Butabika supply of equipment report

REPORT ON THE ALLEGED IRREGULARITIES IN THE TENDER TO 

SUPPLY MEDICAL EQUIPMENT AND SPECIALISED FURNITURE 

FOR BUTABIKA NATIONAL REFERRAL HOSPITAL 

PREPARED BY 

THE PUBLIC PROCUREMENT AND DISPOSAL OF 

PUBLIC ASSETS AUTHORITY (PPDA) 

NOVEMBER 2005

Public Procurement and Disposal of Public Assets Authority 

CONTENTS PAGE 

CONTENTS .......................................................................................................................................... 1 

LIST OF ABBREVIATIONS / ACRONYMS ..................................................................................... 2 

1.0 INTRODUCTION .................................................................................................................. 3 

2.0 BACKGROUND .................................................................................................................... 3 

3.0 OBJECTIVES ......................................................................................................................... 3 

4.0 SCOPE .................................................................................................................................... 4 

5.0 METHODOLOGY ................................................................................................................. 4 

6.0 FINDINGS ............................................................................................................................. 5 

7.0 CONCLUSIONS ...................................................................................................................11 

8.0 RECOMMENDATIONS .......................................................................................................12 

Supply of Medical Equipment and Specialized Furniture Investigation Report 

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LIST OF ABBREVIATIONS / ACRONYMS 

ADB African Development Bank 

CC Contracts Committee 

GOU Government of Uganda 

MOH Ministry of Health 

NACME National Advisory Committee on Medical Equipment 

PDU Procurement and Disposal Unit 

PPDA Public Procurement and Disposal of Public Assets Authority 


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1.0 INTRODUCTION 


The Public Procurement and Disposal of Public Assets Authority (PPDA) received 

complaints from some of the bidders (Ms. Gathercrest Ltd and Ms. Intercross Agencies) 

alleging possible irregularities in the tender. The Authority in compliance with section 8 

(a) of the PPDA Act, 2003 instituted a review into the whole tendering process. PPDA 

commenced the investigation on 27 th October 2005. 

Specific complaints included: 

- Unfairly failing some of the bidders on grounds that were not initially required in 

the bid document; 

- Biased evaluation (failing bidders on areas that were included in the bid 

submissions); 

- Irregularities in the bidding process. 

2.0 BACKGROUND 

The Government of Uganda (GOU) received a loan from African Development Bank 

(ADB) for various activities funded under the Support to Health Sector Strategic Plan 

Project (SHSSPP). Part of the loan was for supply of specialized medical equipment and 

specialised furniture for Butabika National Mental Referral Hospital, Six Regional 

Mental Health Units and 32 Health Units. 

International competitive bidding was used to call for bids for all eligible providers in 

member countries as defined in ADB’s rules of procedures for procurement of goods and 

works. 

Bids were invited on 16 th February 2005 for lots 1, 2 and 3 of medical equipment; 

specialized medical furniture; and office furniture and office equipment respectively. 

Bids were delivered to Head of the Procurement and Disposal Unit, Butabika Hospital 

before 10:00 am on 19 th April 2005 and thereafter opened at 10:30 am same day. Bidding 

period of 60 calendar days from the date of publication as required by the Bank was 

complied with (clause 3.20.1 of ADB rules of procedure for goods and works). Bid 

opening procedures that require bids to be closed and opened publicly on the same day, 

were complied with (clause 3.32 of ADB rules of procedure for goods and works). 

Both ADB rules of procedure on procurement of goods and PPDA procurement rules and 

regulations were applicable in this procurement. 

3.0 OBJECTIVES 

- To find out whether the entity unfairly failed some of the bidders on grounds that 

were not initially required in the bid document; 

- To review the evaluation report and establish whether there was biased evaluation 

and failing bidders on areas that were included in their bid submissions; 

- To investigate the alleged irregularities in the bidding process. 


