$3m NHIA single source procurement attracts Audit Service red flags

The Audit Service review of procurement methods at the National Health Insurance Authority (NHIA) has flagged single source procurement of ¢11,260,793 and $3,307,000.

According to the Service, the justification outlined in the contract document [GR/NHIA/CS/009/17] signed and dated July 7, 2017, for single source procurement method were contrary to Sections of the Public Procurement Act, 2003 (Act 633).

In a letter dated May 3, 2018, the Service observed that the new NHIA team (as a result of a change of government) has inherited poor finances with potential liabilities of about ¢2 billion incurred over a year.

Since this was constraining its fundamental operations, the Authority planned to establish an audit to block the fraudulent claims which were causing the financial leak.

With the audit taking a longer time to be approved and more money going down the drain, the Authority as a matter of urgency engaged the services of two firms on a single source basis.

They engaged Taraji-EOH Health Consortium of South Africa and AKK Management Consulting Limited to review the NHIS Operating Model and overhaul the Claims payment System to stop the financial loss being incurred.

The Audit Service discovered that a similar contract in relation to Provision of Technical and Assurance Service for Claims and Clinical Audit was awarded to Deloitte and Touche on April 2016.

This was at a cost of ¢12,858,011 for a six months period from June 1 to November 30, 2015.

The Service noted that the audit “was neither economical nor consistent in providing sufficient justification to single-source procurement method.

“Failure of the management to effectively analyse the root cause of the purported poor finances with potential liabilities of about ¢2 billion incurred and communicated to government through Ministry of Health (MOH) for appropriate action has led to the abuse of single source procurement method.”

It noted that monies meant for the payment of payment of approved claims might be wrongly used for the payment of unwarranted services rendered by these consultants.

The Audit Service is, therefore, recommended for the immediate termination of these two contracts. It also urged management to liaise with the Internal Audit in matters of these nature for expert advice.

The National Health Insurance Authority is yet to respond to the audit queries.

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