Investigation reveals procurement irregularities in health contracts

Gurjit Degun
10 January 2014

10 January 2014 | Gurjit Degun

The Global Fund has uncovered evidence of overcharging, collusion by suppliers and conflicts of interest in relation to the purchase of health products in Madagascar.

An investigation by the Office of the Inspector General - an independent oversight body at the organisation, which invests money to fight Aids, tuberculosis and malaria - examined procurement irregularities by recipients of Global Fund grants in Madagascar.

Following a review of $12.2 million (£7.43 million) in grants, the report found government agency Unité de Gestion des Projets d’Appui au Secteur de Santé (UGP) had been charged $329,609 (£200,760) more than the market price on contracts worth $640,146 (£389,904) for an anti-mosquito spraying campaign. There was further overcharging of $53,328 (£32,482) in other contracts worth $203,454 (£123,925)

The report said that vendors had "colluded among themselves and submitted bids that had not been prepared independently". The investigation also found UGP’s procurement unit official must have been aware of this, and did not declare one of the bidding companies belonged to a family member.

The report also found a different government agency, Centrale d’Achats de Médicaments et de Matériel Médical (SALAMA), had attempted to overcharge PACT, an NGO it was working for as a procurement agent. It attempted to charge the NGO $967,499 (£589,445) more than had been agreed for laboratory equipment and tests, a 22 per cent increase.

The Global Fund said: “The Global Fund is seeking to recover the misused funds as soon as possible and has suspended phase two of UGP’s grant. The majority of health products will be bought through a pooled procurement process, which reduces the risk of procurement irregularities along the supply chain. SALAMA is currently no longer a principal recipient of Global Fund grants.”

SALAMA general manager Tahina Andrianjafy said: “SALAMA never had the intention to overcharge PACT in the two contracts – $270,643 (£165,556) for laboratory equipment and $29,029 (£17,756) for rapid diagnostic tests. It was the consequence of the fact that the contract between SALAMA and PACT was signed before SALAMA knew the prices to be charged to PACT. SALAMA was obliged to wait for the advice from the Ministry of Health and PACT about the technical specification before sending the final offers.”

UGP did not respond to SM’s request for comment.

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