Auditor-general flags issues in Covid-19 vaccination procurement, logistics

Non-compliance, possible overspending, poor IT systems and poor price negotiations are  some of the observations and findings by the office of the auditor-general (AG) when it audited the national health department’s vaccination procurement processes and nationwide rollout.

“While there were areas that really worked well in the [health] sector with regards to the vaccination programme, some areas needed improvement,” senior manager at the AG’s office Thabelo Musisinyani said on Wednesday.

The AG’s team briefed the portfolio committee on health on the national department of health’s annual performance plan and tabled a vaccine audit report.

Explaining how the audit came about, business unit leader Andries Sekgetho said: “As part of the government’s response to the management of the Covid-19 pandemic, it embarked on a process of acquiring the vaccines to keep citizens safe.”

In January 2021, former health minister Zweli Mkhize approached the office of AG Tsakani Maluleke, requesting it to conduct a real-time audit similar to the one done on the acquisition of personal protective equipment. The office of the AG then developed a value chain based on its understanding of what processes the department needed to follow.

“We identified a number of key risks and preventive controls which we shared with the department's director-general, key officials and the executive authority.”

The main objective was to monitor wastage or leakage in the process, he said.

In her presentation, Musisinyani said plans that had been developed were largely implemented.

“There were some teething issues with the planning. However, we observed that the department was able to amend or quickly change the plans to align with the changes taking place, like the challenges with the AstraZeneca vaccine.”

On funding and goods received, she said the department was allocated sufficient funds (R12.9bn) from the National Treasury to acquire the vaccines.

“We observed that as at August 31 2021, 80% of the doses committed by Pfizer were received as opposed to 30% committed by Johnson & Johnson. We then raised a risk to the department that because these contracts were signed with international service providers, with foreign currency, management needed to be aware that there was a possibility of overspending due to the fluctuating currency rate.”

At this stage, the department was alerted to monitor this and get guidance from the Treasury on how to deal with the situation.

When the procurement process began, the department approached the Treasury indicating it would apply for a deviation. “Initially they had a deviation for the logistics. However, after a while they then issued a tender for the logistics.”

Looking at the deviation for the procurement of the vaccines, Musisinyani said: “We are raising possible non-compliance that we noted related to tax matters. Our findings relating to the logistics is that when they put out the tender, we noticed that they did not include subcontracting criteria as required by the regulation to ensure that bidders have guidance on how the subcontracting will be dealt with. This resulted in bidders using their own judgment on subcontracting.”

Initially, the department had intended to award the contract to one service provider but it did not include criteria that clearly stated that should the winning bidder not be able to deliver the services, the tender could be awarded to the second-highest bidder.

“Unfortunately, due to the different changes, management decided to award the bid to more than one supplier and on our side we requested evidence on the thought process that led them to that decision. The evidence was not provided.”

The AG’s office made an observation that price negotiations were not performed with the appointed second-highest scoring bidder.

“The second bidder had prices significantly higher than the winning bidder, so we raised that they needed to negotiate with the second bidder to reduce the prices.”

She added that possible collusive bidding was not identified by the bid evaluation committee. “We said the department should go back and relook at possible collusive bidding that could have taken place. The recommendation we raised with the department was that it needs to ensure that the supply chain management processes are done by the supply chain management unit itself.”

On the administering of the vaccine, she said the AG observed that the majority of vaccination sites had implemented the rollout processes. However, she said: “There was a shortage of ICT equipment and poor connectivity with systems being offline and there [were] storage conditions or storage practices where the facilities were not adhering to the prescripts issued by the national and provincial departments.

“We noted that the stock management itself — when it was at the facilities — that the movement of the stock was not being tracked effectively in some of the sites. We also highlighted challenges around used vaccine vials that were not defaced and labelled.”

This, she said, opened the sector to the vials being reused and sold on the black market.

On the electronic vaccination data system (EVDS), Musisinyani said even though there were teething problems initially, the department was able to swiftly make changes to it.

She painted a picture of a department under severe financial strain.

“The financial situation in the health sector requires immediate action by the sector so it is able to continue to render services and fulfil its mandate.”

MPs told committee chair Dr Kenneth Jacobs the department needed to be hauled before the committee to explain some of the findings and recommendations made by the AG’s office.

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