• Suspended Kemsa procurement director Charles Juma says they bought from bidders with lower prices, shorter delivery period, favourable payment terms and favourable minimum order quantities.
• According to the World Bank, the pandemic led to a market failure where high demand meets limited supply. Panic buying by high-income countries also led to excessive mark-ups by manufactutrers and suppliers around the world.
Image: FILE
The Kenya Medical Supplies Authority appears to have procured Covid-19 medical supplies from the lowest bidders, according to documents seen by the Star.
The prices quoted by suppliers who lost, in some cases, are double the costs quoted by the winning bidders.
The supplies mostly comprised the personal protective equipment and thermal guns, which were required urgently since February when the pandemic spread rapidly around the world.
For instance, one leading private hospital in Nairobi, which owns a medical school, offered to supply 40,000 thermal guns at Sh19,700 a piece on March 10.
A handheld infrared thermometer costs about Sh10,000, the cost at which Kemsa finally procured 5,000 pieces from a different supplier.
Given the emergency of Covid-19, Kemsa procured some supplies directly from suppliers, which is allowed by law, while others were subjected to formal procurement process.
The hospital also offered to supply KN95 masks at Sh900 a piece, but the offer was rejected and Kemsa procured from another supplier at Sh700.
It further offered to supply 20,000 N95 masks at Sh1,650 a piece, but this offer was rejected and Kemsa bought from the lowest offer at Sh900 a piece.
Procurement director Charles Juma, who has since been suspended, said they procured from bidders with lower prices, shorter delivery period, favourable payment terms and favourable minimum order quantities.
"Your quotation was unsuccessful because it was not the lowest quotation nor offered the most effecting terms of minimum order quantities as well as the delivery terms of the PPE," Juma writes in response to one supplier on February 20.
The push-back by unsuccessful bidders was partly responsible for the exit of Juma, CEO Jonah Manjari, and Commercial director Eliud Muriithi, the Star learned.
The fight was also taken to Parliament, where the authority was accused of procuring Covid-19 supplies at inflated prices. The Star has established that some board members and politicians also wanted companies linked to them awarded lucrative tenders.
"There is for instance the son of one of the board members whose products were rejected at the gate because they were substandard. The commitment letter was cancelled immediately. He called his father who was very furious over this rejection," said a source.
During an interview with the Star, Health Cabinet Secretary Mutahi Kagwe revealed that some politicians who have been condemning the ministry and its agencies over use of the funds are bitter because they lost out on tenders, while some are playing politics.
“If you were denied the project or something and you attack the institution that denied you the project, are you talking out of oversight [concerns] or are you talking out of a personal issue?" he posed.
According to the World Bank, the pandemic led to a market failure where high demand meets limited supply. Panic buying by high-income countries since February also led to excessive mark-ups by manufacturers and suppliers around the world.
Separately, the free-market think tank, the Organisation for Economic Co-operation and Development, says the brutal disruption caused by the pandemic led to difficulties in production and distribution of essential products, leading to price hikes around the world.
"Distinguishing between lawful and unlawful pricing behaviour remains challenging," OECD says in its May brief.
This is because factories faced increased production costs, leading to shortage and higher prices.
"It is also natural for price rises to occur when demand increases and supply shortages take place," OECD says.
Locally, the Ethics and Anti-Corruption Commission has blamed the three suspended officials for high prices of medical supplies.
“Preliminary investigations have established that several senior officials of Kemsa engaged in irregular procurement of Covid-19 items through the issuance of commitment letters to suppliers in excess of the approved budget and at highly inflated prices,” EACC boss Twalib Mbarak says in a letter to Kemsa board chairman Kembi Gitura.
The letter is dated August 13 and titled 'Suspension of Jonah Manjari, Charles Juma and Eliud Muriithi.'
“It is therefore and in the interest of the public that the officers be suspended from the public service while the investigations touching on them are still ongoing,” Mbarak said.
He said the officers took advantage of the pandemic to directly source and allegedly break other procurement laws, which saw the agency procure Covid-19 equipment at double the normal market price.