Former Auditor General Anand Goolsarran says that the Government’s reliance on a Cabinet decision of 2003 for prequalification of a major pharmaceutical company for supply of medical drugs at the expense of other suppliers is not consistent with the Procurement Act of 2003’s criteria and methodology for prequalification.
He wrote about the subject in a column in the Stabroek News on January 28 after a series of public comments in the press and elsewhere about the propriety of Government’s prequalification of medical drugs from New GPC Inc, a company which is a part of the Queens Atlantic Investment Inc (QAII).
New GPC Inc had been since 2005 the main supplier of drugs to the Georgetown Hospital and the Ministry of Health, to the tune of $13 billion between then and 2011. This according to analysts comprises 81 percent of the drugs supplied to the two entities for the period.
These supplies have been based on a Cabinet decision of 2003 which Goolsarran said should have been disused with the passage of the Act. Goolsarran said that Government’s utilisation of the Cabinet Decision is a usurpation of the role of the National Procurement and Tender Administration Board.
“The only involvement of the Cabinet under the Act is the offer of ‘no objection’ in relation to the award of contracts in excess of $15 million. The Cabinet’s decision on the procurement of drugs and medical supplies from 2004 to the present time can therefore be viewed not only as a usurpation of the authority of the NPTAB but also a violation of the Procurement Act 2003,” Goolsarran said.
Act states in Section 28 that procurement may be undertaken using the sole source method where goods, services or works are only available from a particular supplier or contractor by virtue of their highly complex or specialized nature, or where the supplier or contractor has exclusive rights to these goods, services or works.
It said the procuring entity shall make a decision with respect to the qualifications of each supplier or contractor submitting an application to prequalify. It said that in reaching that decision, the procuring entity shall apply only the criteria set forth in the prequalification documents.
It says that the procuring entity shall promptly notify each supplier or contractor submitting an application to prequalify whether or not it has been prequalified and shall make available to any member of the general public, upon request, the names of all suppliers or contractors that have been prequalified. Only suppliers or contractors that have been prequalified are then entitled to participate further in the procurement proceedings.
According to the Act, the procuring entity may require a supplier or contractor that has been prequalified to demonstrate again its qualifications in accordance with the same criteria used to prequalify such supplier or contractor. It said that the procuring entity shall disqualify any supplier or contractor that fails to demonstrate again its qualifications if requested to do so.
Writing in a recent column on this newspaper, Goolsarran said that if the criteria in the 2003 law were to be applied, drugs and medical supplies would not qualify for prequalification. A system of advertisement, pre-qualification and competitive bidding from pre-qualified suppliers would have been more appropriate, as was done prior to 2005.
Any procurement of drugs and medical supplies using the sole source method, although approved by the Cabinet, apart from violating the Procurement Act, will lack the requisite degree of transparency and accountability that is associated with the operations of government,” said Goolsarran.
In elucidating, Goolsarran said that private sector entities procure goods and services without advertisement and competitive bidding with usually in-house arrangements for comparing prices before proceeding with the procurement.
“However, private sector companies exist to make profits, and there are numerous incentives for company officials to ensure that profits are maximised. Managers are also given a significant amount of autonomy and flexibility to function in the furtherance of the company’s stated objectives,” he said.
“Governments, on the other hand, do not exist to make profits but rather to render an economic, efficient and effective public service, using taxpayers’ money,” he said. “It follows that public accountability has to be far more rigorous and requires the highest degree of transparency and accountability. This is why specific legislation and constitutional safeguards detailing the procedures to be followed are so vitally necessary to ensure that taxpayers’ funds are used wisely,” he said.
Goolsarran said that there is no parallel in the private sector, as each company has flexibility to determine what is in its best interest, “bearing in mind that if shareholders are dissatisfied with the company’s performance, there could very well be a change in the management structure.”
He noted that the 2003 Auditor General’s report made reference to the purchase of drugs and medical supplies for the Georgetown Hospital and the Ministry of Health from overseas suppliers through selective tendering as approved by Cabinet decision of May 1997. “Given that six years would have elapsed since the Cabinet made its decision, the report recommended that every three years there should be advertisement internationally for the pre-qualification of suppliers,” he said.
