assessment of procurement system & capacity of health department, khyber pakhtunkhwa

8/10/2019 Assessment of Procurement System & Capacity of Health Department, Khyber Pakhtunkhwa

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TRF is funded by UKaid from the Department for International Development and AusAID, and managed by HL SP

Assessment of the Procurement System and

Capacity of the Health Department

December 2012

Khyber Pakhtunkhwa



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Table of Contents1 Acknowledgements................................................................................................ iii2 Abbreviations & Keywords.................................................................................... v3 Executive Summary................................................................................................ 1

3.1 Strengths & Weaknesses of the Procurement System of DoH KhyberPakhtunkhwa……………………………………………………………………....

14 Background 5

4.1 Technical Assistance…………………………………………………………….. 54.2 Terms of Reference (TORs)………….............…………………………………. 64.3 Organizational Structure of Health Department, Khyber Pakhtunkhwa…….. 64.4 Procurement Entities of Health Department Khyber Pakhtunkhwa…………. 84.5 Procurement Practices in Health Department, Khyber Pakhtunkhwa ……… 9

5 Section-1: Situational Analysis & Assessment of Existing ProcurementProcedures and Procuring Entities of Health Department KhyberPakhtunkhwa 125.1 Assessment Methodology.............................................................................. 125.2 Introduction of Factors Assessed under the Methodology............................. 135.3 Sampling Statistics....................................................... .................................. 135.4 Limitations & Constraints........................................................... ..................... 145.5 Summary of the Assessment Scores……………..……………………………..

145.6 Pillar-I: Legislative and Regulatory Framework..................................... 19

ndicator-1: Public procurement legislative and regulatoryframework complies with applicable obligations withregard to national and internationalrequirements……………………................................ 19

ndicator-2: Existence of implementing regulations anddocumentation…………………………………………. 43

5.7 Pillar-II: Institutional Framework & Management Capacity……… 49Indicator-3: The public procurement system is mainstreamed

and well integrated into the public sectorgovernance system.................................................. 49

Indicator-4: The province has a functional normative and/orregulatory body…….………………………………….. 56

Indicator-5: Existence of institutional development capacity....... 56

5.8 Pillar III: Procurement Operations and Market Practices………………...

60Indicator 6. The provincial procurement operations andpractices are efficient ………………………………… 60

Indicator-7: Functionality of the public procurement market…… 65Indicator-8: Existence of contract administration and

dispute resolution provisions………………………… 705.9 Pillar IV: Integrity and Transparency of the Public Procurement

System........................................................................................................... 76Indicator-9: The province has effective control and audit

systems…………………………………………………. 76ndicator-10: Efficiency of appeals mechanism …………………… 80

ndicator-11: Degree of access to information…………………….. 84Indicator-12: The province has ethics and anticorruption

measures in place……………………………............. 85



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6 Section-II: Supply Chain Management of Pharmaceuticals in the HealthDepartment……………………………………………………………….. 91

7 Section-III: Assessment of Identified Risks & Their MitigationStrategies…………………………………………………………............ 95

8 Section-IV: Spend Analysis of Health Sector Procurements............................ 1099 Section V- Recommendations on Institutional Measures……………………… 112

9.1 ealth Sector Procurement Manual................................................................ 1129.2 trengthening of the Existing Procurement Cell at DGHS KP........................ 1139.3 Utilization of a dedicated web-portal for the Health

Department..................................................................................................... 1149.4 uman Resource Management...................................................................... 1159.5 nventory & Warehousing Management.......................................................... 1169.6 roposed Mission of Procurement Cell........................................................... 1169.7 roposed Administrative Structure of Procurement Cell, DGHS, KP............. 1179.8 ndividual Job Responsibilities & Qualifications of the Procurement Officials

for Procurement Cell& TORs......................................................................... 129

10 Annexures10.1 List of Persons interviewed............................................................................ 15810.2 Training Calendar for Health Department Khyber Pakhtunkhwa................... 16110.3 Questionnaires used for Review Processes…………………………………… 163

List of Figures:

Figure: 5.9 Graphical Presentation of Strengths & Weaknesses of theDoH Procurement System.................................................... 3

Figure: 9.7.1 Organizational Organogram of Procurement Cell, DGHSKP.......................................................................................... 118

Figure: 9.7.2 Functions of Wings in the Procurement Cell, DGHS, KP......119

Figure: 9.7.3 Hierarchy of Pre/Post-Qualification Wing.........................….. 120Figure-9.7.4: Hierarchy of Technical Wing………………………………… 122Figure-9.7.5: Tendering & Coordination Wing………………………………. 125Figure-9.7.6: The hierarchy of the Budget & Planning Wing……………… 128Figure-9.8.1: Nature & Requirement of Individual Job Function………….. 129

Tables:Table 8.1: Comparison of Current Budget spending with Development

Budget for the Years 2009-12……………............................. 109Table 8.2: Budgets allocated for the Purchase of Drugs & Bio-Medical

Equipment for the Years 2009-12 for all DistrictGovernments and the Provincial Government……………… 110Table 8.3: Provincial vs District Budget Estimates & Actual

Expenditure for the Year 2012-13 …………………………... 111



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1. Acknowledgement

This report has been prepared by Muhammad Ali Raza, Procurement Consultant, Technical

Resource Facility (TRF), Khyber Pakhtunkhwa. The Consultant is grateful to Mr. Farooq Azam,

Team Leader TRF Islamabad and Mr. Khalid Mahmood, Procurement Specialist TRF

Islamabad without whose continuous support, facilitation and morale boosting, formulation of

this Report couldn’t have been possible. For facilitation and coordination at Khyber

Pakhtunkhwa, the Consultant is grateful to Dr. Muhammad Rahman Khattak, Provincial

Coordinator TRF KP and Syed Sharf ul Haq Trimizi, Project officer TRF KP.

The Consultant is grateful for support of Mr. Ashfaq Ahmad Khan, Secretary Health Khyber

Pakhtunkhwa, Mr. Zahir Alam, former Additional Secretary DoH Khyber Pakhtunkhwa and Mr.

Sher Gul Safi, Chief Planning Officer DoH Khyber Pakhtunkhwa whose valuable input made

this Report possible. The Consultant is grateful for support of Mr. Nadeem Bashir, Additional

Secretary Finance, Department of Finance, Khyber Pakhtunkhwa.

The Consultant is also grateful to Mr. Sharif Ahmad Khan, Director General Health Services,Department of Health, Khyber Pakhtunkhwa, whose close collaboration and support helped

him in finalizing the said Report.

The Consultant is also much grateful to Dr. Shabina Raza, Chief Coordinator Health Sector

Reforms Unit (HSRU), DoH, Khyber Pakhtunkhwa, for giving her support and assistance in

understanding the new policy framework for the reform initiatives for DoH Khyber

Pakhtunkhwa. The Consultant wishes to thank Mr. Ali Zahir Shah, Deputy Secretary Health

Department Health Department Khyber Pakhtunkhwa for their support in collecting information

on working of Health Secretariat.

The Consultant would also like to thank Govt-Medicine Coordination Cell (Govt-MCC), DoH

Khyber Pakhtunkhwa for coordinating, as Specialized Section for Drugs and Medicines, in

designing, revising and evaluating the Standard Bidding Documents (SBDs) for procurement

of Drugs & Surgical Disposables for DoH Khyber Pakhtunkhwa and assisting in providing a

better insight through discourse on comparative analysis of previous and current procurement

practices prevalent at Govt-MCC Section, DGHS, Khyber Pakhtunkhwa.

Disclaimer

This document is issued for the party which commissioned it and for specific purposes

connected with the above-captioned project only. It should not be relied upon by any other

party or used for any other purpose.

No responsibility is accepted for the consequences of this document being relied upon by any

other party, or being used for any other purpose, or containing any error or omission which is

due to an error or omission in data supplied by other parties.



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2. Abbreviations& Key words

AMI Autonomous Medical Institution

AAMI Association for the Advancement of Medical Instrumentation

API Active Pharmaceutical Ingredient

BHU Basic Health Unit

BOQs Bill of Quantities

BLIs Base Line Indicators

CBET Certified Bio-Medical Equipment Technician

CCE Certified Clinical Engineer

CE Communauté Européenne (Council of Europe)

CE Chief Executive (Autonomous Medical Institution)

CFAA Country Financial Accountability Assessment

cGMP Current Good Manufacturing Practices (for Pharmaceutical Industry)

CIPS Chartered Institute of Purchasing & Supply (UK)CLES Certified Laboratory Equipment Specialist

CMW Community Midwife

CPCM Certified Professional Contract Manager (USA)

CPO Chief Planning Officer, Health Secretariat

CPPO Certified Public Purchasing Officer (USA)

CRES Certified Radiology Equipment Technician

CS Comparative Statement

DAC Departmental Accounts Committee

DDWP Departmental Development Working Party

DFID Department for International Development (UKAID)

DGHS Directorate General Health Services / Director General Health Services

DHO District Health Officer

DHQ District Head Quarter Hospital

DHS District Health Services/District Health Govt./Dept.

DI Drug Inspector

DoH Department of Health, Govt. of Khyber Pakhtunkhwa

DRA Drug Regulatory Authority

DTL Drug Testing Laboratory, Peshawar

ECRI

Emergency Care Research Institute, USA (Bio-Medical Equipment Database)

EDL Essential Drug List

EEC European Economic Community

EMA European Medicines Agency

EPI Expanded Immunization Program

ERP Enterprise Resource Planning (Automation Software)

ERP Emergency Relief PackageETR End of Treatment Response

EU European Union



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EVR Early Virologic Response

ETR End of Treatment Response

FABS Financial Accounting & Budgeting System

FCPA Foreign Corrupt Practices Act

FDA Federal Drug Agency (United States)

FI Financial (SAP)

FIDIC Fédération Internationale Des Injéuneurs Conseils (International Federation of

Consulting Engineers), Geneva

FPP Finished Pharmaceutical Products

FPPRA Federal Public Procurement Regulatory Authority

KP Khyber Pakhtunkhwa (Province)

GFR General Financial Rules (AGPR)

GMP Good Manufacturing Practices (for Pharmaceutical Industry)

Govt. Govt. Of the Khyber Pakhtunkhwa

Govt-MCC Government-Medicine Coordination Cell, DGHSHIV Human Immunodeficiency Virus

HMC Hayatabad Medical Complex, Peshawar

IACCM International Association of Commercial & Contract Management (EU/UK)

ICGFM International Consortium on Governmental Financial Management

IFB Invitation For Bids

IMS Health Intercontinental Medical Statistics for Health (Pharmaceutical Database)

INN International Non-Proprietary Name

INOR !"#$%$&$' )* +&,-'./ 0",)-)12 3 4.5%)-)126 788)$$.8.5

IRNUM Institute of Radiology & Nuclear Medicines, Peshawar

KP Khyber Pakhtunkhwa

KTH Khyber Teaching Hospital, Peshawar

LHW Lady Health Worker (Program)

LMIS Logistics Management Information System

LRH Leady Reading Hospital, Peshawar

MM Materials Management (SAP)

MNCH Mother Neo-natal Child Health (Program)

MoH Ministry of Health (Federal Government)

MS Medical Superintendent (Administrative in charge of DHQ Hospitals)

MSD Medical Store Depot, Health Department

NFC National Finance Commission

NHS National Health Service, UK

NIT National Institute of Training, PPRA, Islamabad

NWFP North West Frontier Province

OECD-DAC Organization for Economic Cooperation & Development- Development

Assistance Committee

PACP Provincial Aids Control ProgramPC Project Coordinator (Vertical Programs)

PDWP Provincial Development Working Party



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PE Procuring Entity

PEFA Public Expenditure & Financial Accountability

PFM Public Financial Management

PHSA Provincial Health Services Academy, Peshawar

PIFRA Project to Improve Financial Reporting & Auditing

PNAC Pakistan National Accreditatation Council

PPRA Public Procurement Regulatory Authority

PPRs Public Procurement Rules

PV Product Vocabulary

PWD Population Welfare Department

RHC Rural Health Center

RVR Rapid Virologic Response

SAP Systems Applications and Products in Data Processing

SBDs Standard Bidding Documents

SID4Health Supplier Information Database for Health, UKSOPs Standard Operating Procedures

SVR Sustained Virologic Response

TA Technical Assistance

T&E Technical & Evaluation (Committee)

TRF Technical Resource Facility

THQ Tehsil Head Quarter Hospital

WHO World Health Organization.



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3. Executive Summary

Contextual Challenges to the Health Sector

Khyber Pakhtunkhwa is currently having the NWFP Procurement of Goods, Works and Services

Rules 2003 in vogue which seem outdated in the context of the Federal Public Procurement Rules

2004 and the Provincial Procurement Rules of Sind & Punjab. Still the Health Department Khyber

Pakhtunkhwa has been engaged in the procurement of bio-medical equipment and pharmaceuticalproducts to the tune of Rs. 125 billion approximately for the year 2012-13 under the said Provincial

Rules.

In the wake of devolution of procurement functions by the 18 th Constitutional Amendment the

procurement officials of the Health Department Khyber Pakhtunkhwa are very well aware of the

professional capacity needs to tackle such a voluminous purchasing challenge. In order to get

thoroughly acquainted to needs, technical possibilities and market conditions for conducting this

sensitive public sector operation, the Health Department Khyber Pakhtunkhwa requested the

Technical Resource Facility (TRF) to initiate a Technical Assistance to strengthen its existingprocurement systems and increase the professional capacity of its procurement officials to meet the

challenges of achieving best value for money in a fair and transparent manner. The Procurement

System Assessment conducted by the TRF is therefore a way forward to indicate the distortions in

the current procurement business processes and suggest mitigating strategies to improve the same.

Review of Existing Procurement Scenarios:

In the Review Section, the Assessment Report under reference gives the background of Technical

Assistance & a brief introduction of the TORs and the post-18th Amendment devolution scenario in

which the current procurement practices are being followed by the procuring institutions of the

Health Department Khyber Pakhtunkhwa. Though the current District Government system has been

abolished by Provincial Government vide notification No. SO(E-I)/E&AD/4-49/2012, dated

28.12.2012, it may not have any immediate significant change in the procurement practices

prevalent in the Health Department except for an anticipated outlay of funds at the disposal of the

Health Department for better annual procurement planning and the increased role of the Principal

Accounting Officer. However, the same is subject to any future review. The Review Section under

reference further elaborates the assessment methodology consisting of OECD’s Base Line

Indicators (BLIs) which have the capacity to be used in assessing the national, sub-national and

agency procurement systems with equal efficiency and meticulous detail. The BLIs are based on

four pillars relating to Legislative and Regulatory Framework, Institutional Framework &

Management Capacity, Procurement Operations and Market Practices and lastly, Integrity and

Transparency of a Public Procurement System.

3.1 Strengths & Weaknesses of the Procurement System of DoH Khyber Pakhtunkhwa:

The four pillars contain various base line indicators which individually assess the strengths and

weaknesses of the Procurement System of Health Department Khyber Pakhtunkhwa in terms of

numerical scoring allocated to various parameters. Whereas the fourth BLI relating to a publicprocurement regulatory authority in the domain of Institutional Framework & Management Capacity



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could not be assessed due to absence of any such body uptil now despite its notification by the

Provincial Assembly vide Khyber Pakhtunkhwa Public Procurement Regulatory Authority Act 2012

dated 20.09.2012, the other BLIs were thoroughly assessed and scored against their benchmarks.

The graphical outcome of the strengths and weaknesses at page 14 of the Report displays the

state of affairs of the current procurement system of the Health Department Khyber Pakhtunkhwa.

Whereas the perfect square along the two axes shows an ideal compliance to all the Base LineIndicators, the resulting geometric quadrilateral within the perfect square along the same axes gives

a snapshot of the extent of deviations or shortcomings of the existing procurement business

practices in the Department at the Provincial level. The resulting quadrilateral shows a stronger side

of the BLIs for the First Pillar relating to Legislative and Regulatory Framework which scored well in

the context of achieving performance benchmarks largely attributed to a strong and robust

regulatory mechanisms for pre-qualification of pharmaceutical firms/bio-medical suppliers existing in

the Health Department Khyber Pakhtunkhwa and pre-notified/ well-structured Departmental

committees for bid evaluation.

The assessment of the Second Pillar relating to Institutional Framework & Management Capacity

displayed that the Province is weakest in institutional framework due to absence of a public

procurement regulatory body and lack of enforcement in developing systems and procedures for

collecting and monitoring provincial procurement statistics. Though the planning side of the

budgetary process in the Department strives to give a well-coordinated picture of development

funds appropriations against procurement initiatives, absence of detailed procurement plans based

on contract actions and lack of initiatives of the Health Department towards imparting professional

trainings in the public procurement regulations to its employees engaged in purchasing function,

has weekend this Pillar.

The assessment of the Third Pillar relating to Procurement Operations and Market Practices gave

an average impact due to absence of any planning towards matching skills with the procurement

assignments, but with somewhat sturdier private sector partnership with the Health Department due

to increase in the demand of pharmaceutical products with the passage of time, and prevailing

traditional but tested contract management processes.

The assessment of the Fourth Pillar relating to Integrity and Transparency of the Public

Procurement System, gives an above average profile of performance for the procurement system

due to a strong vigilance and drug quality control enforcement by the Department. However,

absence of internal audit and a weak appeals mechanism did not let it gain any significant score in

this area.



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Pillar-I

Legislative Framework

3.0

2.07

Pillar-IV 3.0 0 3.0 Pillar-II

Integrity & Transparency 2.0 0.91 Institutional &

Management Capacity

1.6

Province Score

Maximum Score

3.0

Pillar-III

Procurement Operations & Markets

5.9 : Graphical Presentation of Strengths & Weaknesses of DoH Procurement System

In this graphic representation, scoring under each Pillar has been aggregated as a simple

arithmetical average of sub-indicators under the Pillar. The average scores for each Pillar are

compared to the maximum score of 3. The Province assessed is strongest in Pillar I, but has

weaknesses in the other three Pillars, with Pillar-II being the weakest.

The Assessment Report elaborates the major risks belonging to various regulatory, institutional,

process and operational aspects of the procurement life cycle in the Health Department identifiedduring the situational analysis. The said risks have been assessed in terms of their relative

importance, their strengths and probability of occurrence, and their mitigating strategies duly

chalked out to preserve the efficiency of the system.

In the end, certain institutional measures have been suggested for their likely consequences for

improving the efficiency of the system, e.g., a health sector procurement supplement in the form of

a Procurement Manual to be read in conjunction with the prevailing purchasing regulations,

developing a dedicated Human Resource Management for the procurement life cycle,

strengthening of the existing Procurement Cell at Directorate General Health Services and itsfunctional attributes alongwith probable staffing details, creation of a dedicated web-portal for



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Contract Lifecycle Management, and recommendations on improving pharmaceutical warehousing

and inventory management operations and future strategies on procurement spend-trends of the

Department.

Lastly, a Procurement & Contract Management Training calendar for the next six months (January-

June 2013) for Khyber Pakhtunkhwa Health Department procurement professionals has been

appended to render training to meet their specific capacity building and mentoring needs.



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4. Background

4.1: Technical Assistance

The Province of Khyber Pakhtunkhwa has assumed a daunting role in meeting the challenges due

to the enactment of 18th Amendment by National Assembly the form of devolution of social sectors

including health to provinces through abolition of concurrent legislative list. As per the

implementation plan, the Federal Ministry of Health has therefore been abolished with effect fromJuly 1, 2011 and except for Drug Licensing, Registration & Pricing functions, export/import of goods

and services to be retained as Federal functions and keeping professional councils such as

Pakistan Medical & Dental Council, Nursing Council and Pharmacy Council as Federal entities, the

initiatives like drafting and enactment of health and procurement regulations, management of

Vertical Programs and initiation of Health Sector reforms, have become provincial subjects. The

fiscal resources for the said initiatives have also been diverted or, are being diverted to the

Provinces with more administrative control.

In the wake of the said development, the Health Department Khyber Pakhtunkhwa has to shouldernow a far greater responsibility of providing an affordable health care system which is easily

accessible to the common man elsewhere in the Province. Administrative and fiscal space of the

Provinces has increased multi-fold with a simultaneously increase in their responsibilities. In order

to provide equitable, affordable and accessible health care to the people, Provincial Governments

need to re-align and re-adjust their health care delivery systems, governance structures and

financial allocations.

The Government of Khyber Pakhtunkhwa therefore requires adoption of a renewed business

process in procurement of Health Sector Goods to achieve an acquisition lifecycle which addressesall the complex needs of the Health Sector purchasing while keeping intact the requisites of

integrity, transparency, fair play in the process and providing equitable opportunity through open

competition for the Health industry. The Procurement System Assessment, initiated through the

Technical Assistance of TRF therefore strives to support the Khyber Pakhtunkhwa Health

Department to establish priorities for achieving best value for money in the purchasing perspective.

The analysis further identifies the areas wherein the Health Department may align its energies to

improve its procurement practices in view of Khyber Pakhtunkhwa Health Sector Strategy. The

enactment of Khyber Pakhtunkhwa Public Procurement Regulatory Authority Ordinance 2012 by the

Provincial Assembly has paved the way for the administrative notification of Khyber Pakhtunkhwa

Public Procurement Rules 2012 by the Provincial Government in due course of time and has also

made this assessment exercise worthwhile in the wake of adoption of international best practices in

procurement by the Health Department to replace the outdated NWFP Procurement of Goods,

Works & Services Rules 2003. The Health Department therefore needs to be geared up in advance

by standardizing its procurement practices and bidding documents and prioritizing necessary

capacity building initiatives for its procurement officials in the light of international best practices in

public contracting.



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4.2: Terms of Reference (TORs)

Main Objective

The main objective of this assignment is to provide support to the Health Department,

Government of Khyber Pakhtunkhwa and Health Programmes in all issues related to

procurement and to build institutional capacity in procurement management.

Specific Objectives

Specifically the consultant will focus on:

i. identification of weaknesses and gaps in the procurement system and relevant supply

chain issues of Health Department and health programmes of Khyber Pakhtunkhwa

through a detailed assessment;

ii. development of action plan and strategy for implementation;

iii. proper implementation of rules framed by the Government of Khyber Pakhtunkhwa for

ongoing procurement of goods, works and services and consultancy services within theHealth Department and health programmes; with the prime purpose of effective,

efficient and transparent procurement system and processes;

iv. development and adaptation of procurement documents; with proper redressal of

complaints mechanism;

v. building capacity of procurement staff in procurement of goods, works and consultancy

services including recommendations for appropriate institutional structures and

mechanisms;

vi. provide on-the-job support to the procurement staff in all steps of procurement cycle;

vii. implementation of procurement monitoring mechanism and tools, within the DOH and

health programmes; and

viii. Coordination in implementation of procurement related Technical Assistance.

4.3: Organizational Structure of Health Department, Khyber Pakhtunkhwa

The Health Department has the following organizational structure in terms of Procurements:

a. Health Secretariat, Peshawar: All procurement related polices are developed and their administrative approval conducted by

the Health Secretariat. However, Secretary Health has little to do with procurements except for

acting as an approving body for the contract award recommendations being chairman

Selection (Purchase) Committee and acting as the Principal Accounting Officer. The

procurements are now totally dealt by the Director General Health Services.

b. Director General Health

The office of the Director General Health Services procures medicines through a Medical

Coordination Cell (MCC) and bio-medical equipments/General Goods through a newly

established Procurement Cell based on the requirements received by the DG office from



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various Districts & Vertical Programmes. The Procurement Cell, established after the

devolution of powers to the Provincial Government in the post-18 th Amendment era, centrally

procures the bio-medical equipment for all the Districts by conducting all the Pre-Award

procurement planning, designing the Standard Bidding Documents, conducting technical and

financial evaluations, awarding the contract and administering the post-award contractual

relationships with the suppliers. The Govt-MCC, on the other hand, is involved in the Pre-

award planning, bidding documents design , bid evaluation and subsequently awards thecontract on unit rates prevailing for the whole financial year for the selected drugs and surgical

disposables for all the field formations including EDOs (Health), MS DHQs, Autonomous

Medical Institutions (AMIs) etc which in turn conduct the post-award process by placing the

Purchase Orders themselves on need-bases during the whole year. Govt-MCC further aims at

supervising/coordinating the procurements conducted in the field after approval of the

Integrated PC-I which is meant to consolidate & centralize all divisional, regional and

Programme-oriented purchasing.

c. District Health Departments:The Districts headed by EDOs (Health), are independent procuring entities and as per the

current policy of the Health Department these place Purchase Orders for medicines/medical

supplies on the basis of unit rates approved by the Govt-MCC & get the bio-medical equipment

centrally procured through the Procurement Cell at Directorate General Health Services GHS

as per the their requirements within the available budget allocated to them. There are twenty

five districts in Khyber Pakhtunkhwa namely, Kohistan, Bannu, Chitral, Shangla, Tank, Haripur,

Lakki Marwat, Hangu, Karak, Dir Upper, Dir Lower, Nowshera, Swabi, Abbottabad, D.I. Khan,

Battagram, Buner, Mansehra, Tor Ghar, Charsadda, Malakand, Kohat, Mardan, Swat and

Peshawar.

d. District Headquarter Hospitals (DHQs):

Headed by the Medical Superintendents, the DHQs in all the Districts are under administrative

supervision of the EDOs (Health) but the Purchase Orders for delivery of medicines & surgical

disposables selected by the Govt-MCC under unit rate contracting are placed by the respective

Medical Superintendent DHQ.

e. Autonomous Medical Institutions (AMIs):

These Institutions are also independent procuring entities at the Provincial level headed by

Chief Executives and manage their procurements on the basis of unit rates selected by the

Govt-MCC as per their requirement & available budget within the broader policy framework

defined by the Health Department. AMIs may independently procure around 40% of the total

medicines which are not included in the Govt-MCC. Their Board of Management governs

matters related to Procurements.

f. Medical Colleges:

Medical colleges are headed by the Principals and the said entities independently procure bio-medical equipment and laboratory chemicals for their college institutions for educational and



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experimental purposes. The colleges follow a procurement structure similar to the DGHS, with

a T&E Committee, composed of concerned Associate Professors & Professors for preparation

of equipment specifications and finalization of acquisition by a high-level Selection (Purchase)

Committee headed by the Principal of the College.

g. Health/Vertical Programmes:

Vertical Programs, also known as Stand-alone, Categorical or Disease Control Programs,focus either on a specific disease or health issue or target a specific demographic population.

The underlying objective of Vertical Programs is to achieve specific measurable outcomes

within a given timeframe. Vertical Programs have independent management and

implementation structures headed by Program Coordinators, which run parallel and in addition

to the general health system of the Health Department of Khyber Pakhtunkhwa. Vertical

Programs have been mostly Federally funded and procure their medicines specifically related

to their scope based on the pharmaceutical items selected by the Govt-MCC on unit rate

contracting and bio-medical equipment from special program funds. The Selection (Purchase)

Committee at the Health Department finalizes the procurement. Cessation of funding ofVertical Programs through the PSDP after the tenure of 7 th NFC Award in 2014 has led to

provincialize some of them while maintaining their vertical nature.

h. Special Projects:

Special Projects like Aids Control obtain their funding from donors and the Government. Their

procurement methodology is similar to the Vertical Programs.

i. HSRU:

Health Sector Reform Unit, headed by Chief HSRU, is under Secretary Health and procures its

deliverables with the donor funds under the Multi-Donor Trust Funds (MDTF), spearheaded by

the World Bank. It is currently engaged in the procurement of Management Services by hiring

Consulting firms under World Bank’s Guidelines on Selection of Consultants. The said firms

would provide integrated health services on the basis of Public Private Partnership (PPP) to

the six crises-stricken districts in Khyber Pakhtunkhwa, namely Battagram, Buner, Dera Ismail

Khan, Dir Lower, Kohistan and Tor Ghar by upgrading the civil structures, power supplies,

transportation and bio-medical equipment etc. in the said Districts.

4.4 Procurement Entities of Health Department Khyber Pakhtunkhwa

Following is a list of the Procurement Entities of the Health Department involved in Pre-Award,

Award and post-Award activities:

1. Directorate General Health Services (DGHS), Department of Health, KP

(a) Procurement Cell(b) Government- Medicine Coordination Cell (MCC)

2. Executive District Officer Health (EDO-H) – 25 Districts

3. District Headquarter Hospitals (DHQs) – 25 Districts



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4. Vertical Programs/Projects

(a) Maternal Natal & Child Health Program(b) National Program for Family Planning & PHC (LHW Program)(c) EPI(d) TB Control Program(e) Roll Back Malaria(f) PM’s Program for Hepatitis

(g) PACP / HIV

5. Autonomous Medical Institutions (AMIs)

(a) Khyber Teaching Hospital (KTH), Peshawar(b) Lady Reading Hospital (LRH), Peshawar(c) Hayatabad Medical Complex (HMC), Peshawar(d) Ayub Teaching Hospital (ATH), Abbottabad

6. Medical Colleges

(a) Khyber Medical College (KMC), Peshawar

(b) Ayub Medical College (AMC), Abbottabad(c) Khyber Girls Medical College (KGMC), Peshawar(d) Khyber College of Dentistry (KCD), Peshawar(e) Bacha Khan Medical College, Mardan(f) Swat Medical College, Saidu Sharif, Swat(g) Kohat Institute of Medical Sciences, Kohat(h) Bannu Medical college, Bannu(i) Khyber Medical University

7. Health Sector Reforms Unit (HSRU), Health Secretariat, Peshawar

8. Provincial Hospitals(a) Mardan Medical Complex, Mardan(b) Maulvi Ameer Shah Qadri Women & Children Hospital, GT Road, Peshawar(c) Sifwat Gahyoor Memorial (Infectious Diseases) Hospital, Haji Camp, Peshawar(d) Naseer Ullah Babur Hospital, Kohat Road, Peshawar(e) Govt Maternity Hospital, Hashtnagri, Peshawar(f) nstitute of Kidney Diseases, Hayatabad, Peshawar(g) Govt Mental Hospital, Peshawar(h) Khalifa Gulnawaz Memorial Hospital, Bannu

4.5: Procurement Practices in the Health Department, Khyber Pakhtunkhwa

The current procurement practices of the Health Department Khyber Pakhtunkhwa are based

on a matrix management system wherein the centralized procurements are done by the two

procuring units, namely the Govt-Medicine Coordination Cell (MCC) and Procurement Cell

located at the Directorate General Health Services Peshawar.

The Govt-Medicine Coordination Cell (MCC) contracts out the unit rates of the selected

pharmaceutical products of the pre-qualified and lowest evaluated responsive pharmaceutical

firms and the bulk of the said products are in turn bought by the 25 Health Districts for theirrespective BHUs and RHCs, Autonomous Medical Institutions and Vertical Programs.



10

Before the establishment of Govt-MCC in 1996, medicines were provided to the health

institutions through Medical Stores Depot (MSD). The MSD was set up at Peshawar more than

25 years ago to make bulk purchase of quality medicines in the most economical manner

ensuring their timely delivery to the Government health institutions throughout the Province.

Medicines upto Rs. 20 million were usually purchased with no fixed time frame by the MSD and

the rest by the Health Department entities locally at different rates that stated to have led to

financial irregularities. Over a period of time, it failed to achieve its objectives and Audit raisedobservations regarding mismanagement, sub-standard procurements, faulty distribution, undue

cost adjustments and storage shortages etc. MSD was finally re-designated as Government

Medicine Coordination Cell (MCC) on 01.07.1996 vide Health Department’s Notification No.

SOH(V)9-5/96MCC dated 16.05.1996. The Govt-MCC was supposed to annually conduct a

centralized contracting of selected pharmaceutical products through restricted competitive

bidding engaging only those pharmaceutical firms which were registered and pre-qualified

annually by the Directorate General Health Services. As the prevailing practice, an approved

Drug List comprising consolidated demand of medicines from all health institutions based on

last year’s purchase and with around 10% variation, is put to the above stated restricted

competitive tendering process wherein the firms with lowest rates may get the single rate

contract from the Directorate General Health Services. The said products are in turn bought by

the 25 Health Districts, Autonomous Medical Institutions and Vertical Programs etc.

This hybrid contracting methodology under the devolution of power, gives autonomy to the

chief executives of the AMIs to the extent of procuring 40% of those pharmaceutical products

which are not included in the approved Drug List (Drug Formulary) of the Govt-MCC; allows

Program Coordinators of the Vertical Programs to carry out procurements related to their

Programs and allows Executive District Officers (EDO) Health and Medical Superintendents

DHQs to carry out their related procurements for medicines and surgical disposables at District

and District Headquarter Hospital level respectively. The Departmental entities in the form of

Preliminary Scrutiny Committee, Comparative Statement Committee, Technical & Evaluation

Committee and finally the Selection (Purchase) Committee, as discussed later, are part of the

whole purchasing life cycle.

The Procurement Cell, created vide DGHS Notification No. 10760-67/Personnel, dated

30.12.2011, is supposed to purchase bio-medical equipment and occasional non-Govt-MCC

drugs on the basis of requirements sent by the Health Districts and DHQs. As per the said

notification, the Cell is headed by a Deputy Director (Admn) and manned by an Assistant

Director (Admn), Superintendent Complaint/Coordination Cell DGHS Office, Superintendent

Accounts Section, DGHS and a Computer Operator. With the two top tiers of the Cell nowhere

in sight, the potential of the Cell seems underutilized and under-staffed keeping in view the

significantly important functions and sensitive tasks of gathering the requirements of the Health

Districts, technical specification preparation and conducting procurement of bio-medical

equipment.

Procurement demand is prepared and submitted as a component/scheme of the Annual

Development Plan (ADP) of the Health Department. The demand is submitted to the Health



11

Secretariat. Specifications and requirements are prepared by the end users which get

approved by the Departmental Technical Committee. Equipment is purchased under National

Competitive Bidding (NCB) by the Procurement Cell. The purchased equipment is then

delivered to the hospital/district. The Technical Committee may physically inspect the

equipment before final selection according to the specifications mentioned in the tender. The

Technical Committee, headed by the Director General Health Services is composed of

concerned Head of Department of the medical institution and Executive Engineer of electro-medical workshop etc. Purchases recommended by the Technical Committee are approved by

the Departmental Purchase (Selection) Committee. Minor equipment, special drugs and

medicines which are not a part of the regular hospital supply are procured through the process

of local purchase.



12

5 Section-1: Situational Analysis & Assessment of ExistingProcurement Procedures and Procuring Entities of HealthDepartment Khyber Pakhtunkhwa

5.1 Assessment Methodology

Under the auspices of the joint World Bank and OECD Development Assistance Committee

(DAC) Procurement Round Table initiative, developing countries, bilateral and multilateraldonors worked together to develop a set of tools and standards that provide help in assessing

the quality and effectiveness for improvements in procurement systems. The Round Table

initiative culminated with the December 2004 adoption of the "Johannesburg Declaration"

including a commitment for the adoption of the Baseline Indicators (BLIs) as the agreed

international standards for assessment of national, sub-national and agency procurement

systems.

The application of the BLIs used in the subject Assessment is based on a review of the

existing regulatory framework and the procurement related institutional and operationalarrangements in Health Department Khyber Pakhtunkhwa. The BLIs are based on four main

pillars and consist of 12 indicators. Each indicator has been further divided into four to six sub-

indicators and each having a table containing four scenarios. Each baseline sub-indicator is

preceded by a short text explaining those aspects that the sub-indicator has attempted to

assess and some considerations about the nature and importance of the item in question.

Through this short text the relevant aspects have been reviewed whether the acceptable

standard has been achieved or not. After the description of the sub-indicator, scoring against a

particular scenario has been done in the table. The scoring system ranges from 3 to 0 for each

baseline sub-indicator. A score of 3 indicates full achievement of the stated standard. A score

of 2 has been given when the system has exhibited less than full achievement and needs

some improvements in the area being assessed and a score of 1 has been given for those

areas where substantive work is needed for the system to meet the standard.

A rating of 0 has been considered as the residual indicating a failure to meet the proposed

standard. The score for each sub indicator has been a whole number from 0 to 3. Based on

subjective professional judgment by the assessor, the BLI scores will therefore be part of a

narrative report providing information on changes that are underway, but have not yet

impacted the system sufficiently to change the score. This narrative discussion has enabled

the said assessment to provide information that could not be easily reflected in numeric

scoring.

The assessment through BLIs aims at providing a basis upon which Khyber Pakhtunkhwa

Province can formulate an institutional and capacity development plan to improve its

procurement system with a long-term goal to meet internationally recognized standards which

would enable greater effectiveness in the use of public funds to meet Provincial obligations.

The methodology includes a numeric scoring with defined criteria that will provide a qualitative

grading of the Health Department’s procurement system by identifying its strengths and

weaknesses. By aggregating the scores at the pillar level a graphical profile of strengths and



13

weaknesses of the Procurement system of Health Department Khyber Pakhtunkhwa has been

obtained and is displayed in the Executive Summary. The information resulting from the said

assessment would provide the Province with information it can use to monitor the performance

of its current procurement system and the success of the reform initiatives in improving its

business processes.

5.2 Introduction of Factors assessed under the Methodology

This part of the report relates to the assessment of procurement systems within the

Department of Health, Government of the Khyber Pakhtunkhwa. The assessment was

conducted as required by the TORs of the Technical Assistance-52: Strengthening the

Procurement Systems through Support and Capacity Building of Health Department, Khyber

Pakhtunkhwa for identifying gaps in the provincial legislative framework and Departmental

business processes with particular focus on:

i. Existing procurement procedures and steps being followed by the DoH entities

ii. Extent of applicability of NWFP Procurement of Goods, Works & Services Rules 2003 inthe procurement system of the DoH Khyber Pakhtunkhwa

iii. Review of each step of the procurement cycle of the Health Department from planning till

the award of contract

iv. Evaluation of levels of public access and transparency in the procurement process,

contract management mechanisms and techniques in vogue.

v. Review of the Supply Chain of the Department of Health Khyber Pakhtunkhwa and

identification of gaps, if any, and their plugging measures.

vi. Review of Procurement documentation currently used by the Department of Health.

vii. Establish supplier’s issues and concerns related to procurement process and obtain their

opinions for more effective procurement.

viii. Review of contract management and disputes resolution.

ix.

Following were the four main pillars under which the above stated factors were assessed

through various Base Line Indicators:

a) Existing legal framework that regulates procurement in the Province;

b) Institutional architecture of the Procurement System;

c) Operation of the System and competitiveness of the national market; and

d) Integrity of the Procurement System.

5.3 Sampling Statistics:

The information collected is based on document reviews, key informant interviews, collection

of data from existing records and perspective observations. The interviews were carried out

with around twenty personnel related to the DoH, four Districts, seven Vertical programs, three

AMIs, two Medical Colleges and four Pharmaceutical & Bio-medical equipment suppliers etc.



14

The interview were carried out with respect to the BLI sub-indicators and on specific

questionnaires developed for data collection.

5.4 Limitations & Constraints:

1. The reliability and integrity of information collected for the Assessment was based on the

record & information provided by the Health Department.

2. Indicator-4 of Pillar-II relates to the existence of a Public procurement Regulatory Authority

in the Khyber Pakhtunkhwa Province. Until the said regulatory body starts functioning and

exerts its influence on the Procurement System of the Health Department for a significant

outcome, it remains out of the subject discussion and has therefore been rated as zero.

