New GPC secured $798m in drug contracts in 2018

For the year 2018, the New Guyana Pharmaceutical Corporation (NGPC) secured $798m in contracts or 36.5% of the total awarded for the Ministry of Public Health, according to the 2018 Auditor General’s report.

This was the highest single percentage. The next highest was Caribbean Medical Supplies at $318m or 14.5% followed by The Royal Emporium with $213m or 9.7%. ANSA McAl Trading Limited was listed as having secured $29.6m in contracts for the year.

According to the report, the sum of $2.232 billion was allocated in 2018 for the purchase of drugs and medical supplies. The report said that according to the Appropriation Account, amounts totalling $2.183 billion were expended for the period. As at 31 December 2018, thirty cheques totaling $215.118M were on hand, which resulted in the Appropriation Account being overstated by this amount. However, at the time of reporting in September 2019, eleven cheques totaling $59.529M were still on hand the report added.

The table below right shows a summary of the expenditure ($2.183

billion) as per suppliers:

In its reply to the Auditor General’s report, the Head of Budget Agency acknowledged  that at the time of the audit the cheques were on hand due to a multi-year approval that was given by the Ministry of Finance of which some suppliers had fulfilled their contractual obligations.

In its recommendation, the Audit Office urged that the Head of Budget Agency take the requisite action to have cheques paid to suppliers for goods supplied and refund to the Consolidated Fund where necessary.

At the time of reporting in September 2019, the Auditor General’s report said that a supplier who received payment totaling $94.066M did not fully honour his obligations where goods valued at $37.210M remained outstanding. In addition to the amounts outstanding for the year 2018, there were outstanding deliveries for the years 2015 to 2017 totalling $306.205M, as shown in the table below:

The Auditor General’s report said that it was observed that suppliers did not comply with the conditions of the contracts, since deliveries were not made according to the contract specifications and  schedules.

“In addition, the Ministry failed to enforce the penalty of 0.5% on the contract sum for each day of untimely execution of the contract. As a result, the suppliers were not penalised for the failure to adhere to the specifications of the contract. A similar observation was made in the previous year”, the report said.

The Head of Budget Agency noted in a response that that no penalty was imposed due to the revised delivery schedules and space constraints faced by the Ministry so the deliveries were staggered in order to avoid spoilage.

The Audit Office recommended that the Head of Budget Agency undertake a full review of contractors’ obligations under the contracts to ensure that these, including applicable liquidated damages, are fully met without any overpayments.

The report noted that the sum of $13.416M was paid to The Royal Emporium for

 laboratory supplies for the Food and Drug Department.

Examination of the related documents for the transactions listed above revealed the following observations:

a) The items purchased were all sourced from a single supplier.

b) Reasons such as ‘the company provides goods of a very high quality, provides a credit line to the Ministry’ and was ‘willing to supply 100% of the items prior to payment’ were stated by the Ministerial Tender Board for using the single supplier. However, this was not in keeping with the Procurement Act 2003.

c) No contracts were attached to the Payment Vouchers to verify whether the items delivered were in keeping with the contractual agreement.

The Head of Budget Agency in response stated that:

a) The items procured by single sourcing were mainly specialised in keeping with Section 28 (a-b) of the Procurement Act 2003 (No. 8 of 2003).

b) The Ministry wishes to state that some of the overseas companies are willing to supply the items without payment. This is a mutual understanding between the MOPH and Companies over the years. However, the Ministry will be scheduling a meeting with these overseas companies to discuss this matter on the way forward based on the findings.

c) Systems are now in place to correct this action since the established Procurement Department will be procuring all items on behalf of the GA-FDD.

The Audit Office recommended that the Head of Budget Agency: (a) comply with the requirements of the Procurement Act 2003 when awarding contracts; and (b) institute systems to ensure that management of the Food and Drug Department comply with the Ministry’s policies for the receipt of goods and other supplies.