Frantic PPE procurement at height of Covid crisis to be reviewed

Recent reports raise questions over HSE’s spending and procurement decisions

  Medical staff  in the Covid emergency department at St Vincent’s hospital: the HSE spent €1 billion on PPE  rather than its usual €15 million budget in 2020. Photograph: Alan Betson

Medical staff in the Covid emergency department at St Vincent’s hospital: the HSE spent €1 billion on PPE rather than its usual €15 million budget in 2020. Photograph: Alan Betson

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On February 4th last year an FFP2 face mask could be bought for 50c. Within a week, as the Covid-19 pandemic loomed larger internationally, its price jumped by 720 per cent to €4.10 for each one.

Like other international health agencies, the Health Service Executive struggled to get vitally-needed protective equipment for staff and patients, along with the ventilators then considered essential to keep the seriously-ill alive.

Tens of billions of euro, pounds and dollars were offered internationally by bodies such as the HSE, sometimes to people who were barely known, if at all, to secure scarce supplies, lest such supplies disappear elsewhere.

Eighteen months on, in a much calmer environment, the decisions taken by Irish officials in frantic days in February, March and April 2020 are set to become the focus of Oireachtas hearings for months ahead.

Last Tuesday a HSE internal auditors’ report revealed the HSE had paid €81 million in advance for 2,200 ventilators to 10 previously-unknown suppliers at the start of the pandemic. Only 465 were delivered. None were used. Now, the HSE is suing to get a €35 million refund.

This audit is just the latest in a number of reports over recent months which have raised questions over how hundreds of millions was spent in the early weeks of the pandemic.

This week, Minister for Health Steven Donnelly tried to walk a fine line, seeking to put the controversy over the cost of the ventilators’ deal into the context of the time.

“They [the HSE] were being screamed at by the Opposition, by the Government, by the media, by everyone in the country to get these ventilators in at all costs,” he declared.

Minister for Health Steven Donnelly this week tried to walk a fine line, seeking to put the controversy over the cost of the ventilators’ deal into the context of the time. Photograph: Tom Honan
Minister for Health Steven Donnelly this week tried to walk a fine line, seeking to put the controversy over the cost of the ventilators’ deal into the context of the time. Photograph: Tom Honan

The HSE had to buy ventilators “in a war-like situation with countries scrambling to get these ventilators”, or else face the danger that people would die horrifically in hospitals, as was then happening elsewhere, he said.

Everyone understands that there was a crisis last year, says the chairman of the Dáil Public Accounts Committee, Brian Stanley of Sinn Féin, but the procurement decisions taken then must be investigated, and thoroughly.

Unpreparedness

His party colleague David Cullinane said the Oireachtas Health Committee should “investigate and examine pandemic unpreparedness which led to the HSE scrambling last minute for ventilators, IT systems and more”.

“The Health Service was chaotic before pre-Covid, and was overwhelmed very quickly. The ventilators are just part of it but cannot be brushed under the carpet either,” Cullinane declared.

Total doses distributed to Ireland Total doses administered in Ireland
12,143,670 10,222,511

Ultimately, however, when the history of how Ireland handled the pandemic is written, the chapter on procurement may not start with what was bought but rather how the spending took place in the first instance.

Shortly after his appointment last summer, Donnelly raised his concerns directly with the chair of the HSE board, Ciarán Devane, about the spending habits, which had led to a simmering row for months across Government.

Most of the HSE spending had not complied with official rules, leaving him at one point having to go to the Cabinet to get retrospective approval for €400 million worth of spending.

Several weeks earlier on June 17th, the Department of Public Expenditure told the Department of Health that the HSE had spent €371 million on personal protective equipment (PPE) that month, while the Government had authorised only €251 million.

Spending had to be authorised in advance, said the Department of Public Expenditure, insisting that a business case with options had to be submitted and that Ministers could not be left “with a binary choice” to accept or reject HSE plans.

Today, senior health service figures privately argue that the focus on the costs and the mistakes disregards the pressures and sense of crisis that faced HSE officials at the time.

Some countries closed borders and refused to allow the exports of ventilators, etc, while often it was a close run thing that supplies ordered by the HSE were actually delivered, and that health workers did not have to use bin liners as PPE, as happened elsewhere, or worse.

While there may be legitimate concerns now about contracts and due diligence, there are, as yet, no allegations in Ireland of cronyism and VIP inside tracks for companies with political connections, as has happened elsewhere – especially in the United Kingdom.

In the UK, the parliamentary spending watchdog last November found that PPE suppliers with political connections were directed to a “high-priority” channel and were 10 times more successful in getting contracts.

Future hearings in Ireland, however, on Covid-related procurement will centre on details set out in the HSE internal audit, a separate report carried out by consultants KPMG and comments by the Comptroller and Auditor General.

The KPMG report, essentially the audit ordered by Donnelly, reveals that the HSE spent €1 billion on PPE, rather than its usual €15 million budget in 2020, with staff unused to emergency purchasing having to make decisions quickly, and often with a lack of information.

While sufficient PPE was obtained and a significant new storage and distribution network established, the report suggests that traditional procurement rules were not always followed and in some cases due diligence could not be carried out.

The KPMG report compares what Ireland spent to other countries’ spending. The HSE paid more than the UK’s National Health Service (NHS) or its Australian counterpart for comparable PPE items.

The exception was for masks for which the HSE paid about 2 per cent less than the Australians. However, it says the HSE paid on average 163 per cent more than the NHS for masks.

Appeared legitimate

In one case, the HSE tried to get information from Ulster Bank through its parent company that particular vendors existed and verification that the bank details appeared legitimate.

Some of last year’s decisions are now becoming more clear. The HSE’s annual accounts report a “loss” of more than €370 million on PPE purchases, with the price paid last year now judged to be €310 million more than the stock is now worth.

Moreover, the HSE is to make provision of €64 million in its accounts arising from the “anticipated obsolescence” of protective suits which it bought last year, largely due to the fact that it now has 41 years of normal supply in stores.

The HSE has also made a bad debt provision of €42.5 million on the ventilators deal, with this week’s internal audit warning that 41 of the first 100 ventilators received from Chinese suppliers did not work. Orders were subsequently cancelled.

Far more ventilators were ordered than had been recommended by medical experts, while there was a lack of evidence about how new suppliers were identified, about the supervision of the contracts and that due diligence was not performed before payment in all cases.

It also suggests that flags were raised with the HSE by a consultancy firm in April 2020 in relation to two suppliers, identified as “D” and “F”.

“Supplier F had total revenues in the prior year of only $6.6 million and Supplier D was only set up in June 2019. The HSE committed to purchasing 316 units from these suppliers prior the consultancy firm’s warning. On April 7th, 2020, subsequent to the receipt of the email from the consultancy firm, and despite the concerns communicated, the HSE paid a further €8.24 million to Supplier F to complete their order.

“Of the total orders valued at €17.4 million placed with these two suppliers (€925,000 with Supplier D and €16.5million with Supplier F), none of the equipment ordered was delivered. [A total of ]€920,000 has been refunded by Supplier D and a refund of €16.5 million remains outstanding from Supplier F.”

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