Procurement expert, Kobina Ata-Bedu, has presented a critical analysis of the medical drone project, pointing out 18 issues he believes makes the service agreement problematic.
In an opinion piece, published in full below, he says his motivation for picking apart the entire agreement clause-by-clause is the President Addo Dankwa Akufo-Addo’s admonition to Ghanaians to be citizens and not spectators.
“We have accepted the challenge. We will hold them accountable,” Mr Ata-Bedu writes before launching into his analysis.
On the cost of the project, he writes, “Price: it is not a unit rate contract. It is a fixed monthly rate lump sum rate that grows. Dr Nsiah-Asare's [Director-General of the Ghana Health Service] $17 is an untruth. Check the pricing table. The price ranges from $18 - $29.33 at its peak. Do not be deceived, we will pay whether we fly the drones or not. Pls. Refer to 6.3 especially the last sentence in clause 6.3.”
Mr Ata-Bedu said last week that the controversial agreement does not offer value for Ghana adding that some clauses in the agreement do not make business sense.
The agreement was approved by Parliament by a majority decision on last Tuesday to allow Fly Zipline Ghana Ltd to use drones to deliver essential drugs and blood to health centres across the country.
Photo: Kobina Ata-Bedu
Read Ata-Bedu’s full analyses of the Service Agreement
The president said we should be citizens and not spectators. We have accepted the challenge. We will hold them accountable. I have reviewed the drone contract and I will be sharing clause by clause my views. Stand by.
Key Areas of Focus
1. Term: inconsistencies is clause 3 when read together with the definition of the service period. Whiles a section is counting the start date from the date of parliamentary assent, another is starting from phase one which is supposedly a much later date. Recipe for confusing.
2. Delivery Time: This is the most important ingredient in the service but there are no penalties for this performance measure.
3. Insurance: We failed to demand special insurance guarantees with minimum cover levels. Read this with the clause on indemnification and you will see that Zipline has a stroll in the park. The State bears all risk.
4. Price: it is not a unit rate contract. It is a fixed monthly rate lumpsum rate that grows. Dr Nsiah Asare's $17 is an untruth. Check the pricing table. The price ranges from $18 - $29.33 at its peak. Do not be deceived, we will pay whether we fly the drones or not. Pls. Refer to 6.3 especially the last sentence in clause 6.3.
5. Variation: The price is of today could change without recourse to parliament because the validity of the price provided has expired. There's no obligation to revert to parliament for ratification.
6. Taxes: Its designed that Zipline won't pay taxes. MoH is obliged under 7.4 to procure exemption for duty and tax. Failing which the pricing model is built to recover every tax over the life of the contract.
7. Currency: the MoH is in contravention of the Exchange Control Act. Why should a contract between two local entities be priced in $? Refer to 6.4.
8. Payment Terms. Very lax. Zipline can invoice 11k if only 5% of the Health Facilities achieve activation date ie. Readiness to receive supplies. We will pay $25k if 25% achieve readiness. At full operation, only 75% readiness should be achieved and we will be paying $88,000 every month per distribution centre. So multiply by 4. Meaning we shall be paying 25% of facilities which are not ready for services. Refer to my comments on 6.6 together with the on-time payment discount. There is an element of double jeopardy.
16. Schedule 3: very pertinent technical, safety, telecom questions need to be addressed. Refer to my comments.
17. Schedule 4: conveniently missing is the duty clawback provision in the pricing formula set out in clause 6. Smacks of dishonesty. What’s there to hide?
18. Did we do our own cost build up? Did we do some scenario analysis? How many years will all the infrastructure be depreciated over?
The 6 companies who could have been invited to the tender are 1. Zipline 2. Flirtey. 3. Matternet. 4. Horsefly. 5. Flytrex. 6. Whichever company operates the drone services for JD.COM.
So I ask again, what kind of requirements gathering did we do? What research did we conduct? National Security as said to have done due diligence. What was the ToR and Scope of Survey?