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4.0 SCOPE 


The scope of the investigation was limited to the following procurements: 

i) Lot 1- SHSSPP/018/2005, Medical Equipment 

ii) Lot 2- SHSSPP/018/2005, Specialized Medical Furniture 

iii) Lot 1- SHSSPP/018/2005, Office Furniture and Office Equipment 

The investigation covered the review of the following processes: 

• Tender document focusing the qualification requirements and evaluation criteria; 

• Notices and invitations to bid; 

• Record of bid purchases; 

• Records of bid submission and bid opening; 

• Bid proposals; 

• Minutes of the Contracts Committee; 

• Nomination and approval of the Evaluation Committee; 

• Bid evaluation report; 

• Record of approvals and bank’s no objection; 

• NACME minutes on the review of the evaluation report; 

• And a few other relevant documents related to this procurement. 

5.0 METHODOLOGY 

The investigation method included: 

Conducting interviews with the following: 

- Accounting Officer, Butabika National Referral Hospital; 

- Head, PDU; 

- Chairman, Evaluation Committee; 

- Chairman NACME; 

- The Project Manager, SHSSPP; 

- Bidders (Jos Hansen’s Representative). 

Analysis of the following documents that were provided by the entity: 

- Bid documents; 

- Minutes of the pre- bid meeting; 

- Clarifications by the entity; 

- Bid proposals submitted; 

- ADB rules of procedure for goods and works; 

- Contracts Committee file; 

- Record of receipt of bids and bid opening; 

- Evaluation report; 

- Minutes of NACME on the review of the evaluation report; 

- Letters of complaints (Intercross Agencies Ltd and Gathercrest Ltd); 

- Approvals and letters of no objection. 

Note: Attempts to have the complainants interviewed was fruitless. They sent letters 

identifying the areas they wanted the investigation to focus. 


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6.0 FINDINGS 

Bidding process 


The advert for this procurement was published in the New Vision and the Monitor of 16 th 

February 2005 and the closing date was 19 th April 2005. Adequate bidding time was 

given to the bidders as required by PPDA and ADB rules. Thirty four (34) providers 

purchased bids for lot 1, thirty three (33) for lot 2 and twenty four (24) for lot 3. Bidders 

who returned the bids were fourteen (14) for lot 1, thirteen (13) for lot 2 and ten (10) for 

lot 3. 

The following companies purchased bids 

No. Lot 1 Lot 2 Lot 3 

1. Meditec Meditec Kramer Industry Ltd 

2. Kramer Industries Ltd Kramer Industry Ltd Prime Impex 2001 Ltd 

3. Medical Export Group Dragados Nina Interiors 

4. Symphony Nairobi Crown Agents Kitchen Office 

5. Surgipharm (U) Ltd Shrurik Ltd Kazinga Channel 

6. Makiber Dragados California Global Medinet H.C Ltd 

Trading 

7. Crown Agents John Achelis Central Trading Co. 

8. Shurik Ltd Medinet H.C Ltd New Technology 

9. California Global Trading Reddy’s Pharma Ltd Field York Int. Ltd 

10. Medinet Health Care New Technology MJ Medical 

11. Reddy’s Pharma Ltd Field York Int. Panama Enterprises 

12. New Technology Gathercrest Ltd Sino Africa Medicines 

13. Field York Int. Ltd Globe Corporation GM Tumpeco 

14. Achelis (U) Ltd Sino Africa Medicines Jos Hansen Ltd 

15. Globe Corporation GM Tumpeco MFI Office Solutions 

16. Farmo International UK Communications & Spencon 

Accessories 

17. Sino Africa Medicines Jos Hansen Ltd Multiplex 

18. Float Deve Simed Int. Zimwe 

19. Communications & Accessories Hospital Engineering The Copy Cat 

20. Jos Hansen Ltd Geest Oversees Kapkwata 

21. Buchman Medical Care MJ Medical Intercross 

22. Simed International Spencon Multioption 

23. Hospital Engineering Mediworld Mushiram 

24. DRC Medical C.Metha Richmond corporation 

25. MJ Medical Sipco 

26. Radium Pharmaceuticals Mucwimi 

27 GMC Holdings Ltd Radium 

28 Spencon Services Ltd Gatero Instruments Ltd 

29 MedWorld WaterShed 

30 Skipco Multiplex 

31 Higchen (U) Ltd Zimwe 


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No. Lot 1 Lot 2 Lot 3 

32 Zimwe West Minister 

33 West Minister Ltd Ms Richmond 

34 Istrudent 

The bids were submitted as a single document to include compliance, technical and 

financial proposals enclosing the original and copies in separate sealed envelopes. 

