Procurement of Medicines and Medical Equipments

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Compliance Audit Paragraph on Irregular Purchase of Medicines & Equipment in Bihar
(CAG of India, 01-08-2013) CAG of India
Irregular purchase of medicines and equipment in violation of State Health Society's prescribed procedures resulted in excess payment of Rs 1.33 crore. This irregular purchase also resulted in imparting undue favours to those private suppliers.
Compliance Audit on Procurement and Distribution of Drugs, Medical Consumables and Equipments by Odisha State Medical Corporation
(CAG of India, 03-04-2021) CAG of India
Odisha State Medical Corporation Limited (OSMCL) is an independent procurement agency for the Department of Health and Family Welfare (H&FW), Government of Odisha. The key functions of OSMCL are timely procurement of quality medicines, surgicals, equipment, instruments, furniture, etc., through fair, transparent and competitive bidding process. Audit of procurement and distribution of drugs by OSMCL for the period 2016-19 revealed the following: • There was inordinate delay ranging between five and seven months in the finalisation of annual procurement plans for drugs and medical consumables and six to 17 months in respect of Equipment, Instrument and Furniture (EIF). Delay in finalisation of procurement plan impacted the procurement process and supply of drugs and medical consumables to health institutions. (Paragraph 2.1.2) • Against the indented/ approved quantity of 692.97 crore units, OSMCL could supply 336.94 crore (49 per cent) units of drugs and medical consumables to health institutions during 2016-19. Non-supply of indented quantity resulted in non-availability of essential drugs in health institutions which resorted to local purchase at higher costs and stock out of essential and critical drugs. (Paragraph 2.1.3) • Out of 3,471 Purchase Orders (POs) placed for supply of drugs and medical consumables, 791 (23 per cent) POs were partially executed and 252 (7 per cent) POs were not executed at all, which led to less supply of drugs and consumables to the health institutions. (Paragraph 2.1.4) • Deficiencies in stock management led to expiry of 349 kinds valued at ₹4.18 crore during April 2017 to May 2019. Expiry of drugs was due to ineffective monitoring of indents, distribution, consumption, stock position of drugs through e-Niramaya software. (Paragraph 2.1.6) • Short supply of drugs and medical consumables by OSMCL led to the health institutions procuring these items locally incurring extra expenditure. During 2018-19, test checked health institutions had incurred extra expenditure of ₹98.12 lakh (44 per cent) in procuring medicines worth ₹2.24 crore. (Paragraph 2.1.7) • OSMCL could procure only 43 per cent EIF against the approved quantity during 2016-19. As of June 2019, 19 per cent of the procured EIF had not been installed and were lying unutilised with different indenting agencies. (Paragraph 2.1.8) • Quality test reports of 22 per cent drug samples were received with a delay ranging between 16 and 244 days due to which the drugs received remained quarantined without supply to health facilities. Instances of non-replacement of sub-standard drugs by the suppliers were also noticed. (Paragraph 2.1.10) • Monitoring of distribution of drugs and medical consumables through the online inventory management system (e-Niramaya) was not adequate and effective. Lack of monitoring at the level of H&FW Department/ State Drug Management Unit/ OSMCL/ health institutions ultimately resulted in shortage of essential drugs and wastage of government resources due to expiry of unused drugs, supplied in excess. (Paragraph 2.1.13)
Failure to Claim Refund of Customs Duty Exemption by the Firm
(CAG of India, 04-04-2018) CAG of India
Jawaharlal Institute of Postgraduate Medical Education and Research, Puducherry failed to claim refund of customs duty exemption availed by a firm on imported equipment resulting in loss of ₹ 1.08 crore.
Procurement and Maintenance of Equipment in PGIMER Chandigarh
(CAG of India, 04-04-2018) CAG of India
The Institute lacked an established procedure in the form of a Procurement Manual that could ensure effective procurement management and timely acquisitions of equipment based on a holistic and systematic assessment of requirements. This resulted in procurements being made on an ad hoc basis, rush of expenditure towards the end of the financial year and delays in progressing of procurement cases. The Institute also failed to effectively invoke contractual remedies available to it where the supplier did not fulfil their contractual obligations with delay in levy of penalty amounting to ₹ 72.77 lakh for delay in supply or installation of equipment and incorrect calculation of downtime and non-recovery of penalty of about ₹ 1.46 crore for excess downtime with reference to the contractual terms. This undermined both the deterrent effect of the penal provisions as well as the Institute’s ability to enforce due performance of the contract by the suppliers.