5.5 Summary of the Assessment Scores:

Pillar &

Indicator

Sub-Indicator Score

Sub-Indicator

Averaged forPillar &

Indicator

Pillar I: The legislative and regulatory framework 2.07

Indicator 1: Public procurement legislative and regulatory framework complies

with applicable obligations with regard to national and international requirements 2.25

1(a): Scope of application and coverage of thelegislative and regulatory framework

2

1(b): Procurement methods 2

1(c): Advertising rules and time limits 2

1(d): Rules on participation 2

1(e): Tender documentation and technical specifications 3

1(f): Tender evaluation and award criteria. 3

1(g): Submission, receipt, and opening of tenders 2

1(h): Complaints 2

Indicator 2: Existence of implementing regulations and documentation 1.83

2(a): Implementing regulations that provide defined

processes and procedures not included in higher- level

legislation

1

2(b): Model tender documents for goods, works, andservices

2



15

2(c): Procedures for prequalification 3

2(d): Procedures suitable for contracting for services or

other requirements in which technical capacity is a key

criterion

1

2(e): User’s guide or manual for contracting entities 2

2(f): General conditions of contracts for public sector

contracts covering goods, works, and services

consistent with national requirements and, when

applicable, international requirements

2

Pillar II: Institutional framework and management capacity 0.91

Indicator 3: The public procurement system is mainstreamed and well integrated

into the public sector governance system

2.75

3(a): Procurement planning and associatedexpenditures are part of the budget formulation process

and contribute to multiyear planning

3

3(b): Procurement planning and associated

expenditures are part of the budget formulation process

and contribute to multiyear planning

3

3(c): No initiation of procurement actions without

existing budget appropriations

3

3(d): Systematic completion reports are prepared for

certification of budget execution and for reconciliation of

delivery with budget programming

2

Indicator 4: The province has a functional normative and/or regulatory body 0

4(a): The status and basis for the normative and/or

regulatory body is covered in the legislative and

regulatory framework

0

4(b): The body has a defined set of responsibilities 0

4(c): The body’s organization, funding, staffing, and

level of independence and authority sufficient and

consistent with the responsibilities

0

4(d): The responsibilities should also provide for

separation and clarity so as to avoid conflict of interest

and direct involvement in the execution of procurement

transactions

0



16

Indicator 5: Existence of institutional development capacity 0

5(a): The province has a system for collecting and

disseminating procurement information including tender

invitations, requests for proposals, and contract award

information

0

5(b): The province has systems and procedures for

collecting and monitoring provincial procurement

statistics

0

5(c): A sustainable strategy and training capacity exists 0

5(d): Quality control standards are disseminated and

used to evaluate staff performance and address

capacity development issues

0

Pillar III: Procurement operations and market practices 1.6

Indicator 6: The provincial procurement operations and practices are efficient 0.75

6(a): The level of procurement competence among

government officials within the entity is consistent with

their procurement responsibilities

0

6(b): The procurement training and information

programs for government officials and for private sectorparticipants are consistent with demand

0

6(c): There are established norms for the safekeeping

of records and documents related to transactions and

contract management

1

6(d): There are provisions for delegating authority to

others who have the capacity to exercise

responsibilities

2

Indicator 7: Functionality of the public procurement market 2.33

7(a): There are effective mechanisms for partnerships

between the public and private sector

2

7(b): Private sector institutions are well organized and

able to facilitate access to the market

3



17

7(c): There are no major systemic constraints (e.g.,

inadequate access to credit, contracting practices, etc.)

inhibiting the private sector’s capacity to access the

procurement market

2

Indicator 8: Existence of contract administration and dispute resolution

provisions 2.0

8(a): Procedures are clearly defined for undertaking

contract administration responsibilities that include

inspection and acceptance procedures, quality control

procedures, and methods to review and issue contract

amendments in a timely manner

2

8(b): Contracts include dispute resolution procedures

that provide for an efficient and fair process to resolve

disputes arising during the performance of the contract

1

8(c): Procedures exist to enforce the outcome of the

dispute resolution process

3

Pillar IV: Integrity and transparency of the public procurement system 2.0

Indicator 9: The province has effective control and audit systems 1.59

9(a): A legal framework, organization, policy, and

procedures for internal and external control and audit ofpublic procurement operations are in place to provide a

functioning control framework

2

9(b): Enforcement and follow-up on findings and

recommendations of the control framework provide an

environment that fosters compliance

2

9(c): The internal control system provides timely

information on compliance to enable management

3

9(d): The internal control systems are sufficiently

defined to allow performance audits to be conducted

0

9(e): Auditors are sufficiently informed about

procurement requirements and control systems to

conduct quality audits that contribute to compliance

1



18

Indicator 10: Efficiency of Appeals Mechanism 2.19

10(a): Decisions are deliberated on the basis of

available information, and the final decision can be

reviewed and ruled upon by a body (or authority) with

enforcement capacity under the law

2

10(b): The complaint review system has the capacity tohandle complaints efficiently and a means to enforce

the remedy imposed

2

10(c): The system operates in a fair manner, with

outcomes of decisions balanced and justified on the

basis of available information

3

10(d): Decisions are published and made available to

all interested parties and to the public

1

10(e): The system ensures that the complaint review

body has full authority and independence for resolution

of complaints.

3

Indicator 11: Degree of access to information 2.0

11(a): Information is published and distributed through

available media with support from information

technology when feasible

2

Indicator 12: The Province has ethics and anticorruption measures in place 2.14

12(a): The legal and regulatory framework for

procurement, including tender and contract documents,

includes provisions addressing corruption, fraud,

conflict of interest, and unethical behavior and sets out

(either directly or by reference to other laws) the actions

that can be taken with regard to such behavior

3

12(b): The legal system defines responsibilities,

accountabilities, and penalties for individuals and firms

found to have engaged in fraudulent or corrupt

practices

2

12(c): Evidence of enforcement of rulings and penalties

exists

3

12(d): Special measures exist to prevent and detect

fraud and corruption in public procurement

1



19

12(e): Stakeholders (private sector, civil society, and

the ultimate beneficiaries of procurement and/or end-

users) support the creation of a procurement market

known for its integrity and ethical behavior

2

12(f): The province should have in place a secure

mechanism for reporting fraudulent, corrupt, or

unethical behavior

2

12(g): Existence of codes of conduct or codes of ethics

for participants that are involved in aspects of the public

financial management systems that also provide for

disclosure for those in decision-making positions

2

5.6 Pillar I – Legislative and Regulatory Framework

Indicator-1: Public procurement legislative and regulatory framework achieves the agreedstandards and complies with applicable obligations.

The indicator covers the legal and regulatory instruments from the highest level (national law, act,

regulation, decree, etc.) down to detailed regulation, procedures and bidding documents formally in

use. This indicator is broken down into eight sub-indicators (a-h) which are individually scored.

Sub-indicator 1(a) – Scope of application and coverage of the legislative and regulatory

framework (For Directorate General Health Services, Vertical Programs & AMIs).

The said sub-indicator determines:a) The structure of the regulatory framework governing the public procurement;

b) The extent of its coverage; and

c) The public access to the laws and regulations

After the abolition of concurrent legislative list through 18th Amendment in the Constitution of

Pakistan, the NWFP Procurement of Works, Goods & Services Rules 2003 promulgated through

NWFP Procurement of Works, Goods and Consultancy Ordinance 2002 are in vogue. The said

Rules originated in 2003 for procurement of civil works, supply of general goods and consultancyservices and were oriented towards construction works and related supplies by the civil contractors

and general suppliers. Though covering most of the procurement functions at that point of time and

spearheading the procurement legislation in the Country, the said Rules now seem deficient in

various aspects relating to procedures and thus suffer structural infirmities in view of the evolution in

international Procurement Law. Clauses relating to some of the procedures in the said Rules e.g.,

submission of bid security, negotiations on financial bids and contracting methodologies treat the

subject matter inadequately, are not in line with current international best practices or with

procurement practices prevalent at the Federal level; and are also in conflict with donor guidelines

on certain aspects. The said NWFP Procurement Rules 2003 are not designed to address the

particular needs of procurement of specialized items like drugs, vaccines and surgical disposables



20

wherein product efficacy plays major role in evaluating the quotes offered. Acquisition of Bio-

Medical equipment further requires well-defined product specifications for which these rules provide

no viable mechanism to deliberate upon any product definition.

The Directorate General Health Services (DGHS), Health Department Khyber Pakhtunkhwa located

at Health Secretariat Peshawar, had been previously engaged in procuring the medicines and bio-

medical equipment through a three-page Bidding Document alongwith an approved drug

list/formulary on the basis of single Stage Single Envelop bidding procedure. Under the judicial

directives in Writ Petition No. 3129/2010 dated 15.05.2012 of the Honourable Peshawar High Court

to clearly define its procurement policy and post it on DoH website, the Department, in 2012,

decided to conduct procurement of bio-medical equipment and drugs through Two-Stage Tendering

Process under Rule-40 of the NWFP Procurement Rules 2003. It therefore adopted semi-structured

bidding documents based on a sample WHO template for procurement of Bio-Medical equipment in

May 2012 for conducting procurements under the said Rules. Recently, the procurement of Drugs &

Surgical Disposables has also been carried out in August 2012 through the fully structured revised

Standard Bidding Documents (SBDs). These SBDs are based on internationally recognized FIDICtemplates as per the said Rules under Two Envelop Tendering process and the unit rates for the

selected drugs have been finalized and circulated among all the related procuring entities by the

Govt-MCC for the whole Province. Similarly, Vertical Programs relating to the Maternal Natal and

Child Health (MNCH) in the Province has also taken its procurement initiative for the acquisition of

CMW Kits for the Health districts by adopting the above stated revised Standard Bidding

Documents in September 2012 under the said Rules. Accordingly, Technical & Evaluation (T&E)

Committee and Selection (Purchase) Committee, officially nominated by the office of Secretary

Health for bid evaluation and contract award, have finalized the said activity. Surprisingly, some

Provincial procuring entities like the Autonomous Medical Institutions (AMIs) e.g., Lady Reading

Hospital Peshawar are still not following the business processes under the said Rules and are

acquiring non-drug surgical disposables through the old three-page single stage single quotation

system despite Honourable Peshawar High Court’s order on Suo Moto action in Writ Petition No.

3129/2010 dated 15.05.2012 to adopt a clear procurement policy by using the detailed Standard

Bidding Documents.

The NWFP Procurement Rules 2003 draw their strength from Section 45 of the North West Frontier

Province Procurement of Goods, Works & Consulting Services Ordinance, 2002. The adequacy of

the structure of the said regulatory framework is enshrined in the NWFP Procurement Rules 2003

and may be rated as bare minimum for procurement activities in the Health Department. That is why

Standard Bidding Documents, based on internationally recognized FIDIC templates, have been

adopted and customized as per the requirements of the health sector purchasing. The regulatory

framework in the form of NWFP Procurement Rules 2003 contain as an Appendix, the General

Principles for Evaluation of Application for Pre-Qualification and Technical Bids for Post-

Qualification, which elaborate the evaluation process of the bids received in three stages. These

Principles, as their name suggests, are just procedural guidelines for the evaluation committees to

harmonize their efforts towards achieving their goal through some standard practices. The

regulatory impact of the said principles is not defined in the Procurement Rules 2003.



21

The uniformity of coverage of the current legal framework in the form of NWFP Rules 2003 is

therefore not fully applicable on the procurement activities related to health-sector goods initiated by

the Health Department entities using public funds. Presently, no administrative approval is in place

for excluding any autonomous entity related to Health Department KP from adoption of Standard

Bidding Documents and two envelop tendering as per Rule 40 of NWFP Procurement Rules 2003.

This may contribute to unpredictability and distortion in the new business processes adopted by the

Health Department and may add to excessive costs in the operation of the procurement system.

NWFP Procurement of Works, Goods & Services Rules 2003, while having been published in

NWFP Local Government Planning Manual in 2003, are neither publicly accessible on any web-

portal of Health Department KP nor on the Government of Khyber Pakhtunkhwa website which

displays only North-West Frontier Province Procurement of Goods, Works, Services and Consulting

Services Ordinance, 2002. It is worth mentioning that the said website hosts more than 900

different public rules, regulations, acts & laws made since 1798 till 2008 spanning over two hundred

years. While having met procurement officials of many autonomous entities of Health Department, it

was revealed that they seldom have the copies of the NWFP Procurement Rules 2003.

Scoring criteria Score

The legislative and regulatory body of norms complies with all the followingconditions:

(a)

Is adequately recorded and organized hierarchically (laws, decrees,regulation procedures,) and precedence is clearly established. All lawsand regulations are published and easily accessible to the public at nocost.

3

(b) All laws and regulations are published and easily accessible to the publicat no cost

(c)It covers goods, works and services (including consulting services) forprocurement using national budget funds.

The legislative and regulatory body of norms complies with (a) plus one ofthe above conditions

2

The legislative and regulatory body of norms complies with (a) of the above

conditions.

1

The system does not substantially comply with any of the above conditions. . 0

Sub-indicator 1(b) – Procurement Methods:

This sub indicator assesses whether the legal framework includes:

a) a clear definition of the permissible procurement methods; and

b) the circumstances under which each method is appropriate.

The legal framework provided by the NWFP Procurement of Works, Goods and Services Rules

2003 makes, under Rule 7, open competitive tendering the default method of procurement in



22

Khyber Pakhtunkhwa Province. All procurements exceeding financial thresholds of Rs 5 million for

contracts of non-development works, and those exceeding Rs 10 million for contracts of

development works need pre-qualification or post-qualification of suppliers or contractors with

unlimited participation. Pre-qualified suppliers or contractors offer their technical and financial

proposals as per Rule 40 under the Two Envelop Single Stage Tendering procedure which is a

restricted tendering process if only pre-qualified bidders participate as opposed to post-qualification.

However, opportunity to get pre-qualified in Khyber Pakhtunkhwa Province Health Department isopen to firms all across the Country. Rule 35 further defines the types of contracts with estimated

costs ranging from Rs 40,000 to Rs 5,00,000 to attract Request For Quotation (RFQ) procedure

with a minimum of three quotations / bids and prohibits fractioning of contracts to avoid open

competition. The Health Department Khyber Pakhtunkhwa abides by the stated financial thresholds

for competitive bidding.

Rule 36, 38 & 39 define the non-competitive procedures relating to Single Source Procurement,

Repeat Orders and Restricted Tendering respectively under specific circumstances. Financial

negotiations are allowed under Rule 37 upon approval from the Procuring Entity to safeguardagainst quoting of exorbitant prices in Single Source Selection procedure. Currently financial

negotiations are considered inconsistent with the appropriate international standards for competitive

bidding and are apparently not being used by the Health Department Khyber Pakhtunkhwa.

Interestingly, the language regarding prohibition of financial negotiations in the Khyber

Pakhtunkhwa Public Procurement Rules 2012 expected to be notified by the Government soon,

also seems to bear the seeds of NWFP Procurement Rules 2003 and is considered lenient

compared to the Federal PPRA Rules 2004.

There is no specific law or set of rules supplemental to procurement of health-sector goods. Drugs& surgical disposables are purchased in line with the Drug Act 1976 and NWFP Procurement Rules

2003. As per Rule 4 the NWFP Procurement Rules 2003, procurement of essential items & goods

of immediate nature, in case of emergency, is to be carried out by a committee consisting of District

Coordination Officer, District Revenue & Estate Officer and Executive District Officer (Finance &

Planning) by utilizing non-competitive contracting methods under Rules 36, 38 & 39 of the NWFP

Procurement Rules 2003. The said procedure is not being followed by the AMIs and direct

administrative sanction of Secretary Health is the sole means to tackle urgent procurements through

frequent purchase orders in emergency situations from the Emergency Relief Package (ERP)

Funds. Sometimes, in case of more emergencies, funds from the regular budgets for the AMIs are

transferred to the ERP funds with approval of the Competent Authority. The above said transient

practice is not in line with the afore-stated Rule 4 which may be due to the peculiar nature of

emergencies in the hospitals owing to the law & order situation in the Province and wherein timely

decision-making of such committees may be of little use. However, this may also relate to the

absence of a revised procedural setup after the devolution of powers to the Provinces under the 18th

Constitutional Amendment.

Appropriate hierarchical levels have been established in the Health Department Khyber

Pakhtunkhwa through various Departmental committees consisting of health sector professionals

namely, Pre-Qualification Committee, Scrutiny Committee, Comparative Statement (CS)

Committee, Technical & Evaluation Committee and lastly the Purchase Committee to examine the



23

bids under a competitive bidding method. Composition of the said committees for a typical activity

regarding procurement of drugs and medicines is as under:

Committee Composition for Govt-MCC Procurements of Drugs

Functions:

1. Visit business premises of manufacturers and importers of pharmaceutical products and bio-medical equipment all across the Country.

2. Submit Inspection Report to the Chairman Technical & Evaluation Committee within three days

of inspection for evaluation of firms for pre-qualification.

A typical Pre-Qualification Committee is mostly composed of 4-6 members selected fromamong the designations mentioned above for different industrial estates in the Province andthe Committee may further divide the areas amongst sub-committees made from its members.

Technical Bids Scrutiny Committee:

S.No Designation

1. Deputy Director Administration DGHS KP Chairman

2. Drug Inspector, EDO (Health) Peshawar Secretary Member

3. Chief Pharmacist Lady Reading Hospital Peshawar Member

4. Section Officer (Drugs), DoH, Peshawar Member

5. Pharmacist Govt-MCC, DGHS Co-opted Member

Functions:

1. Carry out preliminary screening of the Technical bids received from the pre-qualified bidders

and develop their risk profiles in view of the documentation contained in the Technical Bids.

Pre-Qualification Committee:

S.No Designation

1. Additional Secretary (Dev) Health KP / DGHS KP / MedicalSuperintendent LRH Peshawar / Director Admn, DGHS KP

Chairman

2. Professor of Surgery LRH Peshawar Member

3. Professor of Medicines LRH Peshawar Member

4. Deputy Secretary (Budget), Health Department, Peshawar Member

5. Chief Drug Inspector Peshawar Member

6. Deputy Director Pre-Qualifications Member

7. Pharmacist, Govt-MCC, DGHS Member

8. Drug Inspector, EDO (Health) Peshawar Member



24

2. Point out the deficiencies in secondary documentation and recommendation to the Technical &

Evaluation Committee for taking appropriate action in this regard.

3. After carrying out the preliminary screening, to submit the report to the Chairman Technical &

Evaluation (T&E) Committee for detailed evaluation of the Technical Bids by the T&E

Committee.

Note: With the recent, introduction of the new Standard Bidding Documents for procurementof Drugs & Surgical Disposables, the Scrutiny Committee does all the preliminary screening

and risk profiling of the Bidders and the products offered by them by sifting out relevant data

required by the SBDs, getting the secondary documentation completed by the bidders and

preparing bidders’ corporate and product snapshots on the standard prescribed Bid Evaluation

Proformas for the various categories of suppliers, namely manufacturers/importers of general

drugs, manufacturers/importers of biological drugs, and manufacturers/importers of surgical

disposables and medical devices. The Preliminary Scrutiny Committee then submits screened

profiles of bidders and their products to the T&E Committee thereby informing them of bidders’

preliminary compliance with the technical evaluation criteria with recommendations on certain

technical aspects of the bids for taking decision. This facilitates the T&E Committee to conduct

a detailed evaluation of the technically qualified bidders.

Comparative Statement (CS) Committee

S.No Designation

1. Deputy Director Personnel DGHS KP Chairman

2. Deputy Secretary Budget DGHS KP Secretary Member

3. Section Officer Drugs Health Department KP Member

4. Pharmacist, Govt-MCC KP Member

Functions:

1. Prepares a Comparative Statement (CS) of quotations after public opening of the financial bids

of the technically qualified bidders by the Technical & Evaluation (T&E) Committee.

2. Submits the CS to the Chairman Technical & Evaluation Committee for approval of Selection

(Purchase) Committee.

Technical & Evaluation (T&E) Committee:S.# Designation

1. Additional Secretary(E&A), Govt: of Khyber Pakhtunkhwa Chairman

2. DGHS KP Secretary Member

3. Professor of Medicine, LRH Member

4. Professor of Surgery, LRH Member

5. Representative from Pharmacy Department, University ofPeshawar

Member

6. Senior Hospital Pharmacist, Kohat / Bio-medical Engineer Member



25

DGHS KP

7. Deputy Secretary (Drugs) Member

8. Medical Superintendent, LRH, Peshawar Member

Functions:

1. Carries out evaluation of different manufacturers and importers of drugs/bio-medical

equipment for pre-qualification for the purpose of Govt-MCC or DGHS Procurement Cell as

and when required.

2. Submits pre-Qualification Report to the Chairman Purchase Committee for approval.

3. Constitutes Technical Bids Scrutiny Committee or Comparative Statement Committee for

preparation of Comparative Statement for approval of the Purchase Committee.

4. Co-opts any person considered relevant to the process of evaluation.

5. Opens financial bids for selecting the lowest rates for drugs and bio-medical equipment quoted

by pre-qualified firms under centralized rate selection régime.

6. Carries out clinical trials of drugs of various brands/types prior to selection of the drugs by the

Technical Bids Scrutiny Committee of Govt-MCC and instrument testing of bio-medical

equipment.

7. Performs any other task, if assigned.

8. Requires two third of its members to convene its meetings.

Selection (Purchase) Committee:

S.No Members

1. Secretary Health, Khyber Pakhtunkhwa Chairman

2. Additional Secretary Health (Dev), Khyber Pakhtunkhwa Vice Chairman

3. Director General Health Services, Khyber Pakhtunkhwa/Officer Incharge

Secretary member

4. Professor of Medicine, HMC Member

5. Professor of Surgery, LRH Member

6. Professor of Gynaecology & Obstetrics Member

7. Professor of Pharmacology from any public sector MedicalCollege.

Member

8. Chief Pharmacist, Lady Reading Hospital Peshawar Member

9. Chief Drug Inspector, DGHS, Peshawar Member

Functions:

1. Approves pre-qualification of firms for Govt-MCC.

2. Approves pre-qualification of suppliers of Bio-Medical Equipment

3. Selects & approves pharmaceutical and bio-medical products and their rates from technicallyqualified firms for Govt-MCC and Procurement Cell.



26

4. Co-opts any person considered necessary for carrying out the purpose of the Committee.

The above said committees are officially notified by Secretary Health annually though their

composition mostly remains the same with addition or replacement of some technical or

administrative entity. These committees tend to reasonably control and minimize the discretion of

individual agencies or procurement officials in using the methods that limit competition.

Committee Compositions for Procurement Cell Procurements for Bio-Medical Equipmentetc.:

Equipment & Instruments Committee:

S.No Designation

1. Additional Secretary (Dev) Health KP Chairman

2. Chief Drug Inspector Peshawar Secretary / Member

3. Bio-Medical Engineer Member

4. MS HMC Member5. MS KTH Member

6. MS LRH Member

Functions:

1. Pre-Qualification of firms producing non-drug surgical disposables & Bio-Medical equipment.

2. Visit business premises of manufacturers and importers of pharmaceutical products and bio-medical equipment

3. Submit Inspection Report to the Chairman Technical & Evaluation Committee within three daysof inspection for evaluation of firms for pre-qualification.

Inspection Committee:

S.No Designation

1. Senior Planning Officer-I Chairman

2. Concerned MS of Hospital Secretary / Member

3. Concerned EDO (H) of the District Member

4. Concerned Engineer of electro-Medical workshop Member

Functions:

1. Inspect the equipment purchased under the Development Schemes/Projects/Programs.

2. Check the installation & commissioning of equipment

3. Check the operationalization of the equipment & submit report to the Provincial Technicalcommittee & Provincial Purchase Committee.

4. Check record of payment in respect of procurement of equipment by the MS / EDO(H) / PM /PD / Coordinator

5. Recommend disciplinary action against the MS/ EDO(H)/PM/PD/Coordinator concerned incase of payment before the supply or operationalization of the equipment.



27

Technical Committee:

S.No Designation

1. Director Public Health, DGHS, Peshawar Chairman

2. Concerned Head of Department of LRH & KTH or theirrepresentatives not below the rank of Associate Professors &

KCD in case of dental departments.

Secretary / Member

3. Executive Engineer Electro-Medical Equipment Workshop Member

4. Any other co-opted member expert in the field Member

Functions:

1. Preparation of Technical Specifications

2. Evaluation of Technical Bids

3. Inspection of Samples (if required) before final selection

4. Submission of final Technical & evaluation report within prescribed period to the

Purchase Committee for final approval.

5. Ensure technical evaluation of non-Govt-MCC drugs / drugs not quoted by bidders / included in

PC-I, to ease process of procurement of drugs

Purchase Committee:

S.No Designation

1. Secretary Health Chairman

2. Director General Health Services Secretary / Member

3. Chief Planning Officer, Health Department Member

4. Project Coordinator/MS/EDO (H) Member

5. Assistant Project coordinator Member

6. Any Co-opted member Member

Functions:The Committee shall follow the procurement guidelines of the NWFP Procurement Rules 2003 andWorld Bank Guidelines for procurement of deliverables in MTDF Project.


The legislative and regulatory body of norms complies with all the followingconditions:

(a) Allowable procurement methods are established unambiguously at anappropriate hierarchical level along with the associated conditions under

which each method may be used, including a requirement for approval byan official that is held accountable.

3



28

(b) Competitive procurement is the default method of public procurement.

(c) Fractioning of contracts to limit competition is prohibited.

(d) Appropriate standards for international competitive tendering are specifiedand are consistent with international standards

The legal framework meets the conditions of (a) and (b) plus one of the remaining

conditions.

2

The legal framework meets the conditions of (a) and (b). 1

The legal framework fails to substantially comply with any three of the conditions(a) through (d).

0

Sub-indicator 1(c) – Advertising Rules and Time Limits

This sub indicator assesses whether:

a) the legal framework includes requirements to publish contract awards as a matter of public

interest and to promote transparency;b) there is wide and easily accessible publication of business opportunities; and,

c) there is adequate time provided between publication of opportunities and submission date,

consistent with the method and complexity of the procurement, to prepare and submit

proposals.

Rule 11(3) of the NWFP Procurement Rules 2003 permits the Tender Inviting Authority to provide

atleast fourteen days as minimum time between publication of Notice for Pre-Qualification in two

national dailies and the submission of Pre-qualification documents. In case of any clarification

sought by a contractor or supplier, the Tender Inviting Authority responds to the said request atleastseven days prior to the deadline of submission of the application to pre- or post-qualify. The Health

Department abides by the stated time limits in the pre-qualification procedures.

Rule 20 (1) of the said Rules allows a minimum of thirty days between date of publication of the

Tender Inviting Notice (term used in the Rules for the Invitation For Bids) and submission of bids /

proposals. However, its sub-clause (2) authorizes head of the Procuring Entity to reduce this

mandatory time for reasons to be recorded in writing. As observed, this sub-clause has been used

to reduce this time to fourteen days or even one week in most of the procurement instances by the

procuring entities of the Health Department either owing to meeting an acquisition deadline or someadministrative expediency to avoid lapse of appropriated funds. On one side this reflects that the

planning side of the Department is either inadequately managed or ad-hoc based and on the other

side the standard time gets reduced wherein the prospective bidders could have adequately

prepared their bidding documents to quote well-thought prices, had more time be given to them.

Although content of the Invitation For Bids (IFB) for procurement of Pharmaceutical Products for

Govt-MCC DGHS for the year 2012-13 included sufficient information to enable potential bidders

to determine their ability and interest in bidding, the recently introduced Standard Bidding Document

for the said activity witnessed many revisions in the Technical Evaluation Criteria till the last minutedue to the deliberations between the bidders and the Health Department in the subsequent Pre-Bid



29

Meetings whose minutes could neither be circulated properly among the bidders through an

addendum published in a newspaper due to paucity of time nor could reasonable time be given to

them to reflect these changes in their Bidding Documents; hence majority of bids faced infirmities in

their secondary documentation despite the posting of the revised Standard Bidding documents on

the newly created DHIS web-link for the Govt-MCC.

The silence of NWFP Procurement Rules 2003 on providing a minimum time limit to bidders for

incorporating any such changes made by the client after the Pre-Bid Meeting has considerably

compromised the objective of promoting transparency in the bidding process and has reduced the

quality and level of competition expected. If multi-national firms having their business components

abroad are expected to compete, as many of them have participated through their pre-qualified local

offices, this is a serious factor to consider. The law and regulations should establish the criteria for

setting the minimum time between advertisement and submission of bids/proposals through some

administrative notification for competitive bidding, atleast for the time till the notification of the draft

Khyber Pakhtunkhwa Public Procurement Rules 2012 by the Government.

Scoring Criteria Score

The legal framework meets the following conditions:

3(a)

Requires that procurement opportunities other than sole source or pricequotations be publicly advertised.

(b) Publication of opportunities provides sufficient time, consistent with themethod, nature and complexity of procurement, for potential bidders toobtain documents and respond to the advertisement. Such timeframesare extended when international competition is sought.

(c) Publication of open tenders is mandated in at least a newspaper ofwide national circulation or in a unique Internet official site, where allpublic procurement opportunities are posted, that is easily accessible.

(d) Content of publication includes sufficient information to enable potentialbidders to determine their ability and interest in bidding.

The legal framework meets the conditions of (a) and (b) plus one of theremaining conditions.

2

The legal framework meets the conditions of (a) plus one of the remaining

conditions.

1

The legal framework only meets the conditions of (a) above. 0

Sub-indicator 1(d) – Rules on participation:

This sub indicator assesses the participation and selection polices to ensure that these are non

discriminatory. As a general principle under this sub-indicator, firms, including pre-qualified

multinational firms/importers or suppliers, should not be excluded from participating in a tendering

process for reasons other than lack of qualifications. Those exclusions from the tendering process

that are not based on the qualifications of the firm, may arbitrarily limit competition and may result in

inefficient procurement and higher prices.



30

The Department of Health Khyber Pakhtunkhwa annually pre-qualifies manufacturers, importers or

supplier of bio-medical equipment and pharmaceutical products and surgical disposables whether

the said entities are local or multi-national. All such firms are therefore eligible for participation in the

competitive bidding process for supplying the above mentioned goods. The policies of the Health

Department in this regard are non-discriminatory and result in creating a pool of pre-qualified firms

from whom the Department strives in good earnest to procure quality pharmaceutical products and

equipment. However, it was observed that in certain procurement activities initiated by theDirectorate General of Health Services, Vertical Programs and AMIs, technically qualified bidders

were excluded on account of Rule 34 of the NWFP Procurement Rules 2003, from further

competition when less than three such bidders survived the technical evaluation phase. Right to

audience under Rule 32 of the said Rules was also not accorded to the surviving technically

qualified bidder in the referred cases to present a detailed analysis of workability of his bid before

the Department. A new procurement process therefore used to be re-initiated ensuring minimum of

three technically qualified bidders till the end by relaxing the evaluation criteria despite the fact that

in re-bidding, participation of a minimum of only two bidders is required at the time of bid submission

under Rule 34 of the said Rules. An analysis of these persistent practices in the light of

interpretation of afore mentioned Rules 34 & 32, therefore reveals a distorted interpretation of the

Rule 34 and tends to limit competition and induce rigidity in the business process resulting in

inefficient procurement and higher prices.

Rule 34 of the NWFP Procurement of Works, Goods and Services Rules 2003 states as under:

“34. Modes of Procurement: (1) Except as otherwise provided by these rules, a Procuring Entity

for the Procurement of Goods, Works or Services shall adopt tendering proceedings.

(2) For the purpose of transparency, fair competition and efficiency, the Procuring entity shall

cause evaluation of offers, proposals or tenders only where a minimum of three responses

have been received, unless the Head of the Procuring Entity authorizes the evaluation of less

than three tenders after publishing a Notice Inviting Tenders for a second time in the

newspapers of wide circulation and for cogent reasons to be recorded in writing of the

Procuring Entity authorizes the evaluation of less than three tenders.”

The above mentioned Rule 34 states the condition of submission of a minimum of three quotations /

responses by the bidders in the first round of invitation for Bids. These bids (a minimum of three forthe purpose of transparency, fair competition and efficiency) are required to be submitted to the

Procurement Entity at the Bid submission stage and the same will then be scrutinized in Stage-I

through Preliminary Screening as per General Principles For Evaluation of Application for Pre-

Qualification & Technical Bids for Post-Qualification (Appendix to the Rules 2003). Subsequent to

the Preliminary Screening, detailed evaluation is conducted by the Technical & Evaluation

Committee in Stage-II as per the above said General Principles. Whosoever, emerges as the lowest

evaluated responsive bidder, will be awarded the contract. The above stated Rule 34 and the

General Principles do not, at any stage, mention that all the three bidders who initially submitted

their bids have to emerge as technically qualified till the end. The said Rule also does not state thatany one bidder, who has emerged among the crowd as the sole technically qualified bidder during



31

the Preliminary Screening / Technical Evaluation, has to be excluded from the competition only

because other bidders have been rendered technically disqualified during the said preliminary

screening or technical evaluation. The guiding principle behind retaining in the competition the sole

technically qualified bidder, is embedded into the international best practice adopted World-wide by

all the donor institutions and OECD countries in their procurement régimes, whereby a technically

qualified bidder is not penalized for the disqualification or absence of the other bidders, i.e., he

should not be disqualified for a mistake he has not committed.

Rule 32 of the NWFP Procurement of Works, Goods and Services Rules 2003 mentions the

discretion of the Tender Accepting Authority to reject all tenders, proposals, offers or quotations at

any time prior to the acceptance of a tender, proposal, offer or quotation. This rejection is based on

the assumption that the bid is unworkable. However, before rejection of tender on the said basis,

the stated Rule mentions that the Tender Accepting Authority has to give an opportunity to the said

bidder, upon his request, to demonstrate the workability of his bid. As a matter of opinion,

Justification of rejection of a workable bid of a technically qualified bidder by the Tender Accepting

Authority would be difficult if his price quotation is well within the budget allocated or nearly matchesthe unit rate previously received by the client. The legal as well as audit implications of excluding

such a single technically qualified bidder for no cogent reason by the Procuring Entity may have to

be measured against delaying the purchasing process leading to subsequent acquisition of the

intended items on increased market prices and a belated health service delivery.

There may be cases in which the legal framework may allow restrictions that require purchasing

from or associating with domestic firms, or mandate the inclusion of a minimum locally

manufactured content. Many countries also allow price preferences for domestic firms. Excessive

price preferences or other concessions for domestic bidders may therefore deter effectivecompetition and reduce gains in efficiency.

Though the NWFP Procurement Rules 2003, under which the procurement of pharmaceutical

products and Bio-medical equipment are purchased, do not bar participation of any foreign or local

firm, these do require mandatory pre-qualification vide NWFP Government Notification No.

SOH(V)9-5/96(MCC), dated 20th May 1996 of all foreign/multi-national and local pharmaceutical

drugs manufacturers & distributors (distributors now banned by the Honourable Peshawar High

Court vide Para 9 of the Writ Petition No. 2478/2010 - Daily Mashriq Vs Secretary Health & Others)

by the Health Department Khyber Pakhtunkhwa as a condition to participate in a bid which maybecome an entry barrier for many foreign firms as importers which have no pre-qualification profile

with the DGHS Khyber Pakhtunkhwa. The foreign firms must register with the Sales Tax

Department as importers and get pre-qualified accordingly with the Health Department Khyber

Pakhtunkhwa. However, keeping in view of the restrictions of Import Policy Order 2012-13, prior

verification of current Good Manufacturing Practices (cGMP) and pharmaceutical raw material

source gradation by the DGHS to achieve drug efficacy, pre-qualification requirement seem to out-

weigh the merits of an open no-barrier competition. Interestingly, in some procurement activities

relating to acquisition of bio-medical equipment, it has been observed that the said pre-qualification

requirement for suppliers not registered with the Health Department Khyber Pakhtunkhwa has beenwaived of by the concerned procurement entity on depositing of double the amount of the bid



32

security to entertain them on-the-spot for post-qualification at the time of bid submission. Except for

the supply of drugs, medicines and surgical disposables where pre-determination of manufacturing

quality is essentially required to ensure product efficacy, there is no harm in considering the un-

registered suppliers of non-pharmaceutical products provided the option of their post-qualification at

the time of bid submission is already mentioned in the Standard Bidding Documents to ensure

transparency and wider competition. A strict interpretation of the Rule 8 regarding pre-qualification

of suppliers further suggests that the criteria set by the Health department for the said process arenot pre-qualification but are rather registration and industrial process verification by the Department.

Rules 9 & 10 of the NWFP Procurement Rules 2003 provide for the conditions under which a

supplier ’s bid can be rejected or he can be debarred from current or future procurement activities

e.g., his failure to perform in earlier contracts, making a cartel, submitting a false information or his

inducement to procurement officials. These Rules are then supplemented by the allied laws like

Drug Act 1976. However the stated Rules offer little in regard to grievance redressal in response to

any administrative debarment of a supplier on procurement matters. The Provincial Quality Control

Board (PQCB) Khyber Pakhtunkhwa under Section-11 of the Drug Act 1976 deals with the drugquality control issues and subsequent prosecution of drug manufacturer/seller etc. The concerned

Licensing Board, constituted under Section-5 and Registration Board constituted under Section-7 of

the Drugs Act 1976, also deal with cancellation of registration and licensing of drug manufacturers.

This has therefore significantly reflected upon the existing complaint-handling procedures and

appeal forums with limited procedural & appropriate forum definition by the Health Department in

offering a due process to the barred/blacklisted supplier regarding rebuttal of any such allegations

on him pertaining to submission of false documentation, breach of contract or any other

procurement related issues. Hence, various complaints against debarments, disqualifications and

tender rejections at the DGHS, Vertical Programs and the AMIs in the Health Department Khyber

Pakhtunkhwa are being filed with different forums including the Honourable Peshawar High Court,

NAB and the Provincial Ombudsman Secretariat (under section 31 of the Khyber Pakhtunkhwa

Provincial Ombudsman Act 2010) instead of utilizing the appropriate forum like the office of the

Secretary Health. An independent Provincial Drug Court has recently been notified in October

2012 and awaits appointment of judges with so far no functional Terms of Reference in sight. Apart

from deciding the cases of spurious drugs and cancellation of drug licenses, its utility to fill the gap

of a proper Provincial Appellate Forum for procurement-related grievances is yet to be seen.



3(a) Establishes that participation of any contractor or supplier or group ofsuppliers or contractors is based on qualification or in accordance withinternational agreements; requires the use of pass/fail basis fordetermining qualifications to extent possible; limits domestic pricepreferential, if allowed, to a reasonable amount (e.g.15% or less); and

requires justification for set asides that limit competition.



33

(b) Ensures that registration if required does not constitute a barrier toparticipation in tenders and does not require mandatory association withother firms.

(c) Provides for exclusions for criminal or corrupt activities, administrativedebarment under the law subject to due process or prohibition ofcommercial relations.

(d) Establishes rules for the participation of government owned enterprisesthat promote fair competition.

The law and regulations meet the conditions of (a) and (b) plus one of theremaining conditions.

2

The law and regulations meet the conditions of (a) plus one of the remainingconditions.

1

The law and regulations do not meet the conditions of a) through d) above. 0

Sub-indicator 1(e) – Tender documentation and technical specifications

The sub indicator assesses the degree to which the legal framework specifies the content of

tendering or solicitation documents to enable suppliers to understand clearly what is requested from

them and how the tendering process is to be carried out.

Whereas Rule 23 of the Federal Public Procurement Rules 2004 clearly outlines a detailed list of

components to structure the Standard Bidding Documents (SBDs) for any competitive bidding, the

NWFP Procurement Rules 2003 do not particularly specify the content of the tendering documents

as to enable suppliers to understand clearly what is required from them and how the tendering

process is to be carried out. However, Rule 11 of the NWFP Procurement Rules 2003 dealing with

the Pre & Post-Qualification proceedings for the suppliers and contractors includes certain

information regarding instructions for preparing and submitting the pre or post-qualification

applications, a summary of the required terms and conditions of the contract to be entered into a

result of the procurement proceedings, documentary evidence required to be submitted by the

bidders in this regard and lastly, manner and place for submission of the said applications.

Rule 14 of the NWFP Procurement Rules 2003 further enumerates contents of invitation to pre or

post-qualify and invitation to tender which include the name & address of the Tender Inviting

Authority, nature, quantity and place of delivery of the goods to be supplied, the desired time for the

supply of goods, the criteria & procedure to be used for evaluating the qualifications of suppliers or

contractors, price for pre-qualification or tender documents, terms and conditions for payment of

mobilization advance and finally the place and deadline for the submission of tenders. The General

Principles for Evaluation of Application for Pre-Qualification & Technical Bids for Post-Qualification

(Appendix to the NWFP Procurement Rules 2003) also indicate some parameters relating to the

technical and financial evaluation of bidders.

In the absence of any standard instructions for structuring the Standard Bidding Documents in the

NWFP Procurement Rules 2003, the procuring entities of the Health Department of KhyberPakhtunkhwa have, over the time, grouped together all the above mentioned indicators of the Pre-



34

Qualification documents and General Principles for bid evaluation, to evolve a document to be used

simultaneously to serve the purpose of three documents i.e., (a) the Tender Inviting Notice (b) the

bidding document for purchasing of goods and (c) the contract template for contractual privity. Thus,

in a way, Rule 11, Rule 12 & the said General Principles (Appendix to the NWFP Procurement

Rules 2003) together establish the minimum content of the tender documents and require that

content is relevant and sufficient for bidders to be able to respond to the client’s requirements.

Until recently, in Khyber Pakhtunkhwa, the Directorate General Health Services, the Autonomous

Medical Institutions and the Vertical Programs have been using this evolved 3-in-1 bidding

document for purchasing both pharmaceutical products and bio-medical equipment using Single

Stage Single Envelop procedure. However, the Health Department Khyber Pakhtunkhwa conducted

procurement of Bio-Medical equipment in April 2012 with the help of a more detailed version of

Bidding Documents for adopting Two Envelop Tendering procedure.

In August 2012, the said Bidding Documents were thoroughly revised and standardized in

accordance with the FIDIC templates for procurement of goods and fine-tuned to procurement of

pharmaceutical products i.e., drugs, medicines and biological vaccines as per Rule 40 of the NWFP

Procurement of Works, Goods & Services Rules 2003 under Two Envelop Single Stage Bidding

process. Similarly, Vertical Program relating to the Maternal Neo-natal and Child Health (MNCH)

Khyber Pakhtunkhwa has also taken its procurement initiative for the acquisition of Community Mid-

Wife (CMW) Kits for its 25 health districts through the above said revised Standard Bidding

Documents (SBDs) in September 2012 under the said Rules.

