Road ministry to introduce pre-tender vetting for better contractor selection

The Ministry of Road Transport and Bridges plans to introduce a pre-bid contractor screening process to ensure only qualified companies participate in their open tenders. 

Officials said this new process aims to reduce the number of unreliable contractors, prevent bid-rigging, and streamline the overall tendering process.

The proposed "pre-qualification verification system" under the Open Tendering Method will classify potential bidders into different categories based on their merits, according to a recent meeting, chaired by Road Transport Adviser Fouzul Kabir Khan.

However, this procedure will only be applied to construction projects valued over Tk35 crore and maintenance projects exceeding Tk3.5 crore, meeting minutes reveal.

A ministry official, speaking anonymously, told TBS that the Roads and Highways Department (RHD) has already created a format of screening and shared it with project managers and supervising engineers across all road zones for input. 

A report incorporating their feedback will be submitted to the ministry by next Monday, after which a final decision will be made, he added.

Regarding the move, Syed Moinul Hasan, chief engineer at RHD, told TBS on 2 October, "The Public Procurement Rules (PPR) allows pre-qualification verification. This initiative has been taken but not yet finalised."

He said that the new process offers several benefits, including the classification of contracting firms which prevents the same organisation from repeatedly winning contracts and allows more companies to have the opportunity to secure work.

Currently, open tenders include data sheets detailing the qualifications required for companies to secure contracts, such as previous experience with similar projects, credit commitment certificates from banks, and company turnover. 

However, the department currently uses the Past Performance Evaluation Matrix to select contractors, a system with several loopholes that lead to the same firms repeatedly securing contracts.

To address these issues, a meeting was held on 27 August at Rail Bhawan, chaired by Fouzul Kabir Khan.

According to the meeting minutes, the RHD will prepare pre-qualification and tender documents for contractors, which will be submitted to the Bangladesh Public Procurement Authority (BPPA) for approval.

The BPPA will then take further action in consultation with relevant agencies, and the e-GP (electronic government procurement) system will be updated to incorporate the pre-qualification vetting process.

The meeting also discussed reforms to the current matrix system and the application of price adjustments in future tenders under the operating budget.

However, even before a decision was made on the new screening mechanism, the RHD engineers have raised objections, claiming it will complicate the tendering process.

Why is pre-bid screening crucial?

A ministry official told TBS that this initiative aims to curb irregularities in the open tendering process by preventing the same contractor from repeatedly winning contracts, deterring large contractors from getting low-cost projects, and stopping commission-based joint ventures between large and small contractors. 

The official said that since there are more small projects available, the same contractors often secure multiple contracts, leaving many others without work. This situation can affect the quality of the output.

Citing an RHD statistic, he said the department invited around 40,000 tenders over the past 13 years, with about 34,000 valued under Tk1 crore, predominantly awarded to a select group of contractors.

He explained that the Public Procurement Act of 2006 mandates that bids must be 10% higher or lower than the official estimate during the open tender process. Typically, contractors who are the lowest bidders offer prices below the government's estimated costs.

This practice allows contracting firms to easily determine the government's estimated prices, as the RHD's schedule of rates is publicly available. Consequently, many bidders submit offers that are 10% lower than the estimated costs, said the official. 

He also said that the current Past Performance Evaluation Matrix system to select contractors has loopholes, resulting in rigging and irregularities.

Why do contractors and RHD engineers oppose the move

During a meeting chaired by RHD Chief Engineer Syed Moinul Hasan on 30 September, additional chief engineers and superintending engineers from various zones expressed objections to the pre-qualification process.

They said this approach could introduce new complications. Additionally, there is concern that a political government may not endorse this method after the current interim government's term ends, potentially leading to changes. 

They suggested that any policy should be planned with a long-term perspective and propose reverting to a lottery system for fair distribution of work.

Contractors also spoke against the move.

Ezarder Mukitur Rahman, proprietor of M/s DA Enterprise, which contracts with various government institutions, told TBS that classifying contractors through pre-qualification could create a monopoly effect for engineers. 

He explained that if there are 50 companies listed in a category within a zone, an engineer might favour certain contractors by promising them work.

He advocated for using a lottery system to allocate contracts among organisations that meet all tender data sheet requirements. 

To prevent the same organisation from winning contracts repeatedly, he suggested creating a job limit for contractors.

For FY25, Tk32,042 crore has been allocated for RHD. This funding will support new and ongoing projects, as well as conservation and development efforts. Additionally, Tk3,000 crore has been allocated under the operational budget for road maintenance work.