Improper Procurement Planning Resulting in Idle Equipment
(CAG of India, 04-04-2018) CAG of India
Improper planning in procurement of equipment by National Institute of Nutrition as well as failure to enforce performance on terms of supply order by supplier resulted in equipment worth ₹ 1.52 crore lying idle and equipment worth ₹ 2.13 crore not being put to optimal use for more than five years.
Compliance Audit on Procurement of Machines Equipments and Accessories for Dental Institute RIMS Ranchi
(CAG of India, 04-08-2022) CAG of India
The Rajendra Institute of Medical Sciences (RIMS), Ranchi is an autonomous medical institute of the Government of Jharkhand (GoJ) under the administrative control of the Health, Medical Education & Family Welfare Department (the Department). A Dental Institute, with a capacity of 50 annual intakes in Bachelor of Dental Surgery (BDS) course, was started from the Academic year 2017-18 in RIMS for which 176 types of dental equipment worth ₹ 37.17 crore was procured. On the request of the Secretary of the Department, audit of procurement of equipment for Dental Institute, RIMS was conducted between July 2019 and May 2020 for the period 2014-15 to 2018-19 to assess whether the tendering process was regular and equipment were procured economically. Main audit findings are summarised below: 1. Against an original proposal of ₹ 5.80 crore for procurement of dental equipment as approved by the Governing Council, the Director, RIMS submitted detailed budget of ₹ 9.29 crore to the State Government. However, RIMS procured dental equipment valued at ₹ 37.17 crore during 2014-19 which was 400 per cent of the budget. 2. In a tender invited in January 2016, technical and financial evaluation was not done on combined scoring pattern as per terms of the NIT giving weightage to the technical qualification and financial offers without recording any reasons. The purchase and technical committees approved the lowest rates from the rates quoted by technically qualified bidders without giving scores at any stage. Against this tender, 20 items valued at ₹ 18.52 crore were procured. 3. Though instructed by the Health Minister, the Director, RIMS neither crossverified the compliance submitted by the accused supplier nor surveyed the market price or procurement price of similar equipment in other medical institutions prior to payment of outstanding bill of ₹ 5.40 crore and further procured equipment valued ₹ 11.40 crore from the same supplier without obtaining the approval of the Health Minister. 4. The Finance and Accounts Committee did not decide the tenders though required under the Regulations of RIMS. Instead two different committees (Purchase Committee and Technical Committee) having no defined role in the Regulations were entrusted with the decision of tender by RIMS. 5. There was absence of uniformity and transparency in technical evaluation of bids besides arbitrariness in deciding technical qualification in favour of a bidder with respect to procurement of basic and advance dental chairs, mobile dental van and 15 other items valued at ₹ 25.70 crore. 6. RIMS incurred avoidable expenditure of ₹ 14.25 crore on procurement of dental equipment (Chairs, Mobile dental van and RVG) compared to the rates given in the budget estimates. 7. Attachments and accessories with basic dental chairs, advanced dental chairs and Mobile Dental Van were either missing or of lower specifications. Two out of ten supplied Radiovisiography systems were of different model. RIMS also failed to impose penalty of ₹ 2.37 crore for delayed supply. 8. Dental equipment worth ₹ 12.02 crore supplied to the Dental Institute was not found entered in inventory and was thus fraught with the risk of misuse. 9. Equipment worth ₹ 1.94 crore purchased (August 2016) for laboratory and the operation theatre (OT) was found lying idle in the store as laboratories and OT had not been set up as of May 2020. Disinfectants worth ₹ 17.85 lakh purchased in August 2016 for use in the OT had expired.
Deficiencies in Quality Assurance while Procuring and Disributing Drugs in Karnataka
(CAG of India, 06-07-2018) CAG of India
Poor quality assurance by the Karnataka State Drugs Logistics and Warehousing Society resulted in distribution of non-standard quality drugs. Besides, the Society did not recover INR 2.11 crore being the cost of these non-standard quality drugs.
Avoidable Expenditure on Central Excise Duty by Karnataka Drugs Logistics and Warehousing Society
(CAG of India, 06-07-2018) CAG of India
Karnataka State Drugs Logistics and Warehousing Society failed to insert specific clause in the tender/contract document for availing concession on Central Excise Duty. This resulted in avoidable expenditure of INR 76.55 lakh towards purchase of ambulances.
