Was the tender tailor–made to favour one party?


NHM denies, facts say otherwise

Rejoinder by tiol Health Mission

(1) Nutritiol supplement is provided free of cost to all pregnt women admitted in government health institutions for child birth, under the program ’Jani Sishu Suraksha Karyakaram’ (JSSK) of the tiol Health Mission. The Mission firmly believes that the vast majority of these women, who are poor and economically disadvantaged, deserve a product of excellent market standing with wide acceptance throughout the country and there can be no compromise on such standards.

(2) The three years average annual turnover of a manufacturer has been specified as Rs 500 crores in the bid document to ensure that the manufacturer has sound fincial standing to produce and market products of high quality on a large scale throughout the country. The three years average annual turnover from sales of the particular product offered for supply has been specified as Rs 50 crore to determine that the product has wide consumer acceptance. It is to be noted that the turnover from a specific product is a significant indicator of its market standing and consumer acceptance. Any manufacturer of nutritiol supplement with a tiol brand/tiol standing is expected to have the expected standards as otherwise there is every possibility of rejection of the product by consumers even after providing it free of cost for lack of taste, flavour or proper solubility in water/milk.

3) The above two conditions on turnover paves the way for bidders with requisite credentials to participate in the bidding process and such conditions cannot be considered to be restrictive in any manner. There are many nutritiol supplement products available in the country but not all have wide consumer acceptance. The turnover conditions have been designed to attract bids only for a product with tiol standing which is to be provided free of cost to the poor and economically disadvantaged women who take admission in government hospitals for child birth.

4) It is mentioned in the news item that in accordance to CVC’s guidelines, if a work’s estimated cost is Rs 15 crore then the criteria of average turnover in the last 5 years should be Rs 15 crore. It is clarified that the CVC guidelines dated 17–12–2002 relating to Pre–Qualification Criteria, indicates that a contractor should have experience of successfully completing works of value equivalent to a specified percentage of the estimated cost. This criterion is meant for civil/electrical works. CVC has not specified any percentage for fixing turnover in respect of store/purchase contracts.

5) It is mentioned in the news item that while procuring drugs, NHM office insists on average annual turnover of just Rs 50 crore even if the supply is worth more than Rs 20 crores. It is clarified that average annual turnover of Rs 50 crores for manufacturer of drugs is insisted upon irrespective of the value of supply.

6) It is mentioned in the news item that shelf life of nutritiol supplement is specified as minimum 9 months from the date of manufacture though the shelf life for drugs is a minimum of two years. It would suffice to state that nutritiol supplements and drugs are two different and distinct product categories and comparison of shelf life is not teble.

7) It is also mentioned in the news item that the product offered – Mothers Horlicks of Glaxo Smith Kline by the supplier, has the lowest shelf life (9 months) compared to the other 4 bidders who have offered products with shelf life ranging from 12 to 18 months. It is clarified that the tender specified a minimum shelf life of 9 months and therefore there was no restriction of shelf life being more than 9 months.

8) With regard to revision in the clauses incorporated in the bid document on manufacturer’s turnover after the pre–bid meeting on 12–03–2015, it is to be mentioned that the prequalification criteria including turnover criteria have been approved by the competent authority and dilution of these conditions was not contemplated to ensure that the product proposed to be procured is of a reputed brand of tiol standing.

9) On the point that the same firm is getting the contract for supply of nutritiol supplement since the last four years, it is to be mentioned that the selection of a firm for supply has been done through an open competitive bidding process.

10) Regarding fat content in nutritiol supplement it is clarified that fat content of 10–13 gm per 100 gm was amended to 1.0–1.3 gm per 100 gm through a corrigendum. In a previous tender issued during the year 2012, the technical specifications were framed by a technical committee on 22–11–2011 wherein fat content was idvertently indicated as 10–13 gm per 100 gm but supplies were made at that time with the correct composition.

11) The news item stated that in a departure from the State’s "lahe lahe" work culture, NHM authorities evaluated five bids on 27–03–2015 – the last date for submission of bids and awarded order on 28–03–2015 itself. In this context, it may be noted that the purchase order for supply of nutritiol supplement was issued as quickly as possible on 28–03–2015 so that the needs of beneficiaries comprising of nearly five lakh pregnt women in government hospitals all over Assam could be met in a sustained manner and at the same time eble the Mission to utilize funds as committed expenditure for the fincial year 2014–15.

Rebuttal by The Sentinel to the rejoinder

(1) On the stand of the NHM regarding giving nutritiol supplement to pregnt women under JSSK program and their claim of procuring product of excellent market standing, it is apparent that for the said purpose certification such as GMP, ISO and license under Food Safety and Standard Authority of India had already been insisted upon. Despite possessing such certificates, the NHM successfully excluded all other bidders with excellent market standing and for that purpose the turnover criteria of Rs 500 crore for manufacturers and Rs 50 crore for a particular product was prescribed. Thus, though the other bidders as well as other reputed manufacturers in the country had excellent credentials, NHM deliberately manipulated the evaluation criteria to favour only one party.

(2) As regards the stand of the NHM of prescribing such high turnover to ensure fincial soundness, it is seen that such criteria is not only exclusiory but is a clear example of abuse of domint position by NHM so as to accommodate Glaxo Smith Kline. Imposition of such unfair and discrimitory condition has violated the provisions of the Competition Act, 2002 and has given undue favour to one party. It has also come to notice that out of all the bidders, only Glaxo Smith Kline (GSK)  could meet such criteria of Rs 50 crore from sales of a particular product. In other words, the very purpose of competitive bidding to save State’s revenue and to procure best quality product has been given a go–by.