These Standard Bidding Documents (SBDs) for procurement of Drugs and Surgical Disposables, for

the first time in the procurement stream of the Health Department Khyber Pakhtunkhwa , offer a

proper documentation structured on international contracting standards displaying two sections, onefor fixed conditions and the other for variable conditions of contract. The Part-I of the Standard

Bidding Documents relating to the fixed conditions constitute Instructions To Bidders (ITB) and

General Conditions of Contract (GCC). Part-II of the said Documents constitute Invitation For Bids

(IFB), Bid Data Sheet (BDS) reflecting any changes in reference to the Instructions To Bidders in

Part-I of the SBDs, Special Conditions of Contract (SCC) reflecting any changes in reference to the

General Conditions of Contract (GCC) in Part-I of the SBDs, Technical & Financial Evaluation

Criteria with particular reference to acquisition of pharmaceutical products and bio-medical goods,

Inspection Checklist / Performa for Pre-Qualification of Pharmaceutical manufacturing units pre-

qualified by DGHS Khyber Pakhtunkhwa, Specialized/Biological Drugs List & Drug Formularyapproved by the DGHS, Specifications & Rate Table, Supply Schedules, Technical Specifications

for general medicines, biological drugs & bio-medical equipment and ancillary Services, Standard

Bid Forms and finally the list of eligible countries whose bidders can participate in the bidding

process for supplying goods to DGHS Khyber Pakhtunkhwa.

The Standard Bidding Documents recently adopted by the Directorate General Health Services

Khyber Pakhtunkhwa for procurement of pharmaceutical goods including drugs and surgical

disposables contain sufficient information to enable the submission of responsive bids and to

establish the basis for a transparent evaluation and award process. Specifications relating tobiological drugs and general medicines included as an annexure in the Standard Bidding



35

Documents through the approved Drug Formulary seem to be generic and refer to international

standards associated with the World Health Organization (WHO) and US Food & Drug

Administration (FDA) for their assessment in the Technical Evaluation Criteria.

Though a methodology to determine gradation of pharmaceutical raw material source with respect

to the quality for product efficacy (i.e., excellent, good or satisfactory grade etc) has not yet made its

way into the Technical Evaluation Criteria in the recently adopted Standard Bidding Documents

mentioned above for the want of finalization of the draft policy on raw material source pricing and

quality pending for approval by the Federal Government, other technical criteria have been

incorporated to ensure maximum possible efficacy of the product. The said criteria include past

performance of the bidder through Purchase Orders from major health institutions, market

experience of the bidder and percentage of market share of a biological drug, credibility of the

bidder through Good Manufacturing Practices (GMP) certification and drug manufacturing standards

set by the World Health Organization (WHO), US Federal Drug Agency (FDA), European

Community’s Directive 93/42/EEC (Annex-II, Article 3) and Pakistan National Accreditatation

Council (PNAC) etc.

To ensure drug efficacy, the technical expertise of the staff of the bidder in the areas of plant

management, quality control and quality assurance with an edge given to atleast five years

pprofessional experience in pharmaceutical production, has been given due weightage with

particular focus on handling and maintenance experience of cold chain for transportation of

temperature-sensitive biological/specialized drugs from manufacturing facility situated locally or

abroad to the end-user. Raw Material Stability certificates and Production Quality Control equipment

calibration certificates by third party calibrators for the manufacturing firms have also been

considered for including them in the Technical Evaluation Criteria.

It has been ensured in the Technical Evaluation Criteria that even if the source gradation is at the

moment not possible due to pending policy formulation at Federal level, atleast the source of

pharmaceutical raw material or of a medicine supplied in a finished form against a quoted item

should be ascertained / verified through import documentation e.g., product related Customs Goods

Declaration, Bill of Lading or Commercial Invoice showing the country of origin accompanied by a

bio-assay or an analysis for the said raw material / finished product in the form of an Analytical

Certificate or Quality Assurance Certificate duly issued by the concerned Drug Registration

Authority (DRA) of the country from where imported, e.g., the current GMP (cGMP) certificates

issued by renowned DRAs like USFDA, European Medicines Association (EMA), Medicines &Healthcare Products Regulatory Agency (MHRA) UK, Therapeutic Goods Administration (TGA)

Australia, Pharmaceutical Medical Agency (PHARMAC) New Zealand, Pharmaceutical & Medical

Devices Agency (PMDA) Japan, Swiss Agency For therapeutic drugs (Swiss-medic) Switzerland,

Health Canada, Health Sciences Authority (HAS) Singapore and National Administration of Drugs &

the Food & Medical Technology (ANMAT) Argentina etc., all having recognized international

standards for full quality assurance system for pharmaceutical products. In the case of recently

drafted Standard Bidding Documents for procurement of cancer medicines for Begum Nusrat Bhutto

Oncology Services in Khyber Pakhtunkhwa for 2012-13 by Hayatabad Medical Complex, IRNUM,

INOR and Abbottabad Teaching Hospital’s Oncology Department, the Technical Evaluation criteriahas been introduced which contains highly-scored raw-materials sources for anti-cancer medicines



36

certified from Category-A DRAs consisting of the above mentioned DRAs, and those lesser-scored

certified by Category-B DRAs of China, India, Pakistan, Brazil, Egypt, Korea, Malaysia and Jordon

etc. Various Pre-Qualification Criteria have also been omitted in view of the Post-Qualification in the

said SBDs.

With an estimated outlay of Rs. 629 million allocated for procurement of drugs out of the total Rs 1.2

billion for health sector related procurements for the current fiscal year in Khyber Pakhtunkhwa, the

procurement of medicines in general and biological drugs in particular attained a significant place on

the priority list of the Health Department. The need for specialized Bidding Documents customized

for procuring the said pharmaceutical products and related bio-medical equipment was therefore

direly felt. Directorate General Health Services made substantial efforts towards achieving the said

objective in collaboration with TRF Khyber Pakhtunkhwa.

It was therefore during the re-design and introduction of the revised Standard Bidding Documents

for procurement of pharmaceutical products in compliance with the international contracting

templates and health related acquisition Guidelines of the World Bank, WHO and USFDA that the

Directorate General Health Services has actively demonstrated its sensitivity towards achieving

highest grade for biological drugs keeping in view their life saving impact and assurance against

disease relapse.

Special provisions in the Technical Evaluation Criteria of the said Bidding Documents, in

consultation with pharmaceutical sector specialists in the Health Department, have thus been

introduced for the first time in the form of mandatory bio-equivalence studies to be provided by the

suppliers or manufacturers for anti-Tubercular products (Anti-TB Vaccines), requirement of pre-

qualification of suppliers by the WHO for EPI vaccines (BCG, Measles, Tetanus and Pentavalent:

DPT-HepB-Hib), mandatory Sustained Viral Response (SVR) studies containing clinical trialsperformed with reference standards on efficacy of Hepatitis C vaccine (consisting of conventional

and Pegylated Interferon therapy) and having their clinical data demonstrating published efficacy &

disease relapse period in atleast one indexed journal of international repute with considerable

readership impact. Unfortunately however, the Surgical Disposables, earlier procured by Govt-MCC,

DGHS in the last many years and intended to be acquired through the revised Standard Bidding

Documents, have been handed over to the AMIs like Lady Reading Hospital Peshawar to use the

obsolete three page bidding document for their procurement of non-drug surgical disposables in the

current financial year through administrative approval from Health Secretariat, thus still leaving

some effort in harmonizing the procurement business practices based on the revised Standard

Bidding Documents.

Rule 33 of the NWFP Procurement Rules 2003 concerning description of goods, construction or

services ensures generic and unbiased technical specifications to be included in the tender

documents. The Bidding Documents designed in April 2012 for procurement of bio-medical

equipment and the revised Standard Bidding Documents for procurement of pharmaceutical

products and CMW kits for Govt-MCC, DGHS and MNCH Program respectively contain generic and

neutral technical specifications of goods in compliance to the above said Rule. The Technical

Criteria for the Bio-medical equipment contain product conformance certifications standards like US

Food and Drug Administration (FDA) 510K, European Community (CE) MDD or Japan Industrial



37

Standards (JIS alongwith the product performance certifications from authentic certifying bodies like

Association for the Advancement of Medical Instrumentation (AAMI), International Certification

Commission (ICC) and the United States Certification Commission (USCC) etc. Further, the

participating firms should have their technical resource persons to have expertise based on bio-

medical equipment oriented CCE, CBET, CRES, CLES Certifications etc.

Rule 33(2)(a) further requires recognition of standards which are equivalent when neutral

specifications are not available.



3(a) Establishes the minimum content of the tender documents andrequires that content is relevant and sufficient for tenderers to be ableto respond to the requirement.

(b) Requires the use of neutral specifications citing international standards

when possible.

(c) Requires recognition of standards which are equivalent when neutralspecifications are not available.

The legal framework substantially meets the conditions of (a) plus one of theremaining conditions.

2

The legal framework meets the conditions of (a). 1

The content of the bidding documents is totally or largely left at the discretionof the procuring entity.

0

Sub-indicator 1(f) – Tender evaluation and award criteria

This sub indicator assesses:

a) the quality and sufficiency of the legal framework provisions in respect to the objectivity and

transparency of the evaluation process; and,

b) the degree of confidentiality kept during the process to minimize the risk of undue influences

or abuse.

Rules 23 to 29 in Chapter IV (Tender Evaluation) of NWFP Procurement Rules 2003 indicate

requirements for providing pre-disclosed and objective criteria essential for efficiency, fairness and

transparency in the evaluation of tenders. General Principles for Evaluation of Application for the

Pre-Qualification & Technical Bids for Post-Qualification (Appendix to NWFP Procurement Rules

2003) give three different stages for evaluation of bids or proposals. In Stage-I these make tender

evaluation less subjective by providing screening criteria for preliminary scrutiny, indicators of

compliance, eligibility and responsiveness. The General Principles render the said indicators

quantifiable by making pre-qualification criteria (for pharmaceutical firms and suppliers of bio-

medical equipment) an integral part of the tender evaluation for a detailed technical evaluation.



38

The General Principles further attach value to the legal status of the bidders by defining commercial

acceptability, public and private sector status for participating entities and probable joint ventures for

assessing the corporate relationship of the bidder. In Stage-II, the Principles extensively comment

on the financial and technical capabilities and relevant experience (including past experience) of the

bidders and further define the major features, groups of factors and distribution of points of the

scoring criteria that recognizes several factors collectively to give the client confidence about

whether a criterion has been met in terms of technical compliance by and commercial soundness ofthe bidder.

After having defined the evaluation criteria, the General Principles, in Stage-III, opt for factors

constituting additional information for final determination of qualified bidders. The revised Standard

Bidding Documents being used by the DGHS and Vertical Programs in Khyber Pakhtunkhwa duly

incorporate the above stated features and factors influencing the evaluation criteria in the light of the

said Rules and General Principles to offer an objective assessment of the capabilities of the

bidders.

Rule 28 of the NWFP Procurement Rules 2003 gives indicators for determining the lowest

evaluated responsive bidder. The same has been adopted by the DGHS Khyber Pakhtunkhwa for

selecting the lowest unit rates in centralized contracting for the pharmaceutical products in Govt-

MCC and lowest item rates for the bio-medical equipment of all those suppliers/manufacturers in the

Procurement Cell at DGHS who have complied with the technical & commercial evaluation criteria

designed on lowest price. So far the merit point evaluation technique for choosing the best value for

money has not been applied in the above stated revised Standard Bidding Documents for the year

2012-13. Merit Point technique assigns significant marks to the non-price factors, thereby tilting the

balance of evaluation in favour of quality rather than price. It is hoped that future bidding documentsof the DGHS for the year 2013-14 may incorporate the merit point evaluation mechanism for bid

evaluation as Rule 24 of the NWFP Procurement Rules 2003 allows tender evaluation to be in

accordance with the evaluation criteria even if based on Merit Point Evaluation Method instead of

Lowest Price Method.

Confidentiality and regulated communications with the bidders during the evaluation period have

been duly advised under Rule 26 of the NWFP Procurement Rules 2003 to stop any abuse and

undue interference in the process. Rule 25 binds the evaluation committee to complete evaluations

within 15 days of the bid opening and allowing a further extension of ten days. However,procurement record of the DGHS shows that the earlier evaluations got completed more than a

month or so though administrative approvals for extensions were not usually taken. Generally the

prices/quotations become a public property after opening of financial bids. However, it has been

observed that the Directorate General Health Services keeps them confidential till the

announcement of the lowest selected rates for Govt-MCC by mostly retaining the members

nominated in the preliminary scrutiny committees for initial profiling of the technical bids in the

subsequent committees like Comparative Statement Committee and working with a very limited

number of highly trusted Key Punch Operators/steno typists proficient in typing skills for entering the

voluminous price data against thousands of selected items for Govt-MCC. The inherent risk in such

business practices has the potential to amplify the bias of a committee member thereby vitiating or



39

jeopardizing the integrity of the procurement cycle. The high impact of this risk leads to a potential

conflict of interest.

Though Rule 42 binds the client to promptly inform the selected bidder, there is no provision in the

NWFP Procurement Rules 2003 for disclosing the information related to the evaluation process and

results to the participating or interested parties after the evaluation is complete. The Health

Department has therefore no proprietary mechanism for such disclosure of information except for

displaying in the end the final results of contract award on the website owned by the EPI Vertical

Program. The SBDs for procurement of Anti-cancer medicines have been recently posted as of

31.12.2012 on the Health Department’s website in Tenders section.


The legal framework mandates that:

3(a) The evaluation criteria are relevant to the decision, and preciselyspecified in advance in the tender documents so that the award

decision is made solely on the basis of the criteria stated in the tenderdocuments.

(b) Criteria not evaluated in monetary terms are evaluated on a pass/failbasis to the extent possible.

(c) The evaluation of proposals for consulting services gives adequateimportance to the quality and regulates how price and quality areconsidered.

(d) During the evaluation period, information relating to the examination,clarification and evaluation of tenders is not disclosed to the

participants or to others not involved officially in the evaluation process;

The legal framework covers the conditions of (a) and (b) plus one of theremaining conditions.

2

The legal frame work covers (a) but does not fully cover the other conditions. 1

The legal framework does not adequately address any of the conditions (a)through (d) above

0

Sub-indicator 1(g) – Submission, receipt and opening of tenders

This sub indicator assesses how the legal framework regulates the process of reception of tenders

and tender opening.

Rule 18 of the NWFP Procurement Rules 2003 provides for public opening of tenders for proper

receipt and safe custody of the bids as a means of increasing transparency to an open tendering

exercise. The said Rule further provides for extension in bid submission time where certain changes

in the bidding documents resulting due to the deliberations between the Procuring Entity and the

prospective bidders during the Pre-Bid Meetings need to be communicated to the bidders and

reasonable time to be given to them through extension in bid submission time for reflecting their

thoughtful response by incorporating it in the bidding documents before bid submission. This

practice has not been strictly followed by the Directorate General of Health Services with respect to



40

the acquisition activity for pharmaceutical products despite requests from the prospective bidders;

hence receipt of various bids with limited and inadequate response to the changes carried out

during the Pre-Bid meetings. As the said Rule provides no specific time for any time extension in

this regard, a five to seven days period after proper communication of the changes in the bidding

documents to the bidders seems to be adequate to deal with such an issue.

Rule 19 of the NWFP Procurement Rules 2003 explains the procedure for submission of sealed

bids to the Procuring Entity. DGHS, AMIs and Vertical Programs have constituted Bid opening

committees in this regard where minutes of meeting, the names and addresses of the bidders and

the tender prices (and any withdrawals or modifications to tenders duly submitted) alongwith status

of responsiveness are read aloud and recorded. Records are retained and available for review and

audit purposes. Opening of technical bids is done immediately after the deadline for submission of

tenders which diminishes the possibility of loss or alteration of proposals or submissions.

Rule 20 (1) provides for minimum of thirty days time for submission of tenders. The current practice

in the Health Department relating to the said legal provision deviates on account of Rule 20 (2)

which allows reduction in the time to any number of days as authorized by the Head of the

Procuring Entity in the wake of any lapse of allocated funds for the procurement activity under

consideration or an exigency. Such practices not only reflect badly on the planning side of the

Department but may raise questions on the transparency of the open competitive process which

has been made restrictive by curtailing the mandatory participation time thereby defeating the very

purpose of providing adequate time for bid preparation and submission considered as one of the

international best practices. Rule 20 (2) may therefore be considered as a defective legal provision

which has the inherent characteristic for abuse of procurement process.

The Directorate General Health Services currently controls the majority of contracting actions of the AMIs and Vertical Programs in the Health Department despite allocation of 40% of the procurement

to the AMIs regarding procurement of pharmaceutical products after devolution of powers to the

provinces whereby autonomy to the procuring entities associated with the Health Department

Khyber Pakhtunkhwa was granted. The AMIs have been administratively directed by the Health

Secretariat to get only those medicines procured under the allotted 40% share which have not been

included in the list of medicines procured through Govt-MCC, DGHS in medical emergencies or

otherwise. Reduction in bid submission time for all such contracting activities associated with these

entities is being carried frequently in consonance with the similar practice prevalent in the DGHS.

Rule 21 provides for public opening of financial bids wherein bidders or their representatives must

be permitted to attend. The Health Department complies with the said Rule and proper record of

public opening of the financial bids is maintained.

Rule 17 (2) provides for the Pre-Bid meeting wherein opportunity to the prospective bidders is given

through instructions by the Department to bring clarity on how to submit responsive bids and to

minimize the prospects of rejection of otherwise compliant bids by inadvertent mistakes. The

revised Standard Bidding Documents give elaborate Instructions To Bidders in this regard.

Guidelines on conducting Pre-Bid Meetings have recently been intimated to the procurementofficials of the Health Department by the TRF.



41


The legal framework provides for the following conditions:

3(a) Public opening of tenders in a defined and regulated proceedingimmediately following the closing date for bid submission.

(b) Records of proceedings for bid openings are retained and available for

review.(c) Security and confidentiality of bids is maintained prior to bid opening

and disclosure of specific sensitive information during debriefing isprohibited.

(d) The modality of submitting tenders and receipt by the government iswell defined to avoid unnecessary rejection of tenders.

The legal framework provides for (a) and (b) plus one of the remainingconditions.

2

The legal framework provides for (a) plus one of the remaining conditions. 1

There is no requirement in the legal framework for public opening of tenders. 0

Sub-indicator 1(h) – Complaints

The purpose of this indicator is to assess whether the legal framework establishes;

a) the right to review;

b) the matters that are subject to review;

c) the timeframe for such reviews; and,

d) the different steps in the review process.

Rule 43 of the NWFP Procurement Rules 2003 offers opportunity to an aggrieved bidder to file an

application for review of the decision/order of the Procuring Entity awarding a contract provided the

contract has not already entered into force. The review application should clearly mention the date

of acceptance of tenders, material defects and non-observance of rules in the contract award letter.

However, the reason assigned for review under the said Rule seems restrictive as it only addresses

a situation whereby a bid has been accepted by an unauthorized procuring entity. In the current

scenario of acceptance of bids in the DGHS and its allied procuring entities, proper Purchase

Committees have been formed and notified which have the sole authority to accept or reject a bid.

The opportunity for review under Rule 43 therefore seems irrelevant in this regard. Confidence in a

procurement system is a powerful incentive to competition. A fundamental part of this is the

establishment of the right to review procurement decisions by an efficient and functionally

independent process which should include opportunity to protest against exclusion of a

pharmaceutical firm/bio-medical equipment supplier on account of any pre-qualification or post-

qualification during bid evaluation conducted by the Department which in Firm’s view, has caused

grievance. Further to it, the Rule does not offer any protest against unlawful exclusion of a

technically qualified bidder by the Procuring Entity through abuse of Rule 32 of the NWFPProcurement Rules 2003 who remained as the only one left after the detailed technical evaluation.



42

Rule 43 stated above also does not provide any opportunity to a bidder who feels aggrieved on

account of a biased application of technical or commercial evaluation criteria by the Technical

Evaluation Committee.

The first review exists at the level of the Secretary Health who considering the nature and gravity of

the complaint, either reviews the decision of the Procuring Entity himself or immediately creates a

committee to review the same. The review committee, usually headed by Special Secretary Health

or any Technical member, mostly comprises members who are not part of the referenced

purchasing process, and is fully authorized to review the Procuring Entity’s decision. This attemp ts

to assure the independence of the complaint review body and to eliminate any conflict of interest.

However, the quasi-judicial review stated above is not independent of the procuring agency having

direct interest in the procurement process under reference and with no counter-part appellate

review in the form of any Health Appellate Tribunal in sight. This infirmity currently present in the

system often tempts the aggrieved bidders to directly seek remedy at forums like Provincial

Ombudsman, Provincial NAB or Honourable Peshawar High Court etc. or any other forum

independent of the procuring agency (but not defined in the NWFP Procurement Rules 2003)

without resorting to office of the Secretary Health as the first appropriate forum for a quasi-

judicial/administrative review. Hence, a foray of complaints and litigations at inappropriate forums

against the decisions of the Health Department. The proposed provincial appellate authority under

Section-9 or the functional Federal Appellate Board under Section-9A of the Drug Act 1976 deal

with drug registration, licensing and supplier disqualification issues etc. and do not cover

procurement related complaints.


The legal framework provides for the following conditions:

3

(a) The right to review for participants in a procurement process.

(b) Provisions to respond to a request for review at the procuring agencylevel with administrative review by another body independent from theprocuring agency that has the authority to grant remedies and includesthe right for judicial review.

(c) Establishes the matters that are subject to review.

(d) Establishes timeframes for issuance of decisions by the procuringagency and the administrative review body.

The legal framework provides for (a) and (b) plus one of the remainingconditions.

2

The legal framework provides for (a) plus one of the remaining conditions. 1

The right for review of the proper application of the procurement process is notprovided in the legal framework.

0



43

Indicator 2. Existence of Implementing Regulations and Documentation.

This indicator verifies the existence, availability and quality of implementing regulations, operational

procedures, handbooks, model tender documentation, and standard conditions of contract. Ideally

the higher level legislation provides the framework of principles and policies that govern public

procurement. Lower level regulations and more detailed instruments supplement the law, make it

operational, and indicate how to apply the law to specific circumstances. This indicator consists of

six sub-indicators (a-f).

Sub-indicator 2(a) – Implementing regulation that provide defined processes and proceduresnot included in higher-level legislation

This sub indicator aims at verifying the existence, clarity, accessibility and comprehensiveness of

regulations to the law that further detail and clarify its application.

The NWFP Procurement of Works, Goods & Consulting Services Ordinance 2002 & NWFP

Procurement of Goods, Works & Services Rules 2003 currently governing the procurements at the

provincial level in the Health Department constitute higher level legislation for providing the legalframework for the same in a variety of applications. The NWFP Procurement of Goods, Works &

Services Rules 2003 do not get regularly updated as the responsibility for their updation by the

concerned entity is not clearly defined anywhere.

The recently revised Standard Bidding Documents created in view of procurement of

pharmaceutical products and bio-medical equipment for Directorate General Health Services

constitute the implementing regulations that provide defined processes and procedures not included

in the higher-level legislation with respect to Technical & Commercial criteria. However, the

technical evaluation is currently not based on Merit Point scoring as the same takes into account theimpact of non-price factors alongwith minimum price to get the combined evaluation score – highest

of which gets the contract.


There are regulations that supplement and detail the provisions of theprocurement law that meet the following requirements:

3

(a) They are clear, comprehensive and consolidated as a set of regulationsavailable in a single and accessible place.

(b) They are updated regularly.

(c) The responsibility for maintenance is defined.

The regulations meet the conditions of (a) plus one of the remaining conditions. 2

The regulations exist but there is no regular updating, the responsibility forupdating is not clearly defined or there are many important omissions in the

regulations or inconsistencies with the law.

1

There are no regulations or the existing ones do not meet substantially any of

the requirements listed above.

0



44

Sub-indicator 2(b) – Model tender documents for goods, works, and services

Model documents of good quality promote competition and increases confidence in the system.

Potential contractors or suppliers are more willing to participate when they are familiar with the

documents and their interpretation.

The recently introduced revised Standard Bidding Documents for pharmaceutical products are

based on FIDIC templates customized to health sector requirements and contain the requisiteclauses which can be incorporated into contracts to enable the bidders to value the cost and risk of

mandatory clauses when performing a contract for the government. In consultation with

pharmaceutical sector specialists at the Directorate General Health Services, TRF has standardized

the Bidding Documents for medicines and bio-medical equipment in the light of international best

practices based on performance benchmarks of World Health Organization (WHO), US Federal

Drug Administration (FDA), EU Directive 93/42/EEC and Pakistan National Accreditation Council

(PNAC) etc. for the health sector.

Similar Standard Bidding Documents are being used for Vertical Programs like MNCH & EPI in theHealth Department Khyber Pakhtunkhwa for procurement of CMW Kits & general goods

respectively except for procurement of non-drug surgical disposables for Lady Reading Hospital

where an outdated three page bidding document has been used despite the availability of revised

Standard Bidding Documents. This reflects the vague policy of the Health Department on

mandatory usage of Standard Bidding Documents for ongoing procurements and demonstrates

distortion in adopting the standardized business practices.

The Health Sector Reforms Unit (HSRU) Khyber Pakhtunkhwa - Health Department’s planning

interface for carrying out the World Bank funded project for outsourcing of health sectormanagement services delivery in six selected districts of Khyber Pakhtunkhwa, is utilizing World

Bank’s Standard Bidding Documents based on Cost & Quality based Selection (CQS) method.


(a) There are model invitation and tender documents provided for use for awide range of goods, works and services procured by governmentagencies;

3

(b) There is a standard and mandatory set of clauses or templates that are

reflective of the legal framework, for use in documents prepared forcompetitive tendering.

(c) The documents are kept up to date with responsibility for preparationand updating clearly assigned.

Model documents and a minimum set of clauses or templates are available, butthe use of such documents is not mandatory or regulated. The documents arenot updated regularly.

2

Model documents are not available, but a set of mandatory clauses isestablished for inclusion in tender documents.

1

There are no model documents and the procuring entities developtheir own documents for with little or no guidance.

0



45

Sub-indicator 2(c) – Procedures for pre-qualification

This sub-indicator covers the existence of procedures for pre-qualification of participants in a

particular procurement.

Rule 7 of the NWFP Procurement Rules 2003, discussed earlier at Sub-indicator 1(b) for

Procurement Methods, makes open competitive tendering the default method of procurement in

Khyber Pakhtunkhwa Province and attracts pre- or post-qualification of bidders as is being done atthe Directorate General Health Services. Till now pre-qualification of manufacturers and suppliers of

bio-medical equipment or pharmaceutical goods has been initiated as a separate exercise by the

DGHS usually conducted annually well before initiation of any scheduled procurement activity by

the Health Department.

For the pre-qualification of firms manufacturing or supplying different commodities like bio-medical

equipment, bedding clothing, medical gases, chemicals, kits, reagents, disinfectants, insecticides,

medical/office furniture, vehicle repair & related spare parts etc., the Department requires through a

detailed Inspection Checklist a firm’s corporate profile, valid registration from Registrar Companies

showing manufacturing / supplier status; or any valid agency agreement between importer &

manufacturer duly attested by the embassy of the country of origin in Pakistan or of Pakistani

embassy in that country. The Department also ensures that the firm is registered with FBR for

payment of Income Tax and Sales Tax and gets audited by a chartered accountant firm. Firm’s

annual import statement and sales record are also taken into account.

The pre-qualification criteria for drug manufacturers or suppliers, compared to ones for bio-medical

equipment, is based on somewhat more complex requirements geared at determining the

pharmaceutical product efficacy achievable only through strict implementation of a series of

complex Good Manufacturing Practices (GMP) at the local and foreign business premises alike and

is verified through a significantly detailed Inspection Checklist containing firm’s corporate profile,

type of activity being carried out by the company i.e., formulation of Active Pharmaceutical

Ingredients (API) and Non-Active Pharmaceutical Ingredients (excepients), repacking or basic

manufacturing, annual sales and import record, GMP compliance certificate and / or any other

certification from USFDA, EMA, WHO, ISO or PNAC etc. and related audit report, detail of technical

personnel in plant, production quality control and formulation development sections, manufacturing

information including usage of pharmaceutical raw materials, dosage form and production capacity,

SOPs regarding requisite operations in syrup, tablets, capsules, dry powder, ointment and liquidinjectable manufacturing sections and lastly operations regarding the related inventory

management, warehousing and supply chain of pharmaceutical products.

The GMP Certification is therefore achieved through regular inspections by a typical Pre-

Qualification Committee designated for a specific region and consisting of members from among

Health Department designations like Additional Secretary (Dev) Health KP / Director General Health

Services KP / Medical Superintendent AMI Peshawar / Director Admn, DGHS KP, Professor of Surgery AMI

Peshawar, Deputy Secretary (Budget), Health Department, Chief Drug Inspector Peshawar, Deputy Director

Pre-Qualifications, Pharmacist Govt-MCC DGHS, Drug Inspector, EDO (Health) Peshawar or any other asdesignated. The said Pre-Qualification Committee submits Inspection Report to the Chairman Technical



46

& Evaluation Committee DGHS within three days of inspection for evaluation of firms for pre-

qualification.

Below is the typical annual calendar of activities regarding pre-qualification of firms for Govt-MCC,

DGHS, Khyber Pakhtunkhwa initiated from the office of Section Officer (Drugs), Health Department:

S.No Pre-Qualification Activity Date (each year)

1 Advertisement for application for pre-qualification 1st January

2 Last date for submission of application 24th January

3 Compilation of activities 30th January

4 Assessment of Documents attached with applications 20th February

5 Visit of business premises by Pre-Qualification InspectionTeams & submission of their reports

Upto 25th March

6 Compilation of list of Pre-Qualified firms and its submission toT&E Committee for verification & approval

Upto 30th March

7 Circulation of approved list of pre-qualified firms 1st week of April

With the introduction of the revised Standard Bidding Documents for procurement of drugs for Govt-

MCC in September 2012, criteria or benchmarks set for the Pre-qualification of manufacturers and

suppliers of pharmaceutical products have been incorporated therein to combine them with the

Technical Evaluation Criteria. However, keeping in view the complex nature of procurement of

general medicines/biological drugs, pre-qualification as a separate process has been retained by

the Health Department as a policy decision todate to make the said procurement more efficient bylimiting the number of participants and ensuring only qualified participants to be included thereby

saving departmental resources consumed in bid evaluation. This may help in excluding certain pre-

qualification aspects to be removed from the Technical Evaluation Criteria and introducing post-

qualification aspects instead to save repetition of effort and evaluation time.


Procedures exist that define pre-qualification which:

(a) Provide for limitations on the content of pre-qualification criteria that arebased on the needs of the specific procurement.

3

(b) Specify the use of pass/fail for application of qualification criteria.

(c) Provide guidance on when to apply a pre-qualification procedure.

Procedures exist that cover (a) plus one of the remaining conditions. 2

Procedures exist that cover (a). 1

Procedures for the application of pre-qualification procedures do not exist. 0



47

Sub-indicator 2(d) – Procedures suitable for contracting for services or other requirementsin which technical capacity is a key criterion

NWFP Procurement of Goods, Works and Services Rules 2003, despite the name given to them do

not include any regulations on hiring of consultancy services. This may be attributable to the time of

promulgation of the said Rules when hardly any regulations existed in Pakistan on services

contracting. Rule 40 of the above said Rules offers a Two Envelop Tendering procedure which

relates to procurement of construction work or supply and installation of goods, equipment ortenders where post-qualification procedures is being followed. Though the technical capacity and

quality have been considered key criteria for detailed evaluation in the General Principles for

Evaluation of Applications for Pre-Qualification & Technical Bids for Post-Qualification (Appendix to

Rules), non-existence of any consultancy regulations make it irrelevant for the same. Directorate

General Health Services or its subsidiaries including Vertical Programs, Health Projects like AIDS

Control and AMIs therefore do not have any existing regulations for consultancy services. Any

Technical Assistance acquired by them is governed under the Donor Guidelines whose assistance

is extended to them in this regard.

To address this deficiency, the Provincial Government has notified through Governor KP an Inter-

Departmental Consultant Selection Committee (IDCSC) for selection of design and engineering

consultants for the government departments. The Committee is composed of line members from

Finance Division, Planning & Development Division, C&W Department and functional members

from the department for whom the consultant is being hired. In the light of certain administrative

instructions and SOPs, the IDCSC develops specific Preliminary Scope Statement, Project

Appraisal Document, TORs and RFP Documents for the intended activity.

Health Sector Reforms Unit (HSRU), Health Secretariat Khyber Pakhtunkhwa, on the other hand,

has recently adopted World Bank’s standard bidding templates, which have been customized with

the help of TRF for developing Request For Proposal (RFP) Documents to acquire Management

Consultancy services for revitalizing and strengthening the health service delivery in six crises

affected districts of Khyber Pakhtunkhwa, namely Battagram, Buner, Dera Ismail Khan, Dir Lower,

Kohistan and Tor Ghar under Public Private Partnership . The said project is being funded by the

Multi Donor Trust Fund (MDTF) through World Bank and therefore the World Bank Guidelines for

Hiring of Consultancy Services, revised in 2011, are being followed by the HSRU. The said

Guidelines adequately contain the methodology of a scored evaluation of technical qualification

against stated criteria in order to select the highest qualified proposal by combining the relative

weights allocated to technical capacity and price. Such donor funded scenarios derive their authority

from Rule 4(3) of the NWFP Procurement Rules 2003 whereby donor Guidelines would prevail over

local laws but the condition of Rule 4(3) for observing the lower financial limit of Rs 40,000 for

ascertaining the mode of procurement in the donor funded projects is not being followed. There

seems little coordination between the Health Department & the IDCSC for any probable selection of

management or design consultant for the HSRU for undertaking responsibilities of reforms of health

sector due to lack of ownership of the said restructuring component by the Directorate General

Health Services, Khyber Pakhtunkhwa.



48


The legal framework and its implementing regulations provide for the following:

(a) Conditions under which selection based exclusively on technical capacityis appropriate and when price and quality considerations are appropriate.

3

(b) Clear procedures and methodologies for assessment of technical capacityand for combining price and technical capacity under different

circumstances.

Implementing regulations meet a) above but leave b) to the discretion of theprocuring entity.

2

Implementing regulations leave the possibility of use of technical capacity inselection but neither the law nor the regulations elaborate on the procedure.

1

Neither the law nor implementing regulations cover this procedure. 0

Sub-indicator 2(e) – User’s guide or manual for contracting entities

This sub-indicator covers the existence of a user’s guide or manual for contracting entities.Neither the NWFP Procurement Rules 2003 nor the Health Department offer any User Guide or

Procurement Manual which could act as an implementation tool to help provide Department’s

procurement officials with information that incorporates the law, policy and procedures for turning

policy into practice. Procedures for registration and pre-qualification of firms supplying bio-medical

equipment and pharmaceutical products are in place but have not been translated into any manual

so far. With the creation of a centralized Procurement Cell at DGHS level, it is expected that the

Health Department in consultation with TRF may develop a Procurement Manual or more precisely

a Health Sector Supplement to be read in conjunction with public procurement rules for

procurement of pharmaceutical products and bio-medical equipment to create consistency of their

application within the government procurement system. Development of Technical Evaluation

Guidelines for pharmaceutical products and bio-medical equipment are underway by TRF which are

expected to find their way into the said proposed Supplement containing a calendar of monthly

customized training activities of the procurement officials and to provide an easy desk reference for

users.


(a)

There is a unique procurement manual detailing all procedures for thecorrect administration of procurement regulations and laws. 3

(b) The manual is updated regularly;

(c) The responsibility for maintenance of the manual is clearly established.

There is no unique manual but there is an obligation for the procuring agenciesto have one that meets conditions (b) and (c).

2

There is no manual and no obligation to have one but many procurementagencies have an internal manual for administration of procurement.

1

There is no manual or requirement to have one. 0



49

Sub-indicator 2(f) – General Conditions of Contracts (GCC) for public sector contractscovering goods, works and services consistent with national requirements and, whenapplicable, international requirements

This sub-indicator deals with General Conditions of Contracts that set forth the basic provisions

which will be included in a contract with the government.

The bidding documents used earlier by the Directorate General Health Services and its subsidiariesdid not have any standard General Conditions of Contract but had a three-page contract document

that simultaneously served as an Invitation For Bids, a Contract Template for establishing privity

and Terms & Conditions. The new Standard Bidding Documents recently adopted by the Health

Department for procurement of pharmaceutical products contain the consistent and mandatory

General Conditions of Contract (GCC) based on FIDIC templates duly recognized World-wide. Any

changes in the GCC are thereby brought about in the Special Conditions of Contract (SCC) to

reflect the commercial codes that deal with contracts between parties for performance. The GCC

and resultant SCC therefore duly provide information that enables participants to understand the

allocation of risk between parties to a contract as well as other obligations including impact on price

that the signatories to the contract will incur. Exception to this is the procurement of non-drug

Surgical Disposables still being done on Single Envelop Single Stage by the AMIs with the above

stated three-page primeval contract document, abandoned by the DGHS itself.


Both of the following apply:

(a) There are GCC for the most common types of contracts and their use ismandatory.

3

(b) The content of the GCC is generally consistent with internationallyaccepted practice.

There are GCC for the most common types of contracts, consistent withinternational practice, but their use is not mandatory.

2

There are GCC for the most common types of contracts but they do not conformto internationally accepted practice and their use is not mandatory.

1

There are no GCC and individual agencies use the form of contract of theirchoice.

0

5.7 Pillar-II: Institutional Framework & Management CapacityPillar-II looks at how the procurement system as defined by the legal and regulatory framework in

Khyber Pakhtunkhwa Province is operating in practice through the institutions and management

systems that are part of the overall public sector governance in the Province.

Indicator 3. The public procurement system is mainstreamed and well integrated into the

public sector governance system.

This indicator looks at the procurement system to:

a) determine its suitability to discharge the obligations prescribed in the law without gaps or

overlaps;



50

b) whether the necessary links with other sectors of government affecting procurement

exist;

c) whether procurement operations are constrained by other external institutional factors;

and

d) whether the managerial and technical capacity of the system are adequate to do

procurement without unnecessary cost or delay.

This indicator deals with the degree of integration of the procurement system with other parts of

government and particularly with the financial management system given the direct interaction

between the two, from budget preparation and planning to treasury operations for payments.

There are four sub-indicators (a-d) to be scored under indicator 3.

Sub-indicator 3(a) – Procurement planning and associated expenditures are part of the

budget formulation process and contribute to multi-year planning

The Planning Cell of the Health Secretariat, Khyber Pakhtunkhwa, under the supervision of the

Chief Planning Officer (CPO), plans for the schemes by formulating Annual Development

Programme (ADP). Work on preparation on ADP starts in January of the each financial year.

Demands for inclusion of schemes are received on prescribed formats from districts, autonomous

institution, programme managers and public representatives. The demands for new schemes are

analyzed/scrutinized in light of government policies and Department’s priorities at various levels.

The draft ADP, after approval of Minister Health, is sent to P&D Department for approval. A number

of meetings are held at P&D Department level on the draft ADP. After scrutiny/analysis by the P&D

Department, the draft ADP is placed for approval of Chief Minister. Afterwards, the draft is placedbefore the Provincial Cabinet and the Provincial legislature for approval. In ADP both ongoing and

new projects are included.

The following types of schemes are included in ADP:-

1. Account-Head-42:

Brick & Mortar: For construction of new health facility, upgradation of health facility,

addition/alteration in the existing health facility)

2. Account-Head-36:For purchase of equipment/instruments/furniture for a health facility or programme. For

activities to achieve certain targets/goals. Such soft components like control of TB/Hepatitis

Program/EPI etc involvestaff salaries, purchase of medicines/equipment and other

operating costs.

After approval of the ADP from the Provincial Assembly, the scheme PC-Is is prepared and

approved from the following competent forums:

1. Departmental Development Working Party (DDWP): Schemes upto Rs.60 million.

2. Provincial Development Working Party (PDWP): Scheme upto Rs. 5 billion.



51

(However schemes involving Federal share or donor funding are sent to the Federal Govt. for

approval of CDWP/ECNEC irrespective of cost of the scheme).

Administrative approval of the scheme is issued and the allocation of scheme reflected in ADP for

release by the Finance Department. The funds released by the Finance Department are then placed

at the disposal of the concerned in the executing agency. Funds on capital side (construction) are

placed at the disposal of C&W Department and funds on the revenue side (equipment/furniture/

medicine/salaries etc) are placed at the disposal of concerned DDO.

The following procedures are followed for procurement of equipment/medicine approved in the PC-I

of the schemes:

1. Funds for purchases are placed at the disposal of DDO/Project Director.

2. Technical, purchase and Inspection committees are notified for the purchases.

3. The specification for equipment/item to be purchased are prepared by a technical

committed constituted for the purpose.

