THE PREQUALIFICATION CRITERIA MAY BE LEGALLY CHALLENGED

May 07, 2014 Features / Columnists, Peeping Tom

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Three experts have been identified to examine the bids for prequalification status for companies wishing to supply pharmaceuticals to the government. These experts must not be made into political scapegoats if and when they prequalify the company or companies that everyone anticipates will be prequalified.
These experts are constrained by the criteria that they have to judge the bids on. The opposition has long held that these criteria are biased in favour of a certain local company which is believed to have had close ties with the Jagdeo administration. It is alleged that the prequalification rules are biased in favour of this company.
The experts who have been appointed are there to make a determination as to which companies will be prequalified. This determination has to be done, however, in accordance with a points system that is set by the government. As such, the experts are merely being asked to arrive at a decision based on rules that have been imposed on them. It is these rules which have been criticized by the opposition as being in favour of one particular company.
Critics of the rules point to the fact that the rules favour those companies that have local manufacturing capacity. It also gives a 10 per cent price advantage to locally manufactured goods, thereby erasing whatever price advantage cheaper externally manufactured pharmaceuticals hold.
The rules also favour those companies that have local warehousing facilities. But it does not end there. In spite of these advantages to locally manufacturing companies and to those with local warehousing, in order to be prequalified the successful company or companies must not just show they have the ability to supply the goods, but are required to acquire an 80 per cent score in the prequalification process.
This all but makes it impossible for external companies to have any chance of being prequalified. But the rules get tougher when it demands that the successful companies have a net turnover of over one billion dollars, have $500 million in assets and pay $50 million in taxes.
These rules ought to be challenged as being unfair. They are against the spirit of fair competition, which is the principle on which the liberalization of the procurement sector is based. Instead of encouraging competition, they actually shut out competition.
They are also in violation of regional and international trade laws and thus can be challenged. For one, international trade rules preclude any favouring of local companies over overseas suppliers. By favouring local manufacturers, the prequalification rules are in contravention of the principle of national treatment.
By favouring companies with warehousing facilities in Guyana it is doing the same, because this is not an absolute necessity. By granting a 10 per cent benefit to locally manufactured products, these rules violate the same principle. And by urging that companies have a certain turnover and assets and pay taxes in excess of $50 million, the prequalification rules are anti-competitive. These rules should be challenged and the case should be taken to the High Court, since Guyana has acceded to international treaties and conventions which are being violated by the prequalification rules.
This matter may also be raised with the local and regional competitiveness councils because as argued before, they are inconsistent with fair competition.
The opposition entities, which have complained about the unfairness of the prequalification rules, seem to have resigned themselves to the fate that there is nothing they can do unless there is a Public Procurement Commission in place. They are wrong on that score and they are wrong in the assumption that the Public Procurement Commission can and will improve the fairness of the system. There is nothing to stop the government from perpetuating these rules under the Public Procurement Commission.
But there are remedies available to challenge these prequalification rules. There is the remedy of a High Court challenge to the rules as being inconsistent with fairness and inconsistent with Guyana’s trade obligations under the World Trade Organization and the Revised Treaty of Chaguaramas. There is also the remedy of having this matter raised before the National Competitiveness Council and its regional counterpart.
The question is who will bell the cat. Do not expect the opposition to lead the way in doing so. They had an opportunity to force negotiations on this matter during the consideration of the Budget Estimates. They abstained.
Instead they gave the government a blank cheque when they did not disapprove of the allocations sought by the government for the procurement of medicines for the health sector. In so doing, they threw fair play a curveball.

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