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The Financial Express

Public procurement -- not as righteous as it seems


Public procurement -- not as righteous as it seems

When governments buy products and services, corruption occurs in all parts of the world. Bangladesh is no exception. Corruption has historically been rife in public procurements on our soil due to a lack of checks and balances. When public officials choose to forego fair and equitable policies and favour a particular bidder, impartial competition in bidding is tragically compromised.

However, with the introduction of the Public Procurement Act (PPA) in 2006 and the Public Procurement Rules (PPR) in 2008 and subsequent amendments made thereto, doors to rampant corruption in the performance of public procurement in Bangladesh seem to have been closed to an extent. Central Procurement Technical Unit (CPTU), established in 2002, has done a commendable job in formulating, standardising, reforming, and implementing a plethora of systems and procedures in the procurement processes, ensuring transparency and accountability. Reforms made by CPTU have improved public procurement performance and enhanced capacity for monitoring the development projects in Bangladesh.

During my tenures as General Manager of state-owned banks, PPR was our guidebook while making big purchases. But after my retirement, as I meet my friends in the business world, I am surprised to discover that the PPR may also misguide a procurement entity and victimise a potential bidder with ambiguities and conflicts of meanings in PPA and PPR.

Unfortunately, local and international bidders, sometimes even in tacit collusion with the work-giving authorities, exploit loopholes that are hidden in the procurement tender notices. Guidelines formulated by CPTU are not meticulously followed while floating such tender notices. Due diligence is not often exercised in the procurement processes.

Biased terms and conditions in the tender notices are tailored in such manners, intentionally or negligently, that those, on the surface, seem to be made with good intentions and not detrimental to Public Procurement Rules. But under the surface lies the bad intentions.

Procurement authorities must prepare their Tender Notices in conformity with the provisions of PPR and they do so. But the terms and conditions in their tender notices do not always uphold the true meaning and spirit of the Public Procurement Rules, 2008 which is to ensure impartial and open competition and not to impose any condition that may restrict fair competition.

In the public sector plagued by scandals and corrupt practices, it would be nice to think that noble goals always lead to success. Unfortunately, that is just not true. In the corporate jungle, the road to hell is often paved with good intentions. Flawed and biased tender notices of procurement entities contain bad objectives wrapped up by a veneer of good intentions. "Not all that is good are always good" as the Bangla maxim goes.

Let me broach instances of how bad objectives can be accomplished through goodies. Buying a computer of a big brand like Apple is a wise decision even if the cost is high. But there are computers with specifications same as those of Apple brand. If you are a smart buyer you will go for a computer of whatever brand that runs on a simple operating system with flexible hardware, and most importantly, which is cost-effective. That is why the government formulated a policy that debars procurement entities from mentioning any brand name in their tender notices. Any seller including Apple must now compete to offer the best computer products and services at competitive prices, not on the strength of their popular brands alone.

Those bidders who used to extort fortunes from public procurement agencies by selling branded products suddenly found themselves hard-pressed competing with companies offering quality goods at competitive prices. They were then on the lookout for other novel ways to kill competitors, this time in the name of credentials, not brand. Such a credential is an ISO certificate from the International Organisation for Standardisation. ISO is a reputed global federation that promotes international standards for technology, scientific testing processes, working conditions, societal issues, environment, etc. Alas! This time also those same bidders failed to extort money by inflating prices as ISO certificate, such as ISO 9001, was made an optional, not a mandatory requirement in tender notices by most of the public procurement authorities, and bidders with or without ISO certificate could offer their best products and services at the best competitive prices.

But, surprisingly, of late, a few big procurement entities in Bangladesh are making ISO 9001 certificate mandatory for bidders though there is no rule in PPR making such certification a mandatory one. Of course, PPR in a rule suggests a procurement entity may ask for such a certificate, but nowhere in PPR is mentioned that such a certificate is a must.

Mandatory requirement of ISO certificate is now music to the ears of those who are desperate to hike up price in the absence of local and international bidders who have traditionally been supplying quality goods and services to Bangladeshi public entities at competitive prices and who are not quite enthusiastic about maintaining ISO certificates considering hassles and expenses involved. Fair competition is thus muzzled in the name of certification with the replacement of a single word 'optional' by 'mandatory'.

If a procurement authority chooses, for example, to make the ISO 9001 certificate as an optional requirement, there could be either of the two positive outcomes: the procurement entity could find a bidder without ISO 9001 offering better quality, better price, and better source compared to a bidder with ISO 9001, or the procurement entity could also find a bidder offering better quality, better price, and better source in addition to having ISO 9001 itself. Not having ISO certification must not preclude a bidder from tendering if the bidder can prove that their products and services comply with the customer's requirements and offer competitive prices.

The instance of making the ISO certification requirements mandatory is just one of many more.

The primary aim of public procurement policies is to achieve value for money. The purchasing procedures are to be based on the premises of competitive rate quoting with a goal to promote fair competition. But rigging bids, cartel formation, imposing unreasonable terms in the tender notices, and misinterpreting the procurement rules, etc., compromise the cardinal principle of obtaining the best quality of products and services at a competitive price. The disastrous result: the government buys inferior things at a higher price with taxpayers' money wasted.

A big chunk of Bangladesh's GDP is lost to corruption each year. Some corruptions in the public sector happen in the full glare of publicity; newspapers headline those venalities, people gossip about them, videos and cartoons about those sleazes go viral on the internet and are seen by millions. But most of the mega corruptions go unnoticed because those are committed in the closed-door chambers with intellectual artistry. And clever steps are taken to hush up those misuses of public offices for personal gains or otherwise.

Decades of corruption and distrust of functionaries, who are supposed to guard public interest, have spawned a bewildering variety of cheating tricks and tactics---only to fleece the taxpayers.

 

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