In the Covid-19 crisis, in the process of supplying protective equipment by the health department, one-person decisions were made in several cases, there was a lack of transparency in explaining the evaluation criteria of suppliers, which leads to suspicions of possible corruption risk, the State Audit Office concluded. It has passed the information to the Economic Crime Control Department of the State Police, which has initiated a departmental investigation, including whether there is a collusion in the selection of suppliers.
IN SHORT:
- The SAO criticized the procurement of masks and respirators at the beginning of the Covid-19 crisis.
- The NSA and NMPD spent 5.7 million euros on the purchase of fees and respirators.
- Q: The new procurement procedure was delayed; everyone acted as they could.
- Until March 27, it was not known how many and what kind of protective equipment was needed.
- SAO: One-person decisions were allowed in the health department, creating a risk of corruption.
- The SAO has passed the information obtained during the audit to the Economic Crimes Department of the police.
- The SAO positively evaluates the actions of the NMPD and the NSS when inspecting the delivered goods.
The State Audit Office informed the media that the inspection assessed the process of purchasing personal protective equipment – protective masks and respirators – in the health department from the beginning of March to April, when it was taken over by the defense department. The Ministry of Health had 11.7 million euros available for the purchase of personal protective equipment from contingencies. Of these, health authorities, the National Health Service (NSS) and the Emergency Medical Service (EMS), spent € 5.7 million on protective masks and respirators, buying protective equipment from five suppliers.
Everyone acts as they know
As early as mid-February, the supply of defense 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 defense equipment nine days before the declaration of the emergency, but the Ministry of Finance and the Procurement Monitoring Bureau published guidelines on procurement during the emergency almost two months later. In accordance with the recommendations of the European Commission, derogations from the conformity assessment procedures of protective equipment were also allowed. Also in this case, the Cabinet of Ministers (CM) only on April 9 determined a new procedure for performing quality assessment procedures.
Nor do the auditors answer the question of why it took so long to develop these procedures.
“The audit reveals that no timely measures were taken in our country to make” facilitated procurement “procedures transparent,
nor were guidelines developed at the state level for procurement in a situation 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 remedies, which gave rise to suspicions of corrupt transactions. Although this was not an easy time for any of the decision-makers, it must be admitted that several decisions came too late, ”the State Comptroller Elita Krūmiņa emphasizes in a statement to the media.
Lots of unknowns in the validity of decisions
The first case of Covid-19 in Latvia was diagnosed on March 2, and already on March 3, the Cabinet of Ministers allocated 1.2 million euros to enable the NMPD to purchase medical equipment, personal protective equipment, and medicines for epidemiological safety. Part of this funding was also intended to replenish the state material reserves. However, given the critical situation in Europe, NMPD managed to purchase only 48% of the planned protective masks and 12% of respirators.
The NMPD and NVD relied primarily on health department calculations and needs when purchasing personal protective equipment. At the same time, the NSAs purchased protective equipment with a reserve so that the stocks would be available for as long as possible and part of them could be diverted to other departments. Until 27 March, it was also unknown how much and what kind of personal protective equipment was needed at the national level.
The SAO points out that the health department made purchases of protective equipment in circumstances when it was necessary to act quickly and decisively, but neither at the state level nor within the health department were the requirements for making purchases defined. Consequently, how to make purchases under the facilitation procedure was the sole competence and responsibility of the purchaser in question.
Assessing the acquisition process in the NSS, the auditors of the State Audit Office concluded that
in the health department, one-person decisions were allowed, thus creating a risk of corruption.
Although a working group on the procurement of protective equipment was set up by the NSA by oral order of the director, the auditors were unable to obtain any documentation on its activities. In addition, decisions on concluding contracts with specific suppliers have been taken by the director of the institution alone, 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 NSA for the selection of five specific suppliers, although the criteria for suppliers were set. These were: speed of delivery, conformity of goods, possibility of post-payment, financial situation, quality conformity and the most economically advantageous price. The State Audit Office emphasizes that during the whole process the actions and decisions of decision-makers were not documented even in the minimum amount –
the agreement with the suppliers was made orally, by telephone, using the app “WhatsApp” and the like.
Therefore, decision-making is not traceable and cannot be assessed by audit methods. Potential corrupt practices should be identified through operational methods.
The State Audit Office has passed on all the information obtained in the audit to the Economic Crime Control Department of the State Police, which has initiated a departmental inspection, including to search for answers to the question – whether there is no collusion in the selection of suppliers.
During the procurement process, the NSA also did not publish information on all bids received, but only on 65 suppliers, indicating that the list would be extended. This limited the industry’s ability to follow and monitor the procurement process, which could reduce corruption risks and address public concerns.
At the same time, the State Audit Office positively evaluates the actions of the NMPD and NSS in a situation where health protection services, on their own initiative, organized sample quality testing, involving universities, hospital laboratories, the Consumer Protection Center and the Health Inspectorate. However, inspections were not carried out on all batches of goods delivered.
SAO recommendations
One of the urgent issues that should be on the government’s agenda after an emergency is the State Civil Protection Plan, without which Latvia has lived for three years, the SAO points out. The National Disaster Medicine Plan, which must be updated annually by the NMPD, is also currently being delayed by the Ministry of Health.
Funding for the renewal of material reserves was last granted in 2018, but the new nomenclature of state material reserves, which had to be approved by 1 April this year, has not yet been developed. The old one is no longer valid, therefore Latvia does not currently have such a very important document.
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