AG's Report 2015: RM1.56m worth of contracts made by MOH bounded by LoA

PETALING JAYA: Five out of 45 medicine procurement contracts made by the Ministry of Health through tender or quotations worth RM1.56 million was not bound by a formal contract but guided by Letter of Acceptance (LoA).
The 2015 Auditor-General's Report (Series 2) revealed that although the management of medicine supplies in the ministry was generally satisfactory and achieved its objectives, there were some weaknesses that needed to be addressed.
It also revealed that 31 LoAs for procurement contracts audited at State Health Departments (JKN), District Health offices (PKD) and state pharmacy logistic affairs branches (CFLN) were signed after contract commencement date between six to 34 days.
It said that penalty claims due to medicines “late delivery under APPL (Approved Price Product List) and the Ministry’s procurement contract” were still pending and there was no penalty clauses provided in the event of a late delivery on medicine supplies made through direct purchases
The report added that acceptance of medicines in six locations were not verified at 100% capacity and the medicines’ stock layout in CFLN/PKD/MOH's pharmacy stores did not comply with the stipulated procedures.
It also revealed that the stores' security conditions were less than satisfactory as medicine stocks were kept in an unlocked room, with an unlatched back-door as well as stock level below 50cm from the ceiling limit was not observed.
In addition, there were a few stores in which their ceiling was cracked/broken/torn off, leakages in the air conditioning system, unavailable and expired fire extinguishers as well as empty boxes placed outside the stores' back doors.
The report also revealed that 15 out of 99 payment vouchers worth RM0.49 million in PKD Johor Baru and 67 out of 115 payment vouchers worth RM1.55 million in PKD Seberang Perai Utara were incomplete whereby Delivery Order and Goods Received Notes were not attached to the respective payment vouchers.
The AG's Report recommended:
» Responsibility for centres to adhere to procedures and regulations pertaining to store management;
» Ensure financial regulatory/procedures are observed in procurement, contract administration, payment management and enhance monitoring of suppliers' performance;
» Penalty clause should be given due ttention for the procurement on direct purchase; and
» Review storage suitability, stock arrangements and security levels to enhance an efficient store management and reduce the risk of medicine losses and damages.