There is no evidence that Nairobi Enterprises Ltd purchased the bids, but is on the record 

of bid opening for lots 1 and 2: 

Approvals of bid documents 

The Bank gave a no objection to the bid document on 29/12/04 with a requirement that 

the special procurement notice (SPN) be published in United Nations Development 

Business. Clause 3.5.3 of ADB rules of procedure for goods and works require that the 

draft text of the bidding documents be sent to the Bank for comments and approval. The 

same clause states “Bidding documents that have been approved by the Bank shall be 

considered as sufficient and adequate to satisfy the Bank’s rules of procedure for 

procurement”. 

The tender documents were also approved by the Contracts Committee on 14 th February 

2005as required by Regulation 48(a) of PPDA Regulations, 2003. Normally for such a 

tender, the Contracts Committee should give an input/approval of the appropriateness and 

applicability of the proposed evaluation methodology and criteria contained in the 

solicitation document as per section 48(a)(ii) of the PPDA Regulations. 

EVALUATION 

The evaluation committee comprised of; 

1. Eng. Wanda SSB Robert - Assistant Commissioner, MOH Chairman 

2. Mr. Pieter de Ruijter - Consultant Group 5 Consultant 

3. Mr. Kakira Joel - Head, PDU Member 

4. Dr. Ezati Isaac - Senior Cons. Surgeon Member 

5. Mr. Okello Mathew - Project Quantity Surveyor Member 

Members were nominated by the Head, PDU and approved by the Contracts Committee 

on 27 th April 2005 at its 23 rd meeting, as required by the PPDA Act, 2003. 

Review of the evaluation reports: 

Lot 1: Medical Equipment 

Fourteen bidders were evaluated and five (5) passed the preliminary examination and 

only one (1) passed the technical evaluation. Since only one (1) bidder was substantially 

technically responsive, the financial bid of Є 2,322,620.74 was corrected of errors (Є 


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3,035.90) to Є 2,325,656.64 and recommended for award. The details of these 

corrections are not provided in the evaluation report. When we asked the Chairman of 

the evaluation committee why they did not include the details of the corrections, he said 

that ADB evaluation format does not provide for this requirement. 

The five (5) bidders who passed the preliminary were evaluated for technical 

responsiveness: Makiber Dragos Industrial, MJ Medical, Globe Corporation bv, 

Buchman Medical Care & Services and John Achelis & Soehne GMBH. Below are the 

details of bidder’s performance: 

No. Bidder % Technical non compliance 

1. Makiber Dragodos 16.06% 

2. MJ Medical 6.11% 

3. Globe corporation BV 1.59% 

4. Buchman Medical Care 12.81% 

5. John Achelis & Soehne GMBH 40.99% 

ITB 31.3 required that the aggregated estimated value of the missing or non-conforming 

items or components should not be more than 3% of the bid price. When we reviewed the 

items where the above bidders were non-compliant, it was confirmed that the bidders 

were non- compliant to the bid requirements. 

ITB 31.3(1) required also that for the missing or non-conforming items, the clients 

budget price for those items shall be included/substituted in the total bid price. 

From the evaluation report, we could not understand why in comparing the non- 

conforming items, the total clients price (FOB +IF + Installation) was used for the 

winning bidder (Globe Corporation, BV), whereas only FOB price was used for other 

bidders on non-conforming items (total clients price is higher than total FOB price). This 

raised the percentage of non-conforming items of the winning bidder. When this was put 

to the Chairman Evaluation Committee, he answered that could have been an error in the 

report but actually used the FOB price. 

