HDM Labs took six months to ful­fill two-week ‘emer­gency’ drugs con­tract, au­dit of­fice finds

-prices ‘sig­nif­i­cantly higher’ than com­pe­ti­tion

Stabroek News Sunday - - FRONT PAGE -

In­stead of an agreed two weeks, New York-based firm HDM Labs Inc took six months to fully de­liver on a con­tract val­ued hun­dreds of mil­lion for “emer­gency” phar­ma­ceu­ti­cal sup­plies sought last year by the Pub­lic Health Min­istry, ac­cord­ing to the lat­est Au­di­tor Gen­eral’s re­port, which also found that many of the prices quoted by the com­pany were “sig­nif­i­cantly higher” than some of its com­peti­tors.

The re­port has also re­vealed that as at Septem­ber 30th, the com­pany was still owed $168.5 mil­lion but had made no ef­forts to col­lect the sum and as a re­sult the Au­dit Of­fice has said it will be scru­ti­n­is­ing the con­tract award fur­ther.

The award of the con­tract raised many ques­tions, par­tic­u­larly given the deal­ings be­tween the min­istry and the sup­plier prior to the award of the con­tract. De­spite the con­tro­versy, the sub­ject Min­is­ter Volda Lawrence has de­fended it, say­ing that all the nec­es­sary pro­ce­dures in the award were fol­lowed.

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.

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 in­jec­tion and 12,392 bot­tles of di­clofenac tablets.

Ac­cord­ing to the re­port, on April 28th, 2017, the Min­istry wrote the Na­tional Pro­cure­ment and Ten­der Ad­min­is­tra­tion Board (NPTAB) and re­quested ap­proval for six sup­pli­ers - In­ter­na­tional Phar­ma­ceu­ti­cal Agency (IPA), Caribbean Med­i­cal Sup­plies, ANSA McAL Trad­ing Ltd, Global Health­care Sup­plies Inc., Med­itron Inc. and HDM Labs Inc to be in­vited to bid for the phar­ma­ceu­ti­cal sup­plies, through the re­stricted method of pro­cure­ment.

The NPTAB granted ap­proval in May, 2017 for the use of the re­quested method of pro­cure­ment and ten­der doc­u­ments were sold to all six sup­pli­ers. How­ever only the IPA, Caribbean Med­i­cal Sup­plies and ANSA McAL Trad­ing Lim­ited ten­dered for the sup­ply of the items.

The ten­ders were opened on May 23rd, 2017 and were eval­u­ated by the Eval­u­a­tion Com­mit­tee ap­pointed by the NPTAB. “The Com­mit­tee on the 14 June 2017 did not rec­om­mend an award since the mem­bers agreed that no ten­derer met all the re­quired eval­u­a­tion cri­te­ria and they all failed to sub­mit com­plete bids for all of the items,” the re­port said.

The re­port in­formed that fol­low­ing this de­vel­op­ment, the Min­istry wrote the NPTAB on June 29th, 2017, re­quest­ing ap­proval to re­tender for the pro­cure­ment of the items through the re­stricted method of pro­cure­ment and from the same six sup­pli­ers. The sup­pli­ers were re­quested to sub­mit their ten­ders no later than July 18th, 2017 and on that date, only one ten­derer – HDM Labs – sub­mit­ted a ten­der for the sup­ply of the items.

It was on this ba­sis that the Eval­u­a­tion Com­mit­tee rec­om­mended that a con­tract be awarded to that com­pany.

Sharma’s re­port high­lighted the higher prices

quoted by the com­pany.

“We (the Au­dit Of­fice) com­pared the prices quoted for each item by the ap­proved ten­derer with that quoted by the ini­tial three ten­der­ers to de­ter­mine whether there was due dili­gence with re­gard to econ­omy in award­ing the con­tract. It was de­ter­mined in… nine in­stances that the prices quoted by HDM Labs were sig­nif­i­cantly higher than that of the ini­tial three sup­pli­ers,” it said.

A list of the dif­fer­ences was in­cluded in the re­port and showed in­stances where HDM Labs’ prices were triple that of the com­peti­tors and in one in­stance, al­most ten times more.


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 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 Items 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.

