CMST’s recent PPE deals must be stopped

If concerns from Human Rights Defenders Coalition last week on recent procurement decisions at Central Medical Stores Trust (CMST)—especially those on personal protective equipment (PPEs)—are anything to go by, then the contract awards that the trust has announced must not be effected until certain things are clear.

Moreover, the Public Procurement and Disposal of Assets Authority (PPDA) on Tuesday and Wednesday next week will be conducting disciplinary hearings on suppliers who were allegedly involved in mis-procurements in Covid-19 related procurements, including the infamous K6.2 billion scandal.

It is possible that some of the bidders to whom CMST recently awarded PPE contracts, including the 23 that are part of the K5.3 billion splash that the trust announced on May 12, might be on the list that could be debarred from supplying to Ministries, Departments and Agencies; hence, the need to wait for PPDA’s outcome of the disciplinary process.

I also worry that in the name of targeting micro, small and medium enterprises in the award of the K5.3 billion contracts, we could end up in a situation similar to the one encountered in the Affordable Inputs Programme (AIP) in which scores of such companies were awarded tenders to supply fertiliser under the initiative, but the majority failed miserably due to lack of financial and technical capacity.

Some of those companies could not even produce a bank bond, which was a strong indicator that not enough due diligence was done on the chosen AIP suppliers that ended up not delivering the goods.

In the end, it was the poor farmer who suffered because some got the fertiliser too late to apply while others could only get one bag. By the time government woke up to the mess and fired the non-performing suppliers out of AIP, it was too late for a good number of farmers.

It is one of the reasons agricultural output this year—despite quadrupling both the subsidy budget and number of beneficiaries—has only risen marginally, just around eight percent.

You can partly blame that on suppliers with no capacity, yet they still got the deals. This is my fear with the current wave of tender-dishing at CMST. While I commend government for supporting micro, small and medium enterprises; such a policy is not a license for ignoring the normal conventions of procurement because it can be very costly.

Unlike delayed fertiliser distribution that only affected yields, the goods that CMST buy from suppliers—drugs and medical equipment—are a matter of life and death and you do not experiment with people’s lives.

Remember that PPE is equipment that helps to minimise exposure to specific hazards. Some of these PPEs include respirators, masks and gloves, among others—all crucial saving lives.

That is why if CMST goes about dishing out contracts to companies whose financial viability it cannot vouch for; whose experience in similar procurements is suspect if not non-existent and whose record of probity is questionable, including involvement in mis-procurements, then CMST would be betraying the trust of Malawians who established it to buy from reputable firms that would do them no harm.

Given the large sums involved in the trust’s K5.3 billion deals—with some companies getting tenders valued at more than half a billion kwacha—it is crucial that the CMST make public a clear trail of documents to support the procurement decisions they made in these PPE deals.

I raise this because I am reliably informed that there were some serious gaps in the documentation supporting the bids but officials deliberately looked away, including Malawi Revenue Authority (MRA) and bank documents.

It would really be interesting to see the due diligence reports conducted on the successful companies because I am also told that some firms with low due diligence ratings were awarded contracts in the name of supporting micro, small and medium enterprises.

One just has to look at tax remittances by these companies to prove that they lack adequate capital for large deals and would either bring in players with dirty money from third-party funding sources made from previous dubious deals with government so that they clean it through these tenders or fail to deliver all together, leaving the people who should benefit from PPEs without the needed protection.

And this ‘gold rush’ into the PPE supply deals—if the procurements are not well scrutinised—could see criminal elements using the PPE suppliers and the broke winning bids simply for being used either as fronts for concealing money laundering or as windows for fraud.

The bottom line: The Financial Intelligence Authority (FIU), Fiscal Police, the Anti-Corruption Bureau and the Malawi Revenue Authority (MRA) must look into the financial history of the winning bidders to see if their incomes can support the value of the tender deals they have been awarded.