods worth Sh290 million.

Other beneficiaries were Duke Agencies Limited, which got one tender amounting to Sh180 million for 20,000 PPE at Sh9,000 each.

Teleflex Medical Technology got paid for all the four tenders: 20,000 surgical gloves at Sh2,100 each amounting to Sh42 million with 40,000 surgical masks of different packs amounting to Sh3.6 million. They supplied goods worth Sh45.6 million.

We could not establish the ownership of some of the firms, like Set Life Medical Solutions Limited, as it is not at the companies registry. The mystery firm is among those that were awarded contracts, putting them at the centre of the ongoing fraud investigations.

Set Deekay Relief Ltd, another mysterious firm, was to receive a Sh17million tender to supply 20,000 PPE at Sh850 each while Nhajol Enterprise was awarded a contract to supply 2,000 PPE at a cost of Sh9,000 each. This would see the company make Sh18million.