The role of contractual arrangements in improving health sector ...

Bahrain
deterioration in quality. With 20 health centres spread across the country, it was very difficult
to closely supervise the cleaning without putting a foreman in each health centre. Absenteeism
was another major factor which prompted the Ministry to look for contracting alternatives. At
the time when cleaning was contracted out, it was less expensive to use contractors, as they
had access to the expatriate workforce. This has now changed as new regulations require
contractors to employ only Bahrainis and to pay them a minimum wage. This has resulted in
an enormous increase in the contract cost (an increase of between 150% and 200%).
In the case of maintenance of equipment, the maintenance of highly specialized
equipment is contracted out because the repair and maintenance requires expensive tools and
software and highly skilled personnel. Employing such personnel is not economical.
Maintenance of computer networks, hardware and software has also been contracted-out for
similar reasons. Similarly, in the case of medical waste disposal, the old incinerator needed
replacement and the amount required for a new incinerator was substantial. It was therefore
decided to contract out this service. The Ministry has a 10-year contract.
In the case of vehicles, the Ministry used to buy vehicles from the private sector.
However, high maintenance and repair costs and frequent breakdowns resulted in the
Government changing its policy. It was decided that all the Ministries would lease vehicles
from the private sector. The contractor has to maintain and service the vehicles and provide
replacement vehicles when a vehicle is out of service. This has removed a significant financial
burden from the Ministry. The Ministry has secured better rates by offering longer contracts.
Quality of contract design
Poorly specified contracts, particularly with respect to quality, were found in virtually
all cases analysed in a 1998 study on contracting in the health sector [2]. The various
contracts signed by the Ministry of Health were generally designed very well and contained
standard and specific clauses in consultation with legal experts from the Ministry and Finance
and National Economy.
Contract legal framework. The legal framework is quite strong and robust enough to facilitate
contracting between the public and private sectors. All the contracts contain on the
governing law and on arbitration clauses.
“This agreement is made in Bahrain subject to the laws of Bahrain. All dates and
periods mentioned in this agreement shall be reckoned according to the Gregorian
Calendar.”
“All disputes and differences which may arise between the Ministry and the
Contractor touching on the provisions of this agreement or any part thereof or
operation or construction thereof or the rights or liabilities of the parties hereunder
shall be amicably settled, but failing such amicable settlement shall be referred to
arbitration to be held in Bahrain by one or more arbitrators agreed upon between the
parties or appointed by the competent Court in Bahrain on the application of either
party in case they fail to agree on such appointment. The award to be made by the
arbitrator or arbitrators shall be final and binding on the parties and the persons
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