4. The equipment/items to be purchased are advertised in newspapers.

5. Comparative statements are prepared after receipts of bids.

6. The bids received are technically/financially examined by a technical committee.

7. Purchase Committee meeting is held to approve bids in light of the Technical Committee

SOPs and NWFP Procurement Rules 2003. The bids which are not approved are re-

advertised.

8. The Purchase Orders of the approved item/s are given to the selected firms.

9. After supply of the item/s by the firm, Inspection Committee inspects the supplied items in

light of the approved specification.

10. In case of satisfactory report of the Inspection Committee, payment is made by the DDO

to the firm.

Any distortion in the procurement planning and subsequent budget formulation process is seen in

the Province when politically motivated schemes or schemes based on expediency / urgency are

introduced for construction of some new facility i.e., a cardiac center etc or upgradation of the

existing medical facility i.e., from BHC to Category-C Hospital etc. In such cases, the realization of

the Standardization List specified for an upgraded facility results in erection of structures or

procurement of more sophisticated equipment which do not match with the disease burden or

outpatient load for that particular area where such facility is intended to be created. Hence best

value for money may not be achieved in this regard as the said requirements are not properly

envisaged at the time of their consolidation at the Department level which makes the cost data for

budget allocation less reliable. Politically triggered schemes are also one of the reasons for

inclusion of non-ADP budgetary estimates that are most of the time not realized due to somereason. Around 25-30% of the development budget does not get spent every year and has to be



52

surrendered by the Department thereby losing its development impact.

Periodic updation of the budget by the Department is not frequent to reflect any revised changes

that take place in timing of contracts. However, the Health Department predicts the cost of similar

goods, works or services in future budget years based on experience of the actual cost of goods,

works and services provided in earlier years and may project the same from 10-20%. To the extent

of pharmaceutical goods and medical furniture, it may be near to actual costs as the product

development cost and market prices for the said products do not change much. For bio-medicalequipment significant variation in the price may occur for the machines and assemblies where

technical specification change frequently due to rapid advancements in technology. It has been

observed that the prices for the similar bio-medical items have remained almost same to the ones

bought earlier which means that the neither the technical specifications of such items have been

updated by the Department nor sufficient market research has been conducted in this regard. This

may pose a moderate risk in the costing scenario prepared by the Health Department procuring

entities.

There is visible contribution from the Planning Cell towards the ADP document in terms of supportto the health budget planning and its formulation for health sector. However, the Health Department

in general and the Directorate General Health Services in particular do not prepare any activity-

specific Procurement Plan in a standardized format to depict planned and actual dates for initiation

and closure of contract actions for procuring the intended goods indicated in the ADP above. Lump

sum estimated amounts are allocated in advance in ADPs. This shows a rather weak linkage of

contracting processes with the budget planning and may tend to compromise Department’s

capability to understand the timing of major contracts, to predict cash flow needed to make timely

payments to the suppliers (often delayed due to late inspections of equipment) and to reduce the

extra costs associated with delayed contract completion. TRF has helped HSRU in preparing a

standard Procurement Plan on the internationally agreed-to prescribed format for procurement of

Management Services to provide integrated health services on the basis of Public Private

Partnership (PPP) to the six crises-stricken districts in Khyber Pakhtunkhwa. A similar Procurement

Plan can be utilized by the DGHS as well for its activities related to procurement of bio-medical

equipment.


There is a regular planning exercise instituted by law or regulation that:

starts with the preparation of multiyear plans for the government agencies,

from which annual operating plans are derived.

followed by annual procurement plans and estimation of the associated

expenditures.

and culminates in the annual budget formulation.

Procurement plans are prepared in support of the budget planning and

formulation process.

3



53

The majority of procurement plans are prepared based on the annual and

multiyear operating plans independently from budget allocation but they are

revised to meet the forward budget estimates for the sector or agency allocations

before expenses are committed.

2

Procurement plans are normally prepared based on the annual and multiyear

operating plans. Links with budget planning are weak and plans are not required

to match the budgetary allocation available before expenses are committed.

2

There is no integrated procurement and budget planning of the nature described.

Procurement plans are drawn without obvious and direct connection with the

budget planning exercise and there is no requirement to match procurement

plans with availability of funds before expenses are committed.

0

Sub-indicator 3(b) – Budget law and financial procedures support timely procurement,

contract execution, and payment.

This sub-indicator assesses the degree to which budget law and financial management proceduresare adequate to meet procurement needs.

(a) Budget funds are committed or appropriated within a week from the award of the contract

to cover the full amount of the contract (or amount to cover the portion of the contract to

be performed within the budget period).

(b) There are published business standards for processing of invoices by the government

agencies that meet obligations for timely payment stated in the contract.

(c) Payments are authorized within four weeks following approval of invoices or monthlycertifications for progress payments.

No timelines for committing budget funds for award of contracts have been prescribed by any

Provincial budget manual for utilization by the Health Department’s Planning Cell as these are

already committed in the development budget. The current budget, prepared on the basis of needs

reflected earlier by the Department, is allocated in lumpsum to the Health Department from where it

is disbursed to the procuring entities by Section Officer Budget. However, the Planning Cell, in

addition to the Accountant General of Pakistan’s General Financial Rules (GFR), makes use of the

two manuals namely, Manual for Development Projects and Planning Commission Guidelines forProject Management published by the Planning & Development Division Islamabad to offer

published business standards for processing of invoices.

The Manual for Development Projects alludes to Para 105 of GFR-Vol-I, AGPR Rules, which directs

the public sector authorities not to leave unpaid the indisputably payable amount as far as possible,

and that money paid should, under no circumstances, be kept out of accounts a day longer

than is absolutely necessary. The GFR also states that it is no economy to postpone inevitable

payments and it is very important to ascertain the budget estimates and then liquidate and

record the payment of all actual obligations at the earlier possible date. GFR further callsattention to the fact that the Principal Accounting Officer shall make prompt On-Account



54

payments to suppliers and contractors against their invoices or running bills within the time

given in the conditions of the contract which shall not exceed thirty (30) days, as stipulated in Rule

43 of Federal Public Procurement Rules (PPR), 2004 issued by the Finance Division vide

SRO 432(1) / 2004 dated 8th June, 2004.

Though the development budget funds are already appropriated against the amount of contracts to

be awarded to the successful suppliers in various schemes through the ADP and are available, thetimelines for payments to suppliers generally seem to exceed the contractual timelines prescribed

above as Departmental inspection of Bio-Medical equipment is not conducted for months with no

significant reason and despite creation of liability under Rule 3 of the NWFP procurement of Works,

Goods & Services Rules 2003. This has been dealt in detail in Sub-Indicator 7(c ) & Sub-Indicator

8(a). The procurement, budget and financial management systems therefore need to interact in a

way that once procurement decisions are made and contract actions are completed these should

trigger the corresponding actions on the budget and financial side in due time for timely

disbursements.


Budget and financial procedures in place meet the requirements of a) to c)above formulation process.

3

Budget and financial procedures in place meet the requirements of a) but thereare no published business standards. Authorization of payments is generallytimely.

2

Procedures in place take longer than stated in a) and conditions b) and c) arenot generally met.

2

The procedures in place do not meet the requirements in a material way. 0

Sub-indicator 3(c) – No initiation of procurement actions without existing budget

appropriations.

This indicator assesses whether there are safeguards in the system precluding initiation of

procurement actions unless funds have been allocated to the procurement in question. For this the

following requirements should be in place:

(a) The law requires certification of availability of funds before solicitation of tenders takesplace.

(b) There is a system in place (e.g. paper or electronic interface between the financial

management and the procurement systems) that ensures enforcement of the law.

AGPR’s GFR Para 12 indicates the certification of availability of funds before solicitation of tenders

takes place. The schemes in the ADP contain development funds which have been allocated to the

procurement in question and therefore show availability of funds before solicitation of tenders. The

current budget is further made available for procurement of pharmaceutical products on emergency

basis to the Health Department for providing to the EDOs (Health). It sometimes happens that a

Non-ADP scheme gets introduced into the ADP if need arises. Funds to such schemes are provided



55

through re-appropriation within the sector. As PIFRA’s electronic interface has yet not been able to

ensure initiation of financial management of contract actions by the Health Department, paper-

based management of the said procurement activity is prevalent.


The system meets requirements (a) and (b) above.. 3

The system meets requirement (a) but requirement (b) is not fully enforced dueto weaknesses in the system.

2

The system meets requirement (a) only. 1

There system does not meet requirements (a) and (b). 0

Sub-indicator 3(d) – Systematic completion reports are prepared for certification of budget

execution and for reconciliation of delivery with budget programming.

This sub-indicator is a measurement of the feedback mechanism needed to ensure that information

on contracts covering major budget expenditures is provided to the budgetary and financial

management systems in a timely manner to support the overall public financial management

system.

When the payment bill is deposited with the AG/District Accounts Officer, it gets processed and the

payment to the firm by AGPR. The expenditure is booked in the PIFRA System. The stated

information is reconciled and sent back to the AGPR for finalization of appropriations to accounts.

The said process is further extended for reconciliation and appropriation of running and final bill

payments to suppliers’ accounts and indicates the completion of major contracts by PIFRA.

However, giving a complete picture on the project sign-off or closure remains out of scope of this

financial management system in the absence of any Materials Management Module in the

procurement system of the Health Department.

As discussed earlier, health budget for procurement is directly appropriated to the EDO (Health)

after its sanction from DGHS, Peshawar for ADP Schemes. However, for the current budget some

EDOs (Health) do not even feel the need of the said sanctioning from DGHS and directly get

reimbursed from the DCO. This year 8 out of 25 districts did not seek the sanction of Directorate

General Health Services for disbursement of their health budgets for procurement. In this case, the

DGHS may not have any information on the procurements made at the district level. This exposes

the inherent weakness of the financial management system regarding disbursements on

procurement in some instances as it does not make the budget sanction mandatory by the DGHS.


The procurement system is sufficiently integrated with the financial management

and budgetary systems to provide information on the completion of all major

contracts.

3

Information on completion of the majority of large contracts is submitted asdescribed above.

2



56

Information on the completion of contracts is erratic or is normally submitted with

considerable delay after the fiscal budgetary period.

1

The procurement system does not generally provide this information. 0

Indicator 4. The province has a functional normative/regulatory body.

Indicator-4 relates to the existence of a Public Procurement Regulatory Authority in the Khyber

Pakhtunkhwa Province.

Draft Khyber Pakhtunkhwa Public Procurement of Goods, Works and Services Bill 2012 has been

approved by the Provincial Assembly and notified on 20.09.2012 as Khyber Pakhtunkhwa Public

Procurement Regulatory Authority 2012. Khyber Pakhtunkhwa Public Procurement Rules 2012 are

now pending signatures of Chief Secretary Khyber Pakhtunkhwa & and their implementation in all

the Government departments in the Province. Creation of this regulatory authority would lead to

emergence of the procurement functions within the public sector and their proper discharge,

independence of the regulatory function, the effectiveness of performance and the degree of

coordination between responsible organizations. Until the said regulatory body is manned with

officials to function it will not have any utility and does not come under the scope of discussion

under reference at present. The scoring for this indicator therefore remains zero for the said

purpose.

Indicator- 5: Existence of institutional development capacity.

The objective of this indicator is to assess the extent to which the Province or Department has

systems to support and monitor the performance of the entire system, and to formulate andimplement improvement plans.

Sub indicator 5 (a) – The Province has a system for collecting and disseminating

procurement information, including tender invitations, requests for proposals, and contract

award information.

The objective of this indicator is to determine

a) the existence and capacity of the procurement information system in the Province;

b) the accessibility of the information system;c) the coverage of the information system; and,

d) whether the system provides one stop service (to the extent feasible) where those

interested can find information on procurement opportunities and outcomes.

Health Department does have a Planning Cell which has a capacity for analysis, feedback

mechanisms and planning for implementation of improvements. However, such capacity exists for

the purpose of annual planning, budget formulation and associated expenditures and does not

generate any annual or multi annual procurement plans. The District Health Information System

(DHIS), an Information Technology arm of the DGHS Khyber Pakhtunkhwa disseminates quarterly



57

provincial reports based on health-related data and posts subsequent analysis on its website for the

twenty five districts of Khyber Pakhtunkhwa.

Health Department also publishes on its website selected procurement information for public

access. Rule-31 (c to g) of the NWFP Procurement Rules 2003, in order to promote competition

and transparency, provides for access to general public only upon request, the information relating

to participating bidders on their qualification / disqualification, comparative Evaluation Summary andgrounds of their rejection either under Rule-32 (for sole technically evaluated bidder) or under Rule-

8(2) (for non-submission of secondary documentation).

For posting the Standard Bidding Documents for procurement of bio-medical equipment and

pharmaceutical products for Govt-MCC for the year 2012-13, temporary web-links were created on

DHIS website and published in the IFB for access by the prospective bidders. However, the DGHS

neither has a dedicated web-link or an automated ERP Contract Management system like

Prodagio® or Share Point® software programs which are dedicated solely to the collection and

dissemination of information focused on procurement nor does it offer any one-stop services related

to information on procurement opportunities and outcomes.


There is an integrated information system that provides as a minimum, up-to-date information as described above and is easily accessible to all interestedparties at no or minimum cost.

Responsibility for its management and operation is clearly defined.

3

There is an integrated system of the characteristics described that provides up-to-date information for the majority of contracts at the central government levelbut access is limited.

2

There is a system but it only provides information on some of the contracts andthe system accessibility is limited.

1

There is no procurement information system except for some individual agencysystems. Entities keep information on contract awards and some statistics.

0

Sub-indicator 5 (b) – The Province has systems and procedures for collecting and

monitoring national procurement statistics.

For purposes of this sub-indicator, the focus is on data available on procurement undertaken using

provincial budget funds.

As statistical information on procurement is essential to evaluate the policies and the operation of

the system, it also provides a means for monitoring performance and compliance in a legal and

regulatory framework. Unfortunately, the Directorate General Health Services (DGHS) has not yet

been able to force the Districts, Vertical Programs and AMIs to send their annual requirements to

the Divisional Office in Peshawar well in advance for the sake of generating any statisticalinformation to be used as a tool for procurement planning and market analysis. This non-



58

compliance, though administrative in nature, may be attributable to lack of existence of any system

in operation to collect data on:

i) procurement by method,

ii) duration of different stages of the procurement cycle,

iii) awards of contracts,

iv) unit prices for most common types of goods and services;

v) any other information that allows analysis of trends, levels of participation, efficiency and

economy of the purchases and compliance with requirements.

This may be attributable largely to a mix of centralized and decentralized procurement systems

simultaneously at the Divisional and District levels. Resultantly, the credibility of any such

information on procurement conducted by the Health Department, especially by the DGHS and its

subsidiaries has been compromised as it has not been verified by any audit and no routine analysis

of any such information is carried out except for upgradation of the approved formulary/medicine listby the Govt-MCC, DGHS.


The country has a system that meets the four requirements (a) through (d) listedabove.

3

The country has a system that meets (a) plus two of the remaining conditions. 2

The system is in place to meet (a) plus one of the remaining conditions. 1

There is no statistical data collection system in place. 0

Sub-indicator 5 (c) – A sustainable strategy and training capacity exists to provide training,

advice and assistance to develop the capacity of government and private sector participants

to understand the rules and regulations and how they should be implemented.

The purpose of this sub indicator is to verify existence of permanent and relevant training programs

for new and existing staff in government procurement.

Until recently, no dedicated training programs related to procurement skill enhancement were

conducted in the Health Department Khyber Pakhtunkhwa as there was no strategy existing at thedepartmental level to envisage such needs to generate and maintain the supply of qualified

procurement staff. The Health Services Academy in Peshawar seems to have its major focus on

management training to the doctors. The ongoing USAID DELIVER Project in Khyber Pakhtunkhwa

is involved on the nation-wide supply chain of contraceptives through its Logistics Management

Information System (LMIS), besides catering to the training needs of the Districts’ staff in the LMIS

discipline. The said training component does not address the specific requirements of a

procurement life cycle. Keeping in view the magnitude of funds involved and sensitivity of time in

getting the best value for money and product efficacy, this neglected area poses far greater risk

than anticipated.



59


There is a training and capacity building strategy that provides for:

(a) Substantive permanent training programs of suitable quality and contentfor the needs of the system.

3

(b) Evaluation and periodic adjustment based on feedback and need.

(c) Advisory service or help desk to absolve questions by procuring entities,suppliers, contractors and the public.

There is a training and capacity building strategy that provides for a) above. 2

The existing program is of poor quality and insufficient to meet the needs of thesystem and there is no procurement help desk or advisory service.

1

No formal training or help desk programs exist. 0

Sub-indicator 5 (d) – Quality control standards are disseminated and used to evaluate staff

performance and address capacity development issues.

The purpose of this sub-indicator is to verify existence, relevance and comprehensiveness of the

quality assurance and standards for processing procurement actions and to ensure their systematic

application to provide for monitoring of performance..

Although these types of standards will vary widely between different administrative levels, they

should as a minimum:

(a) Provide quality assurance standards and a monitoring system for procurement processes

and products

(b) Provide for a staff performance evaluation process based on outcomes and professional

behaviors.

(c) Ensure that operational audits are carried out regularly to monitor compliance with quality

assurance standards.

Though the NWFP Procurement Rules 2003 do mention response time for pre-qualification and

tender submission, no quality control standards with respect to purchaser’s performance evaluation

exist or have been disseminated at the level of Health Department to verify the existence of any

such standards which might include response times to reply to inquiries, or length of time to prepare

tender documents after receipt of a requirement. It is due to this fact that time and again the courts

feel the need to interfere on related matters in the Province regarding issues of product efficacy and

spurious drugs bought through procurement procedures which could not assure quality. The

Provincial Quality Control Board (PQCB) Khyber Pakhtunkhwa under the Health Department has a

robust mechanism for detecting, seizing and prosecuting spurious or sub-standard medicines in the

market but its operation may be a post-procurement measure and is not directly related to

procurement of drugs by the Department.



60

No monitoring system so far existed for assuring quality of procurement process or staff

performance in this regard including any performance based incentives for achieving efficiency in

procurement processes. Ironically, the only quality assurance mechanism existing at Departmental

level is the pre-qualification process by which mercantile and manufacturing expertise of suppliers

and manufacturers of bio-medical equipment, drugs and surgical disposables is judged by the

Department.

So far, at the level of Department of Health, to assess & evaluate purchaser’s performance no

mechanism has been developed for conducting the internal audit and observations from the

external audit have not been translated into a lesson i.e., developing some tangible form of

operational standards to avoid emergence of similar observations on procurements in future. The

external audit conducted by the AGPR also seems to have developed expertise on revenue receipt

audit and not on expenditure audit, resulting in observations by audit which are based not on non-

observance of procurement procedures by the procuring agency but on the probable financial

improprietary, as viewed by audit. The interesting examples in this regard are the audit observations

wherein the Health Department is asked to explain why the lowest evaluated responsive bid was

selected instead of instead of the lowest priced bid. Similarly, any drug procured through open

competition by Govt-MCC, if found costlier than the market, has also been objected by the Audit.

Such an instance is beyond the control of the Department and has been identified as a risk

alongwith its mitigation strategy in the Assessment Report.


The procurement system complies with (a) through (c) above. 3

The procurement system complies with (a) and (b) above but there is no regularauditing to monitor compliance..

2

The procurement system has quality standards but does not monitor nor use thestandards for staff performance evaluation.

1

The system does not have quality assurance or staff performance evaluationsystems.

0

5.8 Pillar III. Procurement Operations and Market Practices

This Pillar looks at the operational effectiveness and efficiency of the procurement system at the

level of the implementing entity responsible for issuing individual procurement actions. It looks at the

market as one means of judging the quality and effectiveness of the system when putting

procurement procedures into practice. This Pillar is distinguished from Pillars I and II in that it is not

looking at the legal/regulatory or institutional systems in a Province but more at how they operate.

Indicator-6. The Province’s procurement operations and practices are efficient.

This indicator looks at the efficiency of the operations and operational practices as implemented by

the procuring agencies.



61

Sub-indicator 6 (a) – The level of procurement competence among government officials

within the entity is consistent with their procurement responsibilities.

The purpose of this sub-indicator is to assess the degree of professionalism and knowledge of

those responsible for implementation of procurement activities that:

(a) there are defined skill and knowledge profiles for specialized procurement jobs.

(b) there is systematic matching of skills against requirements for competitive recruitment.

(c) staff required to undertake procurement activities on an ad hoc basis have the knowledge

they need to undertake the activity or have access to professional staff that can provide

this knowledge.

The procurement for pharmaceutical products, surgical disposables, bio-medical equipment and

goods of general nature at the Directorate General Health Services (DGHS), Vertical Programs,

AMIs and Health Projects is being conducted in a traditional way by the related officials & staff who

are supposed to carry out the activity through drafting of the Tender Inviting Notice for publication,updating the Formulary or the list of bio-medical equipment, preparing the list of general items and

submitting the same to the authorized departmental committees comprising sector specialists from

pharmacy, medicine, surgery and bio-medical engineering fields for review, approval and

subsequent purchasing.

The business functions stated above have so far ranged from clerical errands to the administrative

approvals & scrutiny in a repetitive way to establish traditional purchasing practices. The Director

General Health Services and the Chief Executives of the AMIs seemed proficient in current

procurement processes in the health sector. However, none of the above personnel seemed tohave any formal skill and knowledge profile for specialized procurement jobs as per the above

stated Sub-indicator 6(a) as neither there has been any dedicated effort to develop such profile on

any professional footing through customized procurement trainings in the Health Department nor

has there been any academic pursuit of getting a degree, diploma or certificate in procurement

management.

Very few officials of the Health Department Khyber Pakhtunkhwa have attended the two-day

training in public procurement management on PPRA Rules 2004 in National Institute of Training

(NIT) PPRA Office Islamabad in recent years. In the absence of any public procurement regulatoryauthority in Khyber Pakhtunkhwa for initiating a formal training on public procurement in the

Province, NIT in Islamabad is therefore the only venue available which offers the procurement

officials of Health Department Khyber Pakhtunkhwa to align their purchasing functions with

international best practices in public sector contracting but has largely remained unexplored so far.

The Directorate General Health Services though, in July 2011, initiated a one-time effort on capacity

building of drug inspectors, Provincial Quality Control Board and Drug Testing Laboratory Khyber

Pakhtunkhwa under in terms of inspection and drug sampling protocols in a four-day workshop

through Drug Control Strengthening Project which focused on quality of the product but not on its

acquisition methodology.



62

Posting out of officials dealing with procurement from the concerned sections in the Health

Department have also made the fair implementation of procurement procedures ineffective.

Recently, establishment of a Procurement Cell in DGHS has been an important step in initiating

centralized purchasing of bio-medical equipment and general items on the basis of requirements

generated by the districts, but no formal officials have been dedicated for posting to the said Cell.

This may be attributed to lack of any systematic matching of skills against requirements of

competitive recruitment for the procurement function in the Health Department which is consideredas a secondary function vis-à-vis provision of health services as the primary function.

The variance in professional efficiency and operational practices of the procurement staff appointed

to undertake procurement activities on an ad-hoc basis has therefore resulted in delayed award of

contracts and occasional misprocurement due to procedural lapses.

The maturity assessment of the procurement function of Health Department Khyber Pakhtunkhwa

typically considers the dimensions like strategic planning and objectives, organization design,

strategic sourcing and category management, buying operations, supplier management, contract

management, risk and governance management, performance management, knowledge/

information management and organizational capability (skills). The Department has yet to develop

defined skills for the above said dimensions of the procurement functions through specialized

capacity building of their officials.


The system meets the requirements (a) through (d) listed above. 3

The system meets (a) plus one of the remaining conditions. 2

The system only meets (a) above. 1

The system does not meet any of the requirements. 0

Sub-indicator 6(b) – The procurement training and information programs for government

officials and for private sector participants are consistent with demand.

This sub indicator assesses the sufficiency of the procurement training and information programs in

terms of content and supply.

(a) Training programs’ design is based on a skills gap inventory to match the n eeds of thesystem.

(b) Information and training programs on public procurement for private sector are offeredregularly either by the government or by private institutions.

(c) The waiting time to get into a course (for public or private sector participants) isreasonable, say one or two terms.

Though the NWFP Procurement Rules 2003 remain a precursor to Federal PPRA Rules 2004 and

almost both tend to share best practices in transparency and contracting techniques, as earlier

discussed above in indicator 6(a) the Health Department has neither designed any dedicatedprofessional program based on any of the above stated set of Procurement Rules to develop



63

procurement skills of its officials nor has there been any academic pursuit of getting a degree,

diploma or certificate in procurement management by the concerned.

The strategic initiatives taken on provision of health service delivery for the masses in the Province

also seems devoid of any training programs and awareness workshops for the suppliers in the

private sector to educate them for submitting responsive bids. No training calendar has ever been

developed by the Health Department or the Provincial Health Services Academy (PHSA) in

Peshawar to cater to the needs for procurement related trainings at regular intervals. PHSA could

have been a valuable venue for such events for maturing Departmental resources into assets for

the procurement function with its faculty members as Master trainers on public procurement as well.


The training and information programs available meet all the requirements listedin (a)-(c) above.

3

The training programs are sufficient in terms of content and frequency (waiting

time) for government participants but there are few information programs forprivate sector..

2

There are training programs but they are deficient in terms of content andsupply.

1

There is no systematic training or information program for public or private sectorparticipants.

0

Sub-indicator 6(c) – There are established norms for the safekeeping of records anddocuments related to transactions and contract management

The ability to look at implementation performance is dependent upon the availability of information

and records that track each procurement action. A system for safe-keeping of records and

documents should include the following:

(a) The legal/regulatory framework establishes a list of the procurement records that must bekept at the operational level and what is available for public inspection, includingconditions for access.

(b) The records should include:

Public notices of bidding opportunities

Bidding documents and addenda

Bid opening records

Bid evaluation reports

Formal appeals by bidders and outcomes

Final signed contract documents and addenda and amendments

Claims and dispute resolutions

Final payments

Disbursement data (as required by the Province’s financial management system).



64

(c) There is a document retention policy that is compatible with the statute of limitations in theProvince for investigating and prosecuting cases of fraud and corruption and with theaudit cycles.

(d) There are established security protocols to protect records either physical or electronic.

Safekeeping of records and documents related to transactions and contract management is vital to

the functioning of both internal & external control systems and for reviewing the past contracting

actions preserved as organizational process assets. The Health Department Khyber Pakhtunkhwa

and its subsidiaries have kept the procurement record in safe custody for access to external audit

and inspection by other agencies. Separate file for each supplier/manufacturer has been maintained

with respect to his contract actions in most of the cases instead of a master file, containing the

proceedings from Tender Inviting Notice (TIN) to contract award. In the absence of a streamlined

filing system in Procurement Cell & Govt-MCC section, finding administrative approval regarding a

particular procurement activity becomes the sole specialty of the section assistant. However, the

overall sanctity of the preserved record seems intact.

Rule 31 of the NWFP Procurement Rules 2003 binds the Tender inviting Authority to maintain

record of procurement proceedings related to the nature of procurement activity, detail of

participating suppliers/contractors and their contract price, information relative to any qualification,

disqualification or rejection of bidders under Rule 32 of the said Rules, summary of comparative

evaluation of bids and name of Lowest Evaluated responsive Bidder who has been awarded the

contract. No visible security protocols established administratively, either physical or electronic,

were observed in the Department.

However, unlike Rule 46 of the Federal PPRA Rules 2004 whereby all procuring agencies have to

retain the related record for a minimum period of five years, the NWFP Rules 2003 do not assign

any such period. Despite the absence of a statute, the Department has kept procurement

documents since 1996 or earlier since the creation of Govt-MCC stuffed in cupboards in an un-

indexed form.


The procurement system complies with the requirements (a) through(d) listedabove.

3

The procurement system complies with requirements (a), plus two of theremaining conditions.

2

The procurement system complies with (a) but not with the rest. 1

There is no mandatory list of documents or retention policy leaving it to thediscretion of the procuring entity.

0

Sub-indicator 6(d) – There are provisions for delegating authority to others who have thecapacity to exercise responsibilities.

Delegation of authority and responsibility is key to having a well functioning system especially when

procurement is decentralized.



65

Delegation should be undertaken in accordance with the following:

(a) Delegation of decision making authority is decentralized to the lowest competent levelsconsistent with the risks associated and the monetary sums involved.

(b) Delegation is regulated by law.

(c) Accountability for decisions is precisely defined.

In the absence of any specific provision in NWFP Procurement Rules 2003 for delegation of

financial powers, the provisions of the North West Frontier Province Delegation of Financial Powers

under the Financial Rules & the Powers of Re-Appropriation Rules 2001 are observed vide which

the function of the Procuring Agency has been duly delegated from the Health Secretariat to the

Directorate General Health Services for central rate contracting for drug rates and subsequently to

the AMIs, Vertical Programs, Health Projects and EDOs of the districts for issuing purchase orders

through need-based decentralized contracting for pharmaceutical products mentioned in the

approved Formulary & bio-medical equipment (exclusive of non-drug surgical disposables and

general items etc. which are procured by the subsidiaries). Though the decentralization is governed

administratively, little accountability could be visible for the decisions taken by the DGHS

subsidiaries in terms of identifying or consolidating their procurement needs for annual procurement

planning – hence over-specified bio-medical equipment is collecting dust in some districts &

Teaching Hospitals /medical units in the absence of both the personnel trained to run the said

machines and the intended end user.


The system meets all requirements listed in a) – c) above. 3

The law establishes delegation and accountabilities but the system concentratesdecisions at a high level creating congestions and delays.

2

Delegation is regulated in very general terms creating a need to clarifyaccountability for decision making.

1

Delegation is not regulated by law and left at the discretion of the procuringentity. There is lack of clarity on accountability.

0

Indicator-7: Functionality of the public procurement market.

The objective of this indicator is primarily to assess the market response to public procurementsolicitations. There are three sub indicators (a-c) to be scored.

Sub-indicator 7(a) – There are effective mechanisms for partnerships between the public andprivate sector.

The investment friendly policies of the Provincial Government of Khyber Pakhtunkhwa, the Health

Department being a reliable purchasing client and the increasing interest of the foreign donors in

helping the Department to eradicate & roll back diseases like Polio, Measles, HIV/AIDS, Malaria

and neo-natal tetanus etc through various Vertical Programs and Health Projects in the Province,

have generated considerable demand for bio-medical equipment, medical furniture, medical kits,surgical disposables and pharmaceutical products etc. in the Province. This has attracted either



66

various pharmaceutical firms to establish their manufacturing premises in Khyber Pakhtunkhwa or

compete in the tendering process from other provinces to create a public procurement marketplace

and consequently a partnership wherein the government is the buyer and the private sector is the

supplier of the needed goods, works or services amounting to around Rs 1.25 billion annually.

However, most of the suppliers were of the view that they just wanted an introduction in the

Government business otherwise supplying pharmaceuticals to the Health Department consumed

much time and was not worth doing business compared to the their retail operations in privatesector market, private hospitals and other autonomous institutions like Railway and armed forces

etc.

Such an arrangement has led to a dire need for some dialogue between the Health Department and

the private sector with regard to practices by the Department relating to pre-qualification and

tendering that had undermined the competitive effectiveness of the private sector in some areas.

Though Rule 11 of NWFP Procurement Rules 2003 mentions some response time to the applicant

for pre-qualification, there is no minimum time specified in Rule 17 of the said Rules for

communicating the prospective bidders of changes, clarifications or amendments in the biddingdocuments. Misuse of Rule 20(2) regarding reducing the mandatory period of 30 days to any

number of days without a cogent reason has potentially restricted the competitive environment for

which no forums are available in the Health Department for its dialog with the private sector on

deliberating upon any such practices. Similarly, the Standard Bidding Documents, after getting

advertised or posted on web, can only be amended or changed by the approved Technical &

Evaluation Committee as per approved administrative SOPs but the same are amended by the

Directorate General Health Services without intimation to the said Committee. The above said

operational lacunae have raised concern among competitors from the private sector. However, the

private sector has recently relied upon the Health Department as a partner-in-development under

the public private partnership arrangements for providing management consultancy services for

revitalizing and strengthening the health service delivery in six crises affected districts of Khyber

Pakhtunkhwa by the Health Sector Reforms Unit (HSRU), Health Department Khyber Pakhtunkhwa.

But it should be kept in mind that the said partnership has been ensured under the Multi-Donor

Trust Fund (MTDF) by the World Bank. An effective, reliable and transparent mechanism for

sustaining such a partnership from the Department itself has yet to come.

The Department, despite its arm-twisting prowess, has also not been able to create a forum for

initiating dialogue with the local pharmaceutical industry on eradication of spurious drugs. Such

dialogue could have initiated self-correcting actions by the drug associations themselves in the

private sector in taking measures to identify counterfeit medicines supplied in the market and taking

punitive measures against the unscrupulous manufacturers and suppliers with the help of the

Department. Any one-sided effort on the part of the Department so far by prosecuting the

unscrupulous suppliers through lenient penalties under Section 27 of the Drug Act 1976,

introducing alpha-numeric bar code stickers for supply of genuine drugs to the Department or any

other measures without the private sector stakeholders’ buy-in, has resulted in futility.



67


(a) Government encourages open dialogue with the private sector and hasseveral established and formal mechanisms for open dialogue throughassociations or other means.

3

(b) The government has programs to help build capacity among privatecompanies, including for small businesses and training to help new entries

into the public procurement marketplace.

(c) The government encourages public/private partnerships and themechanisms are well established in the legal framework to make possiblesuch arrangements.

The system meets (a) plus one other condition above. 2

The system only provides for (a) above. 1

There are no obvious mechanisms for dialogue or partnership between thepublic and private sector.

0

Sub-indicator 7(b) – Private sector institutions are well organized and able to facilitateaccess to the market.

This sub-indicator looks at the capacity within the private sector to respond to public procurement in

the Province.

Pharmaceutical firms, bio-medical equipment suppliers and general item suppliers from the private

sector are the usual small and medium enterprises (SMEs) which are the business partners of the

Health Department. Around two hundred registered and pre-qualified firms possess the necessary

organizational capacity to access the information and other services to promote their participation inthe tendering process initiated by the Department all the year round. The pharmaceutical sector, at

the moment, seems to be well organized and competitive in terms of its professional staff and

manufacturing capabilities with respect to the firms pre-qualified with the Department on stringent

criteria and is keen on competition.

However, some areas of competition, like vaccines for Hepatitis-B and Tuberculosis and biological

drugs like Hepatitis-C etc., are monopolized by certain multinational suppliers owing to their

probable dominance in global research. Standard Interferon anti-viral therapy for combating

Hepatitis-C has been pioneered since 2002 by a few multi-national companies like M/s RochePharma Ltd and M/s Schering Plough Ltd etc. M/s Roche Pharma Ltd have further initiated the

observational Sustained Virologic Response (SVR) Research Studies for Biosimilar Pegylated

Interferon on multi-continental representative samples since 2007 for non-responders and relapsers

to the treatment of Hepatitis-C, which have been published in indexed journals of international

repute and has created some reference standards for conducting head-to-head clinical trials to be

carried out by other firms Local companies like M/s BF Biosciences and M/s Getz Pharma etc. tend

to compete with the multi-nationals in the bidding process but seem deficient in providing head-to-

head clinical trials based on a longer duration, in publishing any detailed SVR Research studies of

their competing products in indexed journals of international repute or demonstrating any significant

share in the local market as indicated by IMS Health USA, a global pharmaceutical database.



68

Though the said aspects may limit the competition for Hepatitis-C drug, the same need to be

included in the Technical evaluation Criteria to get quality medicines of high therapeutic value from

well-reputed pharmaceutical firms. The Technical Evaluation criteria also contains pharmaco-kinetic

& pharmaco-dynamic in-vivo Bio-Equivalence studies for Anti-Tubercular drugs for determining

proof of sustained response against the disease through continuous serum efficacy and the same

have been made mandatory for technical qualification of the bidders for specialized drugs.

The Directorate General Health Services has ensured that in order to achieve high efficacy of the

specialized product such reference standards should become part of the Technical Evaluation

Criteria of the revised Bidding Documents for procurement of specialized drugs for the Govt-MCC

for the year 2012-13. The above stated reference standards have restricted the participation of

many new entrants supplying or manufacturing specialized drugs dealing with Interferon therapy

who have been agitating against the inclusion of the said reference standards. However, despite

resistance, the Directorate General Health Services has taken a firm stand on achieving high quality

biological products keeping in view the sensitivity of the prevailing situation regarding Hepatitis-C

and Tuberculosis and has strived to ensure supply of quality biological drugs by retaining thereference standards like SVR Reports for Interferon therapy and Bio-Equivalence Studies for Anti-

Tubercular drugs in the revised Standard Bidding documents.


The private sector is competitive, well organized and able to participate in the

competition for public procurement contracts.

3

There is a reasonably well functioning private sector but competition for large

contracts is concentrated in a relatively small number of firms.

2

The private sector is relatively weak and/or competition is limited owing to

monopolistic or oligopolistic features in important segments of the market.

1

The private sector is not well organized and lacks capacity and access to

information for participation in the public procurement market.

0

Sub-indicator 7(c) – There are no major systemic constraints (e.g. inadequate access to

credit, contracting practices, etc.) inhibiting the private sector’s capacity to access the

procurement market.

This Sub-indicator has been assessed through a questionnaire distributed among various suppliers

of pharmaceutical products and bio-medical equipment. The majority of feedback revolved around

the pre-qualification exercise conducted by the Health Department annually to assess the efficacy of

the industrial processes of the manufacturers and supply chain mechanisms adopted by the

importers or suppliers. The suppliers of the bio-medical equipment and surgical instruments were

mostly the importers of the said equipment and were of the view that annual pre-qualification

exercise for them was redundant in view of the nature of supply, process involved and definition of

the product which remained almost constant due to established market practices and fixed product

definition with anticipated upgrades. They were of the view that manufacturers and importers of the



69

pharmaceutical products needed to be checked frequently during the year and through surprise

visits as well, to randomly verify the quality of daily, weekly or monthly batches of medicines and

drugs turning out of production locally.

The importers of the drugs & surgical disposables, on the other hand, were of the view that the

Batch Certificate on Form-7 under Rule 14(d)(i) of Drugs (Import & Export) Rules 1976 from the

Drug Regulatory Authority of the country of export or from manufacturer and submitted by theimporters fulfilled the need for ascertaining the source of raw material and quality of the product,

hence their annual pre-qualification was not needed.

Regarding private sector’s access to credit by the Health Department in the form of any mobilization

advance, no such facility is provided in the contract clauses for procurement of bio-medical

equipment, pharmaceutical products or general items etc. Certain suppliers maintained that the

banks usually extended credit line facility to only those suppliers whose import volume was large

enough to comply with their corporate risk coverage; hence not many of the importers could get any

leverage from banks for opening Letter of Credit and had to import directly from the manufacturersby sending cash in advance to cover the risk of manufacturers but in turn risking their investments.

Certain suppliers of the pharmaceutical products or bio-medical equipment had the strong

impression on the survey scale of intensity that their bid securities were not timely released despite

definite time period given in the bidding documents for their return and even after submission of

Performance Security in case of selection of their pharmaceutical products through central rate

contracting by the Govt-MCC at Peshawar. They had to wait for the Purchase Orders to be issued

from the EDOs (Health) to get their bid securities back and therefore remained at the mercy of the

EDOs (Health) The suppliers were of the view that results of the drug samples obtained by theDepartment were not timely conveyed by the Drug Testing Laboratories leading to delay in their

final payments. This not only affected their investment circulation but reduced their financial

capability for participating in other contracts.

Many suppliers informed in the survey that originally they were distributors of pharmaceutical

products, including drugs, surgical disposables, medical supplies and bio-medical equipment on

behalf of the majority of the major local and multi-national manufacturers in pharmaceutical sector

but due to a recent decision of the Peshawar High Court vide Para 9 of the Writ Petition No.

2478/2010 (Daily Mashriq Vs Secretary Health & Others), they were barred from participating onbehalf of manufacturers. The said decision directs the Health Department to purchase drugs only

from original manufacturers or their authorized importers. However, in the new set-up the

manufacturers are still having the same distributors in the guise of their authorized suppliers serving

their interests owing to the reason that the manufacturers traditionally either do not have the reach-

out potential for marketing of their products to the extent the distributors have with their dedicated

expertise, or do not yet want to develop the same and save the expenditure on establishing any

inter-city corporate setup.

