A strategy of systematic distrust may be followed when contracts are awarded and may also apply to tenders and to transactions by mutual agreement. In the strategy of systematic distrust, the buyer trusts no particular producers or suppliers. Every purchase is made strictly as a function of the best price and quality available at the time. Neither past nor possible future transactions are considered. National producers are not favoured, and the supplier’s reputation is not considered. All that matters is the conditions that are offered for the transaction. As a result, economic relations are very unstable and opportunistic.

In awarding contracts, the only criterion for choice is price (provided the conditions of the contract are met). In open tendering, the decision will depend on several criteria, such as price and deadlines. In transactions by mutual agreement, the buyer consults various suppliers and makes a decision without necessarily stating any criteria. In all of these cases opportunistic decisions may be made.

Table 6 compares prices paid for drugs procured by two strategies, blind confidence (direct purchase) and systematic distrust (tender).

The strategy of systematic distrust has one major disadvantage the transaction costs are very high. These costs arise from the continual quest for the best price and the continual need to verify the quality of the drugs. Thus, launching invitations to tender, awarding contracts and tenders, and reaching mutual agreements require much work. They depend on strong and reliable negotiators who know the international market.

Because of the continual change of suppliers selected solely on the basis of price, there is a very high risk of acquiring less expensive drugs that do not meet quality standards. It is necessary to control the quality of almost every batch of drugs, which is very onerous and adds considerably to the transaction costs. These costs can be reduced by awarding contracts that extend for several years. The longer their duration, however, the further such contracts depart from the strategy of systematic distrust. This strategy is also risky if a batch of drugs must be rejected and a further delivery cannot be made for some time.

Table 6. Prices paid by Mali People’s Pharmacy for drugs procured by international tender and direct purchase

Source: Brudon-Jakobowicz (13)