SPC’s Multimillion Rupee Software Scam


On Friday, this newspaper reported that the State Pharmaceuticals Corporation (SPC) has wasted Rs 644 million on procuring software that doesn’t work.

It further said, the contract was granted to a local company, with the software being developed from 2008, and implemented seven years later in 2015. SPC has been paying this local company a monthly maintenance fee of Rs 5 million, even though the software was malfunctioning. University of Colombo School of Computing (UCSC) has estimated that it would cost Rs 7 billion to upgrade the existing system.

These findings were revealed at a recent Committee on Public Enterprises (COPE) meeting. According to the Government Information Centre (GIC), SPC functions under the Health Ministry, and being a Government corporation, it’s funded with taxpayers’ money. Therefore, the SPC is answerable to the public for its actions.

In 2008, the President of this country was Mahinda Rajapaksa, Nimal Siripala de Silva, Health Minister, Ranjith Maligaspe, SPC Chairman, and Dr. H.A.P. Kahandaliyange, Ministry Secretary. Presently, the Minister is Keheliya Rambukwella, S. Janaka Sri Chandragupta, Ministry Secretary, Dr. U.D.S. Samarasinghe, SPC Chairman, and Dr. Priyantha Halpage, Managing Director.

The SPC website said, it procures drugs for the Ministry and the market after calling for open, competitive tenders. Further, one of its tender documents said it procures pharmaceuticals, surgical consumable items, laboratory chemicals, etc., for its own stocks and distribution in the private sector and for use in all Government hospitals of the Department of Health Services and hospitals under the Provincial Councils through the Medical Supplies Division (MSD).

Therefore, the authorities are obliged to answer to the public in light of the above findings, the following eight questions for the sake of transparency in respect of SPC’s procurement process. They are: 1. Was the above software procured by calling for open competitive bids as enumerated above? 2. Was the successful bidder’s quotation the most technically responsive and of least cost to the SPC?

3. Before selecting the successful bidder, was the company’s antecedents like how many years has it been in operation, how many years of experience did it have in similar types of software supply to the market before and to whom had it supplied this software before, including the names of these buyers, the types of software sold, and the costs at which they were sold to these buyers not only submitted by the bidder, but was this information to the satisfaction of the Chairman, Standing Cabinet Appointed Procurement Committee (SCAPC) before its selection?

4. Did the SCAPC, before tender award, appoint a technical evaluation committee (TEC) to examine these bids and what was their report concerning the same? 5. Was there a clause in the contract agreement to say that if the software supplied by the successful tenderer was faulty and/ or of poor capacity that it was the responsibility of the bidder to install/ reinstall the proper software at its own cost and not of the SPC’s?

6. If there is any delay in supplying and installing the required software, whether there was a contractual clause to say that the successful bidder will have to pay a penalty for these delays to the SPC? 7. If the installed software is faulty/ not having the proper capacity, why is the SPC making a monthly payment of Rs 5 million to the software company in question? And 8. If not, why not?

Sri Lanka presently is in a critical situation, having defaulted on its foreign debt, except with multilateral donor agencies. According to Reuters, only five countries have presently defaulted on their foreign debt. They are Sri Lanka, Lebanon, Suriname, Venezuela, and Zambia.

Presently, Sri Lanka has “no US dollars” to even make essential imports, reflected by the long queues, a daily occurrence, seen at fuel stations and at LPG suppliers’ outlets. Medicines are also in short supply.

To get out of this morass, it requires foreign aid. But no such aid will be forthcoming if Sri Lanka does not first fix its corruption issue, as exemplified above, to the satisfaction of international donors, regardless of who the culprits were. Sparing the sharks and prosecuting the sprats fools no one.