Following an audit report over breaches in relation to COVID-19 purchases, Chairman of the Public Accounts Committee [PAC], Jermaine Figueira, has recommended that the Ministry of Health make recommendations for the amending of the Procurement Act 2003 to include emergency acquisitions and improved regulations.
Figueira made the recommendation yesterday after the Auditor General in his 2021 procurement, storage and distribution of COVID-19 supplies report, revealed that the Ministry of Public Health and the Civil Defence Commission (CDC) had breached procurement laws. That report examined March to August 2020 during the tenure of the APNU+AFC government
However, Malcolm Watkins, Permanent Secretary of the Ministry of Health stated prior to Figueira’s recommendation for a review of the 2003 Procurement Act, that he believe the current laws are functional and breaches in the procurement period at the start of the COVID-19 pandemic should not have occurred. Watkins, made this statement yesterday to the PAC as the MoH and PAC scrutinized the performance audit for the procurement, storage, and distribution of COVID-19 supplies report by the Auditor General.
The AG’s report had stated that the ministry had no protection against late supplies as the procuring entities failed to include contract start dates and end dates penalty clauses. It also found that suppliers who were contracted via single sourcing, delivered supplies monthly as the Ministry could not act against errant contractors.
“The Ministry lost money by not inserting penalty clauses in contracts, and vulnerable persons waited for supplies,” the report said. But in one instance where the clause was included, the AG’s report stated that the Ministry did not deduct penalty fees of close to $5m. This sum could have been used to purchase additional supplies to help fight the disease. Most of the questions asked on the procurement process could not have been answered yesterday as the relevant persons, from both the Ministry of Health and CDC were no longer employed and did not present themselves before the PAC.
Members of the Government side of the committee opened the session with questions on the findings that key details from contracts were missing. CDC’s Director General, Colonel Nazrul Hussain informed the PAC that he was not in possession of the necessary documentation. In the AG’s report, it was stated that nine contracts prepared by the CDC did not have definite terms as to the start and end dates for delivery of the items. “The failure on the part of the Civil Defence Commission to legally bind suppliers to a stipulated delivery period resulted in delays on the part of suppliers when supplying the items,” the report stated.
The government side also sought answers on how the procurement pro-cess was initiated and what led to the selection of the contractors. However, no definitive answers could be provided. The suppliers were sole-sourced for the procurement of Personal Protective Equipment (PPE). At one point, Hussain explained that a few of the contractors, part of sole sourcing, came from the prequalified list of suppliers of the Guyana Defence Force. A Chinese company, it was revealed, was a part of the nine companies, and government member, Sanjeev Datadin, questioned if the company was on the GDF’s prequalified list of suppliers, but got no answer. Hussain at one point acknowledged to the PAC that the CDC would have breached procurement laws and regulations during the period.
When asked what could have caused the possible late deliveries, Watkins explained from his knowledge, the delays were as a result of issues in the global supply chain at the time. Additionally, Watkins told the PAC that when he took over the daily operations of the Ministry of Health in late 2020, when COVID-19 was consistently rising, he was able to implement some structure in the procurement process. He stated that they were able to go to public tender within two days of approval from the National Procurement and Tender Administration Board (NPTAB). With this public process, he explain-ed to the committee, they were able to secure competitive bids in the procurement of the PPE.
Supply of masks
He told the PAC that he was able to secure bids for the supply of masks at 87 cents through public tendering in the height of the pandemic, while the previous administration procured the KN95 mask at $7.50 each at the start of COVID-19. He stated even if some market research was done, they [MoH] would have been able to make informed decision by accessing the suppliers’ capabilities to provide the items at a cheaper cost and have it supplied urgently. Watkins also stated that they could have gone to public procurement while doing small purchases to eliminate breaches in the procurement system. Explaining the reasoning behind the Audit Office’s findings, the Ministry of Health’s Permanent Secretary had told the AG’s office that the urgency of being prepared for the rapidly spreading virus was the key factor in the procurement process.
In the case where a total of eighteen contracts valued at over $424m were awarded before approval was received from the NPTAB, Watkins explained that the procuring team would have secured orders from the supplier[s] before the award was given or before official notice to deliver was provided. The Auditor General’s special audit found that 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.
A breakdown of the contracts showed that the APNU+AFC Public Health Ministry awarded 14 contracts totaling $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. The Procurement Act of 2003 mandates public tendering for all government agencies.
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 subsequent signing of the contract. However, that process was not followed for 18 of the sole-sourced contracts according to the AG’s report.
“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.