This scenario has created not only a dichotomy for the Health Department which is in realization ofthe actual situation and may be keeping silent for a while in violation the Honourable High Court’s



70

decree but also for the distributors working in the garb of authorized suppliers who now face a risky

situation in terms of their financial investment with manufacturers thereby having absolutely no

coverage for the bid securities and performance securities deposited by them on behalf of the

manufacturers. The inherent risk in this situation has emerged out of lack of their agency agreement

with the manufacturers with whom they club together for supply of pharmaceutical products without

any contractual privity. Resultantly with investment getting riskier, they are getting reluctant to

participate on behalf of the firms in the public sector affecting the competition of manufacturing firmsas well. The hue and cry raised by the representatives of the pharmaceutical companies recently

regarding increase in the bid security from Rs. 100,000 to Rs 500,000 by the Directorate General

Health Services Khyber Pakhtunkhwa as a primary qualification for participation in Govt-MCC

procurement of drugs for the year 2012-13 reflected the above mentioned state of affairs. The T&E

Committee evaluating in detail the Technical bids for the above mentioned procurement activity has

categorically instructed all the participating firms that the Department would not allow anybody else

except bidding firms’ regular employees with their salary slips to submit firms’ bids and their

presence at the time of firms’ financial bid opening for the year 2013-14.

Inclusion of KIBOR rate of interest in the contracting provisions for paying 2% of the delayed

amount to the seller by the government is considered to reasonably distribute the risk associated

with untimely payment upon performance of contract and helps offset the cost of doing business

with the government. However, the previous contractual arrangements between the Health

Department Khyber Pakhtunkhwa and the suppliers demonstrates that the pharmaceutical/bio-

medical engineering firms participating in tenders have long conceded their stated right by not

pressing upon the Health Department to include the above mentioned provision in the contract.

Hence the survey displays an alarming trend of delayed payments due to late inspections of bio-

medical equipment by the Department or late DTL Reports for pharmaceuticals to the sellers by the

Department forcing the suppliers to adopt undesirable practices for release of their payments and a

possible constraint to competitive bidding.


There are no major constraints inhibiting private sector access to the publicprocurement market.

3

There are some constraints inhibiting private sector access to the public

procurement market, but competition is sufficient.

2

There are multiple constraints inhibiting private sector access to the publicprocurement market which often affect competition levels.

1

There are major constraints that discourage competition and the private sectorfirms are generally reluctant to participate in public procurement.

0

Indicator- 8: Existence of contract administration and dispute resolution provisions.

This indicator’s objective is to assess the quality of contract administration practices which begin

after contract award and continue to acceptance and final payments. This is an area that manyprocurement systems fail to consider. It is also a period where many issues arise that can affect the



71

performance of the contract and impact on service delivery. This indicator covers three sub-

indicators (a-c) to be scored.

Sub-indicator 8(a) – Procedures are clearly defined for undertaking contract administration

responsibilities that include inspection and acceptance procedures, quality control

procedures, and methods to review and issue contract amendments in a timely manner.

This sub-indicator addresses all of the following procedures which are important aspects of contractadministration:

(a) Procedures for acceptance of final products and for issuance of contract amendments

are part of the legal/regulatory framework or are incorporated as standard clauses in

contracts.

(b) Clauses are generally consistent with internationally accepted practices (see IFI

standard contracts for good practice examples).

(c) Quality control (QC) procedures for goods are well defined in the modelcontracts/documents or in the regulations. QC is carried out by competent officers,

inspection firms or specialized testing facilities. (DTL)

(d) Supervision of civil works is carried out by independent engineering firms or qualified

government supervisors and inspectors.

(e) Final payments are processed promptly as stipulated in the contract.

The Health Department had been using, until recently, a traditional contract template forprocurement of bio-medical equipment and pharmaceutical products which contained some

essential provisions dealing with payments, fraudulent practices, item delivery, pr oduct’s shelf life

or warranty and notices with basic level of treatment for each of them with respect to risk mitigation.

Little did the template offer any credible procedure to resolve contractual disputes through

arbitration considered vital for credibility of review procedures.

With the introduction of revised Standard Bidding Documents based on FIDIC Standard Templates

and customized for specialized operation related to the supply of health sector goods in August

2012, the internationally agreed-to standard contractual provisions found their way in theprocurement business processes for contract administration like Statement of Works (SOW),

Performance Reporting, Period of Performance, Roles & Responsibilities, Seller’s Place of

Performance & Delivery, Pricing & Payment Terms, Inspection & Acceptance criteria, Warranty &

Product Support, Limitation of Liability, Penalties, Incentives, Insurance & Performance Bonds, Sub-

Contractor Approvals, Change Request handling, Incoterms for supply chain risk allocation,

Contract Termination and Alternative Dispute Resolution (ADR) Mechanisms for supplies and

Retainage fees for any civil works etc if required. Service Level Agreement (SLA) elaborating

maintenance requirements and training needs, has therefore become a standard appendage to the

main contract.



72

Instead of a single 100% payment method at the end of each accepted supply, a dual payment

régime was introduced in the Special Conditions of Contract of the Standard Bidding Documents

based on 80% payment at the time of supply and 20% after the acceptance of product by the Client

and upon fulfillment of other contractual obligations.

This dual payment régime aims at easing out the agony of the supplier who had been constantly

waiting for the Quality Assurance Report of the Drug Testing Laboratory (DTL) for approval of thesample taken by the Department for making payments. In the wake of absence in the NWFP

Procurement Rules 2003 of any enforcement clause for payment by the Department in some

prescribed period, Section 22 of the Drugs Act 1976 provides a mandatory period of two months for

furnishing the same. The process may take upto one and a half month for injectables as the

prepared media in the Sterility Test may take atleast 14 days to show any positive growth thereby

leading to another two weeks to duplicate the test to ensure the said growth. The tablets or

capsules may take not more than two weeks if all goes well. This is the minimum time that the

supplier has to bear out with the Department for receiving its payment if no other bureaucratic

hurdles are created afterwards to extort any gratification from the supplier.

However, any genuine delay by the DTL should not undermine the significance of the sampling for

assuring Quality Control (QC) conducted by the Health Department as the said procedure derives

its strength from the Drug Act 1976 & standard SOPs developed for the Pre-Qualification process

and is used at the supply stage by involving the DTL to ensure product quality. In this regard, an

interesting observation has been reported by the DHIS Provincial Report of the 1 st quarter 2012

stating that 100% of the drug samples collected are those being manufactured locally by local

companies and no sample has been taken from any multi-national pharmaceutical firm. This

requires some soul searching on the part of the members of the Govt-MCC Selection (Purchase)Committee to make the right decisions based on quality and not on lowest price regardless of the

low cost quoted for bulk purchases of medicines to be supplied in the government hospitals.

Though the dual payment clause may now theoretically reduce the disbursement time during

contract administration, the 60-days mandatory period for drug sampling and testing practically

reduces the probability of any timely payment based on contractual terms. The suspension of the

KIBOR Clause by the Department through the inactivating ‘Condition Subsequent’ in the Special

Conditions of Contract (SCC), as mentioned above in Sub-Indicator 7(c) has, under Common Law,

created a precedence in favour of the Client and may pose a contractual risk for the seller. Thesame may therefore needs to be mitigated through supplementing any regulation for the said

additional time in the much awaited Khyber Pakhtunkhwa Public Procurement Rules 2012

conforming to the time period in the Drugs Act 1976 for the health sector to establish credibility of

the Department.


Contract administration procedures provide for (a) to (e) above. 3

Contract administration procedures provide for (a) plus three of the remainingrequirements.

2



73

Contract administration procedures provide for (a) plus two of the remainingrequirements.

1

Contract administration procedures do not meet the requirements of (a) to (e)above.

0

Sub-indicator 8(b) – Contracts include dispute resolution procedures that provide for anefficient and fair process to resolve disputes arising during the performance of the contract.

In order to avoid long delays while resolving disputes, a good resolution process should be defined

in the contract that provides for fair and timely resolution. The following describes current good

practice with regard to dispute resolution.

(a) There is an Arbitration law in the Province.

(b) The law is consistent with generally accepted practices for neutrality of arbitrators, due

process, expediency and enforceability.

(c) The Province accepts as a matter of course international arbitration for internationalcompetitive bidding.

(d) Provisions for Alternative Dispute Resolution (ADR) are standard in contracts.

(e) ADR provisions conform to the international standard wording (may refer to IFI standard

bidding documents for sample of good international practice).

Rule 43 of the NWFP Procurement of Goods, Works & Services Rules 2003 provide for the appeal

procedure for the bidders who feel aggrieved by the Procuring Entity and want to file an application

for review of the decision. Unless the Procuring Entity (PE) entered into a contract the aggrieved

bidder may file an application to:

Head of PE if Tender Accepting Authority is other than Head of Procuring Entity

Secretary Industries if Tender Accepting Authority is Head of Procuring Entity

Secretary Law if Tender Accepting Authority is Secretary Industries

District Coordinating Officer if procurement is made with District Government funds

Though the said Rule binds the aggrieved bidder to accept the decision of Reviewing Authority as

final and not to challenge it in any court of law , said condition has been rendered ineffective by the

superior judiciary whereby no contractual provision can stop an aggrieved bidder from approaching

a court for redressal of his grievances. The different review tiers mentioned in the said Rule may not

be applicable now in the post-devolution scenario and need revision.

The Arbitration Act 1940 deals with domestic arbitration proceedings and applies to recognition and

enforcement of domestic awards but is not based on the UNCITRAL Model Law. A Bill for a new

consolidated arbitration law based on the UNCITRAL Model Law was presented to the Parliament

on 27 April 2009 and is still pending before the National Assembly. The Bill aims to consolidate law

relating to domestic arbitration, international commercial arbitration, recognition and enforcement of

foreign arbitral awards as well as settlement of international investment disputes. However, even

the Arbitration Act 1940 is consistent with generally accepted practices for neutrality of arbitrators,



74

due process, expediency and enforceability. The same has been included in the recently revised

Standard Bidding Documents for procurement of pharmaceutical products for Govt-MCC.

Pakistan Engineering Council (PEC) has issued the first edition of its ‘Rules on Arbitration &

Conciliation’ drafted in March 2009. PEC has modeled its rules for conciliation on the principles and

lines of United Nations Commission on International Trade Law (UNCITRAL) taking into

consideration essential elements of Pakistan Arbitration Act, 1940 and relevant provisions of PEC

Regulatory Régime. Section 283 of The Companies Ordinance 1984 also facilitates dispute

resolution through arbitration. However, for establishing credibility among the foreign donors/buyers,

arbitration forums like International Chamber of commerce (ICC), international Court of Justice

Hague, UNCITRAL model Rules on Arbitration and FIDIC Contract Dispute Resolution mechanism

have been added in the said Standard Bidding Documents for the public-private partnership

arrangements to acquire management consultancy services for revitalizing and strengthening the

health service delivery in six crises affected districts of Khyber Pakhtunkhwa by the Health Sector

Reforms Unit (HSRU) under the Multi-Donor Trust Fund (MTDF) by the World Bank.

Talking on the Country level, Section 49 of the Federal PPRA Rules 2004 provides for the

arbitration but leaves it to the procuring agencies to devise any methodology for that. The ‘Rules of

Arbitration & Conciliation 2009’ are well drafted by Pakistan Engineering Council. Adjudicators stand

appointed in the judicial branches of the public sector for dispute resolution. Alternate Dispute

Resolution Committees (ADRCs) to the extent of the Federal Board of Revenue (FBR) for resolving

the disputes outside the courts have already reduced the work load on the Supreme Court and are

a standard practice in the contracts.

In comparison, on the Provincial level Alternate Dispute Resolution (ADR) mechanism has yet to

make its mark in the procurement business processes adopted by the Health Department. In the

absence of any standard mechanism for arbitration under Rule 43 of the NWFP Procurement Rules

2003 and lack of any provincial appellate authority, the aggrieved bidders are free to file complaint

against a procurement process elsewhere ranging from DGHS to Honourable Peshawar High Court

as earlier discussed in Sub-indicator 1(d) regarding Rules on participation despite right of

independent audience granted by the Secretary Health. This has created a contractual risk in terms

of dispute resolution and the Department may definitely consider, in addition to making spontaneous

departmental review committees, adopting the general principles set by the Supreme Court of

Pakistan for recent dispute resolutions through the above mentioned Alternate Dispute Resolution

Committees (ADRCs) which settled a large volume of taxation related cases in Federal Board of

Revenue (FBR), Islamabad. Mediation can be another less hostile mode for dispute resolution

outside the courts which the Department may adopt in certain cases.


The system meets all the good practice standards (a) to (e) above. 3

The system meets (a) plus three of the remaining good practice standards. 2

The system meets (a) plus two of the remaining good practice standards. 1

The system does not use ADR as a normal dispute resolution mechanism inpublic contracts.

0



75

Sub-indicator 8(c) – Procedures exist to enforce the outcome of the dispute resolution

process.

In order to be effective, the contract not only must provide for fair and efficient dispute resolution

procedures, it must also provide for enforcement of the outcome of the dispute resolution process.

The following are some basic conditions.

(a) The country is a member of the New York Convention on enforcement of internationalarbitration awards.

(b) The country has procedures to enable the winner in a dispute to seek enforcement of the

outcome by going to the courts.

(c) The country has a process to monitor this area of contract administration and to address

performance issues.

The current good practices for timely resolution of the disputes lie in the free judiciary in the Country

for enforcement of the contract law. There is no specialist arbitration court in Pakistan. The High

Court and such other superior courts in Pakistan as may be notified by the Federal Government inthe Gazette has jurisdiction over recognition and enforcement of foreign awards. The judiciary in

Pakistan is familiar with the laws governing both domestic and international arbitrations.

The Arbitration Act 1940, supplemented by the Contract Act 1872, accepts the international

arbitration as Pakistan itself is a member of the forums regarding international dispute settlement

like Board of the ‘Forum for International Conciliation and Arbitration (FICACIC).’ There are well

informed arbitration law firms to help enforce the settlement through the judiciary within the Country.

Pakistan is a member of the various other dispute resolution institutions like World Bank’s

‘International Center for Settlement of Investment Disputes (ICSID)’ which helps in the conciliation

and arbitration of international investment disputes. The International Chamber of Commerce (ICC)

is active through ICC Pakistan; however, presently it does not provide any arbitral services.

Pakistan became a signatory to the United Nations Convention on the Recognition and

Enforcement of Foreign Arbitral Awards, 1958, known as ‘New York Convention’ on 30 December

1958. The Recognition and Enforcement (Arbitration Agreements Foreign Arbitral Awards) Act

2011, known as ‘The Convention Act’, implements the New York Convention in Pakistan and is

limited to the enforcement of ‘foreign arbitral awards’. The New York Convention was first

implemented in Pakistan vide the Recognition and Enforcement (Arbitration Agreements and

Foreign Arbitral Awards) Ordinance, 2005 which was subsequently re-promulgated from time to

time before the enactment of the said Convention Act 2011.

Pakistan is party to the Geneva Protocol on Arbitration Clauses of 1923 and Geneva Convention on

the Execution of the Foreign Arbitral Awards of 1927. Pakistan is also a signatory to the

‘Washington Convention’ which is a Convention on the Settlement of Investment Disputes between

States and Nationals of Other States of 1965.

It is important to note that in the absence of clear definitions of ‘domestic arbitration,’ ‘domesticaward,’ and ‘foreign arbitral award’ under the arbitration laws of Pakistan, the scope and ambit of

http://www.worldbank.org/icsid/






76

the aforementioned laws is unsettled. Accordingly it is possible that a particular arbitration

agreement or arbitral award may attract the application of the Arbitration Act 1940 and/or the

Convention Act 2011.


The procurement system in the country meets the requirements of a-c above. 3

The country meets two of the three conditions above. 2

The country meets condition (a) above 1

The country does not meet any of the requirements. 0

5.9 Pillar IV. Integrity and Transparency of the Public Procurement System.

Pillar IV takes aspects of the procurement system and governance environment and seeks toensure that they are defined and structured to contribute to integrity and transparency.

Indicator -9: The Province has effective control and audit systems.

The objective of this indicator is to determine the quality, reliability and timeliness of the internal and

external controls preferably based on risk assessment and mitigation.

Equally, the effectiveness of controls needs to be reviewed in terms of expediency and

thoroughness of the implementation of auditors’ recommendations. The assessment should rely, in

addition to their own findings, on the most current Country Financial Accountability Assessment

(CFAA) or other analysis including PEFA/PFM assessment that may be available. This indicator has

five sub indicators (a-e) to be rated.

Sub-indicator 9(a) – A legal framework, organization, policy, and procedures for internal and

external control and audit of public procurement operations are in place to provide a

functioning control framework.

The procurements conducted by the Health Department Khyber Pakhtunkhwa have been annually

audited by the external auditors of the office of the Provincial AGPR. Such an expenditure audit

exercise for oversight of the procurement function derives its legitimacy from the national legislation

establishing the office of the Federal AGPR as constitutional head for the said state organs even

after Post-18th

Amendment.

However, an Internal Audit mechanism has not been in place in the Health Department for

establishing internal controls for periodically producing recommendations to the heads of the

individual procuring entities based on their findings. TRF has already suggested creation of an

Internal Audit mechanism in its Health Sector Strategy Document for the Province, complemented

by internal control and management procedures that provide for checks and balances within an

agency for processing of procurement actions.

Procurement Audit is an expenditure audit and owing to its process peculiarities, is different fromthe Revenue Receipt Audit. Due to its specialized nature, the Health Department therefore needs to



77

develop a skilled Internal Audit workforce with special focus on Procurement Audit. TRF has

suggested the Directorate General Health Services some capacity building measures on

Procurement Audit in the annexed Training Calendar to abreast the Departmental audit officials with

the universally applicable expenditure audit skills to scrutinize individual contract actions in the

procurement activities.

Special Audits are also an infrequent feature for internal checks and balances on Health Projects,Vertical Programs or any particular aspect of DGHS procurements and are called when required

administratively or for investigating any complaints. These audits address specific risks and check

any controls available for their mitigation and preservation of financial proprietary.


The system in the country provides for:

(a) Adequate independent control and audit mechanisms and institutions tooversee the procurement function.

3

(b) Implementation of internal control mechanisms in individual agencies withclearly defined procedures.

(c) Proper balance between timely and efficient decision making andadequate risk mitigation.

(d) Specific periodic risk assessment and controls tailored to riskmanagement.

The system in the country meets a) plus two of the above. 2

The system meets a) but controls are unduly burdensome and time-consuminghindering efficient decision making.

1

Controls are imprecise or lax and inadequate to the point that there is weakenforcement of the laws and regulations and ample risk for fraud and corruption.

0

Sub-indicator 9(b) – Enforcement and follow-up on findings and recommendations of the

control framework provide an environment that fosters compliance.

The purpose of this indicator is to review the extent to which internal and external auditrecommendations are implemented within a reasonable time. This may be expressed as percentage

of recommendations implemented within six months, a year, over a year or never implemented.

Enforcement and follow-up of recommendations of External Audit by AGPR on past procurements

has to be linked with a monitoring and evaluation function which, unfortunately, is hardly existent as

reflected by the continued business practices on which some audit observations were made. The

audit observations, as seen from the record of the DGHS, were also not based on the standard

international contracting practices which show lack of external auditors’ skills in expenditure audit.

Among some glaring examples of such practices, one pertains to a distorted interpretation of Rule

34 (2) of the NWFP Procurement of Goods, Works and Services Rules 2003 whereby any surviving

technically qualified bidder is denied further evaluation/participation due to reduction in the number



78

of bidders from a minimum of three during technical evaluation. The said Rule requires a minimum

of three bidders at the time of submission of bids. Interestingly, the DGHS procurement officials

refer to the distorted requirement of the AGPR to include at least three technically qualified bidders

in the Comparative Statement, failing which any sole technically qualified would also be disqualified.

Another example relates to inadvertent submission of technical and financial bids in the same

envelop in a Single Stage Two Envelop Bidding process under Rule 40 of the said Rules 2003,

whereby the submitting firm is considered disqualified. Rules 19-22 of the NWFP Procurement

Rules 2003 dealing with the marking and sealing of bids are also silent on the issue. International

best practices in contracting consider such omissions as minor if the bidder has no objection in case

his financial bid gets revealed due to his own mistake. The Audit also makes observations on

competitive procurement of some surgical disposables which were quoted higher than the prevalent

market price. The said items usually have no labeling and their price quotation was beyond the

control of the Department in the event of open competitive bidding.


Internal or external audits are carried at least annually and recommendations areresponded to or implemented within six months of the submission of the auditors’report.

3

Audits are carried out annually but response to or implementation of the auditors’recommendations takes up to a year.

2

Audits are performed annually but recommendations are rarely responded to orimplemented.

1

Audits are performed erratically and recommendations are not normallyimplemented.

0

Sub-indicator 9(c) – The internal control system provides timely information on complianceto enable management action.

The following key provisions should be provided:

(a) There are written standards for the internal control unit to convey issues to management

depending on the urgency of the matter.

(b) There is established regular periodic reporting to management throughout the year.

(c) The established periodicity and written standards are complied with.

The Sub-indicator 1(b) related to Procurement Methods, has earlier been dealt adequately with the

appropriate hierarchical levels existing in the Health Department regarding internal controls over

procurement management through various departmental Committees all having written standards.

The said Committees, namely Pre-Qualification Committee, Scrutiny Committee, Comparative

Statement (CS) Committee, Technical & Evaluation Committee and lastly the Purchase Committee,

consist of health sector professionals for examining bids under a competitive bidding method. Their

composition has also been described in the said Sub-indicator. Though the periodic reporting to

management based on a procurement life cycle throughout the year is infrequent as prescribed timelimit for such periodicity is not very well defined in the administrative SOPs, the presence of a pre-



79

qualification calendar initiating such a procurement makes it an obvious attempt on the part of the

Health Department to initiate yearly procurement cycle on time.


All requirements (a) through (c) listed above are met. 3

Requirement (a) plus one of the above are met. 2

Only requirement (a) is met. 1

There is no functioning internal control system 0

Sub-indicator 9(d) – The internal control systems are sufficiently defined to allow

performance audits to be conducted.

There are written internal control routines and procedures to be adhered to by the auditors through

internal audit and control manual.

Unfortunately, no internal audit control mechanism exists so far in the Health Department as earlier

discussed in Sub-indicator 5(d) regarding Quality Control standards for evaluating staff performance

and addressing capacity development issues and as discussed in Sub-indicator 9(a) regarding

provision of a functioning control framework for public sector procurement.


There are internal control procedures including a manual that state therequirements for this activity which is widely available to all staff.

3

There are internal control procedures but there are omissions or practices thatneed some improvement. 2

There are procedures but adherence to them is uneven. 1

The internal control system is poorly defined or non-existent. 0

Sub-indicator 9 (e) – Auditors are sufficiently informed about procurement requirements and

control systems to conduct quality audits that contribute to compliance.

Perusal of the audit observation in the Health Department reveals that in view of the traditional

procurement practices conducted by the Department the auditors get the information based on thesaid practices. There is hardly any system in place to ensure that

auditors working on procurement audits receive adequate training on expenditure audit or are

selected following the criteria that explicitly requires that they demonstrate sufficient knowledge of

the subject as described in Sub-indicators 5(d) & 9(b) regarding any Quality Control standards

disseminated and used to evaluate staff performance and address capacity development issues in

terms of procurement management.

The annexed Training Calendar proposed by the TRF contains some capacity building based on

short training workshops for procurement audit through which the auditors may receive formal

training on procurement requirements, principles operations, laws and regulations and processes.



80


There is an established program to train internal and external auditors to ensure

that they are well versed in procurement principles, operations, laws, and

regulations and the selection of auditors requires that they have adequate

knowledge of the subject as a condition for carrying out procurement audits.

3

If auditors lack procurement knowledge, they are routinely supported by

procurement specialists or consultants.

2

There is a requirement that the auditors have general knowledge of procurement

principles, operations, laws, and regulations but they are not supported generally

by specialists in procurement.

1

There is no requirement for the auditors to have knowledge of procurement and

there is no formal training program and no technical support is provided to the

auditors.

0

Indicator 10. Efficiency of appeals mechanism.

The appeals mechanism was covered under Pillar-I with regard to its creation and coverage by the

legal regulatory framework. Indicator 10 further assesses a range of specific issues regarding

efficiency in contributing to the compliance environment in the Province and the integrity of the

public procurement system. There are five sub indicators (a-e) to be scored.

Sub-indicator 10(a) – Decisions are deliberated on the basis of available information, and the

final decision can be reviewed and ruled upon by a body (or authority) with enforcement

capacity under the law.

This sub indicator looks at the process that is defined for dealing with complaints or appeals and

sets out some specific conditions that provide for fairness and due process.

(a) Decisions are rendered on the basis of available evidence submitted by the parties to a

specified body that has the authority to issue a final decision that is binding unless

referred to an appeals body.

(b) An appeals body exists which has the authority to review decisions of the specified

complaints body and issue final enforceable decisions.

(c) There are times specified for the submission and review of complaints and issuing of

decisions that do not unduly delay the procurement process.

Sub-indicator 1(h) has earlier assessed in detail the above stated processes covered under Rule 43

of the NWFP Procurement Rules 2003 which offers opportunity to an aggrieved bidder to file an

application for review of the decision/order of the Procuring Entity awarding a contract - provided the

contract has not already entered into force. The survey of the supplier feedback indicates that they

sometimes get the impression of harassment by the concerned officials for pursuing any complaint

and no specified Provincial appellant forum exists to redress the said issue. The Client feedback, onthe other side, interestingly indicates the frivolity prevalent among the bidders and the frequency



81

with which they lodge complaints on every bidding process. Both the feedbacks reflect the legal

aspects of compliance risks which relate to weak enforceability of regulations.


The Province has a system that meets the requirements of (a) through (c) above 3

The Province has a system that meets (a) and (b) above, but the process is notcontrolled with regard to (c).

2

The system only provides for (a) above with any appeals having to go through

the judicial system requiring a lengthy process.

1

The system does not meet the conditions of (a) –(c) above, leaving only the

courts.

0

Sub-indicator 10(b) – The complaint review system has the capacity to handle complaints

efficiently and a means to enforce the remedy imposed.

This indicator deals specifically with the question of the efficiency and capacity of a complaints

review system and its ability to enforce the remedy imposed.

In relation to capacity and efficiency of the grievance redressal system, the Health Department

Khyber Pakhtunkhwa is usually quick enough to arrange representations before the Departmental

Committee instituted in this regard. Keeping in view the outdated procurement regulations in vogue

and traditional administrative practices being carried out, the capacity to handle complaints

efficiently is directly proportional to the magnitude of procurement and sensitivity of allegationsinvolved. This Sub-indicator is closely related to sub indicator 10(a) which also refers to

enforcement and therefore any administrative indecision regarding compliance gets potentially risky

thereby involving the Department into further litigation.


The complaint review system has precise and reasonable conditions and

timeframes for decision by the complaint review system and clear enforcement

authority and mechanisms.

3

There are terms and timeframes established for resolution of complaints but

mechanisms and authority for enforcement are unclear or cumbersome.

2

Terms and timeframes for resolution of complaints or enforcement mechanisms

and responsibilities are vague.

1

There are no stipulated terms and timeframes for resolution of complaints and

responsibility for enforcement is not clear.

0



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Sub-indicator 10(c) – The system operates in a fair manner, with outcomes of decisions

balanced and justified on the basis of available information.

The system needs to be seen as operating in a fair manner. The complaint review system must

require that decisions be rendered only on relevant and verifiable information presented and that

such decisions be unbiased, reflecting the consideration of the evidence presented and the

applicable requirements in the legal/regulatory framework.

The internal controls provided by the Departmental Committees on registration, pre-qualification and

technical evaluation of bidders in the Health Department Khyber Pakhtunkhwa have a fairly

elaborate hierarchical and written mechanism of taking decisions on the related issues. Being a

sensitive sector dealing with health service delivery for the common man on the street and having

little allowance for any error leading to fatalities, the outcome of decisions seems to be significantly

justified on the basis of available information and balanced in terms of suspension of drug licenses,

crackdown on spurious drugs in the Province despite political influence, and selection of efficacious

drug through competitive process. A survey into the medicine sale licenses issued by the EDOs

(Health) and the actual number of outlets selling medicines would give an insight into the problem ofsale of substandard or unregistered drugs since it is most likely that these drugs or a majority of

them originate from unlicensed sale points. The internal controls provided by the Departmental

Committees may therefore be judged on the said criterion as well. With the available remedies

provided for in the legal/regulatory framework under Rule 43 of the NWFP Procurement Rules 2003

and administrative SOPs, representations by the aggrieved parties are handled in such a way that

these have often resulted in unpublished remedies that pertained to the implementation of the

processes relating to pre-qualification and bid evaluation etc.


Procedures governing the decision making process of the review body providethat decisions are:

3 (a) based on information relevant to the case.

(b) balanced and unbiased in consideration of the relevant information.

(c) can be subject to higher level review

(d) result in remedies that are relevant to correcting the implementation of theprocess or procedures.

Procedures comply with (a) plus two of the remaining conditions above. 2

Procedures comply with (a) above. 1

The system does not comply with any of the above. 0

Sub-indicator 10(d) – Decisions are published and made available to all interested partiesand to the public

Decisions are public by law and posted in easily accessible places (preferably posted at a dedicated

government procurement website in the Internet).



83

As discussed in detail in the in Sub-indicator 6(c) regarding the established norms for the

safekeeping of records related to transactions and contract management, and in Sub-indicator 11(a)

regarding publication of information and its distribution through available media, the Health

Department Khyber Pakhtunkhwa publishes on the website of the EPI Program some procurement

information for public access of the participating bidders. This information relates to their

qualification/disqualification, comparative evaluation Summary, grounds of their rejection under

Rule-32 for sole technically evaluated bidder and under Rule-8(2) for non-submission of secondary

documentation. Specific procurement activities are advertised through IFBs and on DHIS website

but Technical Evaluation Reports are not published.


All decisions are publicly posted in a government web site or another easilyaccessible place.

3

All decisions are posted in a somewhat restricted access media (e.g. the officialgazette of limited circulation).

2

Publication is not mandatory and publication is left to the discretion of the reviewbodies making access difficult.

1

Decisions are not published and access is restricted. 0

Sub-indicator 10(e) – The system ensures that the complaint review body has full authority

and independence for resolution of complaints.

This indicator assesses the degree of autonomy that the complaint decision body has from the rest

of the system to ensure that its decisions are free from interference or conflict of interest. Due to the

nature of this sub indicator it is scored as either a 3 or a 0.

The Health Department Khyber Pakhtunkhwa has an administrative hierarchy headed by Secretary

Health and is run by the Rules of Business set by the Government for running day to day

governance through administrative SOPs and official guidelines. Secretary Health is also the Head

of the Selection (Purchasing) Committee and is part of the purchasing process. The process

provided for complaint redressal in Rule 43 of the NWFP Procurement Rules 2003 is not being

followed. Any complaint from the aggrieved person against his decision or against the decision of

the Technical & Evaluation (T&E) Committee is submitted to Secretary Health or routed to him

through Provincial Health Minister or Director General Health Services for grievance redressal.

In the absence any independent Provincial appellate authority, Secretary Health keeping in view the

nature of complaint, either immediately conducts review of the earlier decision himself or creates a

review committee comprising members which are not part of the referenced purchasing process,

usually headed by Special Secretary Health or any Technical member and fully authorizes them to

review the Procuring Entity’s decision. This process tends to assure the independence of the

complaint review body and to eliminate any conflict of interest.

The creation of a Provincial appellate authority is indicated in Section-9 of the Drug Act 1976 butunfortunately its intended functionality is related to drug registration/licensing issues only and is not



84

meant to serve as a appellate tribunal for redressing procurement related grievances. The Khyber

Pakhtunkhwa Public Procurement Regulatory Authority (PPRA) Bill 2012 has been enacted in

September 2012 by the Provincial Assembly four years after its tabling The Provincial Government

has neither manned the PPRA yet nor notified the draft Khyber Pakhtunkhwa Public Procurement

Rules nor notified the draft Khyber Pakhtunkhwa Public Procurement Grievance Redressal Rules.

Keeping in view the speed of legislative enactments by the Provincial Assembly and willingness of

the Provincial Government, not much optimism may be attached to the creation of a higher-levelProvincial Appellate Authority under Section-9 of the Drug Act 1976. But if it happens at some point

of time, its Terms of Reference (TORs) can be extended to include redressal of procurement-related

grievances as well; hence such a step by the Provincial Government will significantly help in

establishing the degree of autonomy and independence required for such state organs.


The complaint review body is independent and autonomous with regard toresolving complaints.

3

NA 2

NA 1

The complaint review body is not independent and autonomous with regard toresolving complaints.

0

Indicator-11: Degree of Access to Information.

This indicator deals with the quality, relevance, ease of access and comprehensiveness of

information on the public procurement system.

Sub-indicator 11(a) – Information is published and distributed through available media with

support from information technology when feasible.

Despite limited access allowed by Rule-31 (c to g) of the NWFP Procurement Rules 2003 for

providing information to general public, the Health Department publicly disseminates the information

relating to the participating bidders on their qualification or non-submission of qualification,

comparative evaluation Summary, and grounds of their rejection under Rule-32 and Rule-8(2).

Specific procurement activities are advertised through IFBs and on DHIS website but Technical

Evaluation reports are not published.

As earlier discussed in Sub-indicator 1(a), NWFP Procurement of Works, Goods & Services Rules

2003, while having been published in NWFP Local Government Planning Manual in 2003, are not

publicly accessible on any web-portal of Health Department KP, or as a matter of fact on the

Government of Khyber Pakhtunkhwa website which displays only North-West Frontier Province

Procurement of Goods, Works, Services and Consulting Services Ordinance, 2002 but hosts more

than 900 different public rules, regulations, acts & laws since 1798 till 2008 spanning over two

hundred years. This may lead to transparency issues as there are no means available for finding

any public information on procurement regulations through a user-friendly point of access. Though

some of the information relating to the technical aspects of the product may contain proprietary,



85

commercial, personal or financial information, the timely public disclosure of information on

completion of the tendering process with respect to the above said Rules 31 & 32 of the NWFP

Rules 2003, need a dedicated web-portal for easy public access. Necessary SOPs for achieving the

said purpose could not be found in this regard.


Information on procurement is easily accessible in media of wide circulation andavailability. The information provided is centralized at a common place.Information is relevant and complete. Information is helpful to interested partiesto understand the procurement processes and requirements and to monitoroutcomes, results and performance.

3

Information is posted in media not readily and widely accessible or not userfriendly for the public at large OR is difficult to understand to the average userOR essential information is lacking.

2

Information is difficult to get and very limited in content and availability. 1

There is no public information system as such and it is generally up theprocuring entity to publish information.

0

Indicator 12. The Province has ethics and anticorruption measures in place.

This indicator assesses the nature and scope of the anticorruption provisions in the procurement

system. There are seven sub indicators (a-g) contributing to this indicator.

Sub-indicator 12(a) – The legal and regulatory framework for procurement, including tender

and contract documents, includes provisions addressing corruption, fraud, conflict of

interest, and unethical behaviour and sets out (either directly or by reference to other laws)

the actions that can be taken with regard to such behavior.

This sub indicator assesses the extent to which the law and the regulations compel procuring

agencies to include fraud and corruption, conflict of interest and unethical behavior references in the

tendering documentation.

The Health Department Khyber Pakhtunkhwa has made part of the earlier bidding documents the

provisions addressing corruption, fraud, conflict of interest, and unethical behaviour which remain

integral part of the revised Standard Bidding Documents as well. The said provisions also set outthat the punitive damages ten times the amount of contract price can be imposed with regard to

such behavior. The revised Standard Bidding Documents include the definitions of what is

considered fraud and corruption and the consequences of committing such acts. This sub indicator

is related to sub indicator-2(b) on content for model bidding documents but is not directly addressed

in that sub indicator.

National Accountability Bureau has set the threshold of Rs 50 million or above for intimating all the

proceedings of a procurement activity and has made it enforceable through its regulatory

framework. Whereas all accountability focus seems to be on the public officials, there is a need forbringing in an anti-corruption legislation for unscrupulous suppliers as well who try to bribe the



86

government officials. The US Foreign Corrupt Practices Act (FCPA) levies fines & penalties on the

foreign sellers for bribing US public sector procurement officials acquiring goods and services under

the US Federal Acquisition Regulations. Inference can be drawn from the said Act in creating a

similar legislation at home.


The procurement law or the regulations specify this mandatory requirement andgive precise instructions on how to incorporate the matter in tendering

documents. Tender documents include adequate provisions on fraud and

corruption

3

The procurement law or the regulations specify this mandatory requirement but

leaves no precise instruction on how to incorporate the matter in tendering

documents leaving this up to the procuring agencies. Tender documents

generally cover this but without consistency.

2

The legal/regulatory framework does not establish a clear requirement to include

language in documents but makes fraud and corruption punishable acts underthe law.

Few tendering documents include appropriate language dealing with fraud and

corruption

1

The legal framework does not directly address fraud, corruption or unethical

behavior and its consequences. Tender documents generally do not cover the

matter.

0

Sub-indicator 12(b) – The legal system defines responsibilities, accountabilities, and

penalties for individuals and firms found to have engaged in fraudulent or corrupt practices.

NWFP Procurement of Goods, Works & Services Rules 2003 do not expressly define

responsibilities, accountability and penalties for individuals and firms found to have engaged in

fraudulent or corrupt practices. However, Provincial Anti-Corruption Department and National

Accountability Bureau’s Provincial arm address the sanctions for such actions by the public

servants. The provisions regarding conflict of interest express action against the concerned officials

but do not spell out the ways and means by which such conflict of interest arises. Anti-corruption

laws contain provisions to stop intervention in procurement matters by any active or formal public

officials for a reasonable period of time after leaving office, in ways that benefit them, their relatives,and business or political associates financially or otherwise. But the said provisions seem to be

disconnected with the infirmities of the procurement processes and need to be re-aligned with

revised business processes contained in the Provincial procurement rules whenever notified, for

vindication of the innocent.


The legal/regulatory framework explicitly deals with the matter. It defines fraudand corruption in procurement and spells out the individual responsibilities andconsequences for government employees and private firms or individuals foundguilty of fraud or corruption in procurement, without prejudice of other provisionsin the criminal law.

3



87

The legal/regulatory framework includes reference to other laws that specificallydeal with the matter (e.g. anti corruption legislation in general). The sametreatment is given to the consequences.

2

The legal/regulatory framework has general anti corruption and fraud provisionsbut does not detail the individual responsibilities and consequences which areleft to the general relevant legislation of the country.

Few tendering documents include appropriate language dealing with fraud andcorruption

1

The legal/regulatory framework does not deal with the matter. 0

Sub-indicator 12(c) – Evidence of enforcement of rulings and penalties exists.

This indicator is about the enforcement of the law and the ability to demonstrate this by actions

taken.

Perusal of the record of the contravention cases and subsequent disqualifications of the retailers

and manufacturers of the pharmaceutical products has revealed Khyber Pakhtunkhwa Health

Department’s resolve to eradicate spurious drugs and to ban unscrupulous drug suppliers and

manufacturers by stringent pre-qualification proceedings and frequent surprise raids on sale and

manufacturing outlets. Though not an easy indicator to score in terms of contravention cases made

and percentage of them prosecuted owing to the political influence exerted on the Department, the

said figures however indicate that a significant portion of cases get treated for suspension of drug

licenses and disqualification during pre-qualification proceedings in the wake of a big challenge

posed by spurious drugs flooding the local market.


There is ample evidence that the laws on corrupt practices are being enforced in

the country by application of stated penalties.

3

There is evidence available on a few cases where laws on corrupt practices

have been enforced.

2

Laws exist, but evidence of enforcement is weak. 1

There is no evidence of enforcement. 0

Sub-indicator 12(d) – Special measures exist to prevent and detect fraud and corruption in

public procurement.

This sub indicator looks to verify the existence of an anticorruption program and its extent and

nature or other special measures which can help prevent and/or detect fraud and corruption

specifically associated with public procurement.

There is no special anti-corruption program to prevent and detect fraud and corruption in public

procurement except for inviting Provincial NAB authorities in the T&E Committee meetings which isa self-defeating approach to make the external reviewers part of the internal process. Transparency



88

International has yet to make an impact in the Province for monitoring a transparent and efficient

procurement system and for providing public information to promote accountability and

transparency. There are no public seminars conducted by the Provincial Government in general or

Health Department in particular on exposing collusive practices in procurement, or any awareness

campaigns, focusing on public sector purchasers and private sector suppliers, as part of efforts to

change social behavior in respect to corrupt practices and creating zero tolerance towards the

same.


The government has in place a comprehensive anticorruption program toprevent, detect and penalize corruption in government that involves theappropriate agencies of government with a level of responsibility and capacity toenable its responsibilities to be carried out. Special measures are in place fordetection and prevention of corruption associated with procurement,

3

The government has in place an anticorruption program but it requires better

coordination or authority at a higher level to be effective. No special measuresexist for public procurement.

2

The government has isolated anti-corruption activities not properly coordinatedto be an effective integrated program.

1

The government does not have an anticorruption program 0

Sub-indicator 12(e) – Stakeholders (private sector, civil society, and ultimate beneficiaries of

procurement/end-users) support the creation of a procurement market known for its integrity

and ethical behaviors.

This indicator assesses the strength of the public in maintaining a sound procurement environment.

