Reforming public procurement

Bangladesh spends an amount of US$30 billion annually on public procurement. This constitutes approximately 45 per cent of the national budget and around 85 per cent of the Annual Development Programme (ADP). To ensure optimal utilisation of this substantial government expenditure, experts have long been calling for a transparent and accountable public procurement system. When public funds are used effectively, it can ensure value for the money, effective delivery of public services, optimum use of scarce government resources and equitable development. Regrettably, a lack of transparency has already created a fertile ground for corruption and favouritism in the public procurement process. To fight this misuse, the interim government's effort to recast the Public Procurement Ordinance by mandating the use of the Electronic Government Procurement (e-GP) platform for all eligible government purchases is a welcome step.

Reportedly, the amendment introduces significant changes, including the removal of provisions for rejection of bids in open tenders for physical works if they deviated 10 per cent above or below the quoted price, as well as the rejection of bids exceeding or falling short of the quoted price by 5.0 per cent in limited tenders. Allegations are rife that these caps have been abused to create a monopoly for certain contractors in the public procurement process, effectively barring the entry of new bidders. Automation of the procurement process and abolishment of the bidding caps are, therefore, seen as a welcome move to make public tendering process more competitive. However, these initiatives will only be effective if transparency and accountability of those managing the automation process can be ensured.

Ensuring the integrity of the e-GP system and preventing any attempt to manipulate the process is also crucial. It is worth mentioning that the e-GP system was introduced in 2011 to make public procurement transparent. However, a 2023 TIB study revealed that work orders in the tendering process are often pre-decided due to collusion between bidders and officials involved in the e-GP system.  Not only has the e-GP system been monopolised, but the TIB study also found that a majority of high-value contracts have been deliberately excluded from the e-GP system. Now, the government's reform process aims to bring all eligible government purchases under the e-GP platform, as recommended by the World Bank. But if the government can break the unholy nexus between and among corrupt politicians, administrative officials and contractors, the procurement system may be streamlined. Otherwise, the evil nexus will find other means to subvert the reform measures.

To mitigate these risks, clear and comprehensive guidelines and regulations are crucial. These guidelines should ensure that all procurement activities are conducted in a fair, transparent, and competitive manner. Systematic reform and targeted measures should be adopted at every stage of the supply chain. Corruption in the procurement process often starts with the deliberate inclusion of biased specifications that favour specific suppliers. Biased conditions or vague specifications in the tender document often undermine fair competition. Tender specifications, therefore, should be reviewed and validated by independent experts. Additionally, drafting tender conditions and technical specifications in a clear, comprehensible manner and publishing all relevant information on digital platforms is crucial. Again, reforms in selection processes alone will not be enough. Rigorous supervision and monitoring of project execution are crucial to ensuring accountability and adherence to standards. These are sine qua non for proper utilisation of public funds.