The Global Fund has rejected Kenya's application to access about Sh12.4 billion to fight HIV, malaria and tuberculosis.
This follows a controversial decision to drop the Kenya Red Cross Society and appoint Amref Kenya as the sole recipient of the funds.
Previously, the funds were managed by at least two major NGOs, mostly Amref and the Kenya Red Cross.
Global Fund says the process to drop Red Cross was flawed, lacked transparency and has asked the country to present a fresh application by 5pm on Monday.
"The process did not comply with the eligibility criteria of ensuring an open and transparent principal recipient selection process, based on clearly defined and objective criteria," the Fund says in their report dated September 7 and seen by Star.
The Fund had already allocated Kenya a total of Sh42 billion (US$415,310,170) for the 2020-2022 period, to be utilised beginning July next year.
Seventy per cent would go to the Treasury and the remaining 30 per cent to one or more selected non-governmental organisations (called non-state principal recipients), who would then subgrant smaller NGOs in the country.
The non-state principal recipients are selected by a 23-member committee called the Kenya Coordinating Mechanism (KCM), chaired by Health PS Susan Mochache.
The KCM team comprises representatives of the national government, counties, NGOs, and private sector.
Some KCM members said the Ministry of Health bulldozed its way to force out Kenya Red Cross and submit Amref as the only recipient to manage all funds for malaria, TB and HIV.
The protesting civil society representatives, who called the decision highly suspect, refused to sign the application that Kenya sent to the GF on August 31.
Global Fund, after reviewing the selection process, said it was significantly deficient and unfair.
"The Global Fund recommends that the KCM cancels the non-state PR selection process as submitted to the Global Fund Secretariat on 31 August 2020 given the significant flaws noted in the financial evaluation part of the procurement process," the Fund says.
Amref had applied to manage funds for all the three diseases while Red Cross applied to manage only for HIV and TB.
Several other NGOs had applied to KCM as principal recipients, but were dropped within the first three stages.
They are World Vision, Kanco, Youth Connect Consortium, LVCT, Health Strat and PS Kenya.
The applications for non-state principal recipients were judged on administrative checks, technical evaluation, onsite verification, and financial evaluation.
The Fund noted the final financial evaluation, where Red Cross was dropped, was flawed and there's no clarity how the winner was picked.
"The KCM should deliberate and provide feedback to the Global Fund on or before 14 September 2020 to ensure timely eligibility review conclusion for Kenya’s funding request," the fund says.
GF allows countries to choose principal recipients and manage the funds to create ownership, but it oversees the process and also audits how the funds are spent.