The Australian National Audit Office plans to assess the effectiveness of the Department of Health and Aged Care’s procurement activities to secure the supply of critical medical goods and services.
The audit is planned in response to decisions taken during the COVID-19 pandemic, including the former Government's agreement with CSL Seqirus, under which the Australian company is constructing a new manufacturing facility in return for a flu vaccine and other product supply commitment.
The company's construction of the new facility in Melbourne is in return for a $1 billion agreement for the 12-year supply of flu pandemic vaccines, antivenoms and Q-Fever vaccine.
According to the planned audit, "Following the privatisation of the Commonwealth Serum Laboratories (CSL) in 1994, the Australian Government relied on commercial contracts with the private sector to ensure that Australians have access to medical products of national significance.
"In a December 2020 report, the Joint Standing Committee on Foreign Affairs, Defence and Trade observed that the COVID-19 pandemic held lessons about supply chains for critical national systems such as health care, and recommended that the Australian Government use procurement in a deliberate manner to build and sustain sovereign capability in critical sectors such as medical manufacturing (Joint Standing Committee on Foreign Affairs, Defence and Trade, Commonwealth of Australia, Inquiry into the implications of the COVID-19 pandemic for Australia’s foreign affairs, defence and trade (2020).
"In late 2020, the then prime minister announced that the Australian Government had concluded a $1 billion manufacturing agreement with Seqirus, a wholly-owned subsidiary of CSL Ltd. The agreement committed Seqirus to the continued supply of products of national significance until 2036 and the development of a new manufacturing facility."
It then adds, "The audit would consider the Department of Health and Aged Care’s procurement planning, procurement of Seqirus and potentially other medical manufacturing suppliers, and contract management."
The audit will assess the different options considered for the development of sovereign health capability. This might have included a direct investment in constructing a medical manufacturing facility rather than an indirect investment via guaranteed procurement agreements.