‘Go after the officials’: Tribunal delivers watershed ruling on substandard and unlicensed PPE for Covid-19

In the first ruling on what must be done with substandard personal protective equipment procured during panic buying during the Covid-19 pandemic, the Special Tribunal ruled on Monday morning that firms should only be compensated for the value of what they had delivered and officials should be paying wasted costs.

The Tribunal added that the companies must be stripped of all the profits they would have made.

Judge Lebogang Modiba, presiding over the tribunal, declared the contracts of 29 suppliers of sterile surgical gowns to the Free State health department to be unlawful and irregular.

She  further ordered that the Special Investigating Unit (SIU) appoint an expert to assess the gowns that were delivered and file a report within 30 days.

Only three of 32 companies contracted to deliver sterile surgical gowns in terms of emergency procurement delivered ones that complied with standards and had the necessary certificates.

None of them was licensed, however. Modiba ruled that a licence was not necessary, as would be the case if they were distributing medicine, but added that their case fell at the hurdle that they did not supply goods that had quality certificates.

Modiba said an expert must determine the fair value of the gowns that were delivered and the companies can be reimbursed for this value.

She added that if the government department suffered any losses relating to these contracts, accounting officers are ordered to recover these costs from the officials involved in the process.

This is the first decision on the issue of whether PPE is included in the requirement of suppliers of medical devices to be bearers of a licence issued in terms of the Medical and Related Substances Act.

The SIU’s legal team argued that a surgical gown was a medical device and suppliers should be licensed. Modiba ruled that it should be a requirement. 

During 2020, shortly after the outbreak of the first wave of coronavirus infections in the country, procurement was centralised in the Free State treasury. A deviation from the standard procurement process was approved for the procurement of surgical gowns. More than 60 bids were received. 

“The procurement seemed to have gone very well until the Free State department of health started receiving complaints from several health service points that surgical gowns of inferior quality were delivered to them. The complaints prompted the Free State department of health to embark on an investigation of the complaints,” Modiba explained. 

A report concluded that only three of 32 successful bidders had delivered surgical gowns that complied with the standards set out in the tender documents. Only four suppliers had complied with technical specifications.

Because of the rate of disbursement to hospitals and a chaotic delivery process, the Free State health department had difficulty matching the rest of the surgical gowns to the bidders who supplied them because the large volume of gowns ordered and delivered made the validation process impossible. Most of the boxes in which they were delivered were not marked, making it impossible to identify the bidders who supplied and delivered them. Several bidders sourced the gowns from the same dealers, which only made the problem worse.

The Free State government had committed R39.1-million towards the gowns and had paid R9.5-million to some of the successful bidders. These were among those that had been accused of having delivered substandard gowns.

An investigator from the health department recommended that the non-compliant respondent entities be penalised R1 per surgical gown on the price quoted and be paid the difference invoiced. 

In subsequent legal action the SIU halted further orders, deliveries and payments pending its investigation. Having found several irregularities in the procurement process, the unit instituted the proceedings currently before the Special Tribunal.

The Free State government argued that there was nothing wrong with the procurement process, but they had been shown one gown and then sent another. 

The SIU’s legal team, however, argued that the government could not put up any evidence to this effect.

Modiba agreed. 

“At the very least, these samples ought to have been presented to the SIU as evidence that the samples complied with the technical specification. This was not done,” she said.

“In any event, even if the respondent entities had presented compliant samples, the failure to submit SANS certificates disqualified them from the bid,” she added.

According to the health department investigation the boxes received from the suppliers stated that they contained sterile surgical gowns but were found to contain “non-sterile isolation surgical gowns”.

The SIU team also found that some of the boxes in which the gowns were delivered were: not from any known reputable manufacturer in the medical environment; severely damaged and as a result the gowns were no longer sterile; the gowns were poorly made; not reinforced in the chest and forearm area and not packaged correctly.

Some were packaged in a normal household bag, some were bunched together and wrapped in plastic and some had labels handwritten on a piece of A4 paper. 

“The allegation by one of the opposing respondent entities that the surgical gowns it delivered to the Free State department of health have been distributed and used and were not part of the surgical gowns inspected by the SIU, is unsubstantiated,” Modiba said. 

“The fact that inferior surgical gowns were delivered casts doubt on the veracity of the assessment of the samples. It is improbable that defective surgical gowns would have been delivered if the samples that were assessed met the requisite SANS standard. Failure to verify the quality of the gowns delivered, to ensure that they are consistent with the approved samples, further casts doubt on the departments’ mindedness to the importance of quality assurance throughout the process. So is the appointment of the suppliers notwithstanding their failure to submit SANS certificates.”

Modiba found that the samples submitted by bidders, with the exception of three companies, were not tested properly.

“Their quotations ought to have been rejected... It was highly irregular for the Free State treasury department to appoint the [suppliers] notwithstanding their failure to comply with the technical specifications.”

Since the South African National Standards (SANS) certificate was the first line of defence, it was “hardly surprising” that the departments were now saddled with poor-quality gowns.

“The technical requirements for the surgical gowns [had the purpose] to ensure that bidders supply the departments with good-quality gowns that are fit for purpose and to eliminate the risk that any of the bidders supply the departments with gowns of a poor quality. Given that the department of health required the gowns for the treatment of patients infected with Covid-19, the importance of the quality of the gowns cannot be underplayed, especially considering the globally recognised highly infectious nature of the Covid-19 disease.”

Modiba said the Free State treasury department displayed reckless disregard for standards.

“That the Free State department of health could not identify the bidders who delivered non-compliant gowns reveals the inefficiencies in the management of the delivery and depot systems at the Free State department of health. These inefficiencies undoubtedly render the procurement process not cost-effective as required in terms of [the Constitution] because, with the exception of the gowns supplied by [three of the companies] the surgical gowns that were supplied by the remaining respondent entities cannot be used for the purpose for which they were procured. If follows that the costs incurred by the departments in respect of the non-compliant surgical gowns stand to be wasted.”

The judge added that since the department is unable to return to each bidder the gowns supplied by it, it would not be just and equitable to order all of them to forfeit payments made to them. 

“[The companies] are no longer insisting on full payment as they have conceded that just and equitable relief should be ordered,” she added, but emphasised that the companies should be divested of their profits.  DM/MC

 

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