Ministry to determine if HDM Labs should be penalised for late supply – Lawrence

In view of HDM Labs’ late supply of what was meant to be emergency supplies, the Ministry of Public Health will undertake a review which will help it to determine if the company will be penalized.

In addition,  questions about an over $40M disparity in the contract costs quoted by the Ministry of Public Health and the Auditor General would have to be clarified.

Answering ten prepared questions and a further two on the subject in the National Assembly yesterday, Minister of Public Health Volda Lawrence said that her ministry was looking at the contract and delivery dates.

“This is a matter that is engaging the Ministry of Public Health, Permanent Secretary and the procurement department and at this time we will not be able to answer,” Lawrence said in reply to People’s Progressive Party Civic (PPP/C) MP Dr. Frank Anthony’s question on if the company will be penalised for lateness. She said that she has the shipping documents and knows the exact dates when the drugs arrived in Guyana and when they were delivered to MoPH.

Auditor General Deodat Sharma in his report for 2017, which was recently tabled in the National Assembly, stated that the ministry requested 13 emergency pharmaceutical supplies for its Regional and Clinical Service.

Instead of an agreed two weeks, the firm  took six months to fully deliver on the  contract  and the Auditor General also reported that he found that many of the prices quoted by the company were “significantly higher” than some of its competitors.

The supplies included 27,040 bottles of metformin tablets, 63,804 of 2% lidocaine injections, 28,232 propofol 10mg injections, 19,651 vercuronium bromide 10 mg powder injections and 12,392 bottles of diclofenac tablets.

The report noted that the contract, which was awarded on August 31st, 2017 by NPTAB in the sum of US$1,891,443 or Guyana dollar equivalent of $409.497 million, was signed on September 8th, 2017.

The Auditor General made three observations which he said were “unsatisfactory features” noted during the examination of the documents pertaining to the award.

The first was that the supplier was required to supply the drugs two weeks after signing of the contract, that is, all items should have been delivered no later than September 22nd, 2017. “At this date, no items were delivered and delivery commenced in October 2017. As at 31 December 2017, items to the value of $141.892M or 35% of the contract price were delivered. The supplier fulfilled his obligations under the contract in March 2018, that is, six months after the agreed delivery date,” the report said.

The second observation was that five cheques, in the sum of $283.811 million and representing 69% of the contract sum, were processed for the supplier, of which one payment for $17.194 million was paid on November 23rd, 2017 and charged to Line Item 6221 – Drugs and Medical Supplies. Three cheques, for amounts totalling $223.710 million, were paid in 2018 and charged to the amounts received via Inter-Department Warrants; the total paid to the contractor was $240.904 million, 59% of the contract sum. At the time of reporting, one cheque valued at $42.907 million remained on hand, the report said.

On the matter of the disparity in the costs quoted, Lawrence said that the Auditor General would have to be asked about the figures he provided in his report as she can only answer for her agency.

Exchange rate

“He (Anthony) will have to establish the exchange rate used by the Auditor General… Cabinet’s decision based on the 29th of August 2017 noted that the award was in the sum of US$1,891,443.46,” Lawrence said to Anthony’s question on what conversion rate used.

The Ministry had informed HDM that the conversion rate used was to be $205 to US$1.

Anthony also asked how many companies were invited to tender for the contract and what were the criteria used for the selection of the companies in the restricted bidding process. Lawrence replied that six companies were invited to tender and that the criteria were that the bidders not have pending contracts and according to the evaluation of the six, none of the companies were declared ineligible.

She was asked on what basis were the suppliers such as ANSA McAl and International Pharmaceutical Agency (IPA) disqualified and Lawrence said that as it pertained to ANSA, they did not submit an authorization from the supplier or surety from the banks and bank statements.  Experience of technical capacity or evidence was also not provided. IPA on the other hand did not provide evidence of its financial capacity to fulfill the contract.

A detailed list of all the items bought was stated and it corresponded to the list the ministry had earlier given.

When asked if HDM Labs Inc. had procured all the items, Lawrence read out the dates and this coincided with the dates stated by the Auditor General in his report.

And on HDM’s experience and technical capacity, the minister said that she has been informed that this company has been in business for approximately 30 years.

With regards to question 10 as to whether the minister was satisfied that the ministry has received value for money expended on the contract Lawrence said: “Let me say that the policy of the ministry is that we ensure that whenever we expend public funds that we receive value for money. There is no other tender to compare any of the information submitted by HDM. So a conclusion that is very concise cannot be drawn by me as the minister, as I was not one of the evaluators. The information that was provided to the evaluators, Sir, it has indicated that they have been given value for money,” she said.

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