November 3, 2015
On 30 October, the Office of the Inspector General released a report on its investigation into the procurement and distribution of nearly two million bed nets in Burkina Faso which did not meet the requirements of the World Health Organization.
The existence of the counterfeit bed nets – they were not properly treated with insecticide – was revealed by the Global Fund in 2012 (see GFO article).
According to the OIG’s report, two local wholesalers, Liz Telecom/Azimmo and Disgefa provided counterfeit nets which they obtained from a manufacturer in Shanghai, China. The OIG said that the principal recipient, PADS (Programme d’Appui au Développement Sanitaire, created by the Ministry of Health) and the Global Fund Secretariat bear some responsibility for what happened.
The investigation was initiated by the OIG after it received a tip by email. The publication of the OIG’s findings was postponed pending the results of a U.S. criminal investigation by the USAID Office of the Inspector General and the U.S. department of Justice. (USAID also provided funding for the bed nets.)
In October 2009, PADS launched a tender, split into 13 lots, for 6.6 million DAWAPlus 2.0 brand-name insecticide-treated bed nets for a planned 2010 mass distribution campaign. The six winning bidders had to procure and deliver the nets in-country up to the district level.
According to the investigation report, only 50,000 out of the 1,876,000 bed nets delivered by Liz Telecom/Azimmo, and only 100,000 out of 869,000 bed nets supplied by Disgefa, met the WHO requirements. The total value of the substandard nets financed by the Global Fund was € 9 million.
According to the OIG, the PADS tender did not require that the bidders prove they had experience in executing large tenders nor did it require a declaration from manufacturers saying they had the capacity to produce the specific number of nets within the requested time-frame. The OIG said that Tana Netting, a company in Thailand which is the sole authorized manufacturer of the brand DAWAPlus 2.0 bed nets, did not, in fact, have the capacity to produce the necessary quantity of nets on time.
The OIG said that the requirement for local delivery of the nets to the district level “significantly impeded” the awarding of contracts to international bed net manufacturers (who could have provided a brand other than DAWAPlus).
The OIG found that the Secretariat did not exercise sufficient oversight of the PR during the tendering process. Nor did the Secretariat have a mechanism in place “that would trigger enhanced oversight, such as requiring the review and guidance of a procurement expert” for large-value procurements like the PADS tender.
As soon as the Secretariat was informed about the problem in 2012, the distribution of the bed nets was suspended and some actions were taken, including the creation of a task force to mitigate the damage; the procurement of 150,000 new nets to replace the counterfeit nets still in storage; and the acceleration of the planned 2013 mass distribution campaign.
“Enhanced” precautionary measures were also taken, as follows:
- health products for HIV and malaria had to be procured through the Fund’s pooled procurement mechanism, and TB products through the Global Drug Facility;
- an independent international fiscal agent was required to check all of the PR’s expenditures and advance payments; and
- a restricted cash policy was put in place in September 2013.
As a result of the OIG investigation, the Secretariat will now require pre-shipment testing for nets and will identify criteria to trigger enhanced oversight at all levels (i.e. Secretariat and implementers).
It is now up to the Secretariat to determine how much money should be recovered from the responsible entities.
The two suppliers and the PR (PADS) were given the opportunity to respond to the findings of the investigation. Liz Telecom/Azimmo did not provide a response. Disgefa responded, and the OIG made some changes to its final report to reflect the comments from Disgefa.
PADS stated that the PADS Tender was conducted in compliance with the public tender regulations in Burkina Faso and that prior to the launch of the tender, its terms were reviewed and approved by the Secretariat. PADS added that it didn’t have the means to test the nets prior to distribution.