Fact Check

Did Govt Pave Way for Profiteering in Test Kits? A Fact Check to Congress’ Claim

Congress has tried to project a scam in the buying of Coronavirus test kits and tried to score a political point amidst the health crisis. It alleged that the decision of BJP government to buy test kits from a Chinese company has harmed the exchequer. It asked, why is the BJP govt spending 145% more for testing kits & wasting tax payers money?. Rahul Gandhi also shared a news report alleging profiteering amidst pandemic.

The crux of their argument is if the kits were acquired directly from the company the cost would have been less.

But this argument obscures a very important point that ICMR (Indian Council of Medical Research) indeed tried to do so, but for the direct procurement the company put a condition of 100% advance payments and no guarantees attached.

The ICMR quickly rebutted this claim by providing the backgrounder and facts. Before we go into the details the fact in a gist is this: ICMR has not made any payment whatsoever in respect of these supplies. Because of the due process followed (not going for procurement with 100% advance amount), Indian government does not stand to lose a single rupee.

 The report Rahul Gandhi quoted in his tweet briefs you about the contention being raised.

The Background and ICMR Explanation of Pricing

When pandemic broke out, testing people has become the starting point in the fight and all the countries have put their might in acquiring as many kits as possible which led to scarcity of test kits.

ICMR was able to elicit response for procurement only in its second attempt. Kits of 2 companies (Biomedemics and Wondfo) were identified for procurement.  Both had international certifications.

For Wondfo, evaluation committee got 4 bids and the corresponding quotes received were Rs. 1,204, Rs. 1,200, Rs. 844 and Rs. 600. Accordingly, bid offer of Rs. 600 was considered as the best.

Why No Direct Procurement?

In the meanwhile, ICMR also tried to procure the kits directly from Wondfo company in China through CGI. However, quotation received from direct procurement had the following issues:

  • Quotation was FOB (Free on Board) without any commitment on logistics issues.
  • The quotation was on the basis of 100% direct advance without any guarantees.
  • There was no commitment on timelines.
  • Rates were communicated in US dollars without any clause for accounting for fluctuations in prices.

Hence, it was decided to go Wondfo’s exclusive distributor for India for the kit who quoted an all-inclusive price for FOB (logistics) without any clause for advance.

It needs to be also remembered that this was the first ever effort by any Indian agency to procure such kits and the rate quoted by the bidders was the only reference point.

No Loss of Taxpayer Money

After receipt of some supplies, ICMR conducted quality checks on these kits in field conditions.  Based on scientific assessment of their performance, the order in question (Wondfo) found under-performing has been cancelled.

It needs to be stressed that ICMR has not made any payment whatsoever in respect of these supplies.