Questions raised about Ministry’s sole-sourcing of $367m in drugs from HDM Labs

Sole-sourcing of $366.9M in emergency drugs in June 2017 has once again brought into question decisions by the Ministry of Public Health  as documents reveal that a company, HDM Labs  was handpicked over three others that went through tendering  and were declared to have failed the evaluation process.

On May 23rd 2017, the National Procurement and Tender Administration Board opened tenders for the procurement of emergency pharmaceutical supplies for regional and clinic services.

The Stabroek News’ May 24th 2017 edition reported on the tender opening and the table below shows the companies with the respective bid amounts.

It is unclear when the bids were evaluated but documents provided to Stabroek News show that all three companies failed the evaluation which was carried out by a three-person committee. Persons on that committee were the MoPH’s Permanent Secretary, Collette Adams, Chief Medical Officer Shamdeo Persaud and Deputy Director of the Food and Drugs Department Jewel Sears.

This newspaper yesterday reached out to the Ministry of Public Health for comment and its Public Relations Officer, Terrence Esseboom said that he could not immediately respond as he needed to check with the requisite persons. He said that he will today provide a response after speaking to “four persons” among whom are the Permanent Secretary and the subject Minister Volda Lawrence.

A checklist of what areas in the 16-criteria evaluation sheet the companies failed  states that some failed  in the submission of bid security of required amount, manufacturer’s authorization in the territory Guyana,  provision of a guarantee and warranty statements and Certification from the US Food and Drug Administration and experience and technical capacity that they would have carried out similar transactions.

IPA failed 7 out of the 16 areas while ANSA McAl is listed with three fails and Caribbean Medical Supplies two.

On June 19th 2017, a company that did not submit a bid, HDM Labs, owned by a Guyanese-American businessman, Hardat Singh,  was written to requesting that it submit quotations and availability for the supply and delivery from a list of pharmaceuticals supplied.  It is unclear how the Ministry would have known whether HDM Labs met  the criteria that the three other companies failed.

The letter to HDM reads as follows:

“Dear Mr. Singh, Materials Management Unit – Ministry of Public Health, Regional Health Services. Request for Quotation Ref # MMU-08-2017 P4 Supply and Delivery of Emergency Pharmaceutical Supplies. The Ministry of Public Health hereby requests your quotation and availability for the supply and delivery of the following item and quantity as described below,” the letter states.

“Please indicate total prices inclusive of delivery to the identified site, Materials Management Unit, Warehouse at lot 55-56 First Avenue, Diamond Scheme, East Bank Demerara for the items. Your response should also include the following: Payment terms offered. All quotes should be in Guyana dollars and for foreign companies the currency should be United States Dollars. If a discount is proposed it should be stated. Indicate the availability of the items, inclusive of delivery time. All goods should be new and free from defects. The validity period of the quotes shall be 90 days. Valid National Insurance Scheme and Inland Revenue Department Compliances are required (Applicable) Manufacturer’s Authorization (Applicable). Bidder must provide Food & Drugs Registration for quoted items,” it added.

The drugs included, 27040 bottles of metformin tablets ,which must all contain 1000 pills in 500mg doses, 63,804 of 2% lidocaine injections and which must be in 20mg or mml dose, 28,232 propofol 10mg injections and 12,392 bottles of diclofenac tablets among other medications.

It is unclear when Singh replied and when the evaluation was done but on June 19th 2017, Permanent Secretary at MoPH Adams wrote to the Chairman of the National Procurement and Tender Administration Board (NPTAB), Berkley Wickham, asking his permission for the company to be allowed to sole- source the items.

Adams told Wickham that the reason for sole-sourcing was because “The Ministry of Public Health has a restrictive tendering process done which was opened at the National Procurement and Tender Administration Board date the 23rd May 2017” and “an evaluation report was prepared and none of the bidders were qualified to be awarded a contract.”

It seems that approval was given the same day or the day after as Jones wrote to Singh on the 20th of June 2017, informing him that he was awarded the contract to the tune of US$1.7M or $366.9M. She also notified him in the mail that the conversion rate used was $205 to US$1.

Observers have raised questions as to the role the Permanent Secretary played in the process when she wrote to the NPTAB head almost in a lobbying tone and how it was that HDM was handpicked after the evaluation of tenders from the three bidders.

“HDM Labs Inc. has great capacity in delivering Supplies to the Ministry of Public Health within two weeks’ time frame. HDM Labs Inc. is a recognized and efficient supplier country wide. HDM Labs has their pharmaceutical supplies registered with the Food & Drugs Department in the county (sic) of Guyana and also they are registered with Food & Drugs Authority located in the United States of America,” she told Wickham.

Further, she added, “HDM Labs Inc. has their broker to clear consignments. Based on experience HDM Labs Inc. has supplied pharmaceutical to Georgetown Public Hospital Corporation (GPHC) using all Standard Operating Procedure.”

One source close to the process said that Adams’ reasons for choosing HDM “leaves much to question because the same can be said for all of the other suppliers.”

“They are all companies that have worked with the ministry and have supplied on time and are above board. What does the company having its own broker [have] to do with it? If the ministry wants the drugs in two weeks, two weeks it is. You can either deliver then or not, it is simple,” the source said.

“If you do a check also  you would see the millions in drugs bought by the ministry, check how many HDM bid for. Check their operations also and ask how long they have been established. They only rolled onto the scene since 2015,” the source added.

This arrangement came despite a controversial sole-sourcing deal earlier in 2017  for $632m in drugs including $605m  from ANSA McAl. That controversy led to several investigations of the role of Public Health Minister Lawrence as the transaction was found to be a grave breach of procurement rules. Despite this, the sole-sourcing for HDM Labs was proceeded with.

Following the controversial $632M drug acquisition in February of last year and two later billion-dollar bids for pharmaceutical supplies for Regional Health Services in July of 2017, Minister of Public Health Lawrence had told this newspaper that it would have been the last in emergency procurements. 

On July 12th four companies submitted bids, some for over $1B, for that contract which has 44 lots.

On July 19th HDM labs was the sole bidder for similar emergency supply services. That time it was for the procurement of Emergency Pharmaceutical Supplies for the Regional and Clinic Services and the bid was pegged at some US$1.8M.

 Adams had explained to Stabroek News that those emergency tenders were placed by the respective regions. She had assured that the MoPH had no plans to seek further bulk emergency purchases, only if a potential health threat warning is given or the nation faces a large outbreak of sicknesses.

The HDM Labs June sole-sourcing was not mentioned then.

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