By Janine Erasmus
First published on Maverick Citizen
With the upcoming deployment of South Africa’s Covid-19 vaccine programme, Corruption Watch felt strongly enough about the possibility of corruption marring the process to write to National Treasury asking for clarification on aspects of the procurement process, given that emergency procurement thus far has been riddled with corruption.
As far back as April 2020, Corruption Watch warned Treasury that the lack of transparency or provision for monitoring emergency procurement posed a significant risk of corruption. By then, corrupt activities were in full swing and would only get worse.
This callousness – enriching one’s own bank account above all else – resulted in healthcare professionals being left without PPE and often succumbing to Covid-19.
Corruption Watch does not want to see this situation happening again.
We emphasised in our most recent letter that the vaccine rollout has two crucial components – the urgent matter of saving lives, and the public finance and governance aspects. We stressed that the two components are by no means mutually exclusive – the rule of law and compliance with the constitutional requirement that public procurement must be fair, equitable, transparent, competitive and cost-effective, can be achieved while being mindful of the imperative of saving lives.
Corruption Watch urged Treasury to hold a public briefing, akin to the health ministry’s briefing on the vaccine rollout, on how emergency procurement in general works, the specific procurement system to be applied, and the oversight measures to be taken to ensure compliance with regulations such as the Public Finance Management Act (PFMA), not to mention the rule of law.
We also requested Treasury to clarify its role – if there is one – in actively advising the national department of health (DoH) in the procurement process. We noted that this concern has been expressed among other civil society organisations.
With a media briefing on procurement and oversight, and clarification on its role in the process, National Treasury would go a long way towards addressing the concerns raised by members of the public and civil society regarding the lack of transparency in the proposed vaccine procurement process. Such transparency would also help to improve public trust levels.
Treasury came back to us with a comprehensive response, signed by director-general Dondo Mogajane and addressing our list of questions thoughtfully and rigorously.
Download the comprehensive Treasury response.
Government and the Gavi Alliance have entered into a committed purchase agreement for South Africa to access vaccines through the Covax Facility, signing a binding financial commitment for future payments to Gavi. This comes to around 85% of the total cost of about R22-billion, as the Solidarity Fund donated the 15% that was required up front.
This has already been included in the preliminary allocation letter to the DoH, the Treasury noted.
Treasury stressed that the Covax agreement was drawn up with care, with all parties ensuring that it was permissible within South African law and that all due compliance processes were followed in the interest of good governance and anti-corruption practices.
“PFMA provisions and related processes are in place to ensure accountability, sound financial management, and fairness in procurement.”
Besides the Covax purchase, the DoH has inquired with vaccine manufacturers about the possibility of purchasing vaccines from them directly. This includes the department’s imminent finalisation of an initial purchase agreement for 1.5-million doses from the Serum Institute of India.
Guidance and advice to the department of health
National Treasury informed us that it and the DoH are communicating closely on the vaccine rollout strategy. The two entities have also established a joint working group on Covid-19 vaccines.
In terms of procurement procedures, the office of the chief procurement officer (OCPO) has guided the department on “simple and swift procurement procedures and has already provided the necessary approvals to proceed with sourcing and procurement of vaccines”.
The OCPO has also advised on procurement procedures which need to be followed when a competitive bidding process is impractical, to ensure compliance with current public procurement legislation.
“Such legislation includes departures from treasury regulations, instructions or conditions in terms of Section 79 of the PFMA, procurement deviations allowed in Treasury Regulation 16A6.4, Practice Note 8 of 2007/2008, par. 3.4=3 and SCM Instruction 03 of 2016/2017 (Preventing and Combating Abuse in the SCM System), par. 8.5.”
We posed a number of questions on specific aspects of the procurement process, relating mostly to oversight, transparency and deviations from the procurement regulations, as well as the source of funding for vaccine purchases.
We asked if the DoH had applied for a deviation from supply chain management prescripts and whether Treasury had received other requests for deviations. We were informed that the department has applied for such a deviation, on the grounds that government “has a responsibility to implement intervention measures quickly and efficiently to minimise the negative impact of the Covid-19 pandemic on the health care of its citizens and the economy.”
The impracticality of holding a competitive bid process, since time is of the essence, was also cited.
The DoH also requested approval to deviate from normal procurement processes and procure vaccines from Pfizer, AstraZeneca, Moderna and Johnson and Johnson for a period of six months, as and when the stock is available.
As the vaccine has been identified as a key intervention in the response to Covid-19, Treasury approved the initial request for a deviation, as well as the application to approach the four pharmaceutical suppliers and the option to engage with other manufacturers as stock becomes available so as to secure vaccines.
“Given the severity of the second wave and its impact on the health system, access to vaccines is required to urgently vaccinate frontline health care workers,” Treasury said.
The DoH has undertaken to negotiate the best available prices with suppliers, and keep Treasury informed of the processes followed and the agreements reached with manufacturers. The department will also advertise a tender for these vaccines to secure supply in the longer term.
The OCPO has stipulated that the department must ensure compliance with regulatory requirements for registration of the vaccines with the South African Health Products Regulatory Authority, as laid down in the Medicines and Related Substances Act.
In addition, the DoH requested permission to use the single source procurement method to appoint the Biovac Institute for a short-term contract of three months to provide storage and distribution services for vaccines procured urgently to immunise frontline healthcare workers.
In terms of regulatory requirements in storing, transporting and distributing the vaccine, the department also requested approval to issue a closed bid to four specialist service providers – Biovac Institute, Imperial Health Sciences, DSV and United Pharmaceutical Distributors.
Treasury approved the appointment of Biovac for the three-month term, as well as the closed bid process to the four companies.
For the discussion of our other questions, download the letter to Treasury, and its full response.