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“All Citizens are Equal before Law and are Entitled to Equal Protection of Law”-Article 27 of the Constitution of the People’s Republic of Bangladesh

Issue No: 166
April 24, 2010

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Public procurement and corruption

Shakhawat Hossain Shamim

AN amendment to a law is designed to remove the lacunas of existing law and find the way to implement the provision more effectively. But unfortunately the recent amendment introduced to the Public Procurement Rule (PPR) would perhaps put a damper on a vital front of governance.

Corruption, terrorism and mismanagement in the public purchase are the common scenario for the last decades. Mishandling of public procurement in absence of a uniform law contributed largely to the situation. Reforms in the public sector finance were initiated during the previous regime of AL government. Later on the law was passed in 2006. But Public Procurement Act (PPA) and PPR were made effective during the caretaker government in 2008. It has been modernized and brought to international standard through the enactment of successive law and rules.

In the PPR 2008, there were mandatory provision of work experience and financial qualification of the bidders for submitting bids against any tender called by the government agencies to procure goods and works. At least five years of experience was required for the contractor to submit bid to get a work or supply of goods for up to tk20 million from any project implementing agencies.

But now under the Public Procurement (amendment) Rules the implementing agencies have been given “discretionary power” allowing to invite fresh contractors or experienced ones to submit bids against any tender for public works and supply of goods up to Tk 20 million. The mandatory financial qualification relating to “turnover” and “liquidity” of the bidders have been relaxed so that the fresh contractors can also compete in any government bidding. Moreover the much debated and discarded system of lottery for contract award will be re-introduced and tender will be rejected if tenders quote less or more than five per cent of the official estimated costs. Another provision provides that, in every contract there should be 10 per cent advanced payment. So a contractor wining a contract up to Tk 20 million is new in one hand and on the other, he will take 10 per cent advanced after the contract is awarded. Another provision was kept that is no performance guarantee for contract up to Tk 20 million. Only retention money will be adjusted up to 10 per cent during the progress of the contract. The provision seems to be ex-facie irrational.

It has been said that it was done to increase the economic efficiency, transparency and fair competition in the process of public procurement. But in practice, qualities of procurement seriously suffer due to capping of tender price and rejection of tenders for quoting prices below or above five per cent of the official estimate. Because the market price is likely to better reflect the real costs than the pre-fixed price. More importantly, these amended provisions have already sent a negative message to the external partners and they will not rely on the government in future. This is a big bump to the pledges to root out corruption from society.

So it is submitted that relaxation of qualification of the bidders for procurement up to 20 million and allowing “single-stage two-envelop” method in submitting bid and lottery to select a contractor will breed corruption in public purchase. It's rational to expect from the law making authority to amend the law in such way which would not re-open the door of corruption. As it happened already, please step backward as soon as possible. When we are marching forward for “Digital Bangladesh” why should we not introduce the system of submitting the tender over internet like India and other developed country? It's high time to think over it.

The writer is a Lecturer, Department of Law, BGC Trust University, Chittagong.


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