THE Interim Audit Report on the utilisation of COVID-19 resources has revealed that the Ministry of Health single-sourced eight suppliers of COVID-19 materials with a total contract value of K35,090,425.
According to the Report for the period February 1 to July 31, 2020, the Ministry of Health procured items valued a K159,277,590 from various suppliers between March and July 31, 2020, without subjecting the procurements to competitive bidding.
“Contrary to the Public Procurement Regulation No. 39 (4), which states that, ‘Where an emergency situation affects the choice of procurement method, the procuring entity shall not automatically exclude competitive methods of procurement, but shall obtain competition to the maximum extent practical in the circumstances.’ It was observed that between 19th March and 5th May, 2020, the Ministry single-sourced eight suppliers with a total contract value of K35,090,425. In addition, although the Ministry had invited bids for various items, it was observed that the suppliers’ quoted for items that were not quoted by the other suppliers. In this regard, items valued at K159,277,590 were procured from various suppliers between March and July 31, 2020, without subjecting the procurements to competitive bidding,” the Report disclosed.
“In response, the controlling officer, Ministry of Health, acknowledged that competition was a primary enabler of a very key fundamental principle of public procurement – Value For Money (VFM). Following a surge in reported cases, there was urgent need to source commodities from vendors, who had them available ex-stock or with competitive delivery periods. An example in point was when the Ministry urgently needed to equip the Levy Mwanawasa Teaching Hospital COVID-19 Isolation Centre. This needed a quick delivery turnaround time for linen, ventilators and other essential commodities.”
But the Report added that the controlling officer at the Ministry of Health stated that the Public Procurement Regulations 2011 supported the Ministry of Health procurement approach.
“The controlling officer further stated that, ‘With respect to Regulation 39 (4) of the Public Procurement Regulations, 2011, it is our considered position that the regulation actually supports our procurement approaches thus far.’ In light of the COVID-19 crisis, the Ministry of Health in a letter dated 13th March, 2020, applied for a no objection from the Zambia Public Procurement Authority (ZPPA) to deviate from using full standard solicitation documents and instead use simplified requests for quotations irrespective of the threshold. In the same application, the Ministry requested the Authority to issue a circular specific to the COVID-19 pandemic for the purpose of ensuring that Zambia successfully fight the pandemic,” read the Report.
“The ZPPA on 14th April, 2020, granted the Ministry a ‘No Objection’ to deviate from using full standard solicitation documents and instead use simplified requests for quotations irrespective of threshold. The authority granted is available for verification. However, a review of the letter from ZPPA revealed that the Ministry was granted a ‘No Objection’ to deviate from using a full solicitation documentation, but did not exclude the need to adhere to other procurement regulations, such as the Public Procurement Regulation No. 39 (4) of 2011, which requires the need for the Ministry to apply maximum competition practical under the circumstance.”
The Report also revealed that the Ministry of Health over-committed government expenditure in the procurement of various medical items.
“As at 26th June, 2020, the Ministry of Health had engaged 100 suppliers to supply various medical items to be used in the fight against the COVID-19 pandemic at a total cost of K779,783,529. As at 31st July, 2020, the Ministry of Health had received funding of K60,884,345 against which K52,326,519 was paid to suppliers. It was, however, observed that the total contracts entered into by the Ministry of Health exceeded the overall total budget provision of K716,000,000 (K659,000,000 – Multi-Sectoral Contingency and Response Plan and K57,000,000 – Epidemic Preparedness Fund) by K63,783,528 resulting in over-commitment of expenditure,” the Report narrated.
“In response, the controlling officer at the Ministry of Health indicated that the commitments were entered into based on the adjustable emergency plans, which initially costed K57 million and then increased to K1.2 billion, leading to the current draft of K3.4 billion. Hence, the contracts were within the approved budgets. However, the approved adjustable emergency plan and the Treasury Authority for the budget of K3.4 billion were not availed for audit as at 14th August, 2020.”
The Report further indicated that Ministry of Health delayed in submission of procurement plans to ZPPA, which was against the ZPPA Circular No. 1.
“The ZPPA Circular No. 1 of 2020 dated 15th April, 2020, requires Procuring Entities (PEs) to identify all COVID-19 procurement requirements and prepare procurement plans and submit a copy of the plans to the ZPPA in line with Section 42 (2) of the Public Procurement Act No. 12 of 2008. Contrary to the Circular, the Ministry of Health procured medical supplies and services between 3rd March and 5th April, 2020, amounting to K129,010,714 without a procurement plan. The Ministry prepared the procurement plan on 26th May, 2020, two months after the outbreak of the pandemic,” read the Report.
“In response, the controlling officer stated that management endeavours to adhere to the procurement plan, with the flexibility to respond to the evolving pandemic and that the procurement plan was adjusted based on the evolving pandemic and needs. Further, it was stated that the initial procurements were not haphazard as they were based on the adjustable contingency plan. Although management indicated that the procurement plan was based on the adjustable contingency plan, the Ministry had only submitted one procurement plan to ZPPA, which was dated 26th May, 2020, and the adjustable contingency plan used was not availed for audit.”