A pandemic of this magnitude like COVID-19 was unpredictable in the world and Latvia. Therefore, the consequences of long-term inaccuracies in the planning and procurement of material reserves are revealing under the state of emergency in a short period, and the organisation of the process of purchasing personal protective equipment still raises a number of unanswered questions. Undeniably, the new circumstances required the ability to respond and adapt to an emergency quickly and caused deviations from the usual order. At the same time, the audit has discovered that in the process of delivering personal protective equipment in the health sector, one has made a number of unilateral decisions, has lacked transparency while explaining supplier evaluation criteria, and this raises suspicions of a possible risk of corruption.
In this inspection, the State Audit Office had assessed the process of purchasing personal protective equipment (protective face masks and respirators) in the health sector from the beginning of March until the moment when the defence sector took the procurement over (April 2). The Ministry of Health had 11.7 million euros available for the purchase of personal protective equipment from contingency funds, of which health authorities such as the National Health Service (NHS) and the Emergency Medical Service (EMS) spent 5.7 million euros on the purchase of protective face masks and respirators by procuring personal protective equipment from five suppliers.
One drafts a new procurement procedure too late, and everybody acts as one can
As early as mid-February, the supply of personal protective equipment was hampered across Europe. In response, the Latvian government allowed the provisions of the Public Procurement Law not to apply to the procurement of personal protective equipment nine days before the state of emergency was declared. Still, the Ministry of Finance and the Procurement Monitoring Bureau published guidelines on procurement during the emergency almost two months later (April 29). Following the recommendations of the European Commission (March 13), derogations from the conformity assessment procedures of personal protective equipment were also allowed. In this case, the Cabinet of Ministers also determined a new procedure for performing quality assessment procedures only on April 9. The auditors have not found an answer to the question of why it took so long to draft those procedures.
“After the audit, one must admit that there was no measure taken in time in our country to make the preferential procurement procedures transparent, and there were no guidelines drafted at the national level for procurement in the cases where the Public Procurement Law is not applied. As a result, there was a legitimate public debate about the lack of transparency in the process of purchasing personal protective equipment, which gave rise to suspicions of corrupt transactions. Although this was not an easy time for any of the decision-makers, one must admit that a number of decisions came too late,” stressed Auditor General Elita Krūmiņa.
There are many unknowns in the organisation of the procurement process and the solidity of decisions in the health sector
The first case of COVID-19 in Latvia was diagnosed on March 2 2020, and the Cabinet of Ministers allocated 1.2 million euros already on March 3 to enable the Emergency Medical Service to purchase medical equipment, disposable personal protective equipment, medicines for epidemiological safety. Part of the funding was also earmarked for the replenishment of the state material reserves. However, given the critical situation in Europe, the Emergency Medical Centre managed to purchase only 48% of the planned protective face masks and 12% of respirators.
The Emergency Medical Centre and the National Health Service relied primarily on the calculations and needs of the health sector when purchasing personal protective equipment. At the same time, the National Health Service procured personal protective equipment with a reserve so that the stocks would be available for as long as possible and part of them could be channelled to other sectors. By March 27, one did not know how many and what kind of personal protective equipment was needed at the national level at all.
The health sector made purchases of personal protective equipment in circumstances where one should act swiftly and decisively, but there were no defined requirements for making purchases either at the national level or within the health sector. Consequently, the way of procuring under the preferential procedure was the sole competence and responsibility of the purchasing authority in question.
When assessing the procurement process in the National Health Service, the auditors of the State Audit Office concluded that one tolerated unilateral decisions in the health sector, thus creating a risk of corruption. Although the National Health Service established a working group on the procurement of personal protective equipment by oral order of the Director, the auditors were unable to obtain any documentation on its activities. In addition, the Director of the Service made decisions on the award of contracts to specific suppliers unilaterally by informing the institutions involved in crisis management of his decisions, thus receiving indirect support.
The State Audit Office also failed to obtain documentary evidence regarding the observance of the supplier selection criteria set by the National Health Service for the selection of five specific suppliers even though one had set the criteria for suppliers, namely, speed of delivery, conformity of goods, the possibility of post-payment, financial standing, quality conformity, and the most economically advantageous price. The State Audit Office emphasises that the actions and decisions of decision-makers were not documented even in the slightest amount during the entire process because agreements with suppliers were made orally, by telephone, using the WhatsApp application, and the like. Therefore, decision-making is not traceable, and one cannot assess it by audit methods. It is possible that one could identify corrupt practices by operational methods. The State Audit Office has passed on all the information obtained during the audit to the Economic Crime Combating Board of the State Police, which has initiated a sector examination including searching for answers to the question of whether there is no collusion in the selection of suppliers.
During the procurement process, the National Health Service did not publish information on all tenders received either, as it published data on 65 suppliers only by indicating that they would extend the list. It limited the ability of the sector to follow and monitor the procurement process, which could reduce corruption risks and address public concerns.
At the same time, the State Audit Office appreciates the actions of the Emergency Medical Service and the National Health Service that organised quality testing of the samples under the shortage of personal protective equipment at their own initiative when the news spread about counterfeit products by involving universities, hospital laboratories, the Consumer Right Protection Centre, and the Health Inspectorate. However, they did not test all batches of goods.
Lessons learnt and consequences
One of the urgent issues that should be on the government’s agenda after the state of emergency is the National Civil Protection Plan, without which Latvia has existed for three years. The Ministry of Health also hesitates with the National Disaster Medicine Plan, which the Emergency Medical Service should update every year, currently. One has allocated the funding for the replenishment of the material reserves last time in 2018, but the new classification of state material reserves, which one should have approved by April 1 this year, has not yet been drafted. In its turn, the old one is no longer valid. Therefore, Latvia does not have such an essential document currently.