THE PAC SHOULD EXAMINE THE PREQUALIFICATION SYSTEM

Jan 27, 2013 Features / Columnists, Peeping Tom

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All is not well with the procurement of drugs in the local health system. All has not been well for some time now.
However, instead of the government attempting to treat the aliment, its defence is to say that it has administered the right medication in accordance with the prescribed regimen and therefore it has acted properly.
The government is convincing very few with this sort of defence. The public by and large are not impressed by the attempts of the government to persuade them that the administration has not over the years favoured the New Guyana Pharmaceutical Corporation (New GPC) when it comes to the procurement of medicines.
The government is disingenuous in trying to have the public believe that because presently its sources supplies from the New GPC under a system of prequalification, that this proves that there is no favouritism towards that entity.
The government has a history of favouritism towards the New GPC; this is borne out by the evidence presented in the annual reports of the Auditor General. Those reports have revealed a worrying pattern of breaches by the government of the Procurement Act and all done in furtherance of granting huge contracts to the New GPC.
In 2008, the Auditor General in his annual report noted that the Georgetown Public Hospital Corporation paid the New GPC some 539.3 million dollars. Approval for payment was made utilizing the old Ministry Of Health Cabinet approval dated 25 November 2003, and there was no evidence to indicate that the relevant tender procedures were followed.
In 2009, the Auditor General reported that the Ministry of Health expended 1.884 billion dollars to purchase medicines and medical supplies. Of this, 1.414 billion was paid to the New GPC. The Auditor General observed that “The awards were however made on the basis of sole sourcing and not competitive bidding occasioned by public advertising. This therefore could not justifiably consider being in fulfillment of the tenets of the Procurement Act (2003)”.
In his 2010 report, the Auditor General noted that the Ministry of Health expended 1.546 billion for drugs and medical supplies. Of this sum, 1.252 B was paid to the New GPC. The awards, the report stated, were made on the basis of sole sourcing.
If these reports are not sufficient to establish the government’s favouring of that company, then the world is flat.
Faced with mounting criticisms about its procurement policies in the health sector, the government moved in 2011 towards prequalification of bidders for the award of contracts for medicines and medical supplies. And guess who ended up winning the prequalification process? The New GPC.
It is for the Public Accounts Committee (PAC) of the National Assembly, which is presently examining the Auditor General’s Report in relation to the procurement of medicines, to determine whether the prequalification process was biased towards the New GPC. That is something that needs to be closely examined, because the more you look at the historical data, the more two things stand out.
The first one is that the New GPC has over the past four years held a virtual monopoly on the supply of medicines to the health sector. The Public Accounts Committee should be worried about this, because for one company to enjoy such a dominant standing in the health sector means that there can be dire implications if that company for some reason should go bankrupt or encounter problems in meeting its contractual obligations to the government.
The second thing that stands out is that the system is clearly not engendering competition, because one company enjoys an overwhelming dominance in the sector.
As such, the PAC needs to closely examine the prequalification rules to see whether these unfairly discriminate against other bidders. In making such an assessment, the Public Accounts Committee needs to question why it is necessary in the first place for a company to have a manufacturing capability in order to be prequalified to supply medicines. Why is that a precondition for prequalification?
Why should any company, local or foreign, be denied or be disfavoured in the prequalification process, simply because that company does not have manufacturing capabilities? What does manufacturing capability have to do with the ability to import the medicines at competitive prices? And how many pharmaceutical companies in Guyana have manufacturing capabilities and are into tendering for the supply of medicines?
The answer is not hard to gauge. Nor is the truth surrounding this whole issue of the supply of medicines to our local health system.

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