3. With reference to point number 3, it can be said that the two conditions were definitely restrictive in manner. This is evident from the fact that other than GSK, no other company could participate in the tender process irrespective of its market standing, acceptability and average annual turnover. Consumer acceptance cannot be the sole criteria of ascertaining quality of a good, since certification from different authorities have already been insisted upon. Moreover, turnover does not necessarily indicate consumer acceptance. In fact, there are other players in the market having much more higher annual turnover than the GSK. The NHM being aware of the same, have incorporated Rs 50 crores turnover criteria from sale of a particular product, to which only GSK conforms. This shows that the tender was a mere eyewash and tailor–made just to accommodate GSK.

4. If the CVC guidelines do not specify any percentage for fixing turnover in respect of store/purchase contracts, then it is very strange that this particular contract fixes these criteria. This definitely points to a well–fabricated conspiracy to favour only one party, while restricting competition severely. On perusal of the CVC guidelines dated 17.12.2002, it appears that clause 3(i) and 3(u) thereof deprecate such practice of prescribing exorbitantly high annual turnover than the amount of work to be executed. The said guideline also speaks that such system gives considerable scope to malpractices, favouritism and corruption. Even for purchase contract, it is provided that no bidder should be denied pre–qualification/post–qualification for reasons unrelated to its capability.

5. In its clarification regarding procurement of medicine with much lesser annual turnover, NHM has accepted the fact that it is adopting two different standards of procurement. In case of nutritiol supplement, turnover criteria seem to be the only yardstick, which they are not using for medicines. From their own stand, it is revealed that by not incorporating such criteria, the NHM has allowed sub–standard quality medicine to be supplied. If both drugs as well as nutritiol supplements are for the well being of the masses –then why this discrepancy in the tender for nutritiol supplement only?

6. They may be different and distinct products but they are both related to the health and wellbeing of the poor and economically disadvantaged people. In fact, shelf life of nutritiol supplement should be more than 9 months as poor women often tend to hoard nutritiol supplements. Moreover, it is a strange coincidence that only GSK products have nine months shelf–life while all products had 12 to 18 months. The NHM has failed to show any reason for fixing the lowest shelf–life of 9 months, which leads to the only possible conclusion that such prescription, is only to accommodate the GSK.

7. In reference to point No. 7 – The fixation of these 2 criteria (i) turnover of Rs 50 crores from the sale of offered product (which amongst all the bidders only GSK had) and criteria (ii) shelf life of 9 months (which is lowest and is the shelf life offered by only GSK products) shows that these two criteria were deliberately, consciously incorporated in the tender document to favour one party.

8. During the pre–bid meeting on requests being made by the intending bidders, the tender committee itself recommended that the annual average turnover of the manufacturer should be on the overall basis and not on the offered products. This was in keeping with the opinion of all the bidders, except GSK who was the only company to fulfill the criteria of average annual turnover from the offered product i.e. Rs. 50 crore. But the Mission Director revised this on the pretext of ensuring product quality. In the process, several reputed bidders such Nestle, Abbott, Wockhardt got excluded from the process and thereby the very purpose of competitive bidding was compromised. It has also come to light that in the previous bidding process, there was no annual turnover prescribed and turnover in respect of a particular item was fixed at Rs 15 crore for supply of nutritiol supplement worth Rs 10 crore. In the said process also, GSK was awarded with the contract and in order to ensure further supply by GSK, such unfair and discrimitory criteria has now been imposed in the present process, which also indicates collusion with the authorities. The reason for such hike in turnover criteria is yet to be justified.

9. In reference to the point No. 9 – "On the point that the same firm is getting contract for supply of nutritiol supplement since last four years" – this has happened because the tender process, including the eligibility criteria, has openly favoured a single company, blatantly violating the norms of competitive bidding.

10. In reference to point No. 10 – "Regarding fat content in nutritiol supplement" – by giving wrong specification,  NHM killed competition, as wrong specification prohibited other companies from bidding, as they could not meet the eligibility criteria of fat content 10–13 gms.

Moreover, the error was amended by a corrigendum dated 25.03.2015, and immediately thereafter on 27.03.2015, the bids were received and evaluated and the work was awarded on 28.03.2015. The above position leads to the conclusion that no reasoble opportunity was given to any other intending bidder who conforms to such amended criteria. Secondly, the plea of idvertence by an authority such as NHM, which was allowed to continue for three years, is beyond any justification. Had the NIT disclosed such amended criteria, many other bidders would have participated.

Moreover, "in the previous tender issued during the year 2012, fat content was wrongly given as 10–13 grams per 100 gms" – many reputed companies didn’t participate as they didn’t meet the specification, but GSK not only participated but also supplied the nutritiol supplement with correct composition.

Complaint to PMO

A complaint was lodged with the Prime Minister’s Office July this year regarding the discrepancies in the tendering process. The PMO forwarded the complaint to the NHM. The Sentinel reproduces the letter sent by the Senior Statistical Officer (NHM) of the Union Ministry of Health & Family Welfare to the State’s Principal Secretary (Health) on September 15 last:

"Please refer to complaint of Sri Piklu Kumar Neogi dated 17.7.2015, PMO Reference no. PMOPG/D/2015/0172580 dated 30.07.2015, Grievance no. PMOPG/D2015/0172580 dated 29.7.2015 and PMOPG/E/2015/0041950 dated 25.7.2015 regarding above cited subject (copies enclosed).

It is stated in this reference that Gol guidelines under JSSK do not recommend/ support Nutritiol Supplementation to pregnt women and no such guidelines have been issued by the Government of India.

It is therefore requested that the matter may be seen for appropriate action at the earliest under intimation to the ministry."

Surely the NHM owes a reply to the PMO’s directive.

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