Objective

To determine what steps the Department of Health (DOH) and the Office of General Services (OGS) have taken during the procurement process for medical equipment for public health emergencies to ensure usability of the equipment purchased and whether DOH and OGS have managed and maintained—in functioning condition—the inventory of the State’s medical stockpile. Our audit scope covered the period from January 2020 through June 2024.

About the Program

DOH’s Office of Health Emergency Preparedness (OHEP) is responsible for coordinating and managing all activities for public health and health care facility emergency preparedness. This includes planning for public health emergencies and ensuring emergency plans work in drills, exercises, and real life, such as during the COVID-19 pandemic. OHEP is responsible for purchasing, receiving, maintaining, and managing DOH’s Medical Emergency Response Cache (MERC), which is located at warehouses across the State and includes pharmaceuticals and medical supplies, equipment such as beds and ventilators, and personal protective equipment (PPE) such as masks and gloves. During emergencies, as needed, OHEP may distribute PPE or durable medical equipment (DME) from its MERC. For the purposes of this audit, we concentrated on DME that was necessary in response to the COVID-19 public health emergency, such as ventilators and X-ray machines. Unlike normal procurement circumstances, DOH was not involved in decisions regarding ordering supplies and DME during the onset of COVID-19. According to DOH officials, the “former Executive Chamber” was responsible for DME procurement decisions at that time, with direction from a consultant who, according to OGS, was responsible for projecting the quantity of DME the State would need to respond to COVID-19. During the public health emergency, based on paid vouchers and credit card transactions provided by DOH, we determined DOH incurred costs of $452.8 million to procure 247,343 items of DME. As of June 2024, DOH had 9,519 DME items stored in its warehouses, and 240,051 DME items were stored in the Division of Homeland Security and Emergency Services (DHSES) warehouses as of March 2024, for a total State DME inventory of 249,570. 

OGS Procurement Services is the State’s centralized procurement office. It solicits, administers, and manages approximately 1,500 contracts on behalf of State agencies and authorities, local governments, school districts, colleges and universities, and other qualifying non-profit organizations. Procurement Services also educates vendors and public purchasers regarding how to participate effectively in the State’s procurement process.

Key Findings

To compete for the purchase of medical equipment to protect the public health and prepare health care facilities during the onset of the pandemic, the State took steps to expedite its procurement process, out of alignment with OGS Procurement Services’ guiding principles. The former Executive’s chamber dictated the procurement orders, with (according to OGS) the quantity of DME projected by the consultant, and when the MERC received the procured DME, OHEP was often unaware of and unable to account for what had been purchased. Specifically, credit card transactions appeared to be an issue; from four out of five credit card transactions sampled worth $329,790, we found that DOH could not provide proof of delivery for 140 pieces of DME (e.g., ventilators) totaling $312,644. While factors beyond OHEP’s control initially contributed to OHEP being unable to confirm receipt of all DME procured during the pandemic, developing new guidance for future public health emergency disasters could provide the direction needed for staff to ensure transactions are recorded and communicated and purchases are received.

Based on paid vouchers and credit card transactions provided by DOH, we determined it incurred costs of $452.8 million to procure 247,343 items of DME and received 51 items donated by others or received from the federal government, for a total of 247,394 items procured during the onset of COVID-19 (as of November 2020). Of the total DME available for use (including pre-COVID-19 inventory), only 324 items were distributed during the public health emergency, and only three from the 247,343 DME purchased during COVID-19. This leaves a significant amount of DME purchased during the pandemic (247,340 items) still unused in boxes at warehouses, for which the State continues to incur contracted warehouse management costs. 

After the COVID-19 public health emergency ended, according to DOH officials, a Medical Stockpile Steering Committee recommended DOH retain 51,140 items of DME in its cache, of which 4,468 items (9%) should receive scheduled preventive maintenance, leaving almost 200,000 DME items without a strategic plan for utilization. Further, DOH stated it could not provide documentation supporting how the Steering Committee reached these decisions regarding how much DME to retain and preventively maintain. Therefore, we could not analyze the Steering Committee’s decisions and conclusions regarding specific DME and quantities of DME to be retained and maintained. Additionally, DOH has conducted surveys of the medical community, with facilities expressing interest in 24,585 DME items, but has taken limited action overall to reduce its stockpile. Reducing inventory that does not have a strategic plan could reduce State spending on warehousing unused equipment and assist the State’s medical community.

Early in the pandemic, DOH contracted with a vendor to perform initial inspections of the DME in the MERC warehouses, as well as preventive maintenance and repairs on certain equipment. That contract ended in December 2023, and DOH has not been able to secure another. As of December 2024, 4,036 (90%) of the 4,468 DME items recommended to have scheduled preventive maintenance were overdue. Missed preventive maintenance may affect product warrantees and risk additional costs to the State for repairs that could have been covered. In addition, failure to maintain DME increases the risk that equipment will need more costly repairs or will not be ready for emergency distribution or work as intended on patients in need.

Key Recommendations

To DOH:

• Maintain basic internal controls during emergency scenarios to ensure stewardship over State assets that address concepts such as conducting transactions in an ordinary manner, recording transactions, effective communication, and documenting receipt of purchases.
• Document and preserve the process and/or key factors used when making significant decisions, and keep documentation of key events, such as the Steering Committee’s recommendation of DME to be retained and to receive preventive maintenance.
• Develop and implement a statewide public health strategic plan to utilize surplus DME.
• Develop and implement a strategic plan for DME preventive maintenance so that it is ready and reliable for use during public health emergencies.

TO OGS:

• Develop and issue statewide guidance for State agency procurements during declared State emergency disasters in conjunction with the State Procurement Council.