THE HSE PURCHASED ten times more ventilators than were necessary and was “seriously misleading” the Department of Health and Department of Public Expenditure in relation to its spending during the pandemic, according to the Comptroller and Auditor General.
The report from the Comptroller and Auditor General (C&AG), released today, also found that the HSE had purchased a significant amount of faulty ventilators but was advised by the Industrial Development Agency (IDA) not to cancel orders from those suppliers.
In late March 2020, during preparations for severe pressure on the health system, HSE clinical staff had estimated as part of its ‘surge capacity planning’ that an additional 326 ventilators would be needed.
Through purchases from its established suppliers of ventilators, the HSE was able to procure 581 ventilators — nearly twice the number deemed necessary.
In response to a proposal from the HSE, the Department of Health on 21 March 2020 sanctioned the purchase of 1,900 ventilators at an estimated cost of €73.5 million, an average cost of €38,700 per ventilator.
The C&AG’s examination was unable to find a business case prepared by the HSE to support its decision to purchase 1,900 ventilators.
Between 3 March 2020 and 14 April 2020, it can be identified that the HSE placed orders for almost 3,500 ventilators at a total cost €129 million — nearly twice the number approved by the Department of Health and over ten times the 329 ventilators deemed clinically required.
The HSE has stated paying an inflated price for ventilators or purchasing more than necessary was a better option than not having enough.
However, the C&AG refutes this point, saying that the health system would have been unable to deploy any additional devices beyond the projected requirement of around 326 machines.
“Even if double that number could have been deployed in the most extreme situation, the level of orders placed by the HSE would have been excessive,” the report noted.
The report details how the HSE sought out ten new suppliers of ventilators in order to rapidly fill its demand and was helped by the IDA in finding these new suppliers.
The HSE sent advance payments to these ten suppliers but were found to have only carried out due diligence checks on four of them.
The HSE also had no previous experience using any of the ventilator models being offered by those suppliers and quality issues began to emerge in the newly delivered ventilators, including some that had already been delivered to hospitals.
Performance tests completed by a third party on behalf of the HSE found that of a batch of 100 ventilators tested, 41 failed.
A further review by the Health Products Regulatory Authority of supplier documentation found that two models did not comply with the EU regulatory framework and that three models required further investigation.
Hospitals were advised not to put some models of ventilator into use and HSE Procurement was also advised to cease accepting delivery of the ventilators sourced from these suppliers, the report continued.
However, the HSE did not cancel the remaining orders it had placed with two suppliers for 365 ventilators at a cost of €6.8 million.
This followed advice from the IDA that the deliveries from the suppliers, who were manufacturers of devices, were on schedule and that as these were ‘sensitive’ supply lines, no interference should be made to the orders.
None of the total of 467 ventilators received from the new suppliers were put into clinical use in Ireland.
By May of 2020 the HSE had made advance payments to the new suppliers totalling €81 million, the C&AG found.
These payments were to secure orders from manufacturers of devices and intermediaries.
Following a subsequent cancellation of orders, the HSE received a number of refunds of advance payments, totalling €50.5 million.
The HSE is still pursuing refunds of €22.3 million for orders that were cancelled or where the ventilators received were deemed not usable, the C&AG found.
Expenditure of a further €8.1 million is considered to be unrecoverable, the majority of which (€6.8 million) relates to ventilators purchased that the HSE ultimately did not need and were donated to health authorities in India.
The C&AG’s report also found that the HSE didn’t include some financial information in its weekly expenditure report to the Department of Health and to the Department of Public Expenditure.
“The report only included expenditure for ventilators that had been delivered and did not include the payments in advance and refunds received from cancelled orders,” the report explained.
“This was seriously misleading and negated the effectiveness of the Departments’ oversight of the expenditure.”
The C&AG’s report concluded that the HSE did not follow all of the routine procurement steps in a direct negotiation process and did not set out the number of ventilators it required prior to orders being placed.
Most of the HSE’s new suppliers were acting as intermediaries, it was found, and were not involved directly in the manufacturing of the medical devices and had little or no experience in the supply of those devices.
The C&AG recommended that the Department of Public Expenditure should consider developing practical guidance for public bodies on the use of advance payments, as no such guidance currently exists.
The Cathaoirleach of the Committee of Public Accounts (PAC), Brian Stanley , has welcomed the publication and said that it raises a number of serious issues in the HSE’s procurement process.
Stanley stated that the Committee will consider the C&AG’s special report at its meeting on Thursday afternoon.
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