Health Department Khyber Pakhtunkhwa has demonstrated its resolve to fight corruption in the

procurement processes. “Vigilance Committees” composed of government officials from different

offices and civil society entities for all the 25 Districts have been formed by the Department in

compliance with the orders of the Honourable Peshawar High Court, Peshawar passed in Suo Moto

Writ Petition No. 3129/dated 28-02-2012, 27-06-2012 & 12-09-2012, for providing oversight to

exercise any social control by some respected or credible civil society groups. A typical Vigilance

Committee for a District is composed of:

Sr.No. Designation

1 District Coordination Officer Chairman

2 Executive District Officer (Health) Secretary/Member

3 Executive District Officer Agriculture Member

4 Medical Superintendent DHQ: Hospital Member

5 All Sub Divisional Magistrates in the District Member

6 Tehsil Municipal Officer in the District Member 7 District Food Controller Member



89

8 President District Bar Member

9 President Bazaar Union Member

10 President District Press Club Member

Functions:

1. The Vigilance Committee would make surprise raids specially at night time on all district, tehsiland jail hospitals to check the services provided, the presence of the medical officers, the

paramedical staff and all allied facilities and deficiencies or absence from duty shall be

reported to the DG Health Services/Secretary Health in the prescribed manner and one copy

should be faxed to the Registrar Peshawar High Court, Peshawar directly.

2. The committee would check particularly in the night-shift any un-authorized staff, personating

as a medical officer and if found so, to be proceeded against under the law immediately and be

given punishment which he deserves.

3. The Committee would furnish fortnightly report of its activities regularly to the SecretaryHealth/DG Health Services with copy to the Registrar, Peshawar High Court, Peshawar

besides report as mentioned in No.1 & 2 of its TORs.

The Honourable Peshawar High Court is very active for establishing and reinforcing social audit and

control through the joint effort of the Provincial Government and civil society groups. However, the

Government still lacks on its own at a larger scale, initiatives on welcoming such groups to generate

quality debates towards creating an environment where integrity and ethical behavior is expected

and deviations are not tolerated. Public seminars on aspects related to transparency and open

competition in public procurement are rarely seen by the Health Department.


(a) There are strong and credible civil society organizations that exercise

social audit and control.

"

(b) Organizations have government guarantees to function and cooperation

for their operation and are generally promoted and respected by the

public.

(c) There is evidence that civil society contributes to shape and improve

integrity of public procurement.

There are several civil society organizations working on the matter and the

dialogue with the government is frequent but it has limited impact on improving

the system.

2

There are only a few organizations involved in the matter, the dialogue with the

government is difficult and the contributions from the public to promote

improvements are taken in an insignificant way.

1

There is no evidence of public involvement in the system OR the government

does not want to engage the public organizations in the matter.

0



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Sub-criteria 12(f) – The Province should have in place a secure mechanism for reporting

fraudulent, corrupt, or unethical behavior.

The Health Department Khyber Pakhtunkhwa provides information on all procurements exceeding

Rs 50 million to NAB through a system for reporting fraudulent, corrupt or unethical behavior that

provides for confidentiality. However, the Department itself reacts quickly to reports as verified by

subsequent actions taken to address the issues reported by any other agency through traditional

ways. A probable automated ERP Contract Management System seems to be the need of the hour

to be installed at the level of the Procurement Cell, DGHS to provide real-time access to the flow of

acquisition processes, their completion timings and personnel involved in disposing of the related

contract actions.


There is a secure, accessible and confidential system for the public reporting of

cases of fraud, unethical behavior and corruption.

3

There is a mechanism in place but accessibility and reliability of the systemundermine and limit its use by the public. 2

There is a mechanism in place but security or confidentiality cannot be

guaranteed.

1

There is no secure mechanism for reporting fraud, unethical behavior and

corruption cases.

0

Sub-criteria 12(g) – Existence of Codes of Conduct/Codes of Ethics for participants that are

involved in aspects of the public financial management systems that also provide for

disclosure for those in decision making positions.

Submission of Annual Confidential Reports (ACRs) is a regular feature of the reporting mechanism

for a Code of Conduct/Ethics that applies to all gazetted provincial public officials meeting financial

disclosure requirements. However, no separate requirements for officials involved in public

procurement are in place to deter them from committing any financial improprietary.


(a) There is a code of conduct or ethics for government officials with particular

provisions for those involved in public financial management, includingprocurement

"

(b) The code defines accountabilities for decision making and subjectsdecision makers to specific financial disclosure requirements.

(c) The code is of obligatory compliance and consequences areadministrative or criminal

The system meets requirements (a) and (b) but is only a recommended goodpractice code with no consequences for violations unless covered by criminalcodes.

2

There is a code of conduct but determination of accountabilities is unclear. 1

There is no code of conduct. 0



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6. Section: II Pharmaceutical Supply Chain of Health Department,

Khyber Pakhtunkhwa

The Supply Chain of pharmaceutical products and bio-medical equipment to the procurement

entities of the Health Department, Khyber Pakhtunkhwa was studied through visits to the selected

sites e.g., Pharmaceutical warehouses of EDO (Health) Abbottabad, Mansehra and Peshawar,

Medicine Store of District Headquarters Hospital Abbottabad, MNCH Vertical Programs, Peshawar,Warehouses of Lady Reading Hospital (LRH) Peshawar, Hayatabad Medical Complex Peshawar,

Khyber Teaching Hospital (KTH) Peshawar, IRNUM Peshawar, Khyber Medical College Peshawar

and Khyber College of Dentistry Peshawar. Apart from physical observation on-site, a

questionnaire, based on the international best practices by the WHO was provided to the Stores

management for filling up. The information so received, reveals that that most of the said practices

regarding storage and inventory are not being carried out as per internationally recognized

guidelines laid out by the WHO. The rest of the warehouses in other districts in the Province could

not be visited due to the travel advisory. However, the concerned EDOs (Health) were conveyed

the said questionnaire for their feedback telephonically and through email. Various EDOs (Health)

were interviewed who were present during the monthly capacity building and training sessions on

procurement.

As observed, the supply chain of the bio-medical equipment is of not much an issue compared to

the pharmaceutical products which require specific storage environments and distribution protocols

and therefore will be the focus of ensuing discussion. By looking at the representative inventory in-

practice samples mentioned above, the following observations on the storage & warehousing,

inventory management, product requisition, distribution and physical verification of the

pharmaceutical goods were made:

Receipt of Goods:

EDO (Health), being the administrative head and the Drawing & Disbursing Officer (DDO) of the

District, issues the Purchase Orders for the medicines whose unit rates have been selected by the

Govt-MCC at DGHS, Peshawar. The purchases made by the EDO (Health) are normally based not

on the requirements conveyed by the primary health facilities like BHUs and RHCs etc in his district

but on a drive to consume the budget allocated for the purchase of medicines and surgical

disposables. The medicines are supplied by the supplier selected by the Govt-MCC to the EDO

Health’s warehouse from where these are distributed to the said primary health facilities , civil

hospitals, BHUs and RHCs etc..

Medical Superintendent (MS) of a District Headquarter Hospital is under administrative supervision

of the EDO (Health) but remains Incharge/Drawing & Disbursing Officer (DDO) of the DHQ at the

District and separately issues Purchase Orders for the medicines of the firms selected by the Govt-

MCC at DGHS. The medicines are supplied by the supplier to the DHQ’s Medicine Store from

where these are provided to the Hospital wards. The requirement of the DHQ is based on the

indents received from the Hospital wards which are prepared by the Incharge nurse. The indents,

after getting checked by the Registrar and counter-verified by the MS, go to the Hospital Medicine

store and the medicine stock is issued thereof to the wards.



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The Autonomous Medical Institutions (AMIs) also receive their medical supplies from the Govt-MCC

approved suppliers and use procedures similar to the DHQs. The Medical colleges, on the other

hand, usually do not purchase pharmaceutical products except for chemicals used in laboratories

and mostly focus on procurement of bio-medical equipment. These have their dedicated equipment

warehouses from where the same are distributed to the concerned sections for installation.

Storage & Stacking of Medicines:

Pallets for storing the medicines were observed to be in acute shortage in the warehouses of all the

health facilities like AMIs, EDO (Health) Stores, Vertical Programs and to some extent in DHQs. The

stacking of the all medicines was not done on dedicated pallets and mostly were placed on the floor

without any consideration of the humidity. The pharmaceutical warehouses/Medicine Stores of the

EDO (Health), DHQ Abbottabad and AMIs were air-conditioned and contained deep freezers for

storing vaccines and biological drugs. However, the purpose-built specialized deep-freezers with

temperature display could only be found at the HMC, Peshawar. The pharmaceutical warehouse of

MNCH at Peshawar was in a deplorable condition with all the medicines placed open on dirty floor

in a non-air-conditioned room and did not employ any dedicated person for checking the dosage,

strength and packaging of the goods received.

Due to lack of any dedicated space in AMIs, the medicines are also stacked there on each other

adjacent to walls and without any clear therapeutic classification in the corridors which have been

annexed to the warehouses before transferring them into the stores. LRH has its analgesics

(narcotics) in lock & key and maintains strict protocols on their issuance.

Inventory Management: Abbottabad and Mansehra Districts contains a good inventory management

system and their pharmaceutical warehouses at the District and DHQ level are well-maintained but

the record keeping is manual. However, distribution of pharmaceutical products in reefer containers

to primary health facilities in the outer reaches of the districts is not done by the EDOs (Health).

Distribution is not an issue for the DHQs and AMIs as the said medicines need to be consumed

within the facility where they are received.

Except for the warehouses of EDO Abbottabad and EDO Mansehra, no specific quarantine area

designated for receipt of goods, their segregation and inspection was observed in the stores of

other districts, AMIs, DHQs and Vertical Programs due to lack of space. However, staff is there to

receive the goods and place the goods in the warehouse after reconciling the batch number of the

medicine, its name, strength, quantity, expiry date and date of receipt with the details mentioned in

the Purchase Order. The ledger system is maintained by keeping the order, delivery challan and

receipt invoice details. Though the record showed the date of dispatch to primary health facilities in

districts, it did not show the documentation of the date of actual delivery of the medicines to the

intended facilities by the EDOs (Health) and Vertical Programs.

The AMIs and DHQs keep an estimate of the average working stock for each product with a fixed

amount of safety (buffer) stock. SOPs for stock Management were made available by the AMIs only

based on quarterly re-ordering frequency. No such arrangement is available with EDOs (Health).



93

Hayatabad Medical Complex, Peshawar runs a computer-based inventory management systems on

Oracle platform for its main pharmacy attached to five other satellite pharmacies within the facility

premises. The said program displays the following information with options to generate reports:

Medicines Monthly Balance Sheet (Summary)

Medicines Monthly Balance Sheet (Detail)

Daily Unit Indent Page

Main Pharmacy Monthly Consumption Main Pharmacy Indent Detail

Satellite Pharmacy Monthly Consumption

Satellite Pharmacy Indent Detail

Main Pharmacy Unit Ledger

Satellite Pharmacy Unit Ledger

Short Expiry Summary (Financial Year-wise / Financial Year-wise + Source-wise)

Main Pharmacy Stock-Receiving Challan

In HMC, the stocks from the regular pharmacy are exchanged with the Emergency Relief Package(ERP) pharmacy when the need arises.

Requisition of Stock:

There is no appropriate procedure for a primary health facility for requisitioning medicines from the

pharmaceutical warehouses of EDOs (Health) and Vertical Programs. The Store Incharge usually

guides the primary facility supervisors to place orders and then pushes the stock to the said facilities

on estimations based on earlier consumptions without considering any current variation in disease

burden in their areas. As informed by Dr. Zafeer Ahmad, EDO (Health) Abbottabad, a computerized

consumption and evidence based inventory management system, created by him in 2002 was notfollowed after his transfer from the said post, and upon his return, nothing remains of the said

system. However, the AMIs hold an adequate procedure for consumption-based requisitioning of

medicines through indents of the ward incharge duly verified by Registrar and counter-verified by

Chief Pharmacist. Indent requisitions from wards are initially based on generic names or INNs

(International Nonproprietary Names) till the time the Ward incharges get acquainted to the brand

names selected for the particular year.

Consumption Reporting of Medicines:

Except for the AMIs and DHQs, no daily, weekly or monthly consumption reporting of the medicines

by the subsequent health facility/end-user was observed in any of the EDOs (Health) or Vertical

Programs. AMIs & DHQs have an appreciable mechanism of reporting back to the wards the

inventory of dead items (pharmaceutical products not requisitioned since long by wards and liable to

get expired) at their regular Stores.

Physical Verification of Stocks:

Physical stock is verified internally on need-basis or on quarterly basis. AMIs like LRH and KTH

have different stores e.g., Regular Store (for receipt of medicines etc), Issue Store (for issuingmedicines to wards), Local Purchase Store (for purchasing non-Govt MCC medicines or short-



94

stock), General Store (for receipt and issue of general items/linen/surgical disposables etc.), A&E

Store (for purchasing accidents and emergency medicines) and C&W Store (for maintenance items

etc). The blank carton / packing of the medicines is later reconciled with those issued to the wards.

The Indent register kept by the chief Pharmacist is therefore reconciled with the Expense Register

kept by the Ward Incharge Nurse. Annual external audit is also conducted with observations usually

on non-prescribed methods of stacking the medicines. As informed by the AMIs, the pilferage of

medicines may take place at the level of wards as the patient is not available to participate in anyreconciliation exercise, or may take place at the level of the distributer who in the garb of supplier,

gets the stock from the manufacturer and sells the expensive medicines in the open market at half

of the Govt-MCC controlled rate.



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7. Section: III Assessment of Identified Risks & Their Mitigation Strategies:

The assessment of the procurement system of the Health Department by using the above stated

BLIs, has revealed the following risks which are assessed here with suggestions on their mitigation.

The assessment also includes some risks identified by the Fiduciary Risk Assessment (FRA) of

health sector of Khyber Pakhtunkhwa PK earlier this year. Risks are categorized accordingly as

High, medium and low risks in terms of their impact on the procurement system, organizational

responsibility and probability of occurrence.

7.1 Regulatory Risks

1. Risk: Absence of Regulatory Framework for the Provincial Procurement System

There is no overseeing Public Procurement Authority in the Province and the existing NWFP

Procurement of Goods, Works & Services Rules 2003 are not comprehensive enough to address

all competitive procurement methods like Single Envelop Single Stage Bidding and Two Stage

Two Envelop Bidding methods.

Impact: High Probability of Occurrence: Low

Mitigation strategy: The Khyber Pakhtunkhwa Public Procurement Regulatory Authority 2012 has

been enacted by the Provincial Assembly but the Public Procurement Rules are pending

notification by the Provincial Government. Establishment of a KP Public Procurement Regulatory

Authority (PPRA) will lead to strengthening of a competitive Provincial procurement régime. In this

regard, a Health Sector Procurement Supplement containing supporting regulations, sector-specific

Bid Evaluation Guidelines, User Notes and Standard contract templates etc on public procurement

customized to the specific health-sector requirements may be prepared and appended to the

expected Khyber Pakhtunkhwa PPRA Rules 2012 and named as Health Sector Supplement toKhyber Pakhtunkhwa Public Procurement Rules 2012 (HSKP PPRA) to be read in line with the

allied laws and Sector-driven specifications for procurement of Drugs, Medicines and Bio-Medical

Equipment. TRF may contribute towards preparing a Health Sector Procurement Supplement for

DGHS KP if desired.

2. Risk: Weak Grievance Redressal mechanism leading to lack of oversight

As observed from the prevalent practice in DGHS KP, no specified Grievance Redressal

mechanism exists. Furthermore, the aggrieved parties do not find the environment conducive for

lodging any complaint perceiving possible backlash from the Department. This has seriously

compromised the monitoring capacity of the Department to address such issues.

Impact: High Probability of Occurrence: High

Mitigation strategy: Weak Grievance Redressal mechanism is being replaced by the Khyber

Pakhtunkhwa Public Procurement Regulatory Authority Bill 2012 containing a robust Grievance

Redressal mechanism. This mechanism seems independent of DoH KP to ensure transparency and

has two tiers of grievance redressal, one at the level of Procuring Entity (as earlier existed) and the

other at the level of KP Public Procurement Regulatory Authority. Counter-review in the form of an

appellate tribunal is still a missing goal for the Department.



96

3. Risk: Inadequate Need Assessment by Districts for Budgetary Allocations for the Bio-

medical equipment & pharmaceutical products.

Yearly centralized procurement of bio-medical equipment is done in order to utilize the ADP

Schemes for various Health facilities in the Province but Departmental inspection of the said

equipment is not conducted for months to check installation and subsequent operationalization.

This shows unnecessary purchases and results in stacking of packed equipment collecting dust in

the health facilities. The payments to the suppliers are therefore considerably delayed. Selectionof drugs on unit rates by the Govt-MCC is also to be completed from 31st July to 30th June for

District Health entities including DHQs, THQs and RHQs where less expensive drugs are bought

but more volume is involved. In the absence of any Annual Procurement Plan, quarterly purchase

lists are consolidated by the EDOs (Health) and instead of buying in each quarter due to small or

variable amount of funds disbursed for basic medicines, purchasing is done by them on bi-yearly

or three-quarterly basis to make the lumpsum purchases with more funds. This sometimes leads

to shortage of medicines at Districts at a particular time. The same exercise is carried out at

Teaching Hospitals and becomes an acute problem where lives saving drugs are required.

Historical pattern of a medicines purchase cycle is not being followed Impact: High Probability of Occurrence: High

Mitigation Strategy: DGHS needs to call for estimates of yearly requirements in advance based on

previous year s’ trends for pharmaceutical products, Bio-medical equipment and medical supplies

from all the EDOs (Health) to formalize the total annual estimates against the budgetary allocations.

The Procurement Cell at DGHS in collaboration with Govt-MCC may continue centralized

acquisition of bio-medical equipment and selection of drugs on unit rates for all the District procuring

entities, based on yearly estimates provided by the EDOs (Health).

4. Risk: Absence of Sector-specific Guidelines

It was observed that any Sector-specific guidelines read in conjunction with NWFP Procurement

Rules 2003 and Drug Act 1976 were not available. The current procurement practices are being

carried out in the Province without identifying the Sector Specialists for the Bio-Medical

equipment, Drugs (General & Specialized), Surgical Disposables and medical furniture.

Consequently, they are not involved in framing the relevant technical specifications, acquisition

guidelines and the above stated regulations.

Impact: High Probability of Occurrence: Moderate

Mitigation Strategy: Health Sector specific guidelines in conjunction with relevant procurement

rules and Drug Act 1976 may be developed in consultation with the available Sector Specialists at

DGHS KP which may become a part of expected PPRA Rules 2012 through a Supplement

suggested above.



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5. Risk: Unauthorized Extension in Drug Pricing by DGHS

Whereas the medicine prices are valid from 31st July to 30th June in a financial year as acquired

through centralized rate contracting via open competition at Govt-MCC, often without getting prior

permission from the selected suppliers the Directorate General Health Services extends the

prices of drugs and surgical disposables upto another three to six months as has been done till

30th November 2012. Though it may be beneficial to the Department to acquire products at old

rates, in anticipation to such events the pharmaceutical manufacturers may load their prices at

the outset thereby creating an undesirable price increase.

Impact: Low Probability of Occurrence: Moderate

Mitigation Strategy: Regulations regarding limitation on extension in purchasing time should be

enacted by the DGHS through administrative notification & and future procurements may be

planned well ahead of the annual milestones.

6. Risk: Internal Audit not available

Internal Audit mechanism for procurement activities is totally lacking. This has also jeopardized

the potential of the Health Department to evaluate the existing procurement procedures. Further,

repair, maintenance and POL heads utilized by the District procuring entities are not being

properly audited. Donor transferred equipment including vehicles, furniture and other assets are

also not being recorded against any Departmental inventory list. As there is no internal audit

mechanism to monitor the procured assets during the Project Closure phase, adherence to

internal controls for safeguarding such assets is not possible.


Mitigation Strategy: Internal Audit functions need to be established in DoH KP as an inherently

governmental function and has to be carried by the state functionaries from within the DoH KP. A

short training/capacity building on Procurement Audit is intended to be conducted by TRF as

indicated in the Training Calendar annexed herewith for the procurement officials of DGHS KP and

Health Secretariat, KP.

Districts visits may be needed to gauge the magnitude of such asset transfers and related inventory

management. Similarly, internal audit mechanisms need to be introduced for the repair,

maintenance and POL. Inventory management system may also be designed. TRF has submitteddraft TORs for a proposed TA to Director General Health Services in this regard. To build capacity

on Assets Management for audit verification purposes, a formal training on Inventory &

Warehousing Management is intended to be carried out as indicated in the Training Calendar for

DGHS KP for the procurement officials of DGHS, AMIs & Vertical Programs.

7. Risk: Consultant Guidelines & Consultancy requirements not available

It was also observed that no definite guidelines for consultants were available with the Health

Department. There was also no governing law which required or created the need for hiring a

consultant. Any need analysis in this regard by the Department was also missing.

Impact: Moderate Probability of Occurrence: Low



98

Mitigation Strategy: TRF has provided its Manual on Hiring of Consultancy Services to the Health

Department. An Interdepartmental Consultants Selection Committee (IDCSC) exists at the

Provincial Secretariat level for hiring engineering and design consultants. Related SOPs may be

obtained from them. Federal PPRA Consultancy Guidelines and SOPs may also be introduced for

customizing them to project specific needs at Directorate General Health Services. Consultant Need

Analysis may be done within the policy framework mutually agreed by the DGHS KP and TRF

owing to Department’s needs based on various Situational Analyses conducted by TRF thereof.Health sector specific guidelines for hiring of consultants may therefore be prepared in light of the

above. HSRU has recently adopted World Bank Guidelines on hiring of Consultants which may also

be utilized by the DGHS if required.

TRF Islamabad has conducted a short one-day training on hiring of consultancy services in the

Health Sector for the Health Department, KP on 6th November 2012.

8. Conflict in the Governing Law Vs the Federal Law

The NWFP Procurement of Works, Goods & Services Rules 2003 are in conflict with the FederalPPRA Rules 2004 in many aspects, especially in negotiations on financial bids, which cause

major deviations from standard national and international procurement practices and open the

venue for misuse of public funds.


Mitigation Strategy: Khyber Pakhtunkhwa Public Procurement regulatory Authority (PPRA) Act

2012 has been notified vice Provincial Assembly notification on 20.09.2012. The said Authority is

supposed to draft Public Procurement Rules under this Act. The World Bank has already got the

said Public Procurement Rules drafted by a management consultancy firm in 2008 which are in line

with the Federal Public Procurement Rules 2004. The Provincial Government has to notify the said

draft Rules to replace the existing NWFP Procurement of Goods, Works & Services Rules 2003.

Subsequent to it any substantial conflict between Federal and Provincial procurement practices is

expected to be reduced. In the meanwhile, international best practices on procurement under NCB

may be adhered to while executing procurements at DGHS KP and avoiding the conflicting

procurement provisions by DoH KP. The international best practices on procurement under NCB

are now being followed in the revised Standard Bidding Documents for procurement of Drugs.

7.2 Process Risks

Risk 1: Outdated Bidding Documents are still being used

Revised Standard Bidding Documents for the purchase of Bio-Medical Equipment, drugs and

Surgical Disposables at DGHS KP have been introduced under NWFP Procurement of Works,

Goods and Services Rules 2003 but the earlier three-paged traditional Bidding Documents are

still being utilized for procurement of non-drug Surgical Disposables which has created distortion

in the purchasing business processes at the Departmental level.




99

Mitigation Strategy: Revised Standard Bidding Documents (SBDs) have been introduced by the

TRF for procurement of Bio-Medical equipment and drugs. Any exclusion in this regard by any

procuring entity of the Health Department may be eliminated to ensure standardization of the

business processes and to bring transparency to the system.

Risk 2: Committee Members are repeated in Subsequent Committees leading to Conflict

of Interest

It was observed that members nominated in the preliminary scrutiny committees for initial profiling

of the technical bids were repeated in the subsequent committees like Comparative Statement

Committee, T&E Committee and Purchase Committee etc. for the same activity. The inherent risk

in such business practices has the potential to amplify the bias of a committee member thereby

vitiating and jeopardizing the integrity of the procurement cycle. The high impact of this risk leads

to a potential conflict of interest.


Mitigation Strategy: Members once nominated in a procurement committee may not be nominatedin another procurement committee designated for a subsequent operation in the same procurement

cycle. Any such nominations eventually do not hold validity in the eye of law when challenged owing

to the probability of perpetuation of bias against a particular bidder and thus leading to conflict of

interest. Though the NWFP Procurement Rules 2003 are silent on the issue, Section 11-A of the

Drug Act 1976 provides an inference to avoid such practices. However, members of a procurement

committee may be included in the inspection committee to inspect the supplied bio-medical

equipment or to conduct post-qualification visit to a pharmaceutical manufacturer.

Risk 3: Different Purchase Committees exist for purchase of Bio-Medical equipment &Chemicals for provincial Hospitals

Different Provincial hospitals have constituted their own Purchase Committees for procuring bio-

medical equipment and laboratory chemicals instead of getting it procured from the DGHS

Procurement Cell which is doing the same exercise for Districts with some expertise available in

procurement functions. This poses a risk of duplication of functions in processes and may lead to

wastage of resources.


Mitigation Strategy: All such purchases of bio-medical equipment may be done at DGHS

Procurement Cell’s level and hospitals’ purchase committees may be done away with.

7.3 Institutional & Professional Capacity Building Risks

Risk: Restricted application of Revised Standard Bidding Documents due to lack of

expertise

Though revised Standard Bidding Documents (SBDs) have been prepared for the procurement of

medicines and bio-medical equipment, their application may be restricted owing to lack of

professional capacity in terms of development of specifications and evaluation process and

internal resistance from the Department in adopting the new format. The bidders may pose



100

another challenge in accepting the said SBDs out of fear of unknown if frequent awareness

sessions and Pre-Bid Meetings are not conducted to expose them to the new system.


Mitigation Strategy: Training not only on PPRA Rules but also on Technical specifications may be

conducted. It may need experts for making agreed benchmarks. Technical Evaluation Guidelines

developed during the evaluation of bids at DGHS KP are being refined to include them in the

proposed Health Sector Procurement Supplement for the Department. Such a document may be

very helpful in the capacity enhancement of the related procurement officials.

Exposure to new Procurement Rules 2012 has already been provided vide the training on the draft

KP PP Rules 2012. An ongoing training program aiming at the capacity enhancement of the

procurement officials of the Health Department KP has been initiated and is expected to be

consisted of 8-10 such trainings till June 2013. Draft PPRA Rules are awaiting notification of the

Provincial Government. Updation of standard procurement documents have already been achieved

through introduction of the revised Standard Bidding Documents for procurement of Drugs and bio-

medical equipment at the DGHS level.

Regular coaching, mentoring and on-job knowledge sharing is being done by the TRF at the

Departmental, District and Program levels in Khyber Pakhtunkhwa while giving procurement support

by guiding on procurement planning, designing of the Standard Bidding Documents, on

participation in Pre-Bid, bid submission and financial bid opening meetings and providing technical

and legal support during bid evaluation.

The following three major areas seek intervention of TRF in the capacity building area for the Health

department KP. In this regard, a Training Calendar addressing the following disciplines has been

prepared for the Health Department.

a) Public Procurement Rules – Comparison of international best practices

b) Designing of Standard Bidding Documents and Bid evaluation.

c) Supply Chain of pharmaceutical products including cold chain for biological drugs.

Keeping in view the above capacity needs, the following tentative training modules will therefore be

followed (but not limited to) by TRF KP in consultation with TRF Islamabad:

1) Comparative Assessment of NWFP Procurement Rules 2003 with Federal PPRA

Rules2004 / draft KP PP Rules 2012

2) Procurement Life Cycle

3) Bidding Document Design & Evaluation of pharmaceutical products/bio-medical

equipment

4) Inventory & Warehousing Management

5) Customs Clearance procedures and carrier pricing for Multi-modal Transportation

(Supply Chain) of pharmaceutical products

6) Procurement Audit

7) Contract Management in the Health Sector



101

8) Comparative Contracting Practices in Donor-funded Projects

9) Procurement of Consultancy Services, RFP design and Consultant Evaluation

Involvement of PHSA, Peshawar in Procurement Training: The Provincial Health Services

Academy, located in Peshawar can be made a stakeholder in training on procurement topics as a

part of the health management courses for the health managers. TRF, in collaboration with the

Procurement Cell of Directorate General Health Services, may arrange courses on publicprocurement at the PHSA venue by developing master trainers from PHSA to subsequently make

this training stream an integral part of the Health Department’s managerial capacity building by the

said Academy.

7.4 Safeguards and Residual risks w.r.t procurement monitoring

Risk: Procurement Monitoring largely remains unattended in the Department

There is no monitoring of the procurement processes to appraise them for their impact on the

efficiency of the Department in the said area.


Mitigation Strategy: TRF Islamabad has got approved TORs from DGHS KP for a relevant

consulting exercise on procurement monitoring tools which may address certain aspects of the

residual risks. Initiation of this exercise is expected soon.

7.5 Operational Risks

1. Risk: Expiry of medicines due to absence of dedicated list for life-saving drugs in

Autonomous Medical Institutions (AMIs) / Tertiary Health Institutions:

Though the NWFP Procurement Rules 2003 mention generic names for the goods to be

procured, in case of life saving drugs, it is hardly applicable. It was observed from the record and

feedback of the officials and medical staff of the tertiary Health Institutions e.g., Teaching

hospitals in Peshawar that in instances of severe medical emergencies, locally purchased drugs

were found in-effective and the patients had to be recommended imported medicines from

internationally reputed brands. Both the local and imported brands use the Active Pharmaceutical

Ingredient (API) of the same percentage which may have been ratified during the pre-qualification

process, but the grade of the Pharmaceutical raw material and its source of origin are the

deciding factors for determining a medicine’s efficacy during treatment and for a life saving drug it

all the more becomes important in the case of a severe medical emergency. This could be

illustrated by an observation by a hospital pharmacist in an AMI in Peshawar that a 10 mg of

Valium from Roche, Switzerland using an A-Grade API immediately relieves the squeaking

patient of his suffering where a local medicine with similar API fails to respond adequately. The

price plays an important role here as the medicine with the same API having lowest price gets

selected as per the prevailing procurement practices. The multi-national drug manufacturers

therefore do not compete due to much low prices offered by the local companies and are thus

restricted by the competition. The local medicines procured in this regard remain unused and

expire thus leading to wastage of public resources.




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Mitigation Strategy: In the case of life saving drugs, open competition may be invited to bring all

the local and multi-national pharmaceutical manufacturers who manufacture the above stated drugs

with the certified A-Grade API raw material imported from OECD countries and certified by Drug

Regulatory Authorities like USFDA, EMA (Western Europe), MHRA UK, TGA Australia and

Swissmedic Switzerland etc. and verification regarding their Certificate of Analysis (COAs), DRA

attestation and import origin to be carried out at the time of post-qualification visits of the firms by

the Department. Open competitive bidding based on Merit Point Evaluation with raw material source

from the above said restricted origins for health-saving medicines is expected to bring desired

product efficacy.

2. Risk: Procurement Planning not available

As no centralized procurement planning is done at DGHS KP level, the related health budget is

usually overstated and duplicated for medicines/bio-medical equipment by various health entities

in the Province. Any supplementary grant thus requested reduces the credibility of the budget.

This creates problems for the release of funding as it is based on creation of commitments

obligated through the budget at a time when public funds are not available.


Mitigation Strategy: Quarterly procurement and financial planning may be introduced. An

extensive meeting with the CPO Health Secretariat with the Financial consultant may be required.

3. Risk: Sub-standard Supply Chain

There is no existing standard mechanism for receipt & storage of medicines & bio-medical

equipment at District level. No Just-In-Time (JIT) delivery was observed. Cold chain for supply of

biological products though projected by respective suppliers but is not visible. No healthcare

procurement guidelines are available on procedures for installing, commissioning and handingover of equipment and their subsequent inspections/quality assurance through after-sales service

& maintenance. Guidelines on storage, inventory management and distribution of medicines are

also not specifically prepared. Traditional supply methods are being used for supply of medicines

to AMIs and Districts which tend to compromise their quality in terms of non-observance of

temperature and movement protocols set by the WHO.


Mitigation Strategy: A situational analysis may help in sorting out the weaknesses and suggesting

improvements. This may also recommend introduction of a supply chain management system forthe health sector in KP which involves inventory management also In case the testing of the drugs

or inspection of bio-medical equipment is delayed, the security mechanism for inventory, return &

warranty claims may be introduced as the case may be. The current supply chain consisting of

distribution, storage and inventory management at various health entities has been looked into in

this Report and probable measures have been suggested. TRF has already initiated related TORs

for a Technical Assistance for a detailed Supply Chain Management initiative which has been

approved by the DGHS KP. Activity in this regard is expected to be initiated by TRF Islamabad

soon. Cold chain for supply of biological products has been made mandatory for the suppliers of

specialized products in the revised Standard Bidding Documents for drugs. Related short-term

trainings are being launched for the DGHS, AMIs, Vertical Programs and the Districts by the TRF on

business processes involved in the supply chain.



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4. Risk: Non-existence of Engineering Estimates or Base-line Price Estimates

Rates are not based on arm-length basis as there are no Engineering Estimates or Baseline Price

estimates for pharmaceutical products or bio-medical equipment. This may become a serious

contractual issue in the wake of lack of pricing for after-sale services where foreign technicians or

similar technical support is involved. From the official documentation, it is not clear that in the

annual budgetary estimates allocations are made and if made where are these amounts spent.

Impact: Moderate Probability of Occurrence: Low

Mitigation Strategy: The Govt-MCC does not conduct any year-wise comprehensive exercise of

constituting Base-line Price Estimates for the purchase of Drugs and Medicines which could be

used while evaluating the prices of drugs and surgical disposables. The Procurement Cell at DGHS

has recently been created and not much was expected from it in conducting any similar exercise for

bio-medical equipment. In the presence of a wide range of price fluctuation for a particular medicine,

there is a probability of selection of an ineffective medicine with more margin of profit, thereby

leading to prospects of corruption in the process. Base-line estimation of drugs and surgical

Disposables may be done before initiation of every procurement activity. Product sampling can be

accompanied with at this stage to check the quality of the drug. Market survey may be done for the

said equipment. This year DGHS intends to conduct market price analysis of the products selected

for Govt-MCC before announcing the centralized unit rates to avoid procurement of any surgical

disposable/medicine at a rate higher than prevalent in the market to avoid audit observation.

5. Risk: No Intimation to companies regarding their failure to Pre-Qualification

Directorate General Health Services does not intimate the pharmaceutical companies which were

not pre-qualified, of the reasons of non-qualifications. The companies get to know about it only atthe moment the list of pre-qualification is released by the Govt-MCC DGHS. This procedure may

lead to exclusion of companies which become victims of personal dislike thereby reducing the

competition.


Mitigation Strategy: Policy Guidelines for indicating the firm for reason of its non-qualification in

the Pre-Qualification Process may be prepared by the Department to dispel any such impression.

6. Risk: Exclusion of Pharmaceutical Companies on the basis of annual Pre-Qualification

Pre-Qualification Proforma as developed by the DGHS is an exhaustive Checklist looking at

every aspect of the pharmaceutical manufacturer and supplier. A full-time pre-qualification of a

pharmaceutical manufacturer requires 2-3 hours upon site visit and not more than three such

manufacturers located at different places is possible per day during office hours alongwith one to

two authorized pharmaceutical suppliers in the after-office hours in the evening, thus making it a

maximum of 5 to six such entities per day. However, the record of the DoH KP reflects a pre-

qualification of around 18-25 pharmaceutical units per day which makes this vital exercise

redundant in terms of quality assurance and subsequently the procurement of efficient drugs.




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Mitigation Strategy: If done properly and rigorously, the pre-qualification exercise for bio-medical

suppliers minimizes the need to be conducted annually and the pre-qualification status of the

successful firm may be renewed for three years. The Department was of the view that the

pharmaceutical manufacturing process may require continuous vigilance coupled with surprise visits

to check the production process and quality control of processes and cannot be left unattended for

more than a year. However, it was observed that much time was consumed in the technical

evaluation of a pre-qualified manufacturer of drugs who was eventually disqualified on the basis of a

sub-standard product sample during the technical evaluation of bids for procurement of drugs for

Govt-MCC for the year 2012-13. The Department may do a soul searching in this regard and weigh

the merits of annual pre-qualification of pharmaceutical firm either against their or scheduled post-

qualification visits to their business premises. Un-announced surprise inspections by the Health

Department may also be conducted for all such manufacturers whose product samples have been

rejected on the basis of non-compliance of prescribed physical sampling standards during the

technical bid evaluation for Govt-MCC for the year 2012-13. This may help them improve their

product quality for further participation in the competition. However, regulatory complications may

also be looked into before gaining access to the said business premises.

7. Risk: Illegal Supply Channel by the pharmaceutical companies

As the Peshawar High Court has restricted the Pharmaceutical manufacturers vide Writ Petition

No. 2478/2010 (Daily Mashriq Vs Secretary Health & Others) to supply directly to the DGHS, the

distributors still supply on behalf of the Companies but without any legal cover. The Sales Invoice

is in the name of the companies and the delivery is done by the distributor, thereby leading to a

procurement risk of an undocumented supply chain.


Mitigation Strategy: The Department may hold stakeholders meeting with the manufacturers tosolve the issue. In future, pharmaceutical firms’ regular employees with valid company identification

or salary slips may be allowed to participate in the bidding process.

8. Risk: Program specific Inventory and related specifications were not created

It could not be determined that the technical specifications for the medical equipment mentioned

in the Specifications Inventory available with the Health Department were current and not based

on the earlier equipment purchased a long time ago. Program-specific technical specifications for

medical equipment were also not very visible in the Department’s Inventory e.g., a syringe

specified therein for a particular purpose in a specific health program should be categorizedaccordingly alongwith its other supplements to make its procurement more program-specific.

Similarly, for drugs and medicines, trend analysis based on disease burden and drug

consumption could have provided region-wise benchmarks for specific medicines inventories.

Some synergy could be developed between DGHS KP and Combined Military Hospital (CMH) for

sharing standards on average patient costs per disease treatment and ancillary costs which could

help in procurement planning.


Mitigation Strategy: Although the technical and operational levels of RHQs, THQs and DHQs vary

with respect to the concentration of urban population and exact two counterpart entities do not

match in functionality owing to different geographical locations & disease burdens, three sample



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lists for the medical equipment and medicines could be categorized for formalizing Inventories of

Technical specifications to become more program-specific for a typical BHQ, THQ and DHQ etc.

These three sample list containing inventories of technical specifications may have a sample Bill of

Quantities (BOQs) for each Heath facility whose details can be modified keeping in view particular

District's requirements. This may make the procurement planning process less time consuming with

the procurement staff when such sample lists are readily available. This can also lead to design the

Bill Of Quantities (BOQs) more comfortably for inclusion in the Standard Bidding Documents.

9. Risk: Absence of End-User Feedback to Gauge Procurement Efficiency

As observed, no customer or end-user feedback from the Health Districts was acquired on regular

basis to assess the supplier performance in terms of product efficacy, timely delivery and

replacement of batches of medicines. This may pose a serious threat in terms of supplier

profiling, lack of which has the potential of compromising the procurement process. The Clinical

Efficacy Form , developed for such type of feedback or reporting from a Departmental whistle-

blower was rarely observed.


Mitigation Strategy: Proper mechanism for receipt of Clinical Efficacy Form depicting supplier

performance or lack of performance may be framed to get regular feedback from Procuring entities.

10. Risk: Purchase of lowest Price Bio-Medical Goods with little availability of Spare Parts

and Service Facility

The specifications of the Bio-Medical Equipment are designed in such a way that many vendors

with hardly any service/maintenance facility in Pakistan also become eligible to compete on low

prices and may pose risk of product obsolescence after purchase. The evaluation criteria in the

existing bidding documents for procurement of bio-medical equipment reflect the strength of thefirm’s technical and financial capabilities but do not emphasize on after -sales services. If the

technical specifications are closely scrutinized, it is revealed that certain items with narrow

specifications have been included to benefit specific suppliers with prearranged incentives.


Mitigation Strategy: Marking/weightage for past performance and prolonged Market presence of

the supplier in the Evaluation Criteria may be Included.

11. Risk: Lack of Dedicated Resources to Assess the technical Capabilities of the

Equipment:

The Technical & Evaluation Committee does not assign any dedicated resource during the

technical evaluation for assessing the technical capabilities of a bio-medical equipment, especially

where meta software components are also an integral part of the machinery.

Impact: Moderate Probability of Occurrence: Moderate

Mitigation Strategy: TRF Islamabad may be requested to arrange a similar workshop on

assessment of technical capabilities of bio-medical equipment for bid evaluation purposes as earlier

done commendably on pharmaceutical product specifications.



