“There is no doubt that having stocks is better than not having them,” said Auditor General Janar Holm. “However, the National Audit Office didn’t hear any exhaustive explanations during the audit as to why the chosen target is to have stocks for one tenth of the population, which makes it look like the target was set at random.”
Although such a target level does not take into account the possible needs of any specific emergency or national defence crisis, and does not meet the target set by the Government of the Republic, neither the Ministry of Economic Affairs and Communications, as the owner of the stockpiling agency, nor the Ministry of Regional Affairs and Agriculture, which is responsible for the security of food supply, has so far proposed anything else. The Ministry of Regional Affairs and Agriculture has accepted the agency’s choices by default.
The Minister of Regional Affairs and Agriculture explained in his response to the National Audit Office that the objective set by the Government of the Republic was changed without the consent of the Ministry. The National Audit Office points out that the management board of the Estonian Stockpiling Agency informed the supervisory board of setting a lower level for food stocks than the target set by the Government of the Republic (due to the financial possibilities) already three years ago, and the food stocks have been created accordingly. The Ministry of Regional Affairs and Agriculture, which is not a member of the agency’s supervisory board, has also been aware of this.
“The authority responsible for ensuring the security of food supply should not place itself in the role of a silent opponent or an independent onlooker,” said Auditor General Janar Holm. In the course of the audit, the National Audit Office did not find that the Ministry of Regional Affairs and Agriculture, which is responsible for the security of food supply, had expressed its disagreement or made any proposals for adjusting the target level of food stocks and for financing the provision of more food stocks during these years.
The Estonian Stockpiling Agency has organised exercises on taking the food stocks into use, but no exercise for all parties involved in this process, including local authorities, has been organised. The ministries and the Estonian Stockpiling Agency find that local authorities have an important role to play in ensuring that food stocks reach those in need. The Ministry of Regional Affairs and Agriculture and the Estonian Stockpiling Agency have thought through and recorded the process of taking food stocks into use, from the preparation of the decision of the Government of the Republic to the transport of the prepared food stocks to the location specified in the decision. It has not yet been agreed how the food stocks will reach local authorities and the specific people in need.
Approximately two-thirds of the food stocks created by the stockpiling agency are flour. However, the contract partner provides half of this quantity as grains, i.e. essentially as raw material, meaning that the food stocks may not be immediately usable in a crisis. The Estonian Stockpiling Agency keeps the stocks as delegated stocks, i.e. stocks created and managed by an undertaking with which the agency has a entered into a contract.
The National Audit Office believes that it should be agreed how local authorities have to organise the distribution of food stocks and how food stocks should reach the specific people in need. This requires the preparation of a comprehensive plan, which would outline the roles, responsibilities and activities of all parties. The role of the local authorities in the distribution of food stocks also needs to be defined at the level of the law. The functioning of the system as a whole must also be tested in exercises.
In addition, the National Audit Office recommends that the Minister of Economy and Industry, in cooperation with the Minister of Regional Affairs and Agriculture, set a clear, measurable and achievable objective for the establishment of food stocks, which is also in line with the other measures of ensuring food security and the scenarios of the national defence action plan, and present the agreed clear task to the Estonian Stockpiling Agency to fulfil.
In the course of this audit, the National Audit Office also audited the stockpiling of pharmaceuticals, veterinary medicinal products, personal protective equipment, medical devices and supplies.
Healthcare stocks have been created in the required nomenclature and quantities, except for the stocks of pharmaceuticals, of which just over 90% is available. The Ministry of Social Affairs has not decided what to do about the rest. At the same time, the State Agency of Medicines sees the need to amend the list on which the stocks of pharmaceuticals are based and to increase, among other things, the quantities of active ingredients in the stocks that the Estonian Stockpiling Agency has been unable to obtain in the required quantities.
Whilst the process of taking the stocks of pharmaceuticals into use is clear to all parties and the stocks have been actually taken into use on three occasions already, taking the stocks of veterinary medicinal products, personal protective equipment and bought-out medical devices and supplies into use have not been comprehensively agreed or practised, i.e. from the decision to take the stocks into use until they reach those in need.