It stated that the third ob­ser­va­tion was that though the sup­plier fully sat­is­fied the re­quire­ments of the con­tract in March, 2018, “there was no ev­i­dence at the time of re­port­ing, that the min­istry took steps to set­tle its in­debt­ed­ness of $168.593 mil­lion, or 41% of the con­tract sum, to the con­trac­tor. In ad­di­tion, no ev­i­dence was pro­vided that af­ter six months of de­liv­er­ing the items, the sup­plier de­manded the re­main­ing bal­ance… from the Min­istry.” In this re­gard, the re­port said, the Au­dit Of­fice, will con­duct fur­ther scru­tiny of the award­ing and ex­e­cu­tion of the con­tract.

Lawrence, in an ad­dress to the Na­tional As­sem­bly in July, main­tained that the award was above board, while cau­tion­ing per­sons to not sen­sa­tion­alise the is­sue.

“I wish to re­mind this Honourable House that in 2017, it was un­der this govern­ment that the pro­cure­ment depart­ment [of the] Min­istry of Pub­lic Health was es­tab­lished to en­sure that there was seg­re­ga­tion of du­ties, trans­parency and ac­count­abil­ity in the pro­cure­ment of items and ser­vices for the Min­istry of pub­lic Health while en­sur­ing that the min­istry fol­lowed and ad­hered to the reg­u­la­tions and pro­ce­dures stip­u­lated by law,” she had said.

The Min­istry’s Per­ma­nent Sec­re­tary, Col­lette Adams, had writ­ten to the NPTAB in June to seek per­mis­sion for drugs to be sin­gle-sourced from HDM Labs Inc.

Let­ters seen by Stabroek News show that Adams wrote NPTAB Chair­man Berkley Wick­ham on June 19th, 2017, seek­ing ap­proval for the sin­gle­sourc­ing of the drugs and on June 20th, 2017, she wrote to HDM Labs Inc.’s US-based Guyanese head Har­dat Singh con­firm­ing the award, although she had not been granted ap­proval for sin­gle-sourc­ing.

Three days be­fore writ­ing to Wick­ham for ap­proval, a re­quest was sent to Singh for a quo­ta­tion for the sup­ply and de­liv­ery from a list of phar­ma­ceu­ti­cals sup­plied. It is un­clear whether sim­i­lar quo­ta­tions were sought from other po­ten­tial sup­pli­ers, in­clud­ing the com­pa­nies that had pre­vi­ously bid for the con­tract.

Adams’ June 19th let­ter sought to jus­tify the sin­gle­sourc­ing by ex­plain­ing that none of the bid­ders who had been con­sid­ered dur­ing a pre­vi­ous ten­der­ing process in May had qual­i­fied. Ad­di­tion­ally, her let­ter stated that HDM Labs Inc. has “great ca­pac­ity” in de­liv­er­ing sup­plies to the Min­istry of Pub­lic Health within a time­frame of two weeks; that HDM Labs Inc. is a “rec­og­nized and ef­fi­cient sup­plier” coun­try­wide; that HDM Labs Inc. has its phar­ma­ceu­ti­cal sup­plies reg­is­tered with the Food & Drugs Depart­ment in Guyana and the Food & Drugs Au­thor­ity in the United States of Amer­ica; that HDM Labs Inc. has its bro­ker to clear con­sign­ments; and that HDM Labs Inc. has sup­plied phar­ma­ceu­ti­cals to Ge­orge­town Pub­lic Hospi­tal Cor­po­ra­tion (GPHC) us­ing all Stan­dard Op­er­at­ing Pro­ce­dures.

While the June 20th let­ter in­formed Singh that he was awarded the con­tract, Adams then wrote to Wick­ham again on June 29th, 2017, for the pro­cure­ment to be re­tendered us­ing re­stric­tive ten­der­ing, with the six sup­pli­ers be­ing iden­ti­fied as ANSA McAL, IPA, Global Health­care Sup­plies Inc., CMS, Med­itron Inc. and HDM Labs Inc.

Adams sub­se­quently told this news­pa­per that the con­tract was ten­dered three times. “…Be­cause of an emer­gency, we were try­ing to go sole-sourc­ing. Ten­der board said no and an­nulled the sole-sourc­ing. So, the sole-source never hap­pened. We went back to re­stric­tive again. One per­son re­spond, so what is the prob­lem? Three times we go with this thing,” she had ex­plained.

A com­par­i­son done by the Au­dit Of­fice of the prices for 9 out of the 13 drugs quoted by IPA, Caribbean Med­i­cal Sup­plies and ANSA McAL Trad­ing against those of the suc­cess­ful sup­plier, HDM Labs. The lat­ter’s prices were sig­nif­i­cantly higher than at least two of the oth­ers.

Volda Lawrence

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