Non-delivery of supplies continues to be a major problem in government procurement with almost a billion dollars of mainly drugs not being delivered even though the suppliers were paid, according to the Auditor-General’s (AG) report for 2014.
It also found that the New Guyana Pharmaceutical Corporation (New GPC) supplied $233 million worth of drugs last year that did not have the required shelf life.
“At the time of reporting, items valued $934.257 M were not yet delivered, even though payments were already made to the suppliers. Included in this sum, were items valued $529.117 M and $405.140 M, which were in relation to 2014, and prior periods, respectively. It should be mentioned that drugs and medical supplies represented eighty percent of the value of items not yet delivered,” AG Deodat Sharma said in the report which was laid in the National Assembly yesterday. The report was presented to Speaker of the House Dr Barton Scotland on September 30.
The non-delivery of supplies has been repeatedly highlighted in previous reports and the latest one revealed that the Ministry of Health is owed drugs and medical supplies, among other items, worth $769.7 million. Among other things, the Ministry of Home Affairs is owed specialized drugs amounting to $95.8 million. Region Eight is owed $49 million worth of school furniture, an ambulance, among other items. The Ministry of Education, the former Ministry of Culture, Youth and Sport and the Public Service Ministry are also owed items amounting to millions.
The latest report said for 2012, six suppliers failed to deliver drugs and medical supplies totalling $114 M which remained outstanding for the year 2012 while the New GPC was still to deliver drugs and medical supplies valued at $11.8 M for the year 2011. The biggest defaulter for 2012 was Productos Roche which has $72.3 million in drugs and medical supplies outstanding.
However, the Ministry indicated that the $114 M outstanding for 2012 has been reduced to $95 M while the New GPC is still to supply the drugs for 2011. The Audit Office recommended that the Ministry engage the suppliers as a matter of urgency to have the outstanding drugs delivered.
The AG report also said that amounts totalling $435.344 M were paid to 21 local and overseas suppliers for the delivery of drugs and medical supplies for the year 2013. However, only one contract for goods valued at $71 M was supported by a bank guarantee.
As at 10 September 2015, goods valued at $257.9 M were delivered on the contract, leaving outstanding goods valued at $82.3 M still to be delivered. International Pharm was identified as the biggest defaulter owing $29.9 million in drugs and medical supplies.
The report said that the Ministry explained that the amount of drugs and medical supplies still to be supplied has been reduced to $75.4 M.
For 2013, in terms of the New GPC, the report said that in 2013, the New GPC was awarded ten contracts valued at $2.374 billion of which freight charges totalled $180.5 M.
The contracts were supported by six bank guarantees with an aggregate value of $2.554 billion. The guarantees were required to be valid for one year, but each had a validity of only three months and a set expiry pattern in months ending October 2013, January 2014, February 2014, March 2014 and June 2014.
There were no guarantees in force at the time of the examination, even though the contractor was still to deliver goods valued at $323.321 M, as at 30 September 2014. During 2014, the remaining balance of $144.901M on contract No. 6/13 was paid, revising the outstanding amount to $496.223M, of which deliveries totalling $359.586M were received, leaving goods valued at $136.637M still to be delivered.
According to the report, the Ministry explained that goods valued at $135.282 M were delivered leaving the balance of $10.159M still to be delivered.
Immediate action
The Audit Office again recommended that the Ministry take immediate action to have contractors fulfil their contractual obligations under contracts awarded to them during 2013.
For 2014, eight contracts valued at $2.617 billion were awarded to New GPC for the supply of drugs and medical supplies. Included in this amount were freight charges totalling $199.777 M.
Two contracts were supported by bank guarantees in the sum of $2.171 billion and while the guarantees were required to be valid for 28 days after the expiration of the contracts, there were no guarantees in force at the time of audit examination in July 2015, even though the suppliers were still to deliver goods valued at $335.709 M, the report said.
However, the Ministry has indicated that the amount of goods outstanding is valued at $51.778 M, the report said. The Audit Office recommended that the Ministry reconcile its outstanding goods as stated in the response with that in the Audit Report and take immediate steps to have suppliers honour their contractual obligations.
Meantime, the report said that three contracts were awarded to the New GPC in May and December 2014, in the sum of $2.236 billion for the procurement of pharmaceutical and medical supplies for the period under review. It noted that the contract document states that, “The shelf life for the product shall …be a minimum of eighteen months from the date of final acceptance for pharmaceuticals and a minimum of twenty-four months for medical supplies or as determined by the purchaser.”
However, the report said, examination of the payment vouchers, contract documents, invoices, delivery notes and other related documents revealed that items delivered did not have the required shelf life. As a result, the supplier did not fully comply with the requirements stipulated in the contracts.
This amounted to $233 million worth of pharmaceutical and medical supplies.
In response, the Ministry indicated that the MMU strives to ensure that drugs received have the required remaining shelf life as stipulated in the various contracts. The Audit Office recommended that the Ministry take immediate steps to have suppliers fulfill their obligations under the contract with regards to the shelf life of products in order to avoid early expiration and resulting in the wastage of drugs.