Another anomaly noted was that the substituted client’s price was never converted to the 

bidders’ bidding currency where they differed, to allow percentage calculations in the 

same currency, but everything was done in euros. This was also noted as an error when it 

was put to the Chairman Evaluation Committee. 

Reference was made to the National Advisory Committee for Medical Equipment 

(NACME) review of the evaluation report and noted the following anomalies in the bid 

of the successful bidder: 

Below are some of the Non compliant items though they were evaluated as compliant: 

• 1.0005: The item in the catalogue was not consistent with what was 


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specified (an IV canula instead epidural kit and spiral needles); 

• 1.0011: Instrument set was not illustrated in the brochure; 

• 1.0022: Country of origin was not eligible as per ITB 5; 

• 1.0026: The brochure indicated a 12 channel machine instead of specified 

3 channels; 

• 1.0046: Specified a single phase instead of 3 phase as was required. 

Globe Corporation failed on the above requirements. Failure by Globe Corporation would 

have meant that none of the bidders would have passed the technical compliance stage. 

However, we were told that the evaluators were aware and conscious of the Bank’s letter 

of 29/12/04; that this procurement should be implemented not later than 30/06/06 (last 

date of disbursement), and they became flexible with the evaluation criteria. The 

procurement of the equipment and furniture was late by over 2 years, due to re-tendering 

the procurement of the Consultant that was in charge of the whole procurement process, 

as required by the Bank. Yet the civil works for the health centers to be equipped and 

furnished had been completed. Consensus was reached that compliant items will be 

negotiated and agreed by the supplier instead of re-tendering. 

The Project sought a no objection from the Bank considering that time was running out, 

by submitting bids of the first three best evaluated bidders for each lot for the Bank’s 

review and advice. The Bank gave a no objection to the best-evaluated bidder. The letters 

were on file and confirmed by the investigation team. 

Contracting 

ITB 42.1 of the bid document required that “prior to expiry of the bid validity period, the 

purchaser shall notify the successful bidder, in writing, that its bid has been accepted and 

notify all other bidders of the results of the bidding.” Clause 3.40.3 of ADB rules of 

procedure for goods and works states; “Upon receipt of the Bank’s approval, the 

borrower shall inform the successful bidder and invite him to conclude the contract, 

within the time period of the validity of bids”. The Bank requires that the borrower 

informs other bidders of the outcome of bidding process after concluding the contract 

with the successful bidder. 

Other bidders were communicated to, of the results of the bidding process on 29th 

September 2005. This was in compliance with ITB 42.1 of the bid document, regulation 

224(5) of PPDA Regulations, 2003, and ADB rules and procedure. 

It was also noted that the relevant authorities made necessary approvals. At its 26 th 

meeting held on 6/6/2005 the Contracts Committee approved award of the contract to Ms. 

Globe Corporation, BV at Є 2,325,656.64. The Bank (ADB) gave a no objection on 27 th 

July 2005 to the award. The Solicitor General approved the contract on 20/9/2005. 

The agreement was signed by both parties (MOH and Globe Corporation, BV) on 

6/10/2005. However, the total price for non-compliant items remained as it was in the 


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bid submission since it was lower than the total substituted client’s price. The signed 

contract specified the correct conforming items and formed part of the contract. 

Evaluation of Lot 2: Specialized Medical Furniture SHSSPP/018/2005. 

Fifteen (15) bidders were evaluated and seven (7) passed the preliminary examination. 

Only one company, Gatero Instruments Ltd, who was 100% technically compliant, 

passed technical responsiveness. The financial bid of the Gatero Instruments Ltd of Є 

798,695 was passed and the provider recommended as the lowest evaluated responsive 

bidder for award. 

