IMED wants smaller purchases only for local contractors

The Implementation Monitoring and Evaluation Division (IMED) and Central Procurement Technical Unit (CPTU) have recommended changes in the public procurement rules to make government purchases up to Tk20 crore exclusive to domestic entities.     

The IMED and CPTU have also suggested the Cabinet Committee on Government Purchase to relax the qualifications and experiences of domestic bidders so that the smaller public procurements become more competitive.

IMED Secretary Pradip Ranjan Chakraborty said. "Since the domestic entities source from local resources and employ local workers, it would be a great opportunity for them as well as for the small and medium ventures."

Economic experts and government officials said the initiative could open a new window to the country's backward linkage industry in capacity building. They also emphasised sufficient measures so that the appreciable initiative does not end up corruptions.

According to the IMED and CPTU under the planning ministry, there would be penalties if the local entities fail to deliver quality works in time.

IMED Secretary Pradip Ranjan Chakraborty said they drafted the recommendations on cabinet division instruction and the Cabinet Committee on Government Purchase will make the final decision on it now.

Contacted, Dr Ahsan H Mansur, executive director of the Policy Research institute (PRI), appreciated the initiative.

Referring to controversial contractor GK Shamim who is now behind bars on graft allegations, he said the public works should not be concentrated on only some companies like GK Builders.

"Smaller works worth Tk10-20 crore can be awarded to several local entities which would help ensure on time delivery and capacity building of the domestic bidders," he noted, adding, public works should not compromise quality to pave the way for the domestic enterprises.

The IMED and CPTU also proposed allowing sub-contracting which is now prohibited in government works.  

Ahsan H Mansur opposed the recommendation saying it will be difficult to identify who is responsible when there will be any inconsistency or delay in public works.

Former IMED Secretary Habibullah Majumder said excluding foreign bidders would be a violation of the competition, but other countries follow some protective measures for their domestic entities.

He thinks keeping the foreign bidders by changing the procurement rules would be difficult. So, there should be provisions to provide incentives for domestic competitors in smaller public works.

"You have to understand that quality matters above everything. If the foreign bidders perform better and deliver quality works in time, then why should we solely rely on low-performing domestic enterprises," the former top official raised the question.

IMED officials said a virtual meeting of the Cabinet Committee on Government Purchase in October last year stressed on increasing the number of participants in government tender to ramp up competition.

The meeting said awarding few participants the government tenders time and again was not fair. The committee subsequently asked the IMED to prepare a concept paper on how more bidders could be attracted to public works.

After several correspondences between the IMED and the cabinet division, IMED recommended a portion of the public works under packages to be open for sub-contracting.

The IMED proposed subcontractors can be awarded a maximum 20% of the estimated cost of a package, subjected to the nature of the works and risk factors.

As per the IMED summary paper, international bidders can be kept aside if the procurement and sourcing is possible from the domestic market. International tenders will only be welcomed when local sourcing fails to meet the project demand.

The paper expressed disappointments over leaking the official estimated cost of the works and blamed the purchasing entities in this regard.

The IMED said the estimated costs do not remain discrete in most of the cases due to the reluctance of the purchasing entities and bidders. Moreover, as all the bidders often offer the same price since they know the estimated cost, numerous issues emerge in tender evaluation.

The IMED finds "the 10% bar on the estimated price" as a problem in public procurement as 10% higher or lower bidding prices than the estimated cost get rejected under the current rule.

The IMED also proposed consultation with the prospective bidders in package formulation and verifying the bidders' capacity beforehand.