Gerd Kerkhoff sees “total failure” when purchasing vaccines

The consultant and procurement expert Gerd Kerkhoff sharply criticized the purchase of vaccines by the EU Commission and the federal government in an interview with the Handelsblatt: “The EU should have granted 50 percent more for a delivery in December and 25 percent more for January,” said Kerkhoff and spoke of a “total failure”. The commission was “far too stingy”.

Kerkhoff attributes the fact that the lockdown in Germany is still ongoing and had to be extended again to failures in purchasing vaccines: “The procurement process was totally messed up. In terms of school grades, one would say: insufficient, six. One consequence of the errors is the extension of the lockdown until mid-February. “

Gerd Kerkhoff is one of the best-known German experts in the procurement of goods. He made the topic of shopping public more than 20 years ago. With various specialist books, Kerkhoff built a reputation for himself as “the nation’s award winner”.

Kerkhoff criticizes that politicians have made “capital mistakes”. He accuses the EU Commission President Ursula von der Leyen, Chancellor Angela Merkel and the Federal Health Minister Jens Spahn (all CDU) of not having taken on “no responsibility” for this. He also attributes this to the fact that the CDU is in the Bundestag election year: “Because we have a Bundestag election, nobody says: ‘It was me!’ In politics everyone now goes to the other and says: ‘It was all totally normal!’ ”.

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In contrast to the performance of the EU, Kerkhoff attests that Israel and the USA have better vaccine procurement: “They knew how to take a monopoly and even paid twice as much,” the procurement expert told Handelsblatt. “Today the Israelis are at 30 percent vaccination coverage. The Americans did better too. They also secured as much as possible, no matter what it costs, ”said Kerkhoff. The failure of the EU leads to “debts that our citizens will have to bear at some point”. If Brussels took responsibility, it would have to bear the cost of the failures. “That didn’t happen either,” he criticized.

Read the entire interview here:

Mr Kerkhoff, there are heated debates about vaccines. They were ordered too late and too little. Can you understand that?
Yes, politics has made major mistakes. The summer of 2020 was an epoch-making procurement process. Only with the vaccine can we stop the pandemic, that was clear to everyone. Like the head of purchasing in a large organization, politicians had to solve the problem of making the right product available in the right place in the right quantity – at a respectable price. She didn’t succeed.

Objection: In the summer, no politician knew which pharmaceutical company would be ahead with its vaccine.
But it was clear that we were not dealing with an atomistic market or a narrow oligopoly, but a monopoly. Whoever finds the right remedy is in a unique position. And that’s the point: in the case of a monopoly, price no longer matters. It’s all about ensuring the product.

Specifically: where were mistakes made?
In such a case, you have to group together those three candidates who are most likely to cross the finish line first. In the economy one would have ordered 60 million vaccine doses from all three. You know that this is a global product and cannot be a misrepresentation. The contracts would then have to be designed in such a way that only ten to 20 percent compensation payment is incurred if the goods are not accepted.

But that’s exactly what happened: The EU Commission ordered from various producers.
Yes, but she was way too stingy. We are talking about 30 euros per vaccine dose and thus a total expenditure of 5.4 billion euros. The EU should have granted 50 percent more for a delivery in December and 25 percent more for January. Corporations like Pfizer are listed on the stock exchange and want a return. The Ifo Institute has calculated that a week of lockdown will cost around 25 billion.

Politics is not free in such cases. There are procurement regulations and procurement guidelines in public spaces.
It would have been easier to change these laws under the umbrella of the Infection Protection Act than to restrict people’s fundamental rights.

Do you also criticize the fact that the European Union regulated procurement centrally? The individual states refrained from competing with one another in the procurement of vaccines. That would have driven up prices.
That is understandable. Large companies also outsource certain groups of goods, such as the vehicle fleet. But the contracts then state that the partner has to make high compensation payments if the whole thing doesn’t work. The failure of the EU leads to debts that our citizens will eventually have to bear. If Brussels takes responsibility, it will have to pay for failures. That didn’t happen either.

Which states did it better?
From the outside it is certainly Israel. They knew how to take a monopoly and even paid twice as much. Today the Israelis are at 30 percent vaccination coverage. The Americans did better too. They also secured as much as possible, no matter what the cost. The Biontech-Founder Ugur Sahin was also amazed at the EU’s procurement policy. When dealing with a monopoly, speed and insensitivity to price count. Anyone who enters into tough rounds of negotiations loses the time that others use to secure the scarce resource. Brussels was wrong here.

The Eastern European countries in particular urged that no “moon prices” be paid.
The procurement process was totally screwed up. In terms of school grades, one would say: insufficient, six. One consequence of the errors is the extension of the lockdown until mid-February. And that probably won’t be the end of it.

Aren’t you exaggerating here?
No. What particularly upsets me is that politicians are not taking responsibility. Because we have a federal election, nobody says: “It was me!” In politics, everyone now goes to the other and says: “It was all totally normal!” I disagree. And it may play a role that Ursula von der Leyen, Jens Spahn and Angela Merkel are in one party. Ultimately, the three at the top are just as responsible for this as Martin Winterkorn VW-Diesel scandal, although he may not have known about it.

The politicians argue that it has always been clear that there will not be enough vaccine available in the beginning. Overall, however, enough had been ordered. Everyone who wants to be vaccinated will be vaccinated by summer.
Lockdown costs 5,000 deaths each week. Vaccination every week would lower the death toll. The child fell into the well. A company like Pfizer is no bogus and has a precise production and sales plan. All one can say now is: we’ll be patient, everything will be there by summer. Even at Biontech there are always delivery bottlenecks due to current production disruptions. We can still be happy that the company is based in Mainz and not in South Korea.

You can’t blame politicians for failing to take precautions.
Of course, things get better up front. But that is no excuse that the politicians have created a bad starting position for the republic and Europe. This is a total failure. Politicians have not properly considered these complicated procurement processes.

How do you see the performance of Health Minister Jens Spahn in detail?
Every time he had to get something, it went wrong. In March and April, Spahn announced that it would buy masks for 1.2 billion euros. His people then walked around the world in a star shape and in the end found that they had ordered for a total of 5.6 billion.

What should happen now?
In August and September, the situation was extremely manageable, now you are a slave to your own, unprofessionally negotiated contracts. One would have to analyze these contracts to see what kind of corrections they provide. However, the documents are as good as invisible. The Members of the European Parliament have only received blackened contracts.

Is it looking better in other ministries?
You can go to any ministry and find out: they just can’t get it. My vision is that at some point there will be a procurement minister who will manage it cleanly for everyone at some point.

Thank you for the interview.

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