Procurement bottlenecks – whose fault and can they be fixed?

Roger Bate and colleagues (Tren, Hess and Bate, 2009) are again challenging us to face up to problems with the procurement, supply and quality of malaria control medicines and commodities. Their article that appeared yesterday in Malaria Journal questions whether efforts to get supplies from the lowest price bidder pay off in the end.

Kenya and the Global Fund are the major focus of this analysis. Kenya’s Round 4 Malaria grant from GFATM has not had easy sailing and currently is rated at B2 – which means “Inadequate but potential demonstrated.” The grantee was plagued with considerable procurement and supply management (PSM) problems during Phase 1, when the Global Fund observed that, “Overall performance of this program has not been satisfactory to date.”

Prior to receiving approval for Phase 2 the Fund did note change: “The PR (had) considerably improved the PSM plan which was a CP (Conditions Precedent) for this disbursement and overall the revisions to the PSM plan address the majority of concerns raised at Phase 2 signature.” An innovation at address PSM was a ‘procurement consortium’ that would enable the Kenyan program to collaborate with experienced agencies and learn.  An observation by Amin et al., shows how this process was complicated by the way the Round 4 Malaria grant was set up initially.

The main challenge centered on how to manage the financial flows to make sure funds were availed in time for orders to be placed and processed. Theoretically, funds would flow from the GFATM, to the principal recipient (Ministry of Finance), then to the MoH (sub-recipient). The MoH would, after consultation with the national procurement consortium established to manage the tendering and ordering of commodities purchased with GFATM funds, place an order with WHO to forward the order to the supplier (Novartis Pharma AG in Switzerland).

dscn5837.JPGThis lengthy process was also highlighted by the Global Fund. “The PR (principal recipient) should also disburse directly to the Consortium, rather than through SRs (sub-recipients), in order to avoid excess bureaucracy and speed up the procurement cycle.”

The specific concern of Tren et al., is a recent effort by the Global Fund to ask some grant recipients to use international competitive bidding processes for certain drug purchases. In the case of Kenya “After awarding the tender for its annual supply of the anti-malarial artemether-lumefantrine to the lowest bidder, Ajanta Pharma, Kenya experienced wide stock-outs in part due to the company’s inability to supply the order in full and on time.”
psm-guide-front-page_page_01.jpgThe Global Fund itself states that, “The central objective of Global Fund procurement policies is to procure quality-assured products at the lowest price and in accordance with national and international law. Procurement must be conducted in a transparent fashion.” ‘Competitive procurement’ is mentioned in these guidelines, and WHO’s pre-qualification process for ensuring drug quality is stressed, though as Tren et al., point out, exceptions to the latter can be made.

Back to Kenya – Tren et al. have shown that delays in procurement have occurred with the Ajanta contract starting in 2008, but delays and stock-outs have been a common occurrence since the start of Global Fund malaria programming in Kenya.

One of the major procurement delays and inefficiencies, sending money into a country, converting it to local currency and then procuring from an outside source requiring re-conversion of the money, has been addressed partially by GFATM’s Voluntary Pooled Procurement (VPP). It was hoped that the labyrinthine procurement process among PRs, SRs and others in Kenya could have been ameliorated by VPP, but apparently this was not to be.

In the meantime Kenya has been turned down by the GFATM for all subsequent malaria grant applications since Round 4, in part due to poor performance linked with these procurement challenges.  Kenya’s only current GFATM malaria grant expires in less than 14 months. Somebody better get the procurement process right before then.

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