The National Audit Office recommends that the Minister of Social Affairs decide how to handle the pharmaceuticals in list of the strategic operation stockpile that have not yet been procured; in other words, how to ensure that there are stocks of all the necessary pharmaceuticals.
The National Audit Office recommends that the Chairman of the Management Board of the Estonian Stockpiling Agency and the Minister of Regional Affairs and Agriculture agree on the actions required in the event of taking the stocks of veterinary medicinal products into use and carry out a comprehensive exercise on taking the stocks into use.
Lisaks tuleks Eesti Varude Keskuse juhatuse esimehel ja sotsiaalministril korraldada isikukaitsevahendite varu kasutuselevõtu terviklik läbiharjutamine, sh jaotuskava koostamine, ning tagada, et väljaostetud meditsiiniseadmeid ja -tarvikuid saaks kasutusele võtta.
Background
The creation, management and taking into use of the state’s operation stockpile is regulated by the Emergency Act, according to which the operation stockpile is established to deal with or avert the threat of an emergency and to ensure the state’s security of supply, national security and the subsistence of the population. The creation and management of the state’s operation stockpile and the organisation of taking it into use is the duty of the Estonian Stockpiling Agency (AS Eesti Varude Keskus, EVK).
The activities and knowhow related to the state’s operation stockpile were consolidated and completely new types of stocks (e.g. pharmaceuticals) were created with the establishment of the Estonian Stockpiling Agency (in its current form since July 2021). Thus, the EVK has contributed to ensuring that the state’s security of supply in the case of possible crises is better than before.
The Ministry of Economic Affairs and Communications is the authority that exercises the rights of the shareholder of the state-owned EVK and sets the expectations of the owner. The Estonian Stockpiling Agency is managed and represented by a three-member management board, whose activities are supervised by a six-member supervisory board. Its members are representatives of the Government Office, the Ministry of Economic Affairs and Communications, the Ministry of Climate and the private sector.
The products belonging to the state’s operation stockpile may be bought out by the EVK or set up as delegated stocks. The Estonian Stockpiling Agency may hold the stocks that have been bought out itself or it may deposit them with a company. According to the Emergency Act, the deposit contract for bought-out stocks must include the exact address of the location of the stocks and an identification code. In addition, the conditions for depositing and renewing the stocks, as well as the technical conditions for the release of the stock from the place where they are deposited, must be agreed. The procedure for inspecting how the stocks are stored and the term of the contract must also be indicated in the contracts.
In the case of a delegated stocks, the EVK enters into contracts with the companies under which the company has the obligation to build and manage the stocks and the EVK has the priority right to buy the stocks. The EVK pays a monthly fee from its budget for the creation, holding, maintenance, renewal, accounting and reporting of the stocks delegated to the undertaking. In addition to the above, the contract for delegated stocks must also include the right of the EVK to acquire the stocks at any time. It must also be ensured that, when acquired, the stocks are made available to the EVK within the agreed timeframe. The contract must also set out the methodology for determining the price to be paid for the acquisition of the stocks.
The food stocks in the state’s operation stockpile have been created as delegated stocks. The healthcare stocks are largely created of delegated stocks, but the stocks also include products that have been bought out.
The Estonian Stockpiling Agency pays companies for the creation, management and reporting of delegated stocks once a year (approximate amounts excluding VAT) as follows: €459,600 for food stocks, €425,600 for pharmaceuticals, €85,300 for veterinary medicinal products, €106,500 for personal protective equipment and €26,300 for medical devices and supplies. In addition, the EVK pays the company providing storage and bundling services for storing the bought-out stocks of personal protective equipment and medical devices and supplies approximately €66,600 per year.
From the report “Effectiveness of the establishment and deployment of the stockpiles of the state”, the National Audit Office will publish a summary and an overview of the field. The full text of the report remains for internal use only.
