ADB won't accept changes in public procurement laws
Sunday, 15 November 2009
FHM Humayan Kabir
Asian Development Bank (ADB) has joined the World Bank in raising strong objection to the government's amendments to the Public Procurement Act, saying the changes would not be "acceptable" for the bank-funded projects.
In a letter addressed to the finance minister AMA Muhith, the Manila-based development donor has warned that "under no circumstances" the ADB would fund any government purchases, which are not consistent with the bank's procurement guidelines.
Bangladesh's second largest multilateral donor, has strongly protested amendments to some provisions in the PPA including allowing lottery system to select a bid winner, inexperienced firms for awarding contracts worth up to Tk20 million and rejection of bids with price above or below fiver per cent of the official estimate.
"We would like to reiterate that these changes would not be acceptable under the ADB-funded projects, under which ADB needs to ensure international best practices in bidding," the bank's country director Paul J Heytens wrote to Muhith last week.
The move follows similar stand by the World Bank, the country's largest donor, which has asked the government to "put on hold" local procurements in the on-going development projects funded by the bank.
The World Bank has warned that it would revise the existing project financing agreements with the government as it has reservations on the four key amendments to the country's procurement law.
Japanese government, the country's top bilateral donor, has also raised similar concern over some changes in procurement rules made by the Awami League government.
The donors have not explained reasons for their reservations in the latest letters, but analysts said the changes in the government procurement acts and rules could lead to widespread corruption and favouritism in awarding bids to ruling-party supporters.
The finance minister, however, ruled out any government move to review the amendments, saying the changes were made in consultations with the World Bank.
"Such situation has developed mainly because the World Bank is now following our Public Procurement Act, which was prescribed by the bank, although we have been following their guidelines all along," Mr. Muhith told reporters last week.
The ADB in the letter said: "Under no circumstances would ADB finance any activity that is the outcome of a lottery or any other process that is not consistent with the ADB procurement guidelines."
It said in the event of above amendments are enacted, ADB would review its existing procurement guidelines for Bangladesh and update them "to reflect those amendments which are not acceptable to ADB, and which must not be used in the procurement in any goods or civil works funded by ADB."
The letter said: "Since most of the loan agreements for ADB funded projects approved since 2006 have references to both ADB guidelines and the PPR/PPA, we would be able to revert back to ADB's guidelines, without amending them."
The Asia-Pacific anti-poverty lender has pledged to provide nearly US$ 1.3 billion worth of assistance including $745 million budgetary support credit to Bangladesh to help it weather the global meltdown and minimise fiscal deficit in the current 2009-10 fiscal.
The government first took steps to recast its procurement rules in April this year as some project executing agencies said that the existing law had been delaying their development activities.
The Central Procurement Technical Unit (CPTU) of the Implementation Monitoring (IMED) revised the rules in September 12 awarding discretionary power to the procurement entities to select inexperienced contractors for procuring goods, works and services.
The WB, the ADB and Japan and some local development experts protested the recast saying the changes have been made to award lucrative contracts to the ruling party members, which would breed corruptions and harm quality of development works.
On November 4, the parliament passed a bill amending the public procurement act 2006, allowing the disputed provisions including awarding bids to inexperienced contractors, introduction of lottery system to select bid winners and one-stage two-envelop systems and rejection of financial offer above or below five per cent of the official estimate.
With the financial support of the WB, the government enacted the PPA in 2006 and the related public procurement rules in 2008 to ensure transparency and accountability in all the public purchases for development works.
Asian Development Bank (ADB) has joined the World Bank in raising strong objection to the government's amendments to the Public Procurement Act, saying the changes would not be "acceptable" for the bank-funded projects.
In a letter addressed to the finance minister AMA Muhith, the Manila-based development donor has warned that "under no circumstances" the ADB would fund any government purchases, which are not consistent with the bank's procurement guidelines.
Bangladesh's second largest multilateral donor, has strongly protested amendments to some provisions in the PPA including allowing lottery system to select a bid winner, inexperienced firms for awarding contracts worth up to Tk20 million and rejection of bids with price above or below fiver per cent of the official estimate.
"We would like to reiterate that these changes would not be acceptable under the ADB-funded projects, under which ADB needs to ensure international best practices in bidding," the bank's country director Paul J Heytens wrote to Muhith last week.
The move follows similar stand by the World Bank, the country's largest donor, which has asked the government to "put on hold" local procurements in the on-going development projects funded by the bank.
The World Bank has warned that it would revise the existing project financing agreements with the government as it has reservations on the four key amendments to the country's procurement law.
Japanese government, the country's top bilateral donor, has also raised similar concern over some changes in procurement rules made by the Awami League government.
The donors have not explained reasons for their reservations in the latest letters, but analysts said the changes in the government procurement acts and rules could lead to widespread corruption and favouritism in awarding bids to ruling-party supporters.
The finance minister, however, ruled out any government move to review the amendments, saying the changes were made in consultations with the World Bank.
"Such situation has developed mainly because the World Bank is now following our Public Procurement Act, which was prescribed by the bank, although we have been following their guidelines all along," Mr. Muhith told reporters last week.
The ADB in the letter said: "Under no circumstances would ADB finance any activity that is the outcome of a lottery or any other process that is not consistent with the ADB procurement guidelines."
It said in the event of above amendments are enacted, ADB would review its existing procurement guidelines for Bangladesh and update them "to reflect those amendments which are not acceptable to ADB, and which must not be used in the procurement in any goods or civil works funded by ADB."
The letter said: "Since most of the loan agreements for ADB funded projects approved since 2006 have references to both ADB guidelines and the PPR/PPA, we would be able to revert back to ADB's guidelines, without amending them."
The Asia-Pacific anti-poverty lender has pledged to provide nearly US$ 1.3 billion worth of assistance including $745 million budgetary support credit to Bangladesh to help it weather the global meltdown and minimise fiscal deficit in the current 2009-10 fiscal.
The government first took steps to recast its procurement rules in April this year as some project executing agencies said that the existing law had been delaying their development activities.
The Central Procurement Technical Unit (CPTU) of the Implementation Monitoring (IMED) revised the rules in September 12 awarding discretionary power to the procurement entities to select inexperienced contractors for procuring goods, works and services.
The WB, the ADB and Japan and some local development experts protested the recast saying the changes have been made to award lucrative contracts to the ruling party members, which would breed corruptions and harm quality of development works.
On November 4, the parliament passed a bill amending the public procurement act 2006, allowing the disputed provisions including awarding bids to inexperienced contractors, introduction of lottery system to select bid winners and one-stage two-envelop systems and rejection of financial offer above or below five per cent of the official estimate.
With the financial support of the WB, the government enacted the PPA in 2006 and the related public procurement rules in 2008 to ensure transparency and accountability in all the public purchases for development works.