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15. Risk: Reasonable Time not provided to bidders after Pre-Bid Meetings:

It was observed that majority of the bidders in the procurement activity for Govt-MCC for the year

2012-13 submitted irrelevant/unnecessary documents in bulk quantity which, on one hand, shows

the irresponsible and negligent behavior of the bidders and on the other hand, reflects that the

Department did not educate the bidders how to properly fill up the bidding documents and what

documentation should have accompanied their bids. The scrutiny of the said documentation and

sifting out the relevant one consumed considerable time of the Examiners/Evaluators. In thisregard, feedback was received from the majority of the bidders regarding non-communication of

the second Pre-Bid meeting’s date and time by the Department for amendments and therefore

inadequate time given to them for incorporating the said changes in their bidding documents. As a

result this led to submission of many bids which were not in conformance to the Client’s

requirements and the bidders claimed to have no idea what documents were exactly required to

be submitted. This may pose a serious process risk in terms of transparency and procedural non-

compliance.


Mitigation Strategy: Sufficient time of atleast five to seven days may be given to the participating

bidders after any Pre-Bid or subsequent Pre-Bid meeting for communicating the said amendments

to bidders through public advertisement so that the bidders may properly incorporate the said

changes in their bidding documents to make them fully responsive to Client’s requirements.

16. Risk: Lack of Detailed Evaluation of Technical Bids by the T&E Committee:

It was observed that due to lack of timelines given by the Competent Authority, the T&E

Committee had to briefly peruse the corporate and product snapshots (resulting out of the

preliminary screening of the technically qualified bidders) submitted by the Preliminary Scrutiny

Committee on the same day when the financial bids were being opened. Not giving enough time

for detailed evaluation of the technical bids may lead to inadequate processing by the T&E

Committee’s technical experts/professionals, of the technical aspects indicated by the Preliminary

Scrutiny Committee and may lead to subsequent process infirmities and omissions related to

product quality assurance.


Mitigation Strategy: The unresolved technical aspects indicated by the Preliminary Scrutiny

Committee always need to be carefully examined in detail by the technical experts included in the

T&E Committee for taking concrete and informed decisions on them. The technical experts includedin the T&E Committee are senior surgeons who can assess the quality of sutures/catguts/surgical

disposables, hepatologists who can assess the SVR Studies for Interferon Therapy for Hepatitis

B&C & other biological vaccines, professors of medicines and senior pharmacists who can assess

the pharmaceutical product efficacy and its impact on patients, and bio-medical engineers to gauge

the performance of an equipment against its functional and conformance specifications. Leaving

the areas indicated by the Preliminary Scrutiny Committee unaddressed by the T&E Committee due

to paucity of time may compromise the quality of evaluation. The planning of the procurement life

cycle may be done in such a way that T&E Committee gets enough time to conduct the detailed

examination of the technical bids. The administrative SOPs issued by the Department may



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determine the minimum number of days required by the T&E Committee to perform its specialized

functions accordingly.

17. Risk: Amendments in the Standard Bidding Documents by Competent Authority:

It was observed that amendment in the Standard Bidding Documents were usually not done by

the Competent Authority as per the Standard Operating Procedures.


Mitigation Strategy: The administrative SOPs may be followed so that proper procedures

regarding transparency and fair practices in procurement may be executed by the Department.



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8. Section:IV Spend Analysis of Health-Sector Procurement:

Review of past years of Health procurement statistics and the new fiscal environment reveals

greater volumes of responsibility and load that will be placed on the healthcare procurements of in

years to come.

The statistics of the last three years in Table 8.1 reveals that the final grants could not be fully

utilized by the Health Department, either due to squeezed timelines or less than accurate estimation

of the budgetary appropriations. However, the most important trend seen here is the significant two-

fold increase from 2009-10 to 2-11-12 in the health budget for procurements which shows a greater

responsibility for the Health Department.

Table:8.1

Comparison of Current Budget spending with Development Budget for the Years 2009-12

Table 8.2 shows that the pharmaceutical products including drugs and surgical disposables keep on

getting the biggest share in procurement spending during the last three years and require more

transparency in procedures to bring best value for money.

2009-10 (Rs in Million) 2010-11 (Rs in Million) 2011-12 (Rs in Million)

TotalBudget of

the KPProvince

HealthDepartmen

t Budget

%AgeShare

TotalBudget of

the KPProvince

HealthDepartmen

t Budget

%AgeShare

TotalBudget

of the KPProvince

HealthDepartment

Budget

%AgeShare

A - CurrentRevenueBudget

80,000 4,024.8 5.03 127,958 5,940.7 4.64 149,000 7,837.25 5.26

B -DevelopmentBudget

49,815.22 6,167.05 12.38 67,783.68 7,364.79 10.87 83,621 7,825.11 9.36

Provincial ADP

32,546.412 4,333.87 13.32 58,500.00 6,571.24 11.23 71,542.4 6,467 9.04

SpecialProgram

/PSDP

10,624.48 1,586.68 14.93 0.000 0.000 0.00 0.000 0.000 0.00

ForeignProject

Assistance6,644.32 246.50 3.71 9,283.68 793.54 8.55 12,078.6 1,358.11 11.24

TOTALA + B

129,815.22 10,191.8 7.85 195,741.7 13,305.5 6.80 232,62 15,662.36 6.73



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The estimated and actual expenditures, mentioned in Table 8.3, on account of medicines and

other stores indicate that the districts get separate funding for the pharmaceutical products and

bio-medical equipment apart from the Provincial funding the current budget.

Table 8.2

Budgets allocated for the Purchase of Drugs & Bio-Medical Equipment for the Years 2009-

12 for all District Governments and the Provincial Government.

Expenditure Heads 2009-10 2010-11 2011-12

All District Governments 244,525,407 368,877,723 349,059,040

A03927-purchase of drug and medicines 110,554,182 100,423,840 99,350,800

A03942-Cost of other stores 126,116,002 201,791,583 191,559,690

A03970-Others 7,412,273 65,969,270 57,547,820

A09404-Medical and laboratory equipment 187,200 315,010 246,010

A09409-Medical stocks 62,150 87,010 95,710

A09410-Life saving medical supplies 0 0

A09411-General utility chemicals 65,200 108,010 91,010

A09412-Specific utility chemicals 60,200 100,000 85,000

A09413-Drapery, fabrics, clothing and allied 55,200 65,000 65,000

A09470-Others 13,000 18,000 18,000

Provincial government 280,949,240 379,145,400 481,855,920

A03927-Purchase of drug and medicines 27,633,100 118,293,000 132,003,000

A03942-Cost of other stores 50,204,270 52,622,600 34,962,960

A03970-Others 203,111,870 208,229,800 314,889,960

A09470-Others 0

Grand Total 525,474,647 748,023,123 830,914,960



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Table 8.3:

Provincial vs District Budget Estimates & Actual Expenditure for the Year 2012-13

Object Head

2012-13

Provincial Districts TOTAL

BudgetEstimates

ActualsBudget

EstimatesActuals

BudgetEstimates.

Actuals

A03927PURCHASE OFDRUG ANDMEDICINES

113,730,900 34,417,285 176,192,710 100,813,063 214,543,963 135,230,348

A03942 COST OFOTHER STORES

866,267,000 35,286,474 222,437,120 20,897,456 887,164,456 56,183,930

TOTAL 979,997,900 69,703,759 398,629,830 121,710,519 1,101,708,419 191,414,278



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9. Section: V Recommendations on Institutional Measures

The subject Procurement System Assessment has helped in identifying various types of risks

emerging out of the Procurement System of the Health Department Khyber Pakhtunkhwa. These

risks may have the potential to compromise the quality and integrity of the System with varied

strengths and probability of occurrence. The following actions as suggested, may lead to mitigate

the said risks if adopted through institutional mechanisms:

9.1: Formulation of a Health Sector Procurement Manual as a Supplement to Khyber

Pakhtunkhwa Public Procurement Rules 2012:

The expected Khyber Pakhtunkhwa PPRA Rules 2012 give broad outlines of public procurement

processes and do not give much detail of the processes. The Mitigation Strategies for the

regulatory, operational and process risks can therefore be incorporated in the proposed Manual

which may supplement and support the administrative regulations, and may contain operational

procedures based on revised business processes, revised time-thresholds for payments, Standard

Bidding Documents evaluation guidelines, benchmarks for technical specifications of the products,

and User Notes on various stages of the public procurement lifecycle customized to the specific

health-sector requirements and to be read in conjunction with the expected Khyber Pakhtunkhwa

PPRA Rules 2012.

Though such a Manual requires another significant effort from the Health Department for its

notification and implementation from the Government, its benefits may outweigh the level of effort

involved. The document may provide the customized environment for the Health sector-specific

procurements and benchmarks for utilizing them in drafting evaluation criteria for the Standard

Bidding Documents.

The proposed Procurement Manual may provide for inviting to the open competition all the local and

multi-national pharmaceutical manufacturers/importers to offer quotes for life-saving drugs prepared

with the A-Grade raw materials (API/Excepients) obtained or imported from OECD countries and

duly certified by the WHO, USFDA and EU-EMA quality assurance standards. In the light of the

Drugs Act 1976 and any recent technological advancements, the drugs may also be defined and

specified in more detail and made part of the proposed Manual alongwith the Formulary. The

Manual may further contain conformance benchmarks based on industrial quality assurance

standards for bio-medical equipment by USFDA, EU’s CE-EMA or Japan’s JIS Industrial Standards,

performance benchmarks set by global certification bodies like Association for the Advancement ofMedical Instrumentation (AAMI), International Certification Commission (ICC), the United States

Certification Commission (USCC), the ISO and international training and certification benchmarks

for Bio-Medical Equipment Technicians (BMETs) e.g., CCE, CBET, CRES and CLES Certifications

etc.

The expected Khyber Pakhtunkhwa Public Procurement Rules 2013 apparently do not have any

provision for central rate contracting for pharmaceutical products as currently being practiced by the

Health Department. The Health Department may therefore need to devise a workable purchasing

strategy by incorporating in the proposed Manual the provisions for Single Stage Two Envelop

Bidding method with a specified year-long fixed price contracting period. For bio-medical equipment,

the Single Stage Two Envelop Bidding method can easily be the one-time purchasing method. The



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vi) Training & Capacity Building of officials handling procurements in the DGHS, AMIs,

Vertical Programs and Districts on the specified topics on monthly basis through short-

term workshops and dedicated technical sessions. Awareness seminars for the

pharmaceutical firms and suppliers of bio-medical suppliers pre-qualified with DGHS

Khyber Pakhtunkhwa may also be arranged by the Procurement Cell for submitting

responsive bids in a reasonable way.

vii) To assist Director General Health Services in the matters relating to co-ordination andliaison with other Provincial bodies/departments related to procurements and facilitation

of various policies and regulations that directly or indirectly effect procurement.

viii) Coordinate with Provincial Health Services Academy for arranging lectures on public

procurement for the purchasing officials of the DGHS.

ix) Conduct market survey for all the selected products which emerged as the lowest in the

CS Statement in order to check whether the suppliers have quoted them above the

market prices. Annual market survey of the tentative market prices may also be

conducted for helping the Planning Cell, Health Secretariat in the budgetary estimations.

9.3: Utilization of a dedicated web-portal for the Health Department:

Instead of using EPI Vertical Program’s web-site, the Health Department Khyber Pakhtunkhwa may

utilize its own dedicated web-portal for not only posting of IFBs, SBDs or evaluation results but also

online verification of suppliers through their corporate profiles. Currently, there exists a “Tenders”

tab on the Health department website which has recently been used only for posting the Standard

Bidding Documents for procurement of cancer medicines for Begum Nusrat Bhutto Oncology

Services, Khyber Pakhtunkhwa. The said web-link can further be designed as per the Indian

Directorate General of Supplies and Disposals (DGS&D) (http://www.dgsnd.gov.in/ ). The Indian

DG&S conducts e-procurements through framework agreements and re-ordering of selected

products. Provincial Procurement regulations are silent on e-procurements or procurements

conducted through dedicated web-portals. However, it also does not bar this option as well. The

DGHS Khyber Pakhtunkhwa, as a start, through its dedicated web-portal may allow the bidders to

submit majority of his secondary documentation online to reduce paper work and submit product

and corporate data in the customized proformas available online. The Client then may score against

the same on the EDI online after perusal and verification of the said documentation and generating

the profile through content management. The in-built procurement monitoring tools may also gauge

the procedural compliance at all steps of the procurement life cycle. Subsequently, District

procuring entities may do on-line re-ordering of products selected by the DGHS through central ratecontracting. This may create logs of the Purchase Orders of all the procuring entities which may

help the DGHS to calculate the total annual quantity of pharmaceuticals purchased during the year.

In future, the said function may be extended to an entire e-procurement based on framework

agreements scenario thereby reducing almost 70% paper work and creating automated record of

purchases. In this regard, a contract lifecycle Management software can be acquired for creating a

customized environment through configuration of prevalent business processes on procurement

and contract management for the Health Department purchasing activities. The said mechanism

has been discussed in detail in the functions of the Technical Wing of the proposed Procurement

Cell later in the discussion.

http://www.dgsnd.gov.in/






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9.4: Human Resource Management:

i) Regular Trainings on Procurement Management to Procurement Entities:

Professional capacity building of all the concerned EDOs (Health), MS DHQs, Chief

Executives of AMIs, Medical Superintendents of DHQs, Principals of Medical Colleges,

Program Coordinators of the Vertical Programs, Senior Hospital pharmacists, P&D

Department & Finance Department GoKP, and senior officials from Health Secretariat,

HSRU and FATA be carried out primarily on basic to intermediate level training modulesbased on regulatory and conceptual frameworks with topics like overview of NWFP

Procurement Rules 2003, Khyber Pakhtunkhwa Public Procurement Rules 2012 and

Procurement Life Cycle and then extending the said capacity building towards advanced

and technical ones based on topics like bidding documents development/design, bid

evaluation for procurement of pharmaceutical products/bio-medical equipment and

consultant selection for hiring of management services etc. The related health officials

conducting or supervising procurement activities further be exposed to modules like

Procurement Audit so that they may safeguard their actions by avoiding the typical

mistakes usually committed during the execution of contract actions. A bi-monthlyTraining Calendar for the Health Department is annexed which provides various training

modules and short-term workshops both for basic and advanced levels.

ii) Technical Soundness of Procurement Officials: The officials and the staff selected for

the Logistics & Procurement Cell may preferably may be from the existing HR strength

that has earlier been involved in procurement and has been trained on it or may be

outsourced as per the regulatory policy of the Health Department keeping in view the

reflected needs. However the officials hired should be technically sound in their

respective areas as they shall be consulted on technical matters by the Department and

other allied agencies in formulating procurement procedures & policies. Preferably,certifications on respective contract management, technical and financial skills should be

sought from the candidates for these proposed posts.

ii) Projectized Remuneration: Prospects of a projectized remuneration to the officials of

the Procurement Cell may help in retaining them in the Cell for a longer period of time and

may help them in keeping their integrity intact. It was observed that during the current

evaluation of the technical bids for procurement of drugs for Govt-MCC, the Health

Department retained the Preliminary Scrutiny Committee members in the subsequent

Comparative Statement (CS) Committee for preparation of the Comparative Statement

(CS) in order to keep the evaluation process and resulting prices confidential. The

authorities seemed apprehensive to change the composition of the Committee members

and did not expand it by adding any dedicated KPO skilled in data entry operation. This

consumed considerable time of the Department as the nominated members did not have

enough data entry speed required to punch-in the names and prices of a large volume of

pharmaceutical entities. On one hand it led to conflict of interest by continuing same

members in consecutive committees and on the other side it exposed the issues relating

to integrity of the staff. World-over, projectized remuneration or honoraria in the form of

project allowance for particular projectized assignments are the norm of the day as

these attract skilled personnel and tend to preserve his integrity. DGHS Procurement Cell



116

may be geared towards conducting projectized activities regarding procurement of bio-

medical equipment and pharmaceutical products.

iii) Merit Point Evaluation under Single Stage Two Envelope bidding process;

The Health Department intends to conduct Single Stage Two Envelope bidding process

In the next round of bidding for the year 2013-14 for procurement of drugs for Govt-MCC.

The said contracting methodology involves cumulative scoring based on price and non-

price factors for both the quality and the price for the medicines & bio-medical equipment.

This methodology involves considerable amount of time in calculating the said scores for

around 700 medicines with varied dosages, strengths and formations extending to around

their 3000 pharmaceutical variants next year as well. It may therefore only be adopted if

the DGHS has a dedicated team of two to three pharmaceutical experts, each

accompanied by a skilled data entry operator with proficient typing speed, soft data is

obtained from the bidders to reduce data entry and that the bidding process is initiated

well in time.

9.5: Inventory & Warehousing Management:

The current situation of Inventory and Warehousing management is far below the required WHO

standards. Instead of re-inventing the wheel, the computerized Inventory Management software

currently utilized by the Hayatabad Medical Complex (HMC) Peshawar may be replicated in all

other medical institutions which may provide a streamlined platform for homogenized

interconnectivity among the health entities.

9.6: Proposed Mission of Procurement Cell

Keeping in view the above stated recommendations, the Mission of the DGHS Procurement Cell

may therefore focus on five key areas

Mission:1. Advocacy: Procurement Cell shall work collaboratively with all legislative and regulatory

authorities to ensure fair and efficient procurement practices in an open and competitive

market within the health industry.

2. Education: Procurement Cell shall provide educational opportunities designed to improve

efficiencies in the purchase, sale and utilization of all goods and services within the health

industry.

3. Ethics: Procurement Cell shall uphold the ethical conduct of business practices within the

industry and the standards adopted by the Govt. of Khyber Pakhtunkhwa and other donor

agencies for Healthcare that are intended to strengthen the integrity of the health care

supply chain.

4. Information: Procurement Cell shall enhance the awareness to all procuring institutions

that fall under the Health Department Khyber Pakhtunkhwa to support the delivery of high-

quality, cost effective health care.



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5. Liaison: Procurement Cell shall promote meaningful dialogue between health industry

organizations engaged in purchasing and other related industry entities on issues of mutual

interest of procurement

9.7: Proposed Administrative Structure of Procurement Cell, DGHS, Khyber Pakhtunkhwa:

The Procurement Cell in the Directorate General Health Services (DGHS) has already been created

vide DGHS Notification No. 10760-67/Personnel, dated 30.12.2011 and is supposed to purchasebio-medical equipment and occasional non-Govt-MCC drugs on the basis of requirements sent by

the Health Districts and DHQs.

As per the said notification, the Cell is headed by a Deputy Director (Admn) and manned by an

Assistant Director (Admn), Superintendent Complaint / Coordination Cell DGHS Office,

Superintendent Accounts Section, DGHS and a Computer Operator. The absence of the two top

administrative tiers of the Cell lastly and all of the processing of bidding documents by an office

superintendent single-handedly after the creation of the Cell has rendered its potential significantly

underutilized keeping in view the sensitive functions like requirement-gathering for need

assessment and annual planning, preparation of the technical specifications, and acquisition of bestvalue for money in procurement of bio-medical equipment and hospital ancillaries etc.

Keeping in view the situational analysis conducted till December 2012, it is proposed that the

Procurement Cell may have the following Wings to utilize its full potential for filling the process gaps:

Pre/Post-Qualification Wing

Technical Wing

Tendering & Coordination Wing

Budget & Planning Wing

The Cell is proposed to be headed by a Director Procurement who will be directly reporting to the

Director General Health Services Khyber Pakhtunkhwa. The Director Procurement should be the

Secretary to the Technical & Evaluation (T&E) Committee of the DGHS and he should have the full

support of the Administration Wing in running the Procurement Cell. For technical matters, the

Director Procurement will be independent and may have appropriate authorization for making

technical decisions with respect to tender evaluation. However the administrative powers may rest

with the Principal Accounting officer of the Department i.e. Secretary Health.

The Procurement Cell may also be expected to ultimately house the procurement officials of the

HSRU who are currently engaged in the hiring of a management consulting firm for outsourcing the

health service delivery to the six crises affected districts of Khyber Pakhtunkhwa and can

subsequently be aligned to work under the Director Procurement, Procurement Cell, DGHS to

increase stakeholders’ acceptance threshold by the Directorate General Health Services towards

reforms carried out by the HSRU and to add to Procurement Cell’s professional capacity. Creation

of procurement skills at HSRU and at DGHS may lead to need-based exchange of procurement

personnel within the Department.

Director Procurement will manage the cases of mis-procurements or erroneous bid evaluations and

may refer such cases to the Director General Health Services for sending the same to Secretary



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Health for administrative decisions. The organizational hierarchy of the Procurement cell is as

under:

Figure-9.7.1: Organizational hierarchy of the Procurement Cell



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Following is the functional scheme of the Various Wings of Procurement Cell:

Figure-9.7.2: Details of the functions of the Wings in Procurement Cell

The Procurement cell would therefore assist Director General Health Services in the following

matters:

a) Provide technical support to Health Department in carrying out specific procurements

b) Standardize public procurement procedures & SOPs for all provincial health entities

c) Coordination & liaison with other Provincial bodies related to facilitation in procurementand various policies / regulations affecting procurements.



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Pre-Qualification Wing:

The organogram of the Pre/Post-Qualification Wing is as under:

Figure-9.7.3: Hierarchy of Pre/Post-Qualification Wing:

This Wing is proposed to come into being as a result of the merger of the Govt-MCC Section and

Pre-Qualification Section currently existing in the Directorate General Health Services (DGHS), and

will be solely responsible for qualifying reliable suppliers (Drug as well as Medical Equipment) who

may then participate in tenders invited by Health Department, Khyber Pakhtunkhwa. The Wing will

also keep a close liaison with the Drug Regulatory Authority of Pakistan (DRAP), Islamabad and

other organizations dealing with Supplier registrations and Quality control.

The officers of this Wing are required to be experienced in administrative as well as technical aspectof pre/post-qualification of suppliers/manufacturers. It is proposed that at least three officers are

delegated this responsibility and one of these may also head as In-charge Pre/Post-qualification

Wing. These officers may be dedicated to qualitative assessment of suppliers of Pharmaceutical

items, Bio-medical equipment and non-drug surgical instruments/disposables/insecticide/general

items/equipment (eg. Medical/office furniture, Medical gases, Waste management, and spares etc.)

respectively.



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The area of function of this Wing will be as follows:

The Wing may be aided by all the Pre/Post-Qualification teams who may have visited the firms

applying for Pre/Post-qualification / registration or its renewal.

Following task will be carried out in this aspect:

• Maintain Database of Suppliers: – All suppliers, manufacturers or importers etc interested in

carrying out business with the Health Department Khyber Pakhtunkhwa will be registered

with this Wing which will maintain complete details of the suppliers in a database. This

database will be frequently distributed among all the procuring entities of the Health

Department, Khyber Pakhtunkhwa.

• Conduct Pre -Qualifications: The Wing will use the already well-defined Pre-qualification

procedure to ensure the Good Manufacturing Practices (GMP) either before the tendering

process or may conduct Post-qualification after the opening of technical bids to ascertain the

same so that only quality products from reliable suppliers are considered for selection.

• Conduct Post Qualifications: The Wing may maintain all record of the supplier’s performance

in terms of their successful contract executions. The Wing may also periodically check on the

pre-qualified / registered suppliers to ensure that they have maintained their quality

standards as were approved at the time of their pre-qualification.

• Blacklisting of Suppliers: Any non-compliance or fraud committed by the suppliers at any of

the health entities may be centrally maintained and notified to all concerned, especially to

Registrar Companies or Security Exchange Commission of Pakistan (ESCP). The Wing may

also ensure that any supplier who has been requested for blacklisting/debarred from the

Health Department is judicially investigated and if required, be blacklisted for a minimum of

three years from participating in the DoH tenders. The Wing may also ensure that such

suppliers do not apply for pre-qualification under any new name or organization.

• Suppliers Defaults: The Wing may be responsible for investigating any non-compliance of

contract terms once purchase order has been issued to a supplier. The Wing may ensure

that the allegations made are fair and that the supplier is given a fair opportunity to justify the

allegations of default and appropriate action taken. The Wing may also intervene on the

issue and try to resolve it amicably.

• Suppliers Grievances: The Wing may be responsible to attend to any of the Suppliers

grievances and to ensure provision of right of audienceto the aggrieved and appropriate

actions recommended that may be formally carried out as per DoH regulations.

• Maintenance of Database of Suppliers: The Wing may install and maintain database of the

Health-sector suppliers all-across Pakistan and their products. This information may be used

for monitoring suppliers’ after -sales services and their product performance for future

reference and to guide any one requiring feedback. The Wing may further liaise with DHIS at

DGHS for through any probable dedicated e-portal offering complete end-to-end Contract

Management automated solution for re-ordering medicines and equipment etc online from

the uppliers selected by the Health Department procuring entities for central rate contracting.



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Technical Wing:

The organogram of the Pre/Post-Qualification Wing is as under:

Figure-9.7.4: Hierarchy of Technical Wing

This Wing may be responsible for all the technical matters of the product/services. It may comprisea minimum of two technical persons. The officers of this unit may be professional pharmacists and

biomedical engineer/technicians with appropriate qualification and experience in Hospitals.

The functions of this Wing may be as follows:

Standardization of Products: The Wing may define the products in various categories and

accordingly may establish guidelines for their procurement. Certain regularly-used products

may be standardized for the specific health-entities and formularies may be developed for

each level of health care/programmes and criteria for estimating quantity be set as per

patient loads and seasonal/area disease prevalence.

Technical Specifications: The Wing may formulate, standardize and update technical

specifications of the products for respective categories for medicines as well equipment.

Maintenance of Database of products: The Wing may maintain a comprehensive data of all

products available in the market with particular reference to the ones available in Pakistan

and their suppliers. This may help assist procuring entities to obtain reference of the

possible options available. The said database may be uploaded on the dedicated e-portal for

the automated Contract Management Solution



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Dedicated Contract Lifecycle Management e-Portal at DGHS: A Contract Lifecycle

Management (CLM) software developed locally and running on a dedicated networking

server at the Procurement Cell, may help the Department to create combined online

purchasing, procedure compliance and procurement monitoring scenario. Any such

enterprise-grade Contract Lifecycle Management (CLM) software may be customized to

meet the requirements of the Procurement Cell, district Procurement Entities (PEs) and

HSRU for:

Customized Drop-down Templates for Assets & Inventory data completion and reporting from

Districts

Assets Management of Bio-Medical Equipment

Inventory Control Management of drugs

Procurement Management of all Health-sector goods & services

Intelligent Contract Management Workflows for contract approval routing, legal terms and

conditions control

Customized Templates for evaluation of bids submitted online to reduce burden of paper-

based tender documentation to 70%

Contract Administration of suppliers & Health-Service Delivery Management firms

Procurement Monitoring Tools embedded in the software for Health Managers to gauge

procedural compliance to the prevalent Provincial Public Procurement Rules

Searchable Contract Database e.g., ECRI-Select Plus & IMS Health for products and their

suppliers and linked to all contract data

Ability to capture images of the primary and secondary documentation submitted alongwith

the bid and subsequent contract

Creation of Vendor Interface on the CLM e-Portal wherein drop-down menus in the Bid

Content Submission Forms customized to the Technical Evaluation Criteria will be provided

so that suppliers may key-in the contents of their documentation bids and upload the

scanned documentation

Creation of Evaluator Interface on the CLM e-Portal wherein evaluators may scrutinize the

data in the Bid Content Submission Forms & attached documentation submitted by thesuppliers/vendors/manufacturers, and subsequent calculation of the highest ranking firm /

Most Economically Advantageous Tender

Generation of Business Intelligence Data Reports for trend-analysis, planning and estimation

of future procurement needs

Technical Comparisons: The Wing may maintain information of the technical comparison and

performance of the products. It may be responsible for developing technical evaluation criteria for

products and carrying out technical evaluations of the bids. The above can be maintained by

acquiring membership of both the ECRI-Select Plus, data base for suppliers / products for bio-

medical equipment and IMS Health, data base for suppliers / products for pharmaceutical products



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which are international nonprofit global organizations providing access to all medical devices /

technologies and pharmaceutical items respectively along with their manufacturers’ details,

specifications, unbiased technical comparisons and other relevant details that are very beneficial for

procurement analysis. The proposed Procurement Cell, after getting membership of the said

databases, may utilize the said information, services and technology to facilitate the Department’s

evaluators to analyze sales data of Pakistan Pharmaceutical market and to develop future

procurement business strategies.

Installed Base: The Wing may maintain a Health Facility-wise comprehensive installed base

of all the major bio-medical equipment earlier supplied to the Health Department and may

maintain an updated status of the performance of such equipment on periodic basis.

Project Management: The Wing may be the key contact point to coordinate with all Hospital

projects in terms of design, construction and medical equipment planning & procurements.

Tendering & Coordination Wing:

This Wing may have three main functions:

i) Being responsible for carrying out the administrative aspect of the tendering process based

on the Procurement Life Cycle carried out by the DoH.

ii) It may also be the coordination Wing for all Districts, AMI and Programs.

iii) Carry out internal audits of procurement procedures all over Khyber Pakhtunkhwa.

iv) Monitor procedural compliance and oversight as well as to intervene in case of mis-

procurement or any system flaws.



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Organogram of Technical Wing:

Figure-9.7.5: Tendering & Coordination Wing

It may comprise around three staff members who are appropriately qualified in procurement

procedures and related administrative functions.

The Wing may have 3 core functions which are as under:

a) Tender Administration & Contracts

b) Coordination with Districts

c) Coordination with AMIs and Programs

The Wing may be responsible for all the technical matters of the product/services. It may comprise

of 5-6 technical persons. The officers of this Wing may be professional Pharmacists, Biomedical

Engineers and technicians with appropriate qualification and experience in Hospitals.



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Tender Administration Function: Following functions may be carried out related to Tender

Administration:

• Standard Bidding Documents Preparation & Tendering Process: The Wing may be

responsible for standardizing the bidding documents for various categories of products

and services i.e.,

•

Pharmaceutical drugs and Surgical Disposables

• Medical Equipment & Spare parts.

• Ancillary Hospital equipment like medical furniture, CMW/LHV Kits, non-Drug Surgical

disposables, insecticides and other miscellaneous items etc.

Also to prepare guidelines for standard procedures for whole tendering process from

advertisement till award of contract.

• Consolidation of tender documents: The Wing may device a checklist for the whole

tendering procedure which may be used by all the procuring bodies as guidelines.

• Advertisements: The Wing may be responsible for devising standard advertising format

for tendering to be used uniformly in all over the Province.

• Tender Opening: The Wing may device a mechanism and standard procedure for tender

opening and its related regulations in accordance to the applicable regulatory régime.

• Technical Evaluations: The Wing may define procedure for technical evaluation and its

formats. May also coordinate with the technical Wing in obtaining technical evaluation

criteria and obtain technical evaluations from them.

• Order Executions: The Wing may define system procedures for purchase order placing

and its execution and provide support to all procuring bodies and Districts in this regards.

• Contracts Drafts & Management: The Wing may be responsible for standardization of

contract and guidance for use by other procuring bodies. All matters related to the contract

administration may also be defined, updated and carried out by this Wing for all healthcare

procurement entities in Khyber Pakhtunkhwa. It may also assist them whenever required.

•

Records: The Wing may maintain all record and documents of the procurement beingcarried out in an organized and accessible manner for monitoring and transparency.

Coordination Function: The Wing would be the only point of contact for the Districts, AMIs and

Programs which require any assistance, guidance, clarifications or any other help regarding

procurement system, procedures or documentation issues. The staff in this Wing will coordinate

with the appropriate Wing of the Procurement Cell and obtain the required information and pass on

to the querying institution. The 25 Districts in Khyber Pakhtunkhwa may be divided in three zones or

regions , each having 8 districts and handled by one person.



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The functional jurisdiction of the Wing would comprise provision of assistance on any of the

following issues:

Suppliers: The Wing would liaise for providing all information on various suppliers, their pre-

qualifications, blacklisting and other information of the suppliers including resolution of their

issues.

Tendering: All support related to tendering procedure, its documentation and contracts.

Technical: To provide all required technical information and support in terms of the technical

specifications and technical comparisons by coordinating with the Technical Wing.

Planning: The Coordination Wing would also assist the Districts and AMIs in proper planning

of their procurements by providing guidelines and support as and when required.

Logistics: To assist the logistics and supply chain.

Oversight Functions: The Wing would also provide oversight to the Health Department’s procuring

entities at different stages of procurement lifecycle. It is recommended that the oversight may becarried out maximum twice during the procurement process:

First oversight may be instituted when a procuring entity is about to issue Standard Bidding

Documents (SBDs), it should seek clearance from the Wing as to the correctness of the said

documents, confirm that the SBDs are being issued to pre-qualified/registered suppliers only

if required by the DGHS, and the Schedule of Requirements with technical specifications

conforms to the requirements of the Client as well as the evaluation criteria and their

application. The procuring entity can only then proceed after receiving an affirmation by the

Wing. Second oversight may be instituted when the technical evaluation is completed by the

procuring entity and the same is submitted to the this Wing confirming that

This Wing would also act as a central repository of all contracts executed by the Health Department

procuring entities. Supplies should send a copy of their respective bids to this Wing as well, for

record and correlation purpose.



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Budget & Planning Wing:

The organogram o the Budget & Planning Wing is as under:

Figure-9.7.6: The hierarchy of the Budget & Planning Wing

This Wing may have three main functions:

i) Guidance on procuring institutes with regard to their budgets.

ii) Provision of Guidelines for procurement planning with specific reference to availability of

the budgets.iii) Management of budgets from procuring institutes for central purchases.

The Wing may comprise of minimum 1 staff member who should be appropriately qualified in

budgeting and finance and related financial management functions.

The Wing may provide following functions:

i) Procurement Planning: The Wing may provide guidelines for procurement planning in

accordance to the cash flow of the budget. These guidelines may be used by all the

procuring institutions.

ii) Budgeting: The Wing may define classifications of budgets for Health care procurements

and maintain these consolidated budgets from all districts, AMI and Programs.

iii) Commercial aspects of tendering: The Wing may formulate policies and guidelines for

various issues like imports, L/C opening and bank payments etc.

iv) Release of payments: The Wing may coordinate with Finance and Audit Department of

Government of Khyber Pakhtunkhwa to expedite timely payments for effective

procurements.

v) Logistics: The Wing may formulate logistic strategies for supplies and guide Districts,

AMIs and Vertical Programs.



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9.8: Individual Job responsibilities:

It is evident that the staff of the Procurement Cell may be appropriately qualified and experienced in

the relevant areas of the procurement as defined in the Organogram with detailed functions.

Figure-9.8.1: Nature & Requirement of the Individual Job Function

It is recommended that the In-charge of the Procurement Cell may be an officer from the regularcadres of the civil services with appropriate qualification and experience and well experienced in the

Government working procedures; or he may be outsourced keeping in view his technical

qualifications. However for the rest of the staff in a number of areas technical expertise is critical for

which no compromise should be made for any such position. The Organogram below is reproduced

with indication of Technical and administrative status of the staff that is being placed in the Wings

and sub-units of the Procurement Cell.

Following is the list of positions for which appropriate Job responsibilities have been individually

prepared and are attached under Annexure1 in section 8 of this report:

i. Director Procurement Cell

ii. Pre/Post-Qualification Wing: PQ

(a) In charge PQ

(b) Pre-Qualification Officer PQ-1 (Pharma)

(c) Pre-Qualification Officer PQ-2 (Bio-medical Equipment, Sterilization and ancillary

Hospital Equipment)

iii. Technical Wing: TW

(a) In charge TW



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(b) Technical Officer TW -1 (Pharma)

(c) Technical Officer TW -2 (Bio-medical Equipment & Spare parts, General and ancillary

Hospital Equipment)

iv. Tendering & Coordination Wing: TC

(a) In charge TC

(b) Tendering Officer TC-1(Tender Administration & Contract Documentation)

(c) Coordination Officer TC-2 (25 districts, AMIs & Vertical Programs)

v. Budget & Finance – BF

(a) In charge BF

(b) Planning Officer – BF-1

Procurement Cell - Job Responsibilities.

Job Title: Director Procurement Cell

Qualifications: Graduation from an accredited four year college or university with a degree in

Strategic Procurement, Public Health (MPH), MBBS, Law, BPharma/M.Phil

(Pharma), Public Administration, Business Management or a closely related field is

strongly preferred. However, any equivalent combination of education and

experience sufficient to perform job duties may be considered.

May also have following:

CIPS, CFCM, CPPO, IACCM or any certified accreditation in Public Purchasingrequired, or ability to obtain such or similar training within first year ofemployment through procurement training.

Comprehensive knowledge of Provincial Procurement Rules / Federal PPRAand other applicable government regulations is required. Knowledge of DonorProcurement Guidelines would be preferred.

Experience: Minimum five years’ experience in the Procurement / Contract Management field is

preferred.

Grade: BPS 19 or equivalent

Recruitment: As per Govt Policy

Position type: Administrative / technical for Khyber Pakhtunkhwa Health Department

Jurisdiction: Complete Province

Reports to: For all matters to Director General Health Services, DoH, KP

Direct responsibilities:

1. To work under the direction of the Secretary Health, Govt. of Khyber Pakhtunkhwa



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2. To be responsible for maintaining the goals, standards, and objectives of the

Procurement Cell in line with the Health care objectives of the Health Department, Govt of

Khyber Pakhtunkhwa.

3. To lead, direct, coordinate, and manage all administrative, technical, contractual and

operational aspects of the tendering process for health care procurements.

4. To train, motivate, coach, develop, and evaluate assigned professional, technical, and

clerical purchasing staff of the Cell for dedicated and best practice professional working.

5. To stay abreast of new processes, technologies, materials, purchasing methods, statutory

requirements and market conditions. Communicate with management on any significant

factors that could affect Provincial Health Procurements.

6. To apply excellent customer service skills, establish and maintain effective working

relationships with other employees, Public officials of Health Department (Districts and

AMI & Programs) and other departments of the provincial Govt. Like Finance, PPRA,

Audit etc.

7. To approve requisitions, purchase orders, procurement expenditures and contracts for the

procurements carried out by the procurement Cell.

8. To manage and ensure timely completion of procurements within the fiscal year and

appropriated budgets.

9. To lead, manage and coach cross-functional teams through the information sharing &

strategic sourcing process.

10. To facilitate team meetings, prepare supporting documentation, conduct market research,

develop market analysis and assist with strategy development for effective and

transparent procurements.

11. To serve as a member of various cooperative and consortium procurement committees

for DoH Khyber Pakhtunkhwa.

12. To serve as lead negotiator for complex technical services/products, professional services

and Hospital projects.

13. To produce written determination for procurement transactions outside the fiduciary levels

(i.e. emergencies) for approval by the Health Department.

14. To ensure discipline and work ethics of all staff of the Procurement Cell and monitor their

performance and professionalism.

15. Attendance at work is an essential function of this position.

Responsibilities through the various Wings of the Procurement Cell:

1. To formulate, obtain, and maintain policies and procedures for the Purchasing System

and Guidelines for Health care procurement for the whole province and thereof to act as

guidance and monitoring of the same.2. To monitor the budget for procurement and facilitate procurement planning.



132

3. To develop and facilitate training for DDO’s of District, AMIs and Programs in purchas ing

policies, procedures and system. Thereof to advise and assist other Districts, AMI and

Programs in management of health care purchasing and contract procedures.

4. To ensure that Quality products/service are standardized for effective health care

services.

5. To ensure that all suppliers/manufacturers are well scrutinized and appropriately pre-

qualified for participating in the tenders for Health care procurement in the province.

Thereof to ensure their post qualification status on periodic basis.

6. To direct, advise, and review specifications for projects requiring extensive technical or

professional services or for complex Hospital projects.

7. To manage projects with cross-functional team members, significant challenges with

information availability, technical requirements and financial complexity.

8. To make site visits to suppliers/manufacturers to ensure that their pre-qualification

statuses are maintain as per original submissions for pre-qualifications.

9. To make periodic visits at various sites of supplies to monitor and measure performance

of supplies throughout the province as and when required.

10. To ensure quality standards are met through administration of purchasing complaints and

resolutions provided by the procuring entities of health in the Province of Khyber

Pakhtunkhwa.

11. To manage large-scale centralized purchasing, contract functions and supplies that

require items with unique requirements as to manufacturing, supply, testing, durability, or

quality characteristics.

12. To review and respond to suppliers/manufacturers protests/grievances in a judicious

manner and resolve in timely manner.

13. To measure vendor performance, cancel contract, suspend or implement debarment

proceedings on vendors not meeting performance requirements.

Note: 1. The duties listed above are intended only as illustrations of the various types of

work that may be performed. The omission of specific statements of duties does not

exclude them from the position if the work is similar, related or a logical assignment to theposition.

Skills required in additional to qualifications:

Ability to communicate orally and in writing, using technical terminology with technical

writing skills is required.

Extensive judgment and originality to plan procurement strategies for large scale

acquisition programs or systems.



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Comprehensive knowledge of personal computers and software packages, including

specific knowledge of MS Word, MS Excel, MS Power Point, MS Access, electronic

document management, imaging and ability to use procurement software.

