Public procurement reform ensures fair play

The interim government has recently amended the public procurement ordinance with the perennial but elusive aim of making the process more competitive and transparent. Through this amendment, the government introduced several key changes to the ordinance, including the elimination of the 10 per cent price deviation rule, a complete transition to e-tendering, and the introduction of a new capacity matrix to replace the outdated evaluation matrix. These changes signal the government's intent to address some of the long-standing problems that have plagued the public procurement system. It is common knowledge that public procurement has been in the grip of monopoly and corruption for long due to the collusion between corrupt officials and influential contractors. By targeting the loopholes that allowed individuals to game the system, this reform takes a vital step forward in ensuring fair competition and controlling corruption.

The now-repealed 10 per cent rule, which disqualified any tender proposal priced 10 per cent lower than the estimated value, was initially introduced to prevent underbidding in procurements made through the open tender method (OTM). However, it quickly turned into a tool for manipulation. The confidential information of official cost estimates is disclosed in advance to a select group of favoured contractors, leaving competing bidders, who are unaware of the confidential price, out of the running. While the cancellation of this rule raises concerns about contractors proposing abnormally low prices, potentially compromising project quality, it also removes a key tool that corrupt officials have used for artificial price fixing and favouritism. Another crucial element of the amended ordinance is the shift to full e-tendering. Launched in 2011 to combat secrecy and prevent syndicates from controlling the process, e-tendering has only reached 65 per cent adoption so far which indicates persistent malpractice. The accompanying directive for thorough e-tendering training for government officials is also important to ensure they can use the system effectively. Additionally, replacing the previous matrix system with the new capacity matrix aims to prevent the concentration of project work among a handful of contractors, who often resell the projects to third parties at a higher price.

Government procurement is further burdened by several deep-rooted issues that compromise its fairness and transparency. One such challenge is the bureaucratic red tape involved in releasing funds from the concerned ministry, making it a hassle to arrange timely disbursement. This forces departments to resort to irregular practices, such as awarding work orders informally to address urgent needs. Such practices lead to a cycle where projects are partially executed before contracts are formalised. When the funds are eventually released, the same contractors, having already completed part of the work, manage to secure the contract through questionable means to finish the remaining tasks. This circumvention of fair competition is one of the key reasons officials avoid e-tendering, as the work is often initiated before the contract is officially awarded. Furthermore, to avoid the complexities associated with open tender method (OTM), which might attract politically connected contractors, government offices frequently fragment large projects into smaller, manageable chunks. This allows them to bypass OTM requirements and limit competition. The resulting fragmentation not only undermines transparency but also leads to inefficiencies and higher costs in the long run.

For far too long, inefficiencies and corrupt practices in public procurement have squandered national resources. Along with the strict enforcement of the amended law, steps must be taken to identify the officials involved in the corrupt practice and hold them accountable. If they are allowed to go unpunished, they will quickly seek out new loopholes in the system to exploit for their own benefit.