Government vaccine procurement contracting

When the second wave of the COVID-19 epidemic hit India in March 2021, it was apparent that mass-immunization was the only way to curb infections. The COVID-19 vaccine procurement problem poses additional challenges when compared to the typical drug procurement problem: there is a need for speed of delivery in addition to sound quality and sensible prices. While we watched the state government driven procurement exercise play out, we captured key data from the tenders of the twelve state governments and 1 municipal body published global tenders for the procurement of COVID-19 vaccines in May 2021.

The Union Government intervention reversing the responsibility of this procurement back to the Centre means that we will not see an outcome of these tendering processes. However, we do have a record of responses received by each of these governments that can help us map any patterns that reflect long-standing weaknesses in the government contracting process. Our aim is to build knowledge on this episode of emergency procurement that can also guide overall procurement effectively.

As researchers in the field of government contracting (GC), we bring a body of knowledge into the field of government vaccine contracting (GVC). On this page, we have built: (a) A clearinghouse of information about state governments purchasing vaccines and (b) A body of research offering insight and ideas for process improvement.

The state government tenders

We have hand-collected a data-set by breaking down and classifying the vaccine tenders from twelve state government agencies and one municipal body. At present, we are testing for linkages between data extracted from the tenders and the bids they received. Our findings will be updated as we make progress in our analysis, complemented with feedback and conversations with market experts.

Highlights and insights:
  • Four of the tenders were successful in receiving bids. These are MCGM, Odisha, Rajasthan and Karnataka.
  • 11 out of 13 tenders were issued by independent medical services agencies, and two were issued by government ministries/departments indicating the preference of state governments to carry out medical-related procurement through a designated agency.

  • The UP Medical Services Corporation was the only procuring agency that modified the provisions of the tender post the pre-bid meeting with manufacturers, reflecting the presence of a positive feedback loop in the bidding process.

  • Two out of 13 tenders committed to advance payments.

  • All the tenders had a reasonable degree of flexibility built in which allowed them the right to vary quantities at the time of order and the freedom to move beyond L1 (lowest price bid), indicating that procurers are encouraged to empanel a larger number of suppliers to distribute their total requirement amongst bidders.

  • Three out of thirteen tenders allowed only manufacturers to place a bid.

  • Since vaccines can be procured from a larger set of suppliers including dealers, restrictions on who can supply can lead to a higher chance that the tender will fail to attract the required quantity. More importantly, a large set of suppliers are likely to deliver a wider range of prices.

  • Four out of thirteen state procurement agencies added a price cap on the bid price linking it to DPCO guidelines on vaccine prices.

  • Some observations to contextualise this bid price constraint: (a) There are no DPCO guidelines on vaccine prices at present, and so this does not appear to be a constraint. (b) But DPCO can release vaccine price guidelines in the future. This could cause problems for suppliers whose prices are higher than the prices set by the guidelines. The price uncertainty could have been a significant source of variation in attracting responses to bids.

  • The location of delivery varied from state to state: Four of the 13 tenders enlist a single point of delivery, four list multiple warehouse locations across the state and five do not specify the delivery location.

  • Some observations to contextualise variations in delivery locations. (1) Limited delivery locations gives clarity to the bidder, and the ability to adjust the bid price to incorporate the cost of transportation which includes cold-chain requirements for vaccines. (2) A wider range of delivery locations can allow for more timely procurement.