AG flags ad hoc procurement of COVID-19 supplies

Dec 18, 2021 News

– found $424M in contracts awarded without Tender Board approval

By Kiana Wilburg

Kaieteur News – Auditor General, Deodat Sharma, has flagged the ad hoc procurement of COVID-19 supplies by the Ministry of Public Health and the Civil Defence Commission (CDC) for the period March 2020 to August 2020.

Auditor General, Deodat Sharma

In a special value-for-money audit, Sharma said a review was conducted on the procurement process used, the storage and accounting for items purchased and gifts received, and the distribution of hampers. He said this was done to determine whether the activities were done in compliance with relevant laws, regulations, guidelines, and international best practices.
But following this audit, the AG said several troubling findings were made. In this regard, he noted that a total of 18 contracts valued at over $424M were awarded before approval was received from the National Procurement and Tender Administration Board (NPTAB). He stressed that this is not in keeping with the nation’s laws.
In response to this finding, officials at the Ministry of Health explained that with reports of the coronavirus being contracted in human beings and spreading rapidly from China to other neighbouring Caribbean countries at a fast rate, Guyana was put on notice to be in a state of readiness, in the event that the coronavirus impacts Guyana in the near future. Subsequent to a meeting held in this regard, the officials said a list of equipment and medical supplies were put together to be procured immediately for the Georgetown Public Hospital Corporation in order for it to be prepared for such a reality. As such, the Ministry said it had its Procurement Department carry out a procurement process in order to ascertain which suppliers had these items readily available on the ground and to be delivered immediately. The officials said the contracts were signed before the award was sent from NPTAB, in order for the Ministry to be able to secure these items and have them in place.
As for the Civil Defence Commission, its management said it would appreciate any guidance, which can be given on the procurement of emergency supplies which may be needed within a short timeframe, and which does not allow for the requesting of relevant approvals. The CDC said, too, that it is committed to observing all regulations and only sought to expedite the procurement to provide urgent COVID-19 relief to affected households in keeping with a task assigned to the Commission by the National COVID-19 Task Force.
Upon noting the feedback from the entities, the Auditor General’s Office recommended that the Permanent Secretary of the Ministry of Public Health and the Director General of the Civil Defence Commission engage the Ministry of Legal Affairs and other stakeholders to have the Procurement Act 2003 amended to include emergency procurement policies and procedures.
Further to the foregoing, the AG also discovered three other worrying findings. Sharma outlined that the contracts effected by the agencies in question did not have fundamental provisions, which could have protected the interest of the State and ensured value for money.
Sharma noted, for example, that nine contracts prepared by the Civil Defence Commission did not have definite terms as to the start and end dates for delivery of the items. Sharma said the failure on the part of the Commission, to legally bind suppliers to a stipulated delivery period, resulted in delays on the part of suppliers.
Furthermore, Sharma was keen to outline that a penalty clause serves as a deterrent to prevent parties from breaching the terms and conditions of a contract. That said, Sharma stated that his office expected all contracts to have this clause to protect the Ministry and the Civil Defence Commission against late suppliers. Surprisingly, the AG said his office found that the Ministry had no protection against late suppliers because many of the contracts did not have penalty clauses.
His report goes on to state, “We noted that the Ministry of Public Health and the Civil Defence Commission worked quickly to procure items and spent over $1 billion to buy equipment, food, drugs, and medical supplies to fight the coronavirus disease or COVID-19.”
“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 clause was included, the AG said the Ministry did not even deduct the penalty fees of close to $5M. Adding that this saving could have been used to purchase additional supplies to help fight the disease.
Speaking to other anomalies, Sharma said the Ministry of Public Health and the Civil Defence Commission did not monitor the performance of contracts from their beginning to end. He said, too, that his office found no evidence that the entities valued donations or gifts and properly recorded and disposed of same. He said the failure of the Ministry and the Civil Defence Commission to properly account for the items received, resulted in him being unable to determine the true value of gifts received during the period.
He subsequently recommended that the Permanent Secretary of the Ministry of Public Health and Director General of the Civil Defence Commission put in place gift registers to account for donations or gifts received.
Taking the foregoing factors into consideration, the AG categorically stated that the entities did not procure COVID-19 supplies in an efficient manner.