The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Bahamian suppliers are “amazed” that the Public Hospitals Authority (PHA) has effectively accused their entire industry of employing “unethical business practices”, despite them accepting profit margins well below the permitted 32 per cent contract maximum.

Responding to the PHA’s statement last week, which claimed it had evidence suggesting it may have suffered from “significantly over-priced supplies and price gouging”, Winston Rolle, spokesman for the medical equipment and pharmaceutical distributors, told Tribune Business the whole industry was “concerned” it was being portrayed in a negative light.

In the latest instalment of the row between the PHA and more than 20 of its Bahamas-based suppliers, over the latter’s concerns they were being excluded from bidding on lucrative contracts associated with the Princess Margaret Hospital (PMH) Critical Care Block expansion, Mr Rolle again reiterated that the issue stemmed from the need to make procurement processes more transparent.

And, calling for the PHA to “set standards” that would determine whether companies could qualify to bid on its tenders, Mr Rolle indicated that persons with no experience/background in the medical industry were establishing corporate entities for the specific purpose of bidding on these contracts.

Refuting the PHA’s ‘price gouging claim’, Mr Rolle, who is also the Bahamas Chamber of Commerce and Employers Confederation’s (BCCEC) chief executive, said: “Everybody’s concerned that it’s trying to paint the picture that the entire industry is trying to operate with unfair business practices, which is amazing for a number of reasons.”

With most PHA tenders, which are executed through a bidding process, Mr Rolle said the difference between bids - and which distributor won/lost - was often “a penny or two”.

And he added: “Taking the pharmaceutical industry as an example, the maximum margin they can charge them [the PHA] based on their bids is between 30-35 per cent, usually 32 per cent.

“The reality is that when these bids are tendered, these companies are coming in with margins significantly lower than that - way below.”

To further hammer home his, and the industry’s point, Mr Rolle questioned why the PHA had consistently stuck with the same Bahamian distributors, when it came to medical equipment and pharmaceutical purchases, if it suspected ‘price gouging’ was taking place.

And he also urged the PHA to state if, and how many, performance bonds lodged by suppliers it had called in as a result of them failing to perform under the terms of the supply contract.

“The PHA really needs to look at its procurement processes, and as much as possible set standards that the industry can live with, so this issue of transparency doesn’t come up,” Mr Rolle told Tribune Business.

“This is not PHA money; this is the country’s money being spent, and it should be an open and transparent process so that companies vying for these bids should meet certain criteria, as opposed to someone opening up a company today and having no experience in this area.

“You want to talk about transparency and price gouging, it goes both ways. There are certain things you need to be accountable for before you hold other people to account.”

Mr Rolle conceded that the issue of persons, with no track record or experience in a sector, establishing a company solely to get ‘a piece of the action’ from lucrative public sector contracts, was not an issue confined solely to the PHA.

Meanwhile, the PHA’s statement last week was issued in response to concerns Mr Rolle and the Bahamian distributors had made public via a Tribune Business article published four weeks earlier in mid-January.

Noting that neither the PHA’s chairman, PLP Senator Frank Smith, nor its Board had formally responded to the industry’s concerns that were first raised in private meetings in November-December 2012, Mr Rolle said he suspected the delayed response may have been done to give time for Bahamian suppliers to be included in some of the tenders.

“Some of them are starting to participate in the bid process, and that may be because some of their foreign manufacturer partners refused to participate; they wanted to do business through their local representatives,” Mr Rolle said.

In its statement, the PHA also sought to justify its tender policy - which Bahamian distributors said was designed to cut them out by going direct to their overseas suppliers - by touting the value of contracts it had given locally.

“Since 2007, the Public Hospitals Authority has spent some $123.639 million with local companies on medical equipment, medical supplies and drug purchases,” the PHA said.

“Of that figure, $71.724 million has gone to drug supply purchases with two of the 25 local vendors taking the lion’s share in the amounts off $27.532 million and $26.599 million during that time period.

“Of the $45.041 million spent over the same five-year period on medical supplies, the Public Hospitals Authority has maintained a consistent relationship with local vendors, evidenced by routine purchases that range between $1 million and $2.5 million annually, in particular among four local vendors.”

It added: “In the instance of one local vendor, the Authority vested some $9.558 million over the five-year period. The same is reflected in equipment purchases where three local providers and well-known Bahamian companies were chief suppliers to the PHA in purchases totalling more than $4 million.”

Mr Rolle, though, suggested that these figures were misleading, as they did not represent the companies’ profit on these transactions.

Noting that these sums had to cover operating costs, such as payroll and government taxes, Mr Rolle told Tribune Business: “If you’re going to paint a picture, paint the whole picture, not just the part you want to paint.

“We’re a very small community, and people are concerned about being blackballed and ostracised for speaking their mind.

“But there’s concern that the PHA is painting the whole industry as being unethical businesspersons, when those persons serving the PHA and industry for a number of years have provided extremely creative terms to business and the PHA to facilitate whatever needs to be facilitated. This is not the kind of thing you do to partners.”

The PHA has repeatedly denied excluding Bahamian distributors from the Critical Care Block tenders, while adding that it had the responsibility of seeking ‘value for money’.