The review sampled out the following bids and reviewed the areas that failed the bidders: 

a) Communications and Accessories International; 

• Bowl, kick stand and anti-static casters - No brochure 

• Bowl, stand, double - Height adjustment 

• Cupboard, drugs - No brochure 

• Caster - Number of casters 

• Stool, surgeons, adjustable - Hand operated 

(Anti-static cushion) 

• Trolley dispensing with shelves - Wrong specifications 

600 (l) x 450 (w) mm 

• Trolley dressing with shelves - No waist bid 

600 (l) x 450 (w) x 800 (h) mm 

The best-evaluated bidder, Gatero on comparison, did not comply with: 

2-0005 Cot, baby: Gatero did not meet the required specification of plex, glass basket 

size of 700 x 350 x 350 mm, but dimensions of 850 x 500x800 mm, which varies greatly; 

2-0006 Cupboard, drugs: Gatero did not provide the brochure for this item; 

2-0008 Examination Couch: Gatero’s specification on dimensions was 1800 x 550 x 

800 mm contrary to what was required i.e. 1800 x 750 x 760 mm and was evaluated 

100% compliant, based on the statement that he will manufacture to the bid 

specifications. 

When Jos Hansen’s representative in Uganda was interviewed, he expressed concern on 

why Gatero was evaluated 100% compliant on some items and not Jos Hansen for items 

quoted from the same manufacturer. When this was put to the Chairman Evaluation 

Committee, he explained that Gatero’s bid had added a statement that they will 

manufacture according to the specifications on such items, which the Chairman NACME 

confirmed was an important statement and the delivery verification team, which is part of 

NACME will ensure that this done. 

Further review of the requirements of the bid document, page 30 section 11 (qualification 

and evaluation –criteria), Manufacturer’s Authorisation letter was only required for only 

Supply of Medical Equipment and Specialized Furniture Investigation Report 9


items marked x under requirements by the supplier”. Clarification no.1 on this tender 1.7 

on manufacture’s authorization stated “ ITB 5.5 and the table/s under the schedule of 

supply clearly stipulates which items required manufacturers authorization”. Hence all 

items for lot 2 did not require the manufacturer’s authorisation letter (see Annex 1). Some 

bidders (e.g. Spencon Services Ltd) were evaluated on this ground. 

The evaluators made some errors in determining compliant bidders in favour of Gatero 

Instruments Ltd, who was evaluated as 100% compliant even on grounds indicated above 

that he had failed. 

Contracting 

The award was approved by the Contracts Committee on 6/6/2005 and ADB on 

27/7/2005. The contract was approved by the Solicitor General on 20/9/2005 and signed 

between Gatero Instruments Ltd and the Republic of Uganda on 28/9/2005 at a contract 

sum of Є 798.695 excluding taxes. 

However, some contradicting information was noted in the agreement, thus; 

• At negotiation, it was agreed that:- 

o Item 1-0009 be increased from 86 to 100 each at Є 240.additional amount 

of Є 3,360 was included. 

o Item 1-000919 be reduced from 87 to 21 each at Є 100, hence a reduction 

of Є 6,600. 

Hence, proposed award of Є 795,455 instead of Є 798,695 was recommended. The 

changes were not effected in the list of requirements and both figures (Є 795,455 and Є 

798,695) are in the agreement. It is not clear what the provider will effect. The Project 

Management needs to take note of the observation. The Director, Butabika Hospital 

clarified that the negotiated price takes precedence of the bid price i.e. Є 795,455. 

ITB 42.1 of the bid document required that “prior to expiry of the bid validity period, the 

purchaser shall notify the successful bidder, in writing, that its bid has been accepted and 

notify all other bidders of the results of the bidding.” Clause 3.40.3 of ADB rules of 

procedure for goods and works states; “Upon receipt of the Bank’s approval, the 

borrower shall inform the successful bidder and invite him to conclude the contract, 

within the time period of the validity of bids”. The Bank requires that the borrower 

informs other bidders of the outcome of bidding process after concluding the contract 

with the successful bidder. 

The entity wrote to the bidders on 29 th September 2005, in compliance with the ADB 

rules. However, communication to the unsuccessful bidders missed important information 

such as the best evaluation bidder and the contract price; an omission some bidders like 

Jos Hansen said, what was communicated was not a notice of the best-evaluated bidder, 

but a letter returning the bid security. Procurement notice number 4 of the PPDA 

guidelines, 2003 should always be used to capture the basic necessary information. 


