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K36 billion contract raises eyebrows

It was part of Best Buy Malawi

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GIFT TRAPENCE

The Democratic Progressive Party (DPP) led government endorsed a seven-year contract for Victoria Pharmaceutical Industries Limited (VPIL) to supply syringes to Central Medical Stores Trust (CMST) worth $6,938,700 per year (about K5,204,025,000 each year).

But Farook Gani, who is one of the managers at VPIL, confirmed about the contract but was quick to say if we needed more details we should contact CMST.

“Yes it is true it has been signed. If you want some more information you can get it from Central Medical Stores Trust, Attorney General and the Ministry of Finance,” he said.

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He also said the contract was part of Best Buy Malawi Campaign as the syringes are locally manufactured.

The contract, which has raised eyebrows, has prompted Human Rights Defenders Coalition (HRDC) to report the matter to the Anti-Corruption Bureau (ACB) to investigate the matter.

HRDC Chairperson Gift Trapence confirmed writing ACB, saying they were shocked that government could sign a seven-year contract with a company.

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The contract which we have seen dated April 12, 2016 stipulates that the supplier presented to the procuring entity professional skills, personal and technical resources hence agreed to supply goods on the terms and conditions set forth in the contract.

“The supplier shall supply goods and related services and remedy any defects therein in conformity with requirements stipulated in appendices. The procuring entity shall pay the contract price to the supplier in consideration of goods supplied as may be payable under the provisions of the agreement.

“In the event that the procuring entity has in a particular financial year procured less than the goods prescribed under the contract for that financial year the obligation to procure the goods shall be carried forward to the following financial year to the extent of the difference,” reads part of the framework agreement.

According to a letter that HRDC has written ACB dated October 8, 2020, the human rights watchdog received allegations that the agreement was an unsolicited bid where VPIL approached CMST and stated that they are local manufacturers of pharmaceutical products which they could supply at cheaper prices than what CMST was procuring through third parties.

“CMST and VPIL then allegedly entered into a one-year framework agreement. It is further alleged that after this agreement had been signed, VPIL came back and stated that they had been misled by CMST in the discussions as the estimates that CMST had provided were based on the country’s total population and not on the sick population.

“Allegedly this meant that demand for syringes, for example, had been calculated at how many each person in the country would need and not on the estimated number of sick persons who would need the syringes. Consequently, following the discussion, CMST and VPIL decided to enter into a new framework agreement lasting seven years at US$6,938,700.00 per year. This framework agreement is based on the fact that VPIL would be manufacturing the goods locally,” reads part of the letter.

The contract also states that the procuring entity may at any time terminate the contract by giving notice to the supplier if the supplier becomes bankrupt or otherwise insolvent.

“In such event, termination will be without compensation to the supplier provided that such termination will not prejudice or affect any right of action or remedy that has occurred or will accrue thereafter to the procuring entity.

“Termination in compliance with market product quality standards requirements and entity’s own needs. The procuring entity by notice to the supplier may terminate the contract in whole or part at any time in compliance with prevailing market product quality standards requirements and entity’s own needs,” it reads.

ACB Director General Reyneck Matemba confirmed receipt of the letter.

CMST spokesperson Herbert Chandilanga said they have not seen the letter that HRDC has written ACB.

“We have not seen the letter but when ACB engages us we will cooperate,” he said.

HRDC has been vocal through its whistle blowing initiative, bringing to light different allegations of rot that happened or are happening in various government parastatals.

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