The government has made a preliminary decision to eliminate the 10 per cent bidding cap in the public procurement system, which disqualifies any offer that is 10 per cent above or below the quoted price in open tendering, officials of the Implementation Monitoring and Evaluation Division (IMED) say.
At a recent meeting held at Shikkha Bhaban, four advisers of the interim government asked the IMED and Bangladesh Public Procurement Authority (BPPA) to initiate the cap's elimination and find ways to avoid the challenges arising thereafter.
They said removing the cap would help ensure transparency and competition in procurement, create opportunities for new bidders, and satisfy the conditions for receiving the ongoing budget support from the World Bank.
Planning and Education Adviser Dr Wahiduddin Mahmud presided over the meeting while Finance Adviser Dr Salehuddin Ahmed, Road and Railways Adviser Muhammad Fouzul Kabir Khan, Environment Adviser Syeda Rizwana Hasan, secretaries of several ministries, and chief engineers of the offices handling big projects attended the meeting.
IMED Additional Secretary Dr Subhas Chandra Biswas was present in the absence of the division's secretary.
He told The Financial Express all contractors have resorted to bidding exactly 10 per cent below the quoted price due to the rejection of offers exceeding the cap.
"When multiple contractors submit identical bids, the selection, instead of a lottery, is done using the existing performance matrix, which favours long-established contractors. This means these contractors consistently secure new projects," he explained.
As a result, projects have become concentrated among a limited number of contractors, posing risks to implementing agencies and also creating barriers for new contractors to enter the market, Biswas noted.
Economists identified the cap as a major component of corruption as it reduces competition. They said it discourages new parties from making bids due to the lower possibility of winning the contracts.
Dr Zahid Hussain, a former lead economist at the World Bank's Dhaka office, described the decision to remove the cap as a welcome move that would ensure transparency and competition in public procurement.
However, the removal will not be sufficient to reduce corruption in this area, he told The Financial Express.
He also said the exact quoted price in any competition is confidential but officials concerned disclose it in exchange for money or other facilities.
BPPA Chief Executive Mirza Ashfaqur Rahman told The Financial Express the meeting instructed officials to organise an inter-ministerial meeting with stakeholders to make another decision on abolishing the cap.
He said the meeting also decided to take initiatives to amend the Public Procurement Act 2006 and the Public Procurement Rules 2008 as well as revise the e-GP guidelines.
During the meeting, he said removing the cap may create a risk of contractors colluding to propose abnormally low prices.
BPPA has formed a technical working group to determine what to do to prevent such abnormally low bids, Rahman explained.
He further said the World Bank had requested the Bangladesh government to take initiatives for various policy reforms in order to receive budget support under the lender's Development Policy Credit instrument.
"The initiatives include abolishing the 10 per cent cap and completing all government procurements through the e-GP system."
The planning adviser said the meeting aimed to address challenges in implementing procurement rules and ensuring transparency, accountability, and competition to achieve the best value for money.
The finance adviser highlighted that a single company often undertakes multiple projects, emphasising the need for greater transparency and competition in procurement.
Railways Adviser Kabir pointed out that the dominance of the matrix method in procurement limits opportunities to a select group of contractors, undermining equality.
He stressed the importance of preventing corruption by ensuring transparency, accountability, equal treatment, and free competition in procurement.
Chief Engineer of the Roads and Highways Department Syed Moinul Hasan said open tendering accounts for around 95 per cent of the procurements made by his office.
"When multiple bids with the same price are submitted, the matrix method is used to select the winning contractor. Consequently, bidders who have completed more projects in the past five years are more likely to secure new contracts," he said.
IMED and BPPA officials said if multiple contractors offer the same price, the winner is determined through a matrix of 300 marks, which prevents the entry of new bidders.
Of the 300 marks, 140 is awarded based on the work experience in the last five years, 60 on the number of ongoing projects, and 100 on the value of the work completed in the last five years.
The major weakness of this system is that the bidder winning the contract by getting the highest mark has a head start on the next competition as per the rules.
Research by Transparency International Bangladesh has revealed the share of the top five contractors in road and bridge projects jumped to 62.3 per cent in FY23 from 6.1 per cent in FY14, the year when e-GP was introduced.
© 2024 - All Rights with The Financial Express
