Ministry now cancels Kshs 4.9 billion contract awarded to Seven Seas Technologies




Seven Seas Technologies has lost Kshs 4.9 billion contract it was awarded by the Ministry of Health to run a data centre connecting various health facilities across the country.

According to mdia reports, Health PS Susan Mochache last week wrote to Seven Seas Technologies asking the IT firm to stop any further works on the grounds that the contract was awarded illegally. In a letter dated November 18, the ministry further argues that completion of the Health Care Information Technology (HCIT) system is running behind schedule.

(TOP: Michael Macharia, the founder and CEO of Seven Seas Technologies).

“Implementation of the HCIT contract and execution of the project as envisaged is now stalled. Your firm has abandoned the site for more than 16 months,” reads the letter as reported by the Standard. “Essentially, this means that your firm has been unable to meet the agreed milestones on the implementation schedule.”

The contract, awarded on October 2, 2017, was meant to provide HCIT solutions for the Managed Equipment Service (MES) project.

It was part of the initiative by the national government to equip select hospitals within counties with leased theatre, ICU, renal and radiology equipment, among other items.

However, the Ministry of Health notes that the Seven Seas Technologies contract contained several clauses not founded on the tender documents, an example being the requirement for the ministry to provide an original copy of a government support letter to the contractor to enable it execute the contract on or before the commencement date.

“The requirement for an original copy of the support letter to be given to your firm does not feature anywhere in the tender documents, and it is overtly clear to the ministry that your firm lacks the requisite financial capacity to execute the HCIT contract,” states the letter by the ministry.

The ministry argues that stepping in to provide documents to assist the contractor meet its financial obligations would amount to the government securing financing for its own procurement.

“It will render the tender requirement that the successful tenderer be able to have adequate financial capacity for the contract irrelevant. It is now apparent that despite having attained a high score of 20 out of 20 in the financial evaluation, your firm does not have the financial capacity to perform the HCIT contract and has been unable to mobilise any funding without a GoK letter of support,” the letter reads.

Last week, Seven Seas Technologies’ CEO Michael Macharia told a Senate committee that his firm was awarded the contract to link 121 hospitals with Kenyatta National Hospital (KNH) to help track patients seeking specialised treatment.

Macharia told the Senate that his firm was at a crossroads, with equipment worth over Kshs 250 million meant for the KNH data centre lying at the Mombasa Port since January last year, adding that the Health ministry had to provide his firm with a letter of support as requested to allow a bank release funds to cover costs of the project.

The ministry has also ordered Seven Seas Technologies to remove “as soon as is practicable” all its property from the site, adding that the ministry “will not hesitate to remove from the site any such property without bearing the responsibility for their loss, damage, costs or other incidentals,“ should the contractor fail to do so within 40 business days from the date of the notice.

”The ministry’s decision was based on the advise of Attorney General Paul Kihara whose office had declared the award of contract an illegality. It is our opinion that the ministry may proceed to cancel the contract on account of illegality,” said the advisory signed by Solicitor General Kennedy Ogeto.

The advisory also puts the blame at the doors of the Ministry Health, stating that its failed to conduct due diligence on Seven Seas Technology, for example, by failing to conduct three site visits to the company as required in the tender documents. The AG’s office also appears to blame the ministry over its failure to submit key documents for scrutiny before the contract was awarded.

“Had these contracts been transmitted to this office prior to their execution, we would have carefully vetted them and advised the ministry on the correct position of the law,” the advisory says. The document also reveals that it was the AG’s office that advised the ministry not to issue a government letter of support to the contractor as it was not provided for in the contract.

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