KARACHI: Serious violations of public procurement rules have been found in the award of a multimillion contract by Karachi University for a health insurance scheme to a private company, it emerged on Monday.

Sources said the KU administration awarded one-year contract of around Rs20 million to the private health insurance company by unlawfully changing the tender’s specification and extending the bid’s validity period to almost a year.

The findings came to light after university teachers complained that the company had stopped offering its service to them two months before the expiry of the scheme. The company neither reimbursed medical expenses to the teachers nor did it return their original medical bills to them, they added.

However, the university registrar said there was no violation related to any change in the tender’s specification. The contract was approved by the syndicate under the procurement rules and guidance of a former finance director, he insisted.

The sources said a KU tender notice for healthcare services and medical coverage was published in newspapers in August 2013 under the rules of the Sindh Public Procurement Regulatory Act (SPPRA). The bidding process, the sources said, was carried out a month later in which five companies participated. But there was no further progress on the matter for almost a year, they said.

According to the advertisement, the university had invited bids for providing comprehensive healthcare facilities and medical coverage to its employees and their families. However, the sources said, the contract was awarded to the company only for teachers’ health insurance and that too several months after the bidding process.

The SPPRA rules said the validity period of a bid (which is not more than 90 days in case of national competitive bidding and 120 days in case of international competitive bidding) can be extended with the approval of competent authority of the procuring agency under certain conditions. These conditions include recording the reasons for extending the bid validity period in writing, fixing responsibility and taking appropriate disciplinary action if validity period has to be extended due to some slackness on part of the procuring agency.

“After obtaining such approval, the procuring agency shall request in writing all bidders to extend the bid validity period. Such a request shall be made before the date of the expiry of the original bid validity period; such an extension shall not be for more than one third of the original period of bid validity.

“In case the procuring agency fails to finalise the bid evaluation within the extended time, the bids shall stand cancelled and a fresh bidding process shall be initiated,” said clauses of Section 38 of the SPPRA rules.

However, the sources said, the university administration met none of these conditions.

At least two companies offered bids lower than the one that was later awarded the contract, the sources said. Under the rules, they added, a bidder with the lowest evaluated bid, if not in conflict with any other law, regulation or government policy, should be awarded a procurement contract.

Syndicate approval

It was almost after a year that the KU administration held a meeting of university’s medical committee that included representatives of teachers and non-teaching staff to seek their approval for health insurance scheme. The non-teaching staff did not agree to adopt the proposal and insisted to continue with the old medical facility system.

“This discussion should have been held before tender’s publication,” said an official who attended the meeting.

“Resultantly, the university had no option but to change the specification of the tender and that’s to limit the health insurance scheme to teachers only,” he said.

In the same meeting, the university’s former finance director submitted a note of dissent on the scheme, objecting to the decision of awarding the contract only for teachers’ health insurance.

The scheme, the sources said, was reported in the KU syndicate in May this year as an “action taken by the vice chancellor” and was passed.

Some members did express reservations over the scheme and called for a detailed discussion on the issue, the sources said. “The matter should have been brought in the syndicate before tenders’ publication. Also, it was never discussed though the members called upon the vice chancellor to share details of the scheme,” said Prof Mohammad Qadri, senior professor and syndicate member.

“It was an illegal move on part of the administration,” he said.

Speaking to Dawn, some university teachers said the health insurance company stopped offering its service two months prior to the expiry of their contract in September.

Also, they complained, their medical bills which they had submitted to the company hadn’t been cleared so far.

“While the university returned to the old medical system for its employees, original medical bills of many teachers are still pending with the company which has not reimbursed the expenses,” said a teacher.

When contacted, KU registrar Dr Moazzam Ali Khan said the contract was approved by the syndicate and no objection was raised against it at the time of its approval and in subsequent meetings of the syndicate. “The university refused to renew the company’s contract because they failed to fulfil some of its commitments. The university will facilitate teachers and reimburse their pending bills,” he said.

The registrar insisted that no rules were violated in the award of the contract and referred to Section 38 of the SPPRA rules under which the competent authority (the vice chancellor in this case) may extend the validity period of a bid. However, he didn’t mention the conditions set for such extension.

When he was reminded about the conditions under the specific clause that he referred to, Dr Khan said: “We only considered that specific clause. The finance director was also there and the scheme was approved under his guidance.

“I also don’t think there is any violation relating to change in tender’s specification,” he said, adding the contract wasn’t awarded to the lowest bidder because the party concerned had not met university’s requirements.

Published in Dawn, November 24th, 2015