Independent Online, 08 November 2002, Condom companies deflated over tender loss

Hundreds of South Africans in the condom manufacturing business have lost their jobs after contracts for the multi-million rand industry were awarded to overseas companies.

The agreements, which form part of the R90-million industry, were awarded to six companies, including Chinese and Taiwanese businesses.

Nearly 500-million condoms are produced in
South Africa annually, with the government awarding tenders to companies to manufacture and supply nearly 400-million condoms each year.

The condoms are distributed throughout the country by the national department of health as part of its campaign against HIV/Aids.

Since the awarding of the contracts, two condom manufacturing companies based in Pietermaritzburg and Johannesburg have been forced to retrench staff.

Surogit Palit, general manager of STX Prophylactics in Pietermaritzburg, said they lost their R17-million contract in 2001.

He said for the past five years they had been manufacturing and producing 70-million condoms annually for the department of health.

"We were told that our contract was being terminated because of the prices that we were charging. But, we have discovered that our prices are some of the most competitive despite our price benefit being taken away," he said.

Palit said that as a direct result of losing the contract to international companies, they had been forced to retrench more than 100 workers.

He said he could not understand why, when South Africa produced more than enough condoms for the country, the contract was awarded to overseas companies.

"It does not make any sense, especially when we have to lay off South African workers because our government wants to hire international labour," said Palit.

Carol Woods of Latex Surgical Products, which is based in
Johannesburg, confirmed that they had also lost their condom manufacturing contract.

She said no reason had been given and declined to comment on how many workers had been retrenched as a result of the loss of the contract.

Spokesperson for the health department, Jo-Anne Collinge, said the tender system had changed since the condom tender was last awarded.

She said in the past the tender process was governed by the State Tender Board Act that allowed specific preference for local companies.

Collinge said the Preferential Procurement Policy Framework Act now applied and allowed local suppliers to compete on an equal footing with foreign bidders.

"Tenders involve a range of criteria with price only forming a part of this," she said while commenting on the fact that STX Prophylactics had lost its contract because of their high prices.

Collinge said the tender was awarded to six bidder companies with the share of the tender ranging from five percent to 25 percent.

She said any company aggrieved by the tender loss could ask for reasons behind the loss in terms of the Administrative Justice Act and the Promotions of Access to Information Act.

Sibani Mngadi, spokesperson for National Minister of Health, Manto Tshabalala-Msimang, said the contract on the procurement of condoms was between the Office of the Tender Board and the companies bidding for the contracts.

He said the responsibility of selecting the companies to carry out the contracts did not lie with the health department.