Biman seeks to bypass PPR for emergency purchases
Sunday, 1 November 2009
FHM Humayan Kabir
A bitter row has ensued between Biman and the government's procurement supervisory agency after the latter accused the state-owned airline of drafting a purchase guideline that contravenes the Public Procurement Rules (PPR).
Biman prepared its own procurement rules and sent it to the Central Procurement Technical Unit (CPTU) for approval recently, saying it needs a separate purchase framework for meeting emergency needs.
The CPTU, which oversees procurements of all state-owned agencies and departments, said it can't approve Biman's rules, as it breaches the government's Public Procurement Act 2006 and PPR 2008.
Experts said the new Biman guidelines could set a precedence for other government agencies and easily be used as a tool to award lucrative government contracts to "chosen bidders."
Biman with a turnover around Tk25 billion is one of the largest state-owned companies of the country. Every year it spends tens of millions of dollars in procuring new spares and emergency servicing.
"We've told Biman that we cannot endorse its procurement guidelines. Biman is a state-owned company and like any other state-owned agencies and companies, it has to follow the PPR," a senior official said.
The CPTU in its observation said as a state-owned company, formed under the Company Act. 1994, Biman has no authority to violate the government procurement laws for any purchase
of goods, services and works, he said.
Biman, which became a company in August 2007 as part of a key public sector reform, retaliated saying it cannot operate without a separate procurement rules that address its emergency requirements that other government enterprises don't face.
"If we follow the PPR, it will be impossible to run our day-to-day business," Biman Managing Director and CEO Air Commodore (retd.) Zakiul Islam told the FE.
"Any of our aircraft can develop glitches at any time in any part of the globe. During such a situation we need direct and quick purchase of spares in a bid to repair the faults urgently," he said.
The Biman chief also said the government's PPR does not have provision that addresses the "emergency nature of the state carrier's affairs. We prepared our procurement guidelines just to tackle these unforeseen problems," he said.
Islam who joined Biman as its new chief in August also defended the airline's right to formulate its own purchase rules.
'Yes, I know that Biman is a government-owned company. But unlike other state-owned enterprises, we run the company with our own money. The government does not provide us any fund."
"So, Biman has no obligation to follow the government law and rules for its purchase," the CEO said.
A top official of planning ministry, which looks after the CPTU, shot back at Biman's arguments, saying the carrier must follow the procurement act and the rules even for emergency cases.
"They cannot simply prepare their own procurement guidelines and say we don't fall under the purview of the government's procurement laws. It is a clear violation of the public procurement law," he said.
The official said under the company's act income of any government-owned entity should be treated as public fund. "Biman's income belongs to the pubic fund," he added.
The official said they've sent back Biman's proposal to the civil aviation ministry and sought clarification on Biman's "own fund" and whether or not it is public money.
Officials also differed with Biman's argument that the present PPR does not tackle emergency procurement needs.
According to the PPR, any state-owned entity could go for direct purchase from any sources for its urgent procurement of goods, works or services without floating tender.
In the provision no. 74-76 of the PPR, the rules and guidelines on direct purchase have been clarified, they said, adding entities like Biman which needs spares on urgent basis could go for "framework contract" for maximum three years under the provision no. 89 of the PPR.
A bitter row has ensued between Biman and the government's procurement supervisory agency after the latter accused the state-owned airline of drafting a purchase guideline that contravenes the Public Procurement Rules (PPR).
Biman prepared its own procurement rules and sent it to the Central Procurement Technical Unit (CPTU) for approval recently, saying it needs a separate purchase framework for meeting emergency needs.
The CPTU, which oversees procurements of all state-owned agencies and departments, said it can't approve Biman's rules, as it breaches the government's Public Procurement Act 2006 and PPR 2008.
Experts said the new Biman guidelines could set a precedence for other government agencies and easily be used as a tool to award lucrative government contracts to "chosen bidders."
Biman with a turnover around Tk25 billion is one of the largest state-owned companies of the country. Every year it spends tens of millions of dollars in procuring new spares and emergency servicing.
"We've told Biman that we cannot endorse its procurement guidelines. Biman is a state-owned company and like any other state-owned agencies and companies, it has to follow the PPR," a senior official said.
The CPTU in its observation said as a state-owned company, formed under the Company Act. 1994, Biman has no authority to violate the government procurement laws for any purchase
of goods, services and works, he said.
Biman, which became a company in August 2007 as part of a key public sector reform, retaliated saying it cannot operate without a separate procurement rules that address its emergency requirements that other government enterprises don't face.
"If we follow the PPR, it will be impossible to run our day-to-day business," Biman Managing Director and CEO Air Commodore (retd.) Zakiul Islam told the FE.
"Any of our aircraft can develop glitches at any time in any part of the globe. During such a situation we need direct and quick purchase of spares in a bid to repair the faults urgently," he said.
The Biman chief also said the government's PPR does not have provision that addresses the "emergency nature of the state carrier's affairs. We prepared our procurement guidelines just to tackle these unforeseen problems," he said.
Islam who joined Biman as its new chief in August also defended the airline's right to formulate its own purchase rules.
'Yes, I know that Biman is a government-owned company. But unlike other state-owned enterprises, we run the company with our own money. The government does not provide us any fund."
"So, Biman has no obligation to follow the government law and rules for its purchase," the CEO said.
A top official of planning ministry, which looks after the CPTU, shot back at Biman's arguments, saying the carrier must follow the procurement act and the rules even for emergency cases.
"They cannot simply prepare their own procurement guidelines and say we don't fall under the purview of the government's procurement laws. It is a clear violation of the public procurement law," he said.
The official said under the company's act income of any government-owned entity should be treated as public fund. "Biman's income belongs to the pubic fund," he added.
The official said they've sent back Biman's proposal to the civil aviation ministry and sought clarification on Biman's "own fund" and whether or not it is public money.
Officials also differed with Biman's argument that the present PPR does not tackle emergency procurement needs.
According to the PPR, any state-owned entity could go for direct purchase from any sources for its urgent procurement of goods, works or services without floating tender.
In the provision no. 74-76 of the PPR, the rules and guidelines on direct purchase have been clarified, they said, adding entities like Biman which needs spares on urgent basis could go for "framework contract" for maximum three years under the provision no. 89 of the PPR.