Govt warns against submitting 'abnormally low' quotations thru understanding

A stern government warning comes against contractors submitting "abnormally low" bids in public-works tenders through understanding, allegedly for windfall gains.

In an official directive, issued on May 4, Bangladesh Public Procurement Authority (BPPA) under the planning ministry notes a surging trend where bidders quoting prices significantly below the official estimated costs.

The bids are sometimes undercut by 50 per cent, 60 per cent, 90 per cent or even up to 99 per cent, according to the findings.

The instructions highlight a major shift in procurement policy under the new government. Previously, under the Public Procurement Rules (PPR) 2008, a 10-percent price-capping rule was in place. This means bids outside this range were automatically disqualified.

This rule was scrapped to foster more competition.

Under the new Public Procurement Act (PPA) 2025, the government has replaced rigid capping with a more nuanced evaluation system. While this was intended to open the market, the BPPA reports that it has instead led to a dangerous "race to the bottom" where contractors submit unrealistic prices to secure deals through "collusion".

The authority warns that these "unrealistically low" bids pose two major risks. Firstly, contractors cannot realistically complete quality works at such low prices, leading to project delays or abandonment.

Secondly, certain groups are coordinating these low bids to drive out honest competitors and monopolize the procurement process.

The BPPA has instructed all procuring entities (PEs) to strictly enforce Rule 42 (2) and Rule 149 of the Public Procurement Act 2025.

According to the directions, if a bid is found to be "Significantly Low Priced (SLP)" and lacks a logical basis, it will be rejected.

Attempting to influence the evaluation process through unrealistic pricing will be treated as "Collusive Practice" under Rule 149(2)(c) and firms found guilty of such conduct may face debarment from future government tenders, directive reads.

The must-do instructions emphasize that assessing the viability of low bids will now follow the procedures outlined in Schedule 18 of the PPA 2025, which aligns with international best practices.

Evaluation committees are now mandated to scrutinize the technical and financial breakdowns of any bid that appears suspiciously low.

"To make the government procurement process more efficient and effective, it is vital to create a truly competitive environment where price reflects reality," says S. M. Moin Uddin Ahmed, Chief Executive Officer of BPPA, in the signed directive.

Copies of the circular have been dispatched to all ministries, the Cabinet Division, and heads of various departments for immediate implementation across all government offices, an official of the planning ministry informs.

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