Auditor General’s report has further exposed HDM deal, procurement commission should launch probe

Dear Editor,

On the 8th   of August 2018, I wrote a letter pointing out that something stinks with the HDM Labs/Ministry of Public Health deal. At the time it was widely believed that the HDM Labs contract was valued at $366,826,660 or (US$1,789,886). I asked the Hon. Volda Lawrence, Minister of Public Health several questions in parliament. To date, she has refused to answer.  But the latest report from the Auditor General report for 31st December 2017, has now confirmed HDM Labs Inc. received a contract valued at $409.497 million on the 31st of August 2017, much more than was previously quoted.

In a statement to parliament on the 18th July 2018, Minister Lawrence claimed that only three of the six companies submitted bids. The Auditor General’s report has identified these companies as IPA, Caribbean Medical Supplies and ANSA McAl Trading. Each of these companies has been a regular supplier to the Ministry of Public Health. But on this occasion, their bids were evaluated and rejected. The disqualification of the three bidders in the first round is highly suspicious; many believed that these bidders received unfair treatment. For us to understand why these three bidders were disqualified, the government should release the findings from the Bid Evaluation Committee.

In the first round, six companies were invited to bid, of these only three participated, of the three companies that participated all were disqualified. The Ministry re-invited the same six companies to retender. The logic behind the Ministry’s action is questionable, except if they had a prearranged outcome. Of the six companies that were invited to participate only one submitted a bid, that is HDM Labs. It is unclear, whether an Evaluation Committee was established to evaluate the HDM Labs bid, if so the report of the committee should be disclosed. If there was no evaluation committee, then on what basis was a decision taken to give the award to HDM Labs? From the information that is currently available, it seems that the process was engineered to favour HDM Labs.

This flawed procurement has led to wastage of taxpayers’ dollars. The Auditor General’s report looked at nine items that were bought under this contract. The report compared the price paid to HDM Labs with that of IPA, Caribbean Medical Supplies and ANSA McAl. For this letter, I will compare HDM Labs’ prices with IPA. Please see the table:

From this analysis, it is clear, that IPA had better prices than HDM Labs.

In justifying the need for restrictive tendering, a case was made for emergency supplies of medicines. I suppose that based on this evidence that the NPTAB agreed to this restrictive method of procurement. The Auditor General’s report pointed out, “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 22nd September 2017. At this date, no items were delivered, and delivery commenced in October 2017. As at 31st December 2017, items to the value of $141.892 M (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. ” As the Auditor General’s report pointed out some of the medicines arrived six months after the date of delivery. 

This deal reeks of corruption. For the nine items that the Auditor General analysed, the government could have saved $166, 942, 315  if IPA was used. HDM Labs was required to deliver the drugs in two weeks but took six months. The Ministry of Public Health should explain to the public if it has taken any action against HDM Labs for failure to deliver as specified in the agreement. The National Procurement and Tender Administration Board (NTPAB) should say whether based on bad performance on this contract that the company would be blacklisted. The Public Procurement Commission should launch an immediate investigation into the multiple breaches of the Procurement Act, and the wastage of taxpayers’ dollars. If the government is serious about corruption, it would call in the police to do a thorough investigation.

Yours faithfully,

Dr Frank Anthony