Extensive knowledge of contract law and its application to the purchasing process.

Ability to manage and supervise others as team.

Ability to establish and maintain effective working relationships with co-workers,supervisors, other DOH personnel.

Pre-qualifications Wing - Job Responsibilities.

Job Title: In charge Pre/Post-Qualifications Wing

Qualifications: Graduation from an accredited four year college or university with any equivalent

combination of education and experience i.e., M.Phil (Pharma), BPharma + 5 years

experience, MBBS + MPH, or MBBS + 1 year experience is strongly preferred.

May also have following:

Knowledge of extensive regulatory framework of Drug Laws is required.

Comprehensive knowledge of Provincial Procurement Rules / Federal PPRA and

other applicable government regulations is required. Knowledge of Donor

Procurement Guidelines would be preferred.

Experience: Minimum seven years’ experience in the field of Drug Laws / public procurement

field with experience of pre/post-qualifications is preferred.


Recruitment: As per Govt. Policy

Position type: Administrative for Pre-qualification of Suppliers/Manufacturers for Health care

procurement in Khyber Pakhtunkhwa Health Department


Reports to: For all matters to In charge of Procurement Cell DoH Khyber Pakhtunkhwa.


1. To work under the direction of the In charge Procurement Cell DoH Khyber Pakhtunkhwa

2. To be responsible for maintaining the goals, standards, and objectives of the

Suppliers/manufacturers dealing with Procurement Cell in line with the Health care

objectives of the Health Department, Govt. of Khyber Pakhtunkhwa.

3. To lead, direct, coordinate, and manage all technical and operational aspects of the pre-

qualifying Suppliers/manufacturers for Health care procurements.


clerical purchasing staff of the Procurement Cell for dedicated and best practice

professional working.



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5. To stay abreast of new processes, technologies, products & materials, statutory

requirements and market conditions in context to suppliers/manufacturers and

communicate with In charge procurement on any significant factors that could affect

quality and reliability of suppliers/manufacturers in Provincial Health Procurements.


relationships with other employees of the Dept. and the suppliers/manufacturers.

7. To approve Pre-qualifications, post qualifications, debarring/black listing of Suppliers/

manufacturers for the procurements being carried out by the Procurement Cell at

provincial level.




develop market analysis and assist with Suppliers/Manufacturers strategy development

for effective procurements.

10. To ensure discipline and work ethics of all staff of the pre-Qualification Wing and monitor

their performance and professionalism.


Responsibilities through the team members of the PQ Wing:

1. To formulate, obtain, and maintain policies and procedures for pre-qualification of

suppliers/manufacturers for the standardized products services to be notified to all

procuring entities of the whole province and thereof to act as guidance and monitoring ofthe same.

2. To appropriately pre-qualify quality suppliers/manufacturers after scrutinizing and

issuance of certification for participating in the tenders for Health care procurement in the

province.

3. To follow up of the post qualification status of the suppliers/manufacturers on periodic

basis.





6. To maintain centralized databank of all suppliers/manufacturers and their offered products

services that can be or is being offered for purchasing and supplies [e.g., IMS Data,

ECRI-SelectPlus, Sid4health for NHS, UK or Indian Directorate General of Supplies and

Disposals (DGS&D)]

7. To obtain market information on the Suppliers/manufacturers and their performance and

maintain complete record of the same in the databank.



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8. To attend, review and respond to suppliers/manufacturers protests/grievances in a judicial


9. To measure and monitor vendor performance, cancel contract, suspend or implement

debarment proceedings on vendors not meeting performance requirements and ensure

that health care procuring entities are immediately informed thru proper notifications.

10. To maintain install base of all suppliers/manufacturers equipment with updated

performance record and any noncompliance or quality issues.

11. To ensure that a regular updated list of pre-qualified suppliers/manufacturers is sent to all

Health care procuring entities in Khyber Pakhtunkhwa.

12. To have liaison with suppliers/manufacturers associations/bodies and keep updated on

the developments that may affect the pre-qualification criteria of Health Department or the

in general suppliers/manufacturers performance.

13. To assist the Health care procuring entities in issues related to pre-qualification or post

qualification of suppliers/manufacturers.



exclude them from the position if the work is similar, related or a logical assignment to the

position.




Extensive judgment and originality to evaluate the suppliers/manufacturers for pre-

qualification for procurements being carried out in the whole province.


specific knowledge of MS Word, MS Excel, MS Powerpoint, MS Access & electronic

document management.

Extensive knowledge of contract law and its application to the purchasing process.


Ability to establish and maintain effective working relationships with co-workers,

supervisors, other DOH personnel.



Job Title: Pre-Qualification Officer - PQ-1(Pharma)

Qualifications: Graduation from an accredited four year college or university in Pharmacy/

Pharmaceutical Sciences, MBBS with atleast one year experience. However, any



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equivalent combination of education and relevant experience sufficient to perform

job duties may be considered.

Must also have following:

Technical Knowledge of Pharmaceutical manufacturing, processes and Raw

Materials.

Comprehensive knowledge of Pharmaceutical Industry and applicableInternational Good Manufacturing Practices/regulations.

Experience: Minimum five years’ experience in the field of Pharmaceutical procurement or

Industry with experience of pre-qualifications is preferred; or

In case of no Degree in Pharmacy, minimum ten years of experience in the field of

Pharmaceutical procurement or Industry with experience of Pre-Qualifications is

required.

Grade: BPS 17 or above


Position type: Administrative for Pre/Post-qualification of Pharmaceutical product Suppliers/

Manufacturers for Health care procurement in Khyber Pakhtunkhwa Health

Department


Reports to: For all matters to In-charge of Pre-Qualification Wing of Procurement Cell of Khyber

Pakhtunkhwa Health Department.


1. To work under the direction of the In charge Pre/Post-Qualification Wing of Procurement

Cell Khyber Pakhtunkhwa Health Department.

2. To be responsible for maintaining the goals, standards, and objectives of the pre-

qualification standards of Pharmaceutical Product Suppliers/manufacturers dealing with

Procurement Cell in line with the Health care objectives of the Health Department, Govt.

of Khyber Pakhtunkhwa.

3. To stay abreast of new manufacturing & supply processes, technologies, products &

materials, statutory requirements and market conditions in context to Pharmaceutical

Product including Insecticides suppliers/manufacturers and communicate to the In charge

Pre-qualifications Wing of any significant factors that could affect quality and reliability of

Pharmaceutical Product suppliers/manufacturers in Provincial Health Procurements.

4. To formulate, obtain, and maintain policies and procedures for pre-qualification of

Pharmaceutical Product suppliers/manufacturers for the standardized products & services



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to be notified to all procuring entities of the whole Province and thereof to act as guidance

and monitoring of the same.

5. To appropriately pre-qualify quality Pharmaceutical Product suppliers/manufacturers after

scrutinizing and issuance of certification for participating in the tenders for Health care

procurement in the province.


basis.





9. To maintain centralized databank of all suppliers/manufacturers and their offered

products services that can be or is being offered for purchasing and supplies. [e.g., IMS

Data, ECRI-SelectPlus, Sid4health for NHS, UK or Indian Directorate General of Suppliesand Disposals (DGS&D)]

10. To obtain market information on the National & International Suppliers/manufacturers of

Pharmaceutical Products operating in Pakistan with regards to their performance and

maintain complete record of the same in the databank.

11. To attend, review and respond to suppliers/manufacturers protests/grievances in a

judicious manner and resolve in timely manner.






14. To ensure that a regular updated list of pre-qualified Pharmaceutical suppliers

/manufacturers is sent to all Healthcare procuring entities in Khyber Pakhtunkhwa.

15. To have liaison with Pharmaceutical Product suppliers/manufacturers associations/bodies

and keep updated on the developments that may affect the pre-qualification criteria’s of

Health Department or the in general suppliers/manufacturers performance.




relationships with the suppliers/manufacturers.

18. To participate /represent Incharge Pre-qualification Wing in meetings, prepare supporting

documentation, conduct market research, develop market analysis and assist with

Pharmaceutical product Suppliers/Manufacturers strategy development for effectiveprocurements.



138


clerical staff of the Cell for dedicated and best practice professional working.





position.






Comprehensive knowledge of personal computers and software packages, includingspecific knowledge of MS Word, MS Excel, MS Powerpoint, MS Access & electronic



Job Title: Pre-Qualification Officer - PQ-2 (Bio-medical Devices, Consumables & Ancillary

Hospital Equipment)

Qualifications: Graduation from an accredited four year college or university in Biomedical

Engineering, Electronics or physics. However, any equivalent combination ofeducation and relevant experience sufficient to perform job duties may be

considered.


Technical Knowledge of Medical Equipment Technologies and their technical

Services issues.

Comprehensive knowledge of Medical Device standards and safety regulations

particularly in context to the Supply and manufacturing.

Experience: Minimum five years’ experience in the field of Biomedical Engineering Industry with

experience of procurements of Medical Devices is preferred; or

In case of no Degree in Biomedical or Electronics Engineering, Technical Diploma in

Biomedical or Electronics with minimum ten years of experience in the field of

Medical devices Industry and procurements is required.





139

Position type: Administrative for Pre-qualification of Medical Equipment Suppliers/ Manufacturers

for Health care procurement in Khyber Pakhtunkhwa Health Department


Reports to: For all matters to In-charge of Pre-Qualification Wing of Procurement Cell of

Khyber Pakhtunkhwa Health Department.


1. To work under the direction of the In charge Pre-Qualification Wing of Procurement Cell

Khyber Pakhtunkhwa Health Department.

2. To be responsible for maintaining the goals, standards, and objectives of the pre-

qualification standards of Medical equipment Suppliers/manufacturers dealing with

Procurement Cell in line with the Health care objectives of the Health Department, Govt.


3. To stay abreast of new technologies, products & services, statutory requirements andmarket conditions in context to Medical Equipment suppliers/manufacturers and

communicate to the In charge Pre-qualifications Wing of any significant factors that could

affect quality and reliability of medical equipment suppliers/manufacturers in Provincial

Health Procurements.

4. To formulate, obtain, and maintain policies and procedures for pre-qualification of Medical

equipment suppliers/manufacturers for the standardized products & services to be notified

to all procuring entities of the whole province and thereof to act as guidance and

monitoring of the same.

5. To appropriately pre-qualify quality Medical Equipment suppliers/manufacturers after

scrutinizing and issuance of certification for participating in the tenders for Health care

procurement in the province.


basis.



8. To make periodic visits at various sites of supplies to monitor and measure performanceof supplies throughout the province as and when required.

9. To maintain centralized databank of all Medical equipment suppliers/manufacturers and

their offered products services that can be or is being offered for purchasing and supplies.

[e.g., IMS Data, ECRI-SelectPlus, Sid4health for NHS, UK or Indian Directorate General

of Supplies and Disposals (DGS&D)].

10. To obtain market information on the National & International Suppliers/manufacturers of

Medical Equipment operating in Pakistan with regards to their performance and maintain

complete record of the same in the databank.



140

11. To attend, review and respond to suppliers/manufacturers protests/grievances in a judicial







14. To ensure that a regular updated list of pre-qualified medical Equipment suppliers

/manufacturers is sent to all Healthcare procuring entities in Khyber Pakhtunkhwa.

15. To have liaison with Medical Equipment suppliers/manufacturers associations/ bodies and

keep updated on the developments that may affect the pre-qualification criteria of Health

Department or the in general suppliers/manufacturers performance.




relationships with the suppliers/manufacturers.

18. To participate /represent In charge Pre-qualification Wing in meetings, prepare supporting

documentation, conduct market research, develop market analysis and assist with

Medical Equipment Suppliers/Manufacturers strategy development for effective

procurements.


clerical staff of the Cell for dedicated and best practice professional working.





position.











141

Technical Wing - Job Responsibilities.

Job Title: In charge Technical Wing


relevant field (Pharmacy/Biomedical Engineering or Medical technology) or a closely

related field is strongly preferred. However, any equivalent combination of education

and experience sufficient to perform job duties may be considered.


CIPS or any certified accreditation in Purchasing or Public Purchasing required,

or ability to obtain such within first year of employment.

Comprehensive knowledge of Pharmaceuticals and or Medical electronic devices

is required.

Experience: Minimum five years’ experience in the industry of Medical Engineering/

Pharmaceuticals with relevant experience of technical aspects of procurements is

preferred.

Grade: BPS 18 or equivalent or M3


Position type: Technical aspect of Health care Product and their technologies for Health care



Reports to: For all matters to In charge of the Procurement Cell of Khyber Pakhtunkhwa Health

Deptt.


1. To work under the direction of the In charge of Procurement Cell Khyber Pakhtunkhwa

Health Deptt

2. To be responsible for maintaining the goals, standards, and objectives of the Products

and services being dealt within the Procurement Cell in line with the Health care

objectives of the Health Department, Govt. of Khyber Pakhtunkhwa.

3. To lead, direct, coordinate, and manage all technical aspects of the Products involved in

Health care procurements.


clerical purchasing staff of the Cell for dedicated and best practice professional working.

5. To stay abreast of new technologies & materials, techniques and their market conditions

in to products and services and communicate with in charge procurement on any

significant factors that could affect quality and reliability of products/services in Provincial

Health Procurements.



142


relationships with other employees of the Dept. and the suppliers/manufacturers.

7. To approve technical specification and other technical aspects of products/services for

standardization of products/services for all procurements being carried out by the

procurement entities at provincial level.




develop market analysis related to products/services and assist in strategy development


10. To ensure discipline and work ethics of all staff of the technical Wing and monitor their



Responsibilities through the team members of the Cell:

1. To formulate, obtain, and maintain policies and procedures for product/services

categorization and standardization in line with the provincial Health care delivery policy at

different level of health care facilities.

2. To notify the same to all procuring entities of the whole province and thereof to act as

guidance and monitoring of the same.

3. To appropriately review and evaluate products/services after scrutinizing and maintaining

a database of products and issuance of approvals for procurement by tenders for Health

care procurement in the province.

4. To follow up of the performance status of the products/services on periodic basis and

keeping record of the same.

5. To obtain market information on the products/services and their performance from all over

the province and maintain complete record of the same in the databank.

6. To manage Hospital Projects and coordinate the medical equipment supplies with the

design and construction of the hospital.

7. To attend, review and respond to suppliers/manufacturers protests/grievances related to

technical aspect of the product/services and in a judicial manner and resolve in timelymanner.

8. To ensure that a regular updated list of standardized products and any technical

advancements to all Health care procuring entities in Khyber Pakhtunkhwa.


the developments that may affect the technical aspects of a product or development or its

performance.

10. To assist the Health care procuring entities in all issues related to technical specification

and comparisons for procurement.



143




position.


Ability to communicate orally and in writing, using technical terminology with technicalwriting skills is required.

Extensive judgment and originality to understand and evaluate technical aspects of the

product/services and be able to evaluate its clinical applications and users requirements

for procurements being carried out in the whole province.




Ability to use any software based program for use in technical aspects of medical devicesand drugs.



supervisors, other DOH personnel and Suppliers.


Job Title: Technical Officer – TW-1 (Pharma)


Pharmacy or Micro-Biology/Chemistry is preferred. However, any equivalent

combination of education and experience sufficient to perform job duties may be

considered.


Comprehensive knowledge of Pharmaceutical Products and their clinical

applications is required.

Comprehensive knowledge of Pharmaceutical raw materials and theirManufacturing is required.

Experience: Minimum five years’ experience in the industry of Pharmaceuticals with relevant

experience of technical aspects of procurements is preferred.

Grade: BPS 17 or equivalent or M3


Position.type: Technical aspect of Pharmaceutical Products and their technologies for Health care




144


Reports to: For all matters to In charge of the Technical Wing of Procurement Cell of Khyber

Pakhtunkhwa Health Dept.


1. To work under the direction of the In charge of Technical wing of the Procurement Cell

Khyber Pakhtunkhwa Health dept.

2. To be responsible for maintaining the goals, standards, and objectives of all the

Pharmaceutical Products, Insecticides and services being dealt within the Procurement

Cell in line with the Health care objectives of the Health Department, Govt. of Khyber

Pakhtunkhwa.

3. To formulate, obtain, and maintain policies and procedures for Pharmaceutical

product/services categorization and standardization in line with the provincial Health care

delivery policy at different level of health care facilities.

4. To prepare technical specification and other technical aspects of Pharmaceutical

products/services for standardization of products/services for all procurements being

carried out by the Procurement Cell at provincial level.

5. To notify the same to all procuring entities of the whole province and thereof to act as

guidance and monitoring of the same.

6. To appropriately review and evaluate Pharmaceutical products/services after scrutinizing

and maintaining a database of products and issuance of approvals for procurement by

tenders for Health care procurement in the province.

7. To follow up of the performance status of the Pharmaceutical products/services on

periodic basis and keeping record of the same.

8. To obtain market information on the Pharmaceutical products/services and their

performance from all over the province and maintain complete record of the same in the

databank.

9. To ensure that a regular updated list of standardized Pharmaceutical products and any

technical advancements to all Health care procuring entities in Khyber Pakhtunkhwa.

10. To attend, review and respond to Pharmaceutical suppliers/manufacturers

protests/grievances related to technical aspect of the product/services and in a judicialmanner and resolve in timely manner.

11. To have liaison with Pharmaceutical suppliers/manufacturers associations/bodies and

keep updated on the developments that may affect the technical aspects of a product or

development or its performance.


and comparisons for procurement of Pharmaceutical products





145

significant factors that could affect quality and reliability of Pharmaceutical

products/services in Provincial Health Procurements.


relationships with other employees of the Dept. and the Pharmaceutical

suppliers/manufacturers.

15. To attend/represent Incharge Technical Wing and facilitate team meetings, prepare

supporting documentation, conduct market research, develop market analysis related toPharmaceutical products/services and assist in strategy development for effective

procurements.





position.








specific knowledge of MS Word, MS Excel, MS Powerpoint, MS Access & electronicdocument management.

Ability to use any software based program for use in technical aspects of medical devices

and drugs.



Job Title: Technical Officer – TW-2 (Bio-medical Devices, Consumables & Ancillary

Hospital Equipment)


Biomedical Engineering is strongly preferred. However, any equivalent combination

of education and experience sufficient to perform job duties may be considered.


Comprehensive knowledge of Electro-medical Products/devices (and their

Technologies & after sales services is required.

Knowledge of Clinical Application and Standards of Medical devices is alsorequired.



147

9. To ensure that a regular updated list of standardized Electro-Medical Products/Devices

and related services and any technical advancements to all Health care procuring entities

in Khyber Pakhtunkhwa.

10. To attend, review and respond to Electro-Medical Products/Devices

suppliers/manufacturers protests/grievances related to technical aspect of the

product/services and in a judicial manner and resolve in timely manner.

11. To have liaison with Electro-medical Products/Devices suppliers/manufacturers

associations/bodies and keep updated on the developments that may affect the technical

aspects of a product or development or its performance.


and comparisons for procurement of Electro-medical Products/Devices.



significant factors that could affect quality and reliability of Electro-medical

Products/Devices and their services in Provincial Health Procurements.


relationships with other employees of the Dept. and the Electro-medical Products/Devices

and their services.

15. To attend/represent In charge Technical Wing and facilitate team meetings, prepare

supporting documentation, conduct market research, develop market analysis related to

Electro-medical Products/Devices and services and assist in strategy development for

effective procurements.





position.












148

Ability to use any software based program for use in technical aspects of medical devices

and drugs.


Tendering & Coordination Wing - Job Responsibilities.

Job Title: In charge Tendering & Coordination (T&C) Wing

Qualifications: Graduation from an accredited four year college or university with a Masters degree

in Project Management, Procurement & Contract Management, Business

Administration, Law or a closely related field is strongly preferred. However, any

equivalent combination of education and experience sufficient to perform job duties

may be considered.


CIPS, CPCM, CPPO or any certified accreditation in Purchasing or Public

Purchasing required, or ability to obtain such within first year of employment.

Comprehensive knowledge of PPRA and other applicable government

regulations is required.

Experience: Minimum seven years’ experience in the Public Health sector with relevant

experience of administrative aspects of procurements is preferred.



Position type: Tender Administration & Coordination of procurements with health care pro-

curement entities of Khyber Pakhtunkhwa Health Department

Jurisdiction: Within the Health department


Deptt.



Health Deptt

2. To lead, direct, coordinate, and manage all tendering process for procurements &

Coordination with Health procuring Institutes within the Health Department.

3. To stay abreast of new developments in the Procurement Cell and be able to

communicate to the other procuring institutes of health to whom they are coordinating

4. With respect to Tendering process:

a. To be responsible for carrying out all tendering processes and concluding it in lineswith the PPRA regulations.



149

b. To facilitate team meetings, prepare supporting documentation, related to tendering

process and assist in strategy development for effective procurements.

5. With respect to Coordination Functions:

a. To be responsible for providing support to all Govt procuring agencies like the

Districts, AMI’s and Program in their healthcare procurement and related issues. This

wing may be the may be the focal contact point for these organization for obtaining

any relevant information from the procurement department and same may be providedby the concerned person by internal coordination within the department.

b. To lead, direct, coordinate, and manage all coordination aspects of the Procurements

with the procuring agencies.


clerical staff of the wing for dedicated and best practice professional working.


relationships with other employees of the Dept. and the coordinating institutes.




develop market analysis related to products/services and assist in strategy development


10. To ensure discipline and work ethics of all staff of the coordination Wing and monitor their



Responsibilities through the team members of the Procurement Cell:

1. To formulate, obtain, and maintain procedures for tendering and inter related activities &

to notify the same to all procuring entities of the whole province and thereof to act focus

contacts for providing guidance and support to them.

2. To manage all administrative aspect of tendering process and carry out procurements for

Health Department in and effective and timely manner.

3. To ensure that any development or new policy from the Govt. effecting tendering

procedure is duly informed to the Procurement Cell and updated information is timelyprovided to all Health care procuring entities in Khyber Pakhtunkhwa.


the developments that may affect the tendering process of procurement.

5. To formulate, obtain, and maintain procedures for coordination with the provincial Health

care procurement entities & to notify the same to all procuring entities of the whole

province and thereof to act focus contacts for providing guidance and support to them.

6. To attend, review and respond to requests made by the Districts, AMI and programs

procurement relate issues and resolve in timely manner.



150

7. To ensure that a regular updated information of the related wing is timely provided to all

Health care procuring entities in Khyber Pakhtunkhwa.

8. To assist the Health care procuring entities in all issues related to Pre-Qualifications,

technical specification, Tendering related quarries and any other procurement related

issue.

Note: 1. The duties listed above are intended only as illustrations of the various types ofwork that may be performed. The omission of specific statements of duties does not


position.




Extensive judgment and originality to understand the issues and be able to resolve them

for the quarrying body in the whole province.






supervisors, other DOH personnel and Suppliers.


Job Title: Tendering Officer – TC-1 (Tender Administration & Contracts)


Project Management, Business Administration, Law or a closely related field is

strongly preferred. However, any equivalent combination of education and

experience sufficient to perform job duties may be considered.


Knowledge of PPRA regulations and Public Procurements.

Contracts Management

Administrative function and systems of Provincial Govt.

Experience: Minimum five years’ experience in the Public Health sector with relevant experience

of administrative aspects of procurements is preferred. Or

In case the candidate is not a degree holder, Minimum requirement of Graduation

with minimum ten years of experience in Administrative and Coordination functionspreferably in Public Sector.



151



Position type: Tender processing function and contracts of procurements of Khyber Pakhtunkhwa

Health Department

Jurisdiction: Within Govt. of Khyber Pakhtunkhwa, Health department

Reports to: For all matters to In charge of the Tender & coordination Wing of the Procurement

Cell of Khyber Pakhtunkhwa Health dept.


1. To work under the directions of the In charge of the Tender & coordination Wing of

Procurement Cell Khyber Pakhtunkhwa Health dept.

2. To formulate, obtain, and maintain procedures for tendering and inter related activities of

Health Care procurement being carried out by the Health Dept of Khyber Pakhtunkhwa.

3. To formulate, obtain, and maintain various forms of contracts for tendering and contracts

management activities of Health Care procurement being carried out by the Health Dept


4. To notify the same to all procuring entities of the Khyber Pakhtunkhwa Health Dept. and

thereof provide guidance and support to them.

5. To manage all administrative aspect of tendering process and carry out procurements for

Health Department as per PPRA regulations and in and effective and timely manner.

6. To provide advisory function for contracts and related issues of tendering and orderplacing.

7. To ensure that any development or new policy from the Govt. effecting tendering

procedure is duly informed to the Procurement Cell and updated information is timely

provided to all Health care procuring entities in Khyber Pakhtunkhwa.

8. To have active liaison with various wings of the Procurement Cell in carrying out the

tender process and its documentations.


the developments that may affect the tendering process of procurement.

10. To attend/facilitate and represent Incharge Tendering & Coordination in team meetings,

prepare supporting documentation, related to tendering process and assist in strategy

development for effective procurements.

11. To guide the Health care Procuring entities in all issues and Policies related to Public

tendering Process and its documentation in a timely and effect manner.


Note: 1.The duties listed above are intended only as illustrations of the various types ofwork that may be performed. The omission of specific statements of duties does not



152


position.


Ability to communicate orally and in writing skills is required.



Comprehensive knowledge of personal computers, Internet & electronic document

management.


supervisors, other DOH personnel.


Job Title: Coordination Officer – (25 districts, AMIs & Vertical Programs)

Qualifications: Graduation from an accredited four year college or university with a degree in Public

administration, Business management or a closely related field is strongly preferred.

However, any equivalent combination of education and experience sufficient to

perform job duties may be considered.


Knowledge of PPRA regulations and Public Procurements.

Administrative function and systems of Provincial Govt.

Experience: Minimum five years’ experience in the Public Health sector with relevant experienceof administrative aspects of procurements is preferred. Or

Incase the candidate is not a degree holder, Minimum requirement of Graduation

with minimum ten years of experience in Administrative and Coordination functions

preferably in Public Sector.

Grade: BPS 16/17 or equivalent


Position type: Coordination function of procurements with the assigned Coordinating Insti-tution* ofKhyber Pakhtunkhwa Health Department

Jurisdiction: Within the assigned Coordinating Institution* of Health department

Reports to: For all matters to In charge of the Tender & coordination Wing of the Procurement



1. To work under the direction of the In charge of the Tender & coordination Wing of

Procurement Cell Khyber Pakhtunkhwa Health dept.



153

2. To formulate, obtain, and maintain procedures for coordination with the provincial Health

care procurement entities & to notify the same to all procuring entities of the whole

province and thereof to act focus contacts for providing guidance and support to them.

3. To attend, lead, direct, coordinate, and manage all quarries related to Procurement

received from the Assigned Coordinating Institutes & resolve the same in a timely manner

by coordination with relevant wings of the Procurement Cell of the Health Department.

4. To be responsible for providing support to all the assigned Govt procuring agencies intheir healthcare procurement and related issues. He/she may be the focal contact point

for these organizations for obtaining any relevant information from the procurement

department.

5. To stay abreast of new developments in the Procurement Cell and be able to

communicate to the assigned Coordinating Institutes to whom they are responsible.



7. To ensure that a regular updated information of the related wing is timely provided to allHealth care procuring entities in Khyber Pakhtunkhwa.

8. To guide the Health care procuring entities in all issues related to Pre-Qualifications,

technical specification, Tendering related quarries and any other procurement related

issue.

9. To attend/facilitate and represent In charge Tender & Coordination in team meetings,

prepare supporting documentation, review issues of the assigned procuring institutions

and analysis the same and thereof assist in strategy development for effective

procurements.





position.

* Note 2: The coordinating Institution refers to the assigned districts or AMI/Programs.

Four posts are foreseen three number handling 12 districts each and the fourth onedealing with AMIs and Programs.


Ability to communicate orally and in writing skills is required.



Comprehensive knowledge of personal computers, Internet & electronic document

management.



154


supervisors, other DOH personnel and Assigned coordinating Institutes.

Budget & Planning Wing - Job Responsibilities.

Job Title: In charge Budgets & Planning

Qualifications: Graduation from an accredited four year college or university with a degree inFinance, Business Management or a closely related field is strongly preferred.




Knowledge of PPRA

Administrative knowledge of Khyber Pakhtunkhwa Govt Business and financial

regulations.

Knowledge of Khyber Pakhtunkhwa Govt. Financial Management system.

Experience: Minimum seven years’ experience in the Public Health sector with relevant

experience of Financial and administrative aspects of procurements is preferred.



Position type: Budget & Planning of procurements in Health care procuring entities of Khyber

Pakhtunkhwa Health Department



dept.



Health dept.

2. To lead, direct, coordinate, and manage all Budgetary and Planning aspects of the

Procurements within the DoH.


clerical staff of the wing for dedicated and best practice professional working.

4. To stay abreast of new developments within the Provincial Finance Dept. and

communicate to the In charge Procurement Cell and the other procuring institutes of

health.

5. To have liaison with Finance Department and other depts. and keep updated on the

developments that may affect the financial aspects of a product or development or its

performance.



155






develop market analysis related to budget & planning of the procurements and assist in

strategy development for effective procurements.

9. To ensure discipline and work ethics of all staff of the coordination Wing and monitor their



Responsibilities through the team members of the Procurement Cell:

1. To formulate, obtain, and maintain procedures for Budgeting & planning of procurement

of Health care products for Khyber Pakhtunkhwa Health Department.

2. To notify the same to all procuring entities of the whole province and thereof to provide

guidance and support to them with regards to Procurement budget and planning.


related to procurement Budgets issues and resolve/guide them in timely manner.

4. To ensure that a regular updated information of the financial releases of the procurement

budgets is promptly provided to all Health care procuring entities in Khyber Pakhtunkhwa.




position.


Ability to communicate orally and in writing, using financial terminology with appropriate





specific knowledge of MS Word, MS Excel, MS Access & electronic document

management.



supervisors, other DOH & Finance Department.



156

Budget & Planning Wing - Job Responsibilities.

Job Title: Planning Officer BF-1


Finance, Business Management or a closely related field is strongly preferred.




Knowledge of PPRA

Administrative knowledge of Khyber Pakhtunkhwa Govt Business and financial

regulations.

Knowledge of Khyber Pakhtunkhwa Govt. Financial Management system.

Experience: Minimum five years’ experience in the Public Health sector with relevant experienceof Financial and administrative aspects of procurements is preferred.



Position type: Budget & Planning of procurements in Health care procuring entities of Khyber

Pakhtunkhwa Health Department



dept.


1. To work under the direction of the In charge of Budget & Planning Wing of Procurement


2. To lead, direct, coordinate, and manage all Budgetary and Planning aspects of the

Procurements within the DoH.

3. To formulate, obtain, and maintain procedures for Budgeting & planning of procurement

of Health care products for Khyber Pakhtunkhwa Health Department.

4. To notify the same to all procuring entities of the whole province and thereof to provide

guidance and support to them with regards to Procurement budget and planning.

5. To monitor the planning of procurement and their actual schedules and to escalate any

issues of concerned to the Director Procurement Cell or the Procuring Institutes.


related to procurement Budgets issues and resolve/guide them in timely manner.

7. To ensure that a regular updated information of the financial releases of the procurement

budgets is promptly provided to all Health care procuring entities in Khyber Pakhtunkhwa.



157

8. To have liaison with Finance Department and other depts. and keep updated on the

developments that may affect the financial aspects of a product or development or its

performance.



10. To attend/facilitate team meetings, prepare supporting documentation, conduct market

research, develop market analysis related to budget & planning of the procurements andassist in strategy development for effective procurements.





position.


Ability to communicate orally and in writing, using financial terminology with appropriate





specific knowledge of MS Word, MS Excel, MS Access & electronic document

management.



supervisors, other DOH & Finance Department.



158

10. Annexures

10.1: List of Persons Interviewed Annex-1

S.No Department/Category Designation/Institute Name

Health Secretariat, KP

1. Health Secretariat, KP Secretary Health Mr. Ashfaq Ahmad Khan

2. Health Secretariat, KP Special Secretary Dr. Noor al Iman

3. Health Secretariat Additional SecretaryDevelopment (M&E)

Mr. Zahir Alam Khan

4. Drug Section, HealthSecretariat

Deputy Director (Drugs) Mr. Ali Zahir Shah

5. Drug Section, HealthSecretariat

Section Officer (Drugs) Mr. Naseer Ahmad

6. Planning Cell, HealthSecretariat

Section Officer Planning Dr. Shaheen Afridi


Chief Planning Officer Mr. Sher Gul Safi


Senior Planning Officer Mr. Bahr Ullah Khan

Directorate General Health Services (DGHS), KP

9. Directorate General HealthServices Director General HealthServices Dr. Sharif Ahmad Khan

10. Directorate General HealthServices

Deputy Director (Admn) Dr. Muhammad Zafar


Assistant Director(Procurement Cell)

Dr. Muhammad Saleem


Pharmacist Govt-MCC Mr. Welayat Shah

13. Directorate General HealthServices Chief Drug Inspector Mr. Sabir Ali


Deputy Director Pre-Qualification Cell

Mr. Dil Nawaz Khan


Senior Pharmacist Mr. Muhammad Saleem

16. Electro-Medical Workshop XEN Bio-Medical Mr. Muhammad Yaseen

Health Sector Reforms Unit (HSRU)

17. Health Sector Reforms Unit(HSRU)

Chief HSRU Dr. Shabina Raza



160

38. Khyber Medical College,Peshawar

Stores Incharge Mr. Khursheed Khan

Auditor General of Pakistan, Peshawar

39. Auditor General Peshawar Deputy Director Audit Mr. Bahadur Shah

40. Auditor General Peshawar

(PAC)

Deputy Director Audit Mr. Mutahir Rehman

Pharmaceutical Sector

41. BF Biosciences (FerozsonsLabs)

Hepatology Manager Mr. Zia ur Rehman

42. Getz Pharma (Pvt) Ltd Institutional BusinessExecutive

Mr. Shahid Ali

43. A.Y Traders, Peshawar Chief Executive Mr. Shahbaz Khan

44. Leads Pharma (Pvt) Ltd National Sales Manager Mr. Shahnawaz Qureshi



161

Annex-2

10.2: Training Calendar for TA-52

Strengthening of Procurement Systems & Capacity Building of DoH Khyber Pakhtunkhwa

December 2012 Sequence Duration Level Participants Location Month/Year

Khyber Pakhtunkhwa

Public ProcurementRules 2012

Day 1 2 days Basic Procurement

Officials to benominated byDGHS &HSRU

Abbottabad January 3-4 2013

Procurement LifeCycle

Day 2 Intermediate

Khyber PakhtunkhwaPublic ProcurementRules 2012

Day 1 2 days Basic ProcurementOfficials to benominated byDGHS &HSRU

Islamabad January

30-31 2013


Day 2 Intermediate

February 2013 Sequence Duration Level Participants Location Month/Year


Day 1 2 days Basic SeniorManagement

HealthDepartment

Murree February

3-4 2013


Day 2 Intermediate

Inventory Management& Warehousing

Day 1 Advanced Inventory/StorageManagers ofVerticalPrograms/Pr ojects//DHQs/Districts

Islamabad February 21-222013

Multi-modalTransportationManagement in SupplyChain of

Pharmaceutical Goods

Day 2 Advanced

Procurement ofConsultancy Servicesunder QCBS SelectionMethod; BiddingDocument Design andEvaluation of Supplier& Consultant: ContractManagement ofManagement Services

Day 1 Advanced HSRU Peshawar 27 February 2013

March 2013 Sequence Duration Level Participants Location Month/Year

Development of PC-1& Procurement Plan

Day 1 1 day Advanced ProcurementOfficials to benominated bySecretaryHealth,DGHS &HSRU

Beingworked outinconsultationwith DGHS

March 4 2013

Execution of WorkPackages throughWork BreakdownStructure (WBS) andProcurement Audit

Day 1 Advanced

ComparativeContracting Practicesin Donor-fundedProjects

Day 1 1 day Advanced ProcurementOfficials to benominated byDGHS &

Beingworked outinconsultation

March 26



162

Procurement ofConsultancy Servicesunder QCBS SelectionMethod

Day 1 Advanced HSRU with DGHS

April 2013 Sequence Duration Level Participants Location Month/Year




April 8-9 2013


Day 2 Intermediate

Contract Managementw.r.t Health Sector

Day 1 2 days Advanced ProcurementOfficials to benominated byDGHS &HSRU


April 22-23 2013

Bidding DocumentDesign and Evaluationof Suppliers ofPharmaceuticals andBio-MedicalEquipment

Day 2 Advanced

May 2013 Sequence Duration Level Participants Location Month/Year




May 6-7 2013


Day 2 Intermediate


Day 1 2 days Advanced ProcurementOfficials to benominated byDGHS &

HSRU

Beingworked outinconsultation

with DGHS

May 27-28 2013

Bidding DocumentDesign and Evaluation

of Suppliers ofPharmaceuticals andBio-MedicalEquipment

Day 2 Advanced

June 2013 Sequence Duration Level Participants Location Month/Year

Inventory Management& Warehousing



June 3-4 2013

Multi-modalTransportationManagement in SupplyChain ofPharmaceutical Goods

Day 2 Advanced




June 24-25 2013

Bidding DocumentDesign and Evaluationof Suppliers ofPharmaceuticals andBio-MedicalEquipment

Day 2 Advanced



163

Annex-3

10.3: Supply Chain Questionnaire:

1 – Goods Clearance & Transportation Management

Is there any system in place that can expedite the receiving of Shipment?

No Yes If yes, please give details

At the import stage?

At the freight forwarding stage?

At the destination/Health Facility?

2 - Inventory Management

Is there any system in place that can verify whether the medicines supplied from the supplier are in

compliance with those that have been asked? If yes, please give details:

Yes No Details

Separate space for checking the arrivedmedicine/ equipment

Is there a designated person for checking thereceipts against the list?

Is the invoice documented anywhere?

Is the dosage, strength and packaging of drugschecked?

Are the medicine supplied are appropriatelylabeled?

Are the samples from the batch of medicinesent to drug testing laboratory to check theirpotency and efficacy?

Are the medicines from the sampled batchissued before the receipt of DTL Report?

If yes, is the said fact recorded in a DTL

Register somewhere?

1.3-Is there enough space available for the storage of received pharmaceutical drugs? If yes Please

answer the following?

Yes No Remarks

Classified Alphabetically?

Classified Therapeutically?

Classified by Dosage form?



164

Is the storage space enough to facilitatemovement?

Are the medicine placed directly on floor?

If pallets are used, are they in good conditions?

Is there any mechanism for the control of

temperature and humidity in the ware house?Is there any bin card arrangement availablewith the stock of individual item in thewarehouse?

1.4-How is the integrity of drugs protected from the effect of climate during transportation and

distribution to primary Health Facilities (For Districts)?

Yes No Remarks

Are reefer containers used in vans, maintainingtemperatures at 2-8°C?

If not, are the drug cartons covered fromsunlight through canopy vans or parachutetarpaulins?

2- Storage & Distribution Documentation:

2.1 - Is there any system (Bin Cards, Stock Cards etc.) that documents the storage of

pharmaceutical in the ware house?

Yes NO Remarks

Does it document the date of receiving of theshipment?

Does it document the date of delivery ofmedicine to the primary health facilities?

Does it document the batch number, name andstrength of the individual medicine?

Does it document the expiry date of eachreceiving shipment/delivery?

Does it specify the quantity send to individualHealth Facility?

Does it specify the name of Health Facility towhich the medicine are sent?



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3 – Inventory Management:

3.1 - Is there an inventory management system at each level of the distribution system which

provides information as minimum on the following elements?

YES NO Remarks

The average working stock for each Product?

The amount of safety (buffer) stock for eachProduct?

The frequency of reordering for each product?

The Quantity of re-ordering for each product?

The Lead Time before replenishment of stock?

The Expiry Date of the drug?

3.2 - Are there any Standard Operating Procedures (SOPs) for stock Management at each level of

the Distribution System ?

Yes NO Remarks

4 – Internal Audit of Stocks:

4.1 - Is there any physical inventory verification conducted on the stocks and reconciled with therecords by the Health Facility?

Yes NO Remarks

Monthly

After every 3 months

After every 6 Months

Once a year

4.2 - If other verification exercise conducted, please specify? ______________________

4.3 - Are there independent audits of warehouse by external inspectors or auditors /AGPR?

Yes NO Remarks

Any observations by Audit?

If yes, please give detail

5 – Distribution:

5.1 - Is there a system (computerized or manual) to track the movement of products from

pharmaceutical ware house to a health Facility/Ward, and which provides the following informationfor medicine that have left the ware house?



Yes No Remarks

Types of medicine that have left the warehouse?

Quantity of medicine that have left thewarehouse?

The person who verified the amount?The intended recipient of these medicine?

The time and date that medicine arrived atappropriate facility?

Documentation of any regularities or problemwith the supplies received?

6 – Requisition of Products:

6.1 - Does the health facility have any appropriate procedure for requesting medicine?

Yes No Remarks

Is the medicine requisitioned on the basis of itsgeneric / International Non-Proprietary name(INN)?