NGPC still to supply $171M in items from 2014 contract

Up to July this year, the New Guyana Pharmaceu-tical Corporation (NGPC) had $171M in supplies outstanding from a 2014 contract of $2.2B and this was likely one of the reasons why the Permanent Secretary of the Ministry of Health, Leslie Cadogan was sent on leave as of today.

On July 14th, 2015, the Head of the Materials Management Unit (MMU) of the Ministry of Health, Prakash Sookdeo wrote to Cadogan stating that despite the Ministry of Public Health (MoPH) having the responsibility to validate that 100% delivery was made on contracts, the procurement department had found that $171m was outstanding on the 2014 contract and there was a further $2.9m still to be supplied on the 2013 contract.

Sookdeo’s letter to Cadogan came on the same day that Cadogan had signed off on a document to begin processing a $572m payment to NGPC in connection with a 2015 contract that was awarded to the company weeks before the May 11, 2015 general elections.

NGPC has been a controversial supplier to the health system because of concerns over single sourcing, the price of drugs supplied, whether shipments are adequately completed and pre-qualification guidelines that appeared stacked in its favour. While in opposition, both APNU and the AFC who now comprise the coalition government had vowed to review drug procurement arrangements. Sources say the processing on July 14th of the $572m payment by the Ministry of Public Health to NGPC would have raised eyebrows in the administration.

Sookdeo’s letter to Cadogan said that based on a request from the MMU, NGPC had submitted their reconciliation of outstanding costs under the 2013 and 2014 contracts. It added that “Despite the fact that the MoPH has to validate every contract entered to ascertain that 100% delivery was made”, the MMU had noted discrepancies.

In relation to the 2014 contract, Sookdeo said that there was some $171m still outstanding from contracts entered into in 2014 including from a major contract for $156.6m which should have been concluded during the first quarter of this year. At the time the letter was written, supplies worth $146m of the $171m were said to be in transit. The remainder was on order.

The items which had not been delivered included $140m in pharmaceuticals and $16m in medical supplies. (See table below)

In addition to this, from the contract for 2013, NGPC was still to supply $2.9m worth of radiology supplies. (See table below) A problem developed in relation to the supply of this item as NGPC said that the items were no longer manufactured with 400 speed as required by the MoPH but 800. The Department of Standards and Technical Services of the MoPH had stated that this speed was unacceptable. Sookdeo said that a decision needed to be made on this issue and for the contract to be closed.

He recommended that for the major 2014 contract that a revised completion date of September 30th 2015 be given to the supplier to conclude the contract. Simultaneously, he said that NGPC has to provide the MoPH with revised performance and advance payment bonds to cover the agreed extension.

The 2013 Auditor General report had said that 10 contracts worth $2.374b had been concluded with NGPC.

The report said “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 and March 2014. There were no guarantees in force at the time of the examination in July 2014, but the contractor was still to deliver goods valued at $323.321m”.

The Auditor General’s report also noted that NGPC was still to deliver $11.8m worth of supplies for 2011.

On Wednesday, at a post-Cabinet press briefing, when asked about the processing of the payment from the Health Ministry to NGPC for the April 22, 2015 contract, Minister   of Governance Raphael Trotman had stated that government has a duty to ensure that the bidding process is a level playing field.

Trotman was asked what the government’s plans were to reformulate the bidding process inclusive of the pre-qualification criteria for large contracts such as the one awarded to NGPC. He said “we can’t have one agency, one person supplying all the drugs, but that one agency, one person may bid just like others and if he or she wins so be it. But it can’t be a single source for this vital commodity that the nation needs.”

He declared “that regime is over”.

Trotman said that “it is our duty to ensure that the playing field is levelled in such a way that others can compete and that there is no unfair competition so it is a concern. It leaves room for a monopoly, it leaves room for unfair price fixing, it leaves room for manipulation and even corruption”.

The previous PPP/C administration had introduced the guidelines which were criticised by commentators for being skewed in favour of NPGC with which it had close ties.

Trotman said that in a transparent economy it was not “healthy” to have “one source for something as critical and as costly as the supply of drugs for the national health care sector.”

In June, Minister of State Joseph Harmon had announced that the National Procurement and Tender Administration Board (NPTAB) would be reconstituted.

Harmon had said the current board will have to go because “that is where the initial award of contracts are made… I am saying to you now that sole sourcing was pervasive in the (last) administration. From small things to big things sole sourcing took place.”

Cadogan was on Thursday instructed to proceed on accumulated leave of 193 days from today to enable significant reforms particularly in light of growing concerns over the procurement and distribution of drugs.

Harmon in a letter to Cadogan said it had been brought to the attention of the Ministry of the Presidency that he had accumulated 193.5 days of leave.

The letter added “The Minister of Public Health (Dr George Norton) by a letter dated July 16th, 2015 has advised me that as part of significant reforms to be undertaken within the Ministry of Public Health, particularly in light of growing concerns relative to the procurement and distributing of pharmaceuticals of his intention to have you proceed on all outstanding vacation leave”.

The letter said that Trevor Thomas has been identified to act as Permanent Secretary in the interim and there must be a handover of all ministry/government properties to him.

The letter was copied to Norton and the Permanent Secretary in the Ministry of the Presidency, Omar Shariff.