Controversial Sh63 billion Medical Equipment Services contracts to continue for 3 years 

The controversial Sh63 billion Medical Leasing Equipment Scheme has received a boost after the Council of Governors (CoG) endorsed the lease extension for an additional period of three years ahead of the anticipated completion of the initial 7-year contract period. 

CoG, through its chairman Governor Martin Wambora, said they acknowledged the impact the equipment has had on health service delivery to Kenyans, prompting the resolve to extend the contract. 

They cited consensus with the Ministry of Health on the need to review budgetary allocations. However, several factors form the conditions of the extension. 

CoG, through a statement, said that a joint multidisciplinary negotiating team between governors and the Health ministry will determine the 3-year contract extension, that will be tackled on a contract-by-contract basis. 

Other set conditions for the extension include:  

That the governors and Ministry of Health jointly agree on the composition and terms of reference (TORS) for the contract implementation committees. 

“That the CoG and Health ministry teams jointly draft the addendums to the contracts and the MoUs between the ministry and county governments.  

That the MES contractors deliver on all their obligations under each contract and address the negatives observed in the implementation of the contracts attributable to them,” added the governors. 

Additionally, the CoG and Health ministry shall review and consider modalities to compensate counties whose equipment was not delivered but fully paid for. 

“In considering the three options, the council acknowledges the impact of the equipment on health service delivery to the people and resolved to extend the contract for additional three years,” CoG health committee chairperson Prof Anyang’ Nyong’o said. 

“It has been recommended that the CoG jointly with MoH to draft the appendix to the contracts and the Memorandum of Understanding between the Ministry and county governments,” Nyong’o said. 

They also demanded that the contractors awarded the supply of medical equipment under the lease agreement rolled out in 2015 address concerns reported during the 7-year period set to lapse in December. 

The Sh63 billion project shrouded in secrecy was marred with claims of graft with some counties claiming some of the equipment had broken down even before they were commissioned due to lack of appropriate housing units in county-run hospitals. 

County governments embarked on a process to seek an expert opinion of the continued engagement of county-run hospitals in the national government-initiated project on December 20, saying the contracts were expected to come to an end between December 2022 and May 2023. 

A MES review committee proposed a three-year extension in a report considered by the Council of Governors during a full council meeting on December 20, 2021. 

Wambora said a survey which was conducted between May and June 2021 with the aim of ascertaining the status of the MES Equipment in the counties endorsed the extension. 

Apart from extension, the team considered two other alternatives namely; decommissioning and disposal of equipment by the contractor or/and transfer of equipment to the Ministry of Health. 

“In view of the options provided, the Council of Governors has resolved that county will seek expert opinion on the issue who will render professional advice which will inform the counties on the next course of action,” Wambora said. 

In September, last year, it emerged that governors approved the Sh39 billion Managed Equipment Service (MES) project despite their insistence that they were not aware of the transactions. 

Under the MES arrangement, equipment manufacturers were outsourced to supply, install, train users, and provide maintenance, repair and replacement services for the specialized medical equipment for the duration of the MES contract. 

In February 2015, the Ministry of Health awarded leasing agreements for the provision of specialised medical equipment to counties worth Sh63 billion. 

According to the Ministry of Health, the type of equipment prioritised under the MES project was informed by a Needs Assessment conducted in March 2014. 

The scope of services offered under the MES contracts included; fitting out works to the rooms designated for equipment, during the term, replacement of old infrastructure, furnishings and fittings, supply of equipment, delivery and instalment of equipment, testing of equipment, commissioning of equipment and maintenance (both scheduled and reactive). 

Additionally, repairs and replacement of spare parts, upgrading of equipment software, supply of consumable and reagents, insurance over the equipment, replacement of equipment upon expiry of its useful lifespan, decommissioning of equipment and training of staff using the equipment in the hospitals. 

Further, as per the original agreement, recurrent costs such as supply of consumables and reagents as well as equipment maintenance and replacement of spare parts were to be covered at no additional cost to the facilities. 

Despite several accountability and transparency issues raised by counties, counties were compelled to pay Sh95 million per annum for the project. 

Counties argued that the requirement to include the Sh95m in their budgets had adversely affected their budget ceilings. This figure has since been revised upwards to Sh200 million. 

In 2020, the Senate committee probing the MES project found out that Lands Principal Secretary Nicholas Muraguri who served as the Health Principal Secretary between 2015 and 2017 withheld the contracts and other supporting documents from former Health Secretary Cleopa Mailu on grounds that they were “secret”. 

Mailu currently serves as the Director-General of the United Nations Office at Geneva (UNOG) as the new Permanent Representative of Kenya to the UNOG. 

The Senate report indicated that the MES project flooded hospitals with highly-priced equipment which failed to improve the health standards in counties as promised. 

Top Health ministry officials were also denied access to the documents in attempts to block their input to Health and Budget committees over the project, according to the Senate Committee report.