Health service spending risks legal action, Minister warned

The Minister for Public Expenditure has raised concerns about the spending of €1.25 billion by the Health Service Executive on goods and services last year which had not been competitively procured.

The figure was contained in a confidential letter from Michael McGrath to the Minister for Health, Stephen Donnelly, warning about the spending in a manner that risks value for the public, exposes the State to potential legal action and falls short of the requirements of domestic and European law.

Mr McGrath said of this €1.25 billion, more than €111 million of non-Covid expenditure had been declared to be non-compliant with public-procurement obligations. He said €108 million in non-Covid expenditure “was declared to be awarded following a non-competitive process”.

Mr McGrath told Mr Donnelly the scale of non-competitive and non-compliant procurement practices in the health sector was “an area that requires significant focus”.

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It is understood HSE officials provided on a voluntary basis details of the spending on goods and services last year to the State's Interim Procurement Reform Board several weeks ago. It was part an exercise aimed at setting out the scale of the problem and the measures it was taking to deal with it.

On foot of this presentation, the board wrote directly to Mr McGrath, who in August sent the letter on the issue to Mr Donnelly.

Some health service sources maintained that the terms “non-competitive” and “non-compliant” should not be conflated. They suggest that non-competitive procurement, which can be defined as where a buyer either selects who to purchase from or restricts the bidding process, was routine.

Mr McGrath said there had been issues with the procurement of goods and services in the health sector for some time and this had frequently been raised by the Comptroller and Auditor General and the Dáil Public Accounts Committee (PAC).

The letter emerged as the PAC is scheduled to hold a hearing on Thursday on procurement by the HSE during the pandemic.

Earlier this month an internal audit 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 and none was used.

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 currently worth.

It is also 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. Spokespeople for Mr McGrath and Mr Donnelly did not comment on the letter.