Parliament reviewed a draft revision of the Law on Procurement of Goods, Works and Services with State and Local Funds (known as the Tender Law) during its plenary session on April 27.

Under the bill, projects and actions on the list of development projects to be implemented as part of the New Revival Policy will be processed with the establishment of contracts. The law will not be followed if less than 30 percent of the funding for a project or an action is provided from a state owned or state controlled enterprise. 

It has become possible to make procurement arrangements online and retrieve necessary information from state databases. Therefore, the proposed amendments include the reduction of the timeframe for the client to make a decision and establish a contract from 30 days to 15 days.

As there are times when the budgeted cost rises beyond the control of the client or the contractor for some long-term projects and actions, the draft revision enables to increase the contract price if the budgeted price has been renewed.

The client can establish a contract with a term of up to three years upon reaching agreement of the price per unit and other terms for the procurement of goods and products in regular demand. To reduce the financial burdens on the bidding individuals or companies, a reduction of the tender guarantee amount is also proposed.

During the session, parliamentarian S.Chinzorig commented, “The problems related to the quality and price of medicines are causing people’s frustration. In accordance with the Tender Law, low-quality medicines are being imported in order to select tenders based on the lowest bids. The supply of high-cost drugs from developed countries has been decreasing in recent years. WHO and UN organizations are using a quality and low-cost purchase system from the market. It is necessary to introduce a law and regulate the system of purchasing medicines by these organizations. If we use this system ourselves, we can use quality medicine.”

Stressing that the problem of the medicine quality is drawing attention, member of Parliament Ts.Sandag-Ochir said, “The principle of this law is to be economical and efficient. There is a problem of low price and poor quality of medicines. Under the bill, a Medicines Agency will register drugs that meet the medical requirements that can be used in Mongolia by an order approved by the minister of health. Registered medicines can be sold, but it regulates the purchase of the lowest price. If the problem of drug quality is not satisfactory, the working group that registers medicines should pay attention to the quality and improve it. Medicines that are not used in Mongolia and are of poor quality are not regulated by this law. There is a need for the Ministry of Health to pay attention to the issue of drug registration within the policy framework and increase it. In Mongolia, the purchase of more than 1,000 registered drugs is regulated by law at the lowest price. The pharmaceutical agency has more than 100 employees. It needs to raise its quality standards.”

The working group explained, “Clause 2 of Article 36.1 of the draft law states that in connection with the provision of health security of the population, contracts can be concluded directly if certain special medicines, medical equipment, and vaccines needed for emergency immunization are purchased directly from the manufacturer or international organization. Medicines worth 650 billion MNT are sold annually in Mongolia. A total of 224 billion MNT or 35 percent of it is purchased by the government. Therefore, 65 percent are from the private sector. There are 1,321 types of medicines in Mongolia. There are 44 drug manufacturers and 444 drug suppliers in Mongolia. We are buying 853 medicines of 173 types produced in Mongolia. In 2022, drugs worth 143 million USD were imported from a total of 58 countries. If we raise the standards of incoming drugs and production, we will buy cheaper ones from there.”  

Minister of Justice and Internal Affairs Kh.Nyambaatar expressed, “I would like the deputy speaker of Parliament to give direction on this matter. In December 2022, the Law on Judicial Investigation Organization was approved. An organization that compares and decides on facts that require accurate scientific knowledge in criminal, civil, and administrative proceedings. This organization purchases chemical reagents for 400 million MNT annually. This chemical was discontinued last year. In the case of a murder, very small amounts of chemical reagents are taken to strengthen the traces, to perform comparative DNA analysis, and to detect the presence of drugs in the blood. A direct open tender was announced, and enterprises no longer participated. Similar institutions have been following the standard of importing their own substances and supplying them at the market price.”