Multi-billion$$$ drug contracts for New GPC…Govt. under pressure to scrap ‘biased’ selection process

Weeks after Government announced that it has selected a preferred supplier of drugs for its hospitals, there are now more calls for the decision to be overturned and a fresh selection held.

Former Auditor General, Anand Goolsarran

“Any new proposal developed should result in the creation of a level playing field so as to enjoy the full confidence of all stakeholders and to allay fears of bias.  Transparency, fairness, equity and competitiveness should be the watchwords. Every effort should also be made to avoid the outcome of any prequalification exercise resulting in a monopoly situation,” says former Auditor General, Anand Goolsarran.
Writing in a weekly column, recently, Goolsarran made it clear that there is strong evidence to suggest that the revised evaluation criteria for the prequalification for the supply of drugs and medical supplies were biased in favour of a particular local company.
That company is none other than the New Guyana Pharmaceutical Corporation (New GPC), a company that has close links with the present administration and former President Bharrat Jagdeo. Its principal, Dr. Ranjisinghi ‘Bobby’ Ramroop, is Jagdeo’s close friend.
The supply of pharmaceuticals to the Georgetown Public Hospital Corporation (GPHC) and to the Ministry of Health, has been a major chunk of spending for Government and has been growing over the years. This year, the allocations are well in excess of $5B (US$25M) with New GPC set to take the lion’s share.
Other bidders, including Ansa McAL Trading, have protested the stringent conditions set to select a pre-qualified company. They said it was virtually impossible for any company other than New GPC to be selected, because the conditions were designed to deliberately shut them out.
SCRAP
“Manufacturers and distributors who were not prequalified, therefore, have every reason to feel aggrieved. The results of the prequalification exercise have also resulted in a virtual monopoly situation and stifle competition,” Goolsarran said in his column.
“The way forward is for the entire prequalification exercise to be set aside and a fresh start made.”

New GPC’s Dr. Ranjisinghi ‘Bobby’ Ramroop

The accountant, who is also a prominent member of the Transparency Institute Guyana Inc. (TIGI), a powerful corruption watchdog body that has global linkages, noted that with some 70 per cent of the national budget being devoted to public procurement, the whole episode highlights the need for the activation of the Public Procurement Commission, comprising members who are technically and professionally competent to oversee Government’s procurement.
“As it now stands, the National Procurement and Tender Administration Board (NPTAB) is not perceived to be independent enough to oversee this process since the Minister of Finance appoints the members. The Board’s Chairperson also has a reporting relationship with the Minister who is a key member of Cabinet that approves of all major contracts.”
In the circumstances, a significant lacuna exists in the present arrangements. “Once the Public Procurement Commission is activated, that lacuna will cease to exist,” Goolsarran said.
Under the Jagdeo administration, New GPC had become the main supplier, accounting for over 75 per cent of the Government’s requirements. It also virtually displaced the overseas specialized agencies – PAHO/WHO, UNICEF, UNFPA and IDA – which had provided 90 per cent of the Government’s requirements.
BIASED
Under the revised criteria for prequalification as was put in place last year when the previous arrangements expired, interested suppliers had to scramble to qualify on a points system with a maximum score of 200.
Goolsarran argued that certain mandatory requirements were also included in the points system. He suggested that for future prequalification exercises, “these be separated out, and a two-stage evaluation carried out.

Former President Bharrat Jagdeo

“In addition, there was a lack of consultation with key stakeholders to secure the necessary buy-in of the new proposals. Had this been done, and the views of stakeholders were taken into account in formulating the new proposals, the allegations of bias might have been avoided.”
Among other things, suppliers had to prove that they had 30,000 square feet of storage with temperature-controlled environment.
With only New GPC fitting the bill, there had been arguments that the conditions were tailor made for that company.
“This requirement appears too stringent, especially for distributors who, based on orders received, would import pharmaceutical supplies and deliver them to their customers without the need for elaborate storage for any extended period.”
Goolsarran also pointed out that the requirements relating to financial capacity also appeared too stringent, as they would have placed small and medium sized suppliers as well as distributors in a position of disadvantage.
“Applicants for prequalification had to have an annual turnover over $1 billion; net assets over $500 million; at least $50 million per annum in corporate taxes; and over 50 full-time employees.”
In terms of previous experience, which carries a score of 40, or 20 per cent of the maximum score, the supplier was required to have more than seven years’ experience in supplying the Ministry without any adverse reports as well as a proven track record in handling contracts over $500 million.
“It is obvious that was the only company that was prequalified and would have met these requirements. They also pose a major entry barrier for new suppliers, and it would have been more appropriate if previous experience was not limited to supplying the Ministry.”
Goolsarran also pointed out that it is a fact that over the years, the Auditor General has commented adversely on the performance of the prequalified company without evidence of any action taken against it.
“For example, in his 2012 report, he reported that medical supplies valued at $58.583 million were not delivered to the Georgetown Hospital as at 30 September 2013 and the related bank guarantee had expired in April 2013. A similar observation was made in respect of the Ministry of Health where medical supplies valued at $164.603 million had not been delivered, and there were no bank guarantees in force to cover this amount.”
Another major problem that the former Auditor General found was that there was a failure by the NPTAB to communicate, as required by law, to the unsuccessful applicants, the grounds in which they failed.
“There was, however, no evidence that the six unsuccessful companies were informed of the results of the prequalification exercise. Needless to mention, the 23 July 2014 announcement by the Head of the Presidential Secretariat does not satisfy the requirements of Section 6 of the Procurement Act.”
One of the unsuccessful suppliers, Trinidad-owned Ansa McAl said that on July 25, last, it requested the Ministry of Health to review the decision.
Ansa McAl even claimed that its storage facility had not been inspected.
New GPC itself has been under investigation by Parliament after audits picked up a number of issues questioning actual deliveries and prices.