A special audit by the Auditor General into the procurement, storage and distribution of COVID-19 supplies has revealed that the Ministry of Public Health and the Civil Defence Commission (CDC) awarded 18 contracts, totalling almost $242 million, before receiving the approval of the National Procurement and Tender Administration Board (NPTAB).
A breakdown of the contracts showed that the APNU+AFC Public Health Ministry awarded 14 contracts totalling $307,806,000 for medical supplies. Those were awarded between March 30 and May 30, 2020.
The CDC, between March 13 and April 22, 2020, awarded 14 contracts for food hampers, personal protective equipment and hygiene supplies. The total sum awarded amounted to $116,113,000.
Guyana recorded its first case of the novel coronavirus (COVID-19) on March 11, 2020, and in an effort to ensure preparedness to battle the fast-spreading disease, the then APNU+AFC government began procuring emergency supplies. The audit report was commissioned to determine whether the Ministry of Public Health and the CDC procured, stored and distributed COVID-19 supplies in an efficient manner and in compliance with all relevant laws and guidelines.
It examined the period March 1, 2020, to August 31, 2020, to specifically establish whether the Procurement Act of 2003 and Stores Regulation 1993 along with the established guidelines for the distribution of the supplies were followed.
The Ministry and CDC spent over $1.3 billion to purchase drugs and medical supplies, food, medical equipment and print educational materials among others. The report stated that the CDC received $45 million in cash donations and spent $28 million to print materials and purchase supplies.
The Procurement Act of 2003 mandates public tendering for all government agencies but there are no provisions for emergency public procurement. As a mechanism for emergency tendering, entities are allowed to sole-source based on a satisfactory history of the supplier.
In the sole-sourcing process, after the identification of the supplier the procuring entity would be required to approach the Tender Board for approval followed by the issuance of an acceptance letter and subsequently signing of the contract. However, that process was not followed for 18 of the sole-sourced contracts according to the AG’s report.
Explaining the reasoning behind the Audit Office’s findings, the Ministry of Health’s Permanent Secretary said that the urgency of being prepared for the rapidly spreading virus was the key factor.
In keeping with the established elements of contracts, the audit report found that the CDC prepared 9 contracts without any start and end dates for the delivery of items. It noted that the failure to construct proper contracts resulted in the CDC being unable to legally bind suppliers to a specified delivery period which ultimately resulted in delayed deliveries.
On the Public Health Ministry’s part, the report stated “We noted that suppliers delivered close to $400M in supplies a month late. The Ministry could not act against them and had to wait on the suppliers for the items. This delayed the distribution of the items to vulnerable persons. As a result of not inserting penalty clauses in contracts, the Ministry lost money and vulnerable persons had to wait for much-needed supplies. Conversely, in one instance where the penalty clause was included, the Ministry did not deduct penalty fees of close to $5M. This saving could have been used to purchase additional supplies to help fight the disease.”
The audit report also found that there was non-compliance with Stores Regulations 1993 which mandates a purchase order before issuing payment for supplies. The Auditor-General said he conducted interviews with key personnel and found that both entities failed to comply with the regulations. The Ministry prepared 6 purchase orders after receiving items such as Fiocchetti cold storage refrigerators, Xerox copier and pavilion laptop. Similarly, the CDC also prepared 13 purchase orders after food hampers and cleaning supplies were received.
The AG said that the payment before a purchase order represents a breakdown in the system of internal controls at the CDC and Ministry.
“The Ministry of Public Health and the Civil Defence Commission did not procure COVID[-]19 supplies in an efficient manner. There was no monitoring of the performance of contracts, which resulted in millions of dollars of supplies being delivered close to a month after the delivery dates had expired. In addition, the entities prepared Purchase Orders after receiving supplies. These findings made us conclude that the entities did not procure COVID-19 supplies in an efficient manner,” the audit report concluded.
Lack of accountability
The National Coronavirus Disease Task Force was responsible for the distribution of COVID-19 supplies and hampers to vulnerable persons within communities based on the report, 6,043 hampers were distributed during the examined period. The hampers amounted to just about $124 million and residents in 7 regions benefitted.
The AG found that though it was indicated that there was an urgent need for the supplies, which resulted in breaches to procurement regulations, the hampers were sitting for months before being distributed. It said that on August 26, 2020, at the National Gymnasium, the CDC had more than 100 hampers in the stores for over three months.
It further noted that there was a lack of accountability for the more than 6,000 hampers distributed. There was no evidence of acknowledgement from the recipients of the hampers.
The Director-General of the CDC, Kester Craig explained that hampers were left at the entrance of homes to avoid close contact with persons.
“There were delays in the distribution of food hampers. The Civil Defence Commission did not explain how they chose persons for hampers and hampers may have gone to ineligible persons. Further, there was a lack of accountability for hampers distributed. This led us to conclude that COVID-19 supplies were not distributed in an efficient and transparent manner,” the AG concluded.
The AG also found that the CDC breached the requirements of the Stores Regulations 1993 by not keeping proper records of donations and other items.
“To test the accuracy levels of items on hand, we conducted stock counts on 26 August 2020 at the Gymnasium. We selected all of the items on hand for testing. We found that in sixteen instances, the physical count balances were greater than the Stores Ledger balances. Conversely, nineteen items had a lower physical quantity or negative variances when compared to the ledger balances,” the report related.
It added that neither the Ministry nor the CDC could have properly accounted for the COVID-19 supplies because of the poor record-keeping.
