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Medical Equipment and Health Insurance Fund: Government’s Secret Conclusion and Invisible Procurements

15 Apr 2020
foto: Presidency of Serbia/ Dimitrije Goll
After a secret conclusion the government enacted on March 15, the National Health Insurance Fund of the Republic of Serbia halted public procurement of large quantities of medical equipment – masks, gloves, gowns, protective glasses and other items. Although procurements are no longer publicized, Suzana Vasiljević, an advisor to President Aleksandar Vučić, has told CINS that the procurement of ventilators and other medical equipment is going exclusively through this institution. While the government and the Health Insurance Fund are not answering CINS’ questions, Transparency Serbia’s Nemanja Nenadić says that hiding information is bad because it is about taxpayers’ money, but also about citizens’ trust in the government.

In the days ahead of the declaration of a state of emergency in Serbia, citizens were mostly preoccupied with news of coronavirus spread and measures the government would take to stop the epidemic.
It was exactly during those days that procurements passed under the public radar, the outcome of which would indicate the subsequent if not secret, then insufficiently transparent purchase of the highly necessary medical equipment.

The National Health Insurance Fund of the Republic of Serbia on March 12 and 13 launched two public procurement procedures.

The first was to result in the purchase of consumables – disinfectants, six million surgical masks, six million pairs of surgical gloves, six million disposable gloves, three million caps and three million shoe covers.

An announcement of launching the procedure states that health care institutions had notified the Health Insurance Fund of danger to the regular provision of health care to patients.

“(…) There is a disruption of delivery of vital consumables by the suppliers with whom [the institutions] have a concluded contract, given that delivery has been suspended until further notice, as a ’coronavirus’ epidemic was declared in the territory of PR of China as of December 31, 2019, and so operation was halted and a state of emergency was declared in the regions where the seats and factories of the subcontractors that manufacture the material in question are located,“ reads the announcement.

The second procurement was launched the following day, after the Government of Serbia declared COVID-19 an infectious disease. To prevent its spread, the Health Insurance Fund attempted to obtain, among other things, more than 132,000 masks with filters, nearly 33,000 single-use coveralls, more than 23,000 disposable gowns, the same number of protective glasses and a smaller number of face shields.

Both procurements, with an estimated combined value of more than 1.4 billion dinars or around 12.3 million euros, were to be carried out through negotiation procedure without an invitation for the submission of bids. This type of procedure is reserved for urgent procurements because it entails shorter deadlines.

Galenika Pharmacia, its daughter company Galenika Tehnoplast and MBS Tehno were set as potential bidders. Oliver Stanisavljević is the technical director of Galenika Pharmacia, but also the owner of MBS Tehno, which he said in a statement to a journalist of the Center for Investigative Journalism of Serbia (CINS) was out of operation. Stanisavljević assumes that the Health Insurance Fund planned to invite companies which “it has in its database, which have worked with them (the Fund) in the past, which were their suppliers etc.”

However, already on March 16, the day after the declaration of the state of emergency, the Fund suspended the procurements. The decisions of this institution read that suspension was preceded by the government’s conclusion labeled as strictly confidential – Conclusion SP 05 Number: 00-96/2020-1 of March 15, as regards the coronavirus. (suspension of 1st and 2nd pp)

After that, no procurement of this equipment was publicized on the Health Insurance Fund website.

Tour of a medical equipment storage facility in Krnješevci; photo: Presidency of Serbia/ Dimitrije Goll

Nemanja Nenadić, program director of the Transparency Serbia organization, assumes that by that Conclusion the government took a decision that deviated from the general public procurement regime during a state of emergency.

“I assume that the government decided to carry out procurement in a different way, by not applying the negotiation procedure, but rather by addressing vendors directly and buying the necessary goods from them without applying any further procedures,” Nenadić explained to CINS.

According to the Public Procurement Law, he added, the procurement procedure does not need to be applied if it needs to be carried out for the purpose of protecting citizens’ lives in cases of natural disasters. However, that exception should be interpreted very narrowly and applied only when there is no possibility for carrying out any other procedure without jeopardizing the life of the population, Nenadić pointed out.

He also says that the question is whether it was necessary to suspend the procurement procedure already in progress, and purchase the required goods through a procedure that does not entail the publication of information on the Public Procurement Portal.

Neither the government nor the Health Insurance Fund answered CINS’ questions about what exactly has been regulated by the government Conclusion and how Serbia is procuring equipment now.

The only information is coming from officials – predominantly from Serbian President Aleksandar Vučić.

Touring an equipment storage facility near Stara Pazova some ten days ago, Vučić said that 370 million euros had been spent on ventilators and other medical equipment.

“When I listen to the presidents of some big countries that have a population of 300 million or 400 million,

According to Official Gazette data, the Health Insurance Fund has since the start of the state of emergency received around 37.6 billion dinars or 320 million euros, on the grounds of use of funds from the current budget reserve. The money was transferred for the purpose of mitigating the consequences of coronavirus, without further explanation as to the specific purpose, and had initially been earmarked for the Republic Directorate for the Property of the Republic of Serbia, the Public Investment Management Office and various ministries.

when they say: ‘We’ve delivered three million masks’, well, we’ve transported more than 30 million masks into the country, and have 50 million more purchased. I’m talking about surgical masks, whereas epidemiological ones – we’ve dragged in roughly 13 million of them. Protective gloves – around 12 million,” Vučić said at the time.

Suzana Vasiljević, an advisor to President Vučić, in a reply to CINS claims that all ventilators and medical equipment are procured exclusively through the National Health Insurance Fund of the Republic of Serbia.

Oliver Stanisavljević partially confirms that, saying that even though procurement was suspended, Galenika Pharmacia is currently supplying masks to the Health Insurance Fund, along with “50 different companies [operating] in other areas.”

“It (procurement) was suspended due to the state of emergency and other forms of procurement. You see what is happening on television, the government has entered into the manufacture of masks and other protective gear,” Stanisavljević explains.

Regardless of statements conveyed by the media, Nemanja Nenadić says that the main problem is a lack of official information on what has been procured and at what price, and what else needs to be procured:

“That is very bad, not just from the standpoint of public procurement transparency and managing taxpayers’ money, but rather it is also very bad from the standpoint of trust between the authorities and citizens. That trust is a requisite for all actions of state bodies in the struggle against the epidemic to be successful,” says Nenadić.

The Fight for Ventilators

Ventilators, the piece of medical equipment extremely needed during the coronavirus pandemic, have long been a topic of public conversation. CINS published an article in mid-March on the official number of ventilators in hospitals in Serbia, while later we also checked what condition they are in.

The only public procurement of ventilators the media reported on was called by the Ministry of Health on March 11 and just two days later the job went to German-owned Drager Tehnika, from which 15 ventilators were purchased.

Nenadić says that this procurement shows it is possible to apply one of the procedures envisaged by the Public Procurement Law and for that to be relatively quick and efficient.

“There was competition there, too, and in the end it was paid less than originally planned,” he explains.

Ventilators were also procured from Chinese company AEONMED, which on March 25 announced on its website that over 100 ventilators were on their way to Belgrade.

“President of Serbia Vucic declared the emergency state of Serbia on 15th Mar. He asked for help from China motioned with tears in front of press,” reads the announcement titled “Dear Serbia, AEONMED is coming!”

On the Upitnik (Questionnaire) show on Radio Television of Serbia, Vučić said that Serbia had bought more than 2,700 ventilators, of which 573 had already been distributed to hospitals.

He has so far often pointed out that there is a big fight going on in the world over who will get to buy ventilators, that they are paid “in cash” and that Serbia is procuring them “semi-legally.”

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