Performance Audit on Procurement and Suply of Drugs in Central Government Health Services
(CAG of India, 08-08-2022) CAG of India
This Audit Report highlights the audit findings on procurement and supply chain of drugs by the CGHS and also the findings on reimbursement of claims made by Health Care Organisations (HCOs) by the CGHS.
Procurement of Disposables at Higher Cost in Karnataka
(CAG of India, 09-12-2020) CAG of India
Failure of the Karnataka Institute of Medical Sciences, Hubballi to finalise its tender for procurement of disposables within the scheduled time resulted in re-tendering and additional expenditure of INR 1.18 crore.
Fictitious Purchase of Implants and Equipments in Karnataka
(CAG of India, 09-12-2020) CAG of India
The Director of the Koppal Institute of Medical Sciences had issued cheques worth INR 64 lakh out of SCP/TSP funds for purchase of implants/ equipment which were never indented or supplied.
Procurement Supply and Utilisation of Drugs & Consumables and Machinery and Equipments in Himachal Pradesh (2015-2018)
(CAG of India, 14-12-2019) CAG of India
Assessment of demand for procurement of drugs & consumables and their distribution was neither scientific nor systematic, leading to instances of non-procurement, delay in procurement and non-availability of drugs; and nonissuing, short-issuing, excess issuing of drugs to health institutions. Drugs were purchased irregularly and without requirement resulting in their expiry. Ineffective quality control resulted in distribution of substandard drugs to patients. Procurement of machinery & equipment was not systematic in the absence of any inventory management system leading to cases of non-procurement and procurement without requirement, which resulted in items remaining unutilised/ idle and non-functional. Items were also found to be lying unutilised owing to non-posting of technical staff.
Undue Benefits to Suppliers Despite Short or Non Supply of Medicines in UP
(CAG of India, 19-08-2021) CAG of India
The Department failed to impose penalty of INR 6.17 crore on non-supply of medicines/drugs resulting in undue benefit to the suppliers coupled with concurrent risk of inadequate patient treatment.
Unfruitful Expenditure on Central Oxygen System in Uttar Pradesh
(CAG of India, 19-08-2021) CAG of India
Lackadaisical approach of the department resulted in unfruitful expenditure of INR 1.88 crore on procurement of Central Oxygen System, which could not be made operational even after a lapse of more than eight to ten years.
Avoidable Excess Expenditure in Procurement of MRI Scanners in Tamil Nadu
(CAG of India, 19-10-2022) CAG of India
Lapses on the part of heads of three Government hospitals caused delays in site identification for installation of MRI scanners. This resulted in an avoidable expenditure of INR 1.12 crore and delay of over one year in commencement of MRI scan services to needy patients.
Avoidable Expenditure Due to Non Execution of AMC for MRI Machine at Shillong Meghalaya
(CAG of India, 19-12-2019) CAG of India
Due to non-execution of Annual Maintenance Contract for maintenance of MRI machine, the Department incurred an avoidable expenditure of INR 1.50 crore towards its repair besides depriving the patients the benefit of its services for almost three years.
Non Levy of Penalty Towards Non Supply of Medicines in Madhya Pradesh
(CAG of India, 22-07-2015) CAG of India
Penalty amounting to ₹ 2.37 crore was not levied on the suppliers towards non-supply of medicines/material, in violation of contract clause.
Procurement and Distribution of Non-Standard Medicines in Madhya Pradesh
(CAG of India, 22-07-2015) CAG of India
Medicines procured from the suppliers were not tested by the Department before distribution. Medicines worth ₹ 65.95 lakh procured were found not of standard quality during test conducted by FDA.
Medical Equipment Not Installed in Manipur
(CAG of India, 23-07-2018) CAG of India
Medical equipment costing INR 3.68 crore was lying idle even after two years of their procurement.
Deficiencies in Procurement of Medicines and Equipments by J&K Medical Supplies Corporation
(CAG of India, 23-09-2020) CAG of India
There were delays in finalisation of rate contracts and consequent delay/ non-procurement of medicines/ drugs, instruments, machinery, equipment; thereby defeating the purpose of creation of the Company. Audit came across instances of non-levy of liquidated damages of INR 7.92 crore for delayed supplies, undue favour to a supplier by rejecting the seven bidders and procuring suture items at negotiated rates for INR 25.48 crore from the eighth bidder, non-operationalisation of 102 Ambulance Service in the State over a period of more than three years despite receiving INR 3.18 crore and non-observance of prescribed procedure for empanelment of testing laboratories leading to extra-expenditure of INR 9.47 lakh.

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