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Lot 3: Office furniture/equipment SHSSP/017/2004. 

The tenders were advertised on 16/2/2005 in the press and bids were opened on 

19/4/2005. The bid validity period was 120 days from the date of opening. 

Evaluation 

Ten (10) firms were evaluated and only three (3) bidders passed the preliminary 

examination for technical evaluation. These were MJ Medical, MFI Office Solutions and 

Spencon Services Ltd. However, firms like New Technology Company, Intercross 

Agencies Ltd, and Munshiram International Business Machines (U) Ltd were evaluated 

on manufacturers authorization, when it was not a requirement of evaluation criteria in 

the bid document for lot 3. 

Out of the 3 bidders who passed preliminary examination, only MJ Medical complied 

technically at 2.18% of technical non-compliance. Hence, MJ Medical was 

recommended for award. 

The following figures were noted in the evaluation report for MJ Medical: 

Bid price (as read-out) $ 3,737,190.04 

Corrections for errors $ 1,530,359.58 

Proposed Award $ 2,206,830.46 

Details of corrections for errors were not available in the evaluation report. However, 

the bid clearly indicated MJ Medical bid price as: 

$ 1,530,342.31 CIP excluding taxes and duties 

$ 3,737,190.04 CIP including taxes and duties 

However, thorough review of documents indicated that correct amount in the contract 

was $ 1,530,338.38 excluding taxes (bid price $ 1,530,342.31 plus $ 3.93 rounded-up 

errors). 

NACME raised a number of technical issues on the evaluation report especially on items 

that were found non-compliant. The list of items is long with approximately 25 items. If 

these items were subjected to the substitute of the client’s price, MJ Medical would not 

have passed the less 3% requirement of technical non-compliance. 

However, we noted that MJ Medical accepted to deliver compliant items and was agreed 

as part of the signed contract. 

7.0 CONCLUSIONS 

• The procurement was conducted using both GOU and ADB procurement 

regulation and guidelines. However, ADB rules prevailed over the GOU 

procurement rules, where there was conflict, since there was a requirement of the 


11


bank’s approval. The bidding procedures were generally complied with by the 

entity, apart from only not using the recommended format PN4 of the PPDA 

guidelines for the notification of the best-evaluated bidders. 

• There were some anomalies in the evaluation report. However, the Bank approved 

the evaluation reports as required by clause 3.36.7 of ADB procurement 

procedures that “a detailed report on the evaluation and comparison of bids, 

setting forth the specific reasons on which the determination of the lowest cost bid 

is based, shall be prepared by the borrower and addressed to the bank for 

approval. The three lots were approved by the Bank for financing after reviewing 

the first three best bids for each lot. And Clause 3.40.4 emphasizes, “A contract 

which is awarded with the Bank’s approval is eligible for the Bank’s financing” 

and the contract requires that funds be disbursed directly to the suppliers. 

• Hence, in compliance with the requirements of Section 4 of the PPDA Act, 2003 

under international obligations, the signed contracts shall continue and be 

implemented by the entity. 

• The above notwithstanding, it is important that in future, the Contracts Committee 

should always scrutinize the evaluation report more especially where an 

outsourced ‘technical expertise’ is involved before the expert’s contract is paid 

and closed. 

The above notwithstanding, the errors identified in the evaluation report do not 

necessitate cancellation of the award but should serve as a learning experience of 

Government Officials that formed the evaluation team, for future procurements. 

8.0 RECOMMENDATIONS 

• The Evaluation Committee including the outsourced experts should always follow 

the requirements of the bid document and the evaluation criteria, to ensure that all 

procurements are conducted in a manner that promotes fair competition and 

transparency; 

• The Contracts Committee should always scrutinize the evaluation reports before 

approval is made, to avoid errors of omission in future; 

• The Accounting Officer should ensure that the goods delivered conform to all the 

specifications and should put a competent team to verify the items especially the 

ones that were non-complaint but negotiated and agreed upon by the contractors, 

as part of the contract. 


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Butabika supply of equipment report

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