Public Procurement Reform in Bangladesh
19/03/2017 12:00 AM
The Government of Bangladesh, as part of strengthening overall sectoral governance, embarked upon a comprehensive effort to improve performance of public procurement.
In order to achieve its aim and objective, a permanent unit, named as Central Procurement Technical Unit (CPTU) was established in 2002 as implementing unit in the field of procurement reform and reform implementation monitoring. Reform process was carried out with ultimate outcomes of formulation and issuance of a unified procurement processing system (Public Procurement Regulations 2003), Implementation Procedures for PPR 2003, Public Procurement Processing and Approval Procedures (PPPA), Revised Delegation of Financial Powers (DOFP) and several Standard Tender Documents (STD's)/Standard Request for Proposal Document for the procurement of Goods, Works and Services.
Later on in 2006, the Public Procurement Act was passed by the Parliament (PPA 2006) and in 2008, a new set of Public Procurement Rules (PPR 2008) was issued. The PPA 2006 and PPR 2008 were made effective on w.e.f. 31 January, 2008.
Country Procurement Assessment Report (CPAR) and the Public Procurement Reform Project (PPRP)
The slow procurement performance under different projects led to the Country Procurement Assessment of prevailing public procurement policy, framework, institutions and staff skills in 2001. The Country Procurement Assessment Report (CPAR) which was prepared by World Bank, in agreement with the Government of Bangladesh, identified many deficiencies, including the following major deficiencies, in the procurement system of the Government of Bangladesh:
Absence of sound legal framework governing public sector procurement
Complex bureaucratic procedure causing delay
Absence of planning
Multiple layers in the approval and review process
Lack of adequate professional competence of staff to manage public procurement
Generally poor quality bidding documents and bid evaluation
Ineffective administration of contracts
Absence of adequate mechanism for ensuring transparency and accountability.
With the above backdrop, the need for improving governance in the public procurement management area was felt. The first "Public Procurement Reform Project" with IDA assistance approved on 14 February 2002 clearly defined its implementation objectives as to 'contribute to improved performance in public procurement through introduction of measures to make the public procurement system compliant with internationally agreed norms for efficiency, transparency and accountability with the increase of procurement capacity through training and creation of a pool of national procurement professionals.
Under the PPRP (2002/03 to 2006/07) government made considerable improvements by completing following major policy reform actions;
Issued Public Procurement Regulations 2003 (PPR) (remained in force up to 30 January, 2008) with the implementation procedures, procurement processing and implementation procedures and in July 2006 passed a procurement Act in the Parliament. The Act and the regulations contain most features of the international good public procurement practices.
A specialized unit on public procurement practices implementation, the Central Procurement Technical Unit (CPTU), was established to implement, manage and support the recommended procurement reforms;
CPTU established a website (www.cptu.gov.bd) publishing Invitation to Tenders, RFPs, RFQ, contract awards on procurement for public access,
Developed a centralized Procurement Management Information System (PROMIS),
Developed a critical mass of 25 national trainers and provided training to over 1800 staff of 260 organizations up to March 2007.
A comprehensive set of Standard Tendering Documents were developed complying the Public Procurement Regulations 2003 for use by all government funded agencies;
Revised the delegation of financial power
Public Procurement Act was ratified by the parliament in 2006;
A new set of public procurement rules and supporting procedural guides were prepared;
Subsequently the Public Procurement Regulations 2003 was replaced by Public Procurement Rules, 2008, framed under Public Procurement Act, 2006.
A number of changes to improve the process have been included in the Public Procurement Rules 2008:
Provision of Framework Contracts
Provision of Concession Contracts
Use of Request for Quotation Method for the procurement of divisible commodities in bulk
Special provision to meet urgent national needs
Establishment of Central Procurement Technical Unit (CPTU) within the IMED
Implementation of Public Procurement Reform
Improvement of Procurement Management Capacity
Public Procurement Reform Project II (PPRP-II)
To sustain and strengthen the public procurement reform, a technical assistance project titled 'Public Procurement Reform Project II (PPRP-II)' was approved by the GOB in June, 2007. The project having extension twice was implemented by the CPTU/IMED. In implementing those initiatives and addressing the issues PPRP-II had a comprehensive set of four (4) major components:
Component 1: Furthering Policy Reform and Institutionalizing Capacity Development
Component 2: Strengthening Procurement Management at Sectoral Level & CPTU/IMED
Component 3: Introducing e-Government Procurement (e-GP)
Component 4: Communication, Behavioral Change, and Social Accountability
The PPRP-II ended on 30 June 2017 successfully. According to World Bank Final Review Mission, the achievement of project development progress was Satisfactory. At the end of the project all five PDO indicators have met the project- end target with four exceeding the targets, and have been contributing to a systemic change in the public procurement environment of Bangladesh in a sustainable manner.
Digitizing Implementation Monitoring and Public Procurement Project (DIMAPPP)
On 29 August 2017 at 03:00 pm a Financing Agreement of US$ 55 million was signed between the Government of Bangladesh and the International Development Association (IDA) of the World Bank Group at the NEC-II Conference Room of Economic Relations Division (ERD) to implement the five-year (July 2017-June 2022) "Digitizing Implementation Monitoring and Public Procurement Project (DIMAPPP)".
Kazi Shofiqul Azam, Secretary, ERD and Mr. Qimiao Fan, Country Director of the World Bank signed the Agreement on behalf of their respective sides. Senior officials of the Government and the World Bank were present at the ceremony. The project will be implemented during July 2017-June 2022 period by Central Procurement Technical Unit (CPTU) under Implementation Monitoring and Evaluation Division (IMED) of Ministry of Planning.
The DIMAPPP has four components:
- Restructuring CPTU and Institutionalizing e-GP,
- Enhancing Digitization of Public Procurement,
- Professionalization Procurement and Citizen Engagement (CE), and
- Digitizing Project Implementation Monitoring.
A total of 32 Selected Public Sector Organizations (SPSOs) including previous four target agencies (BREB, BWDB, LGED, RHD) that constitute the bulk of total public procurement will be the part of procurement management, monitoring and e-GP implementation. It is expected that all procuring Public Sector Organizations (SPOs) will be registered with the e-GP system and conduct e-procurement as part of government’s plan to fully digitize public procurement in the country.
Objective of DIMAPPP: The overall objective of the project is to improve public procurement performance and enhance capacity for implementation monitoring of development projects/programs through digitization.
Restructuring of CPTU into an Authority and institutionalization of e-GP system; Digitizing public procurement process to bring all government organizations under e-GP system; Training of government officials and bidders to enhance capacity and professionalizing public procurement to increase capacity of procurement management and e-GP system of government offices and Strengthen capacity of Implementation Monitoring and Evaluation Division (IMED) for digital and modern monitoring of projects will be done by this project.
The loan is received in standard terms and conditions of IDA, which includes 0.75% service charge on disbursed amount. The repayment period of the loan is 38 years including 6 years grace period. Commitment Fee is 0.50% on un-disbursed amount but World Bank has kept Commitment Fee suspended for several years. Through implementing this project one more step will be achieved in building ‘Digital Bangladesh’ by expediting and ensuring transparency and accountability in public procurement process.
Results of Procurement Reforms
Up to August 2021:
- Increase in transparency: In 2007, 15 per cent of tenders used to be advertised. Presently, in e-GP, it is 100 per cent. The publication of contract award information was 15 per cent in 2007. It is now 100 per cent.
- Savings of time: It would take on an average 100 days, starting from tender invitation up to contract signing, in the open tendering method. Now it has come down to 59 days.
- Increase in skills: In 2007, 10 per cent of contracts used to be awarded within the stipulated time. It is now 90 per cent.
- Increase in competition: In 2007 on an average the competition for every tender was 4. Now it has increased to 16 (with open and limited tender together).
DIMAPPP Additional Financing approved
The agreement for DIMAPPP Additional Financing was signed by the government of Bangladesh (GoB) with the World Bank on 11 April 2021. The World Bank Board approved the AF on 5 February 2021.
The IDA of the World Bank contributed 40 million US dollars and the GoB part is 5 million US dollars in the AF. The duration of the AF is from July 2022 to December 2023. The GoB approved revised TAPP in February 2021.
Rationale for the Additional Financing
The main purposes of the DIMAPPP AF are;
- scaling-up of the coverage and features of the e-GP and associated activities in response to the COVID-19 pandemic.
- Making up the shortfall of US$14.8 million in the original project considering the higher costs of originally planned activities; and
- covering the estimated expenses related to extension for one year and a half of the original project to complete the ongoing activities under the original project which will need more time and resources to complete due to the COVID-19 pandemic.
- Incorporating MAPS (methodology for assessing procurement system) recommendations, jointly made by GoB and WB in 2020, into the procurement law.
Project Progress up to June 2021:
In March 2021, the World Bank awarded DIMAPPP as a project which is the most Innovative, Collaborative and Impactful. Until June 2021, despite the outbreak of the COVID pandemic, the project continued working towards completion of various activities under the following components. The e-GP system remained uninterrupted.
- Restructuring CPTU and Policy Reform.
Revised proposal for restructuring CPTU into Bangladesh Public Procurement Authority (BPPA) was sent to the Cabinet Division for Scrutiny Committee headed by Additional Secretary of the Cabinet Division on 13/04/2021. BPPA law and organogram have been drafted.
PG1, PW1, PG2 and PG3 were finalized and published on the CPTU Website. PW3 - work is in progress.
Proposed modifications of the e-GP guidelines have been shared with Target Agencies. It is expected to be finalized soon. The e-GP Security Policy has been approved.
Integration of business identification number (BIN) and NID to prevent duplication of e-GP registration is being done. Fees have been paid to the Election Commission to integrate BIN and NID.
- Enhancing Digitization of Public Procurement.
Procurement of computers and accessories for 28 NSPSOs covering 2085 PEs is done. Since 2012 up to July 2021, 5842 tenderers, 13527 PE users and 128 bank users received training on e-GP. Up to August 2021, a total of 90 thousand tenderers registered with e-GP system. A total of 1362 procuring agencies registered with e-GP system up to August 2021.
Training on e-GP for 888 local government institutions is going on and during 20-21 up to 2021 June, 11425 training days (around 40%) out of a total of 26700 days were conducted.
The e-GP system is upgraded (Java) by the developer to make it suitable for international tender. It is live in training server.
Independent audit firm for e-GP security and vulnerability assessment is hired. Tenderers’ database is prepared and process ongoing to put it into use. Electronic contract management system (e-CMS) piloting in six contracts of three agencies is going on since 2020. It will be rolled out in other agencies after piloting. Preparation of an audit module is in progress for the purpose of electronic audit of procurement of various entities by the office of the Audit & Comptroller General.
- Professionalizing Procurement and Citizen Engagement.
Due to COVID pandemic, activities under DIMAPPP in the component was disrupted and halted for some months. Up to June 2021, 445 officers received basic three-week training on public procurement. Apart from this 386 officers were given short training. About 488 of municipalities and local government received training of various short durations. Work on updating of existing training modules, and developing all remaining new training modules (except T2, T3, T4) is in progress: S1, S2, S3, S4, O1, O2, O3, O4, O5, O6, R and further revisions of T1 were approved.
- W1, W2, W3 were approved with minor revisions on the 18 of May 2021.
- The introductory online course on public procurement was approved in August 2020 by CTPU with revisions.
- The Online Introductory course hosted on the DIMAPPP-CDP web portal was launched on the 22nd of December 2020.
- Learning management system (LMS) was launched during the presentation of the DIMAPPP-CDP web portal on November 26, 2020
- T2, T3 were approved on the 18 of May 2021.
Since 2003 up to June 2021, a total of 37 thousand persons including tenderers and
journalists received training on public procurement of various durations.
Citizen portal to disclose procurement information to citizens was developed in 2020, made functional and opened to all in August 2020. Social media strategy for CPTU was approved. In a total of 48 upazillas, physical monitoring of contract implementation was taken up. Up to June 2021, citizen groups completed monitoring, from starting to ending, of 64 contracts implementation of which was completed. Now monitoring of 236 contracts is going on. The citizen groups have raised 323 complaints, 318 were resolved by the upazilla engineers and 5 remained unresolved. Three researches relating to public procurement have been done. One PPSC meeting was held.
- Digitizing Project Implementation Monitoring.
Electronic Project Monitoring Information System (e-PMIS) contract was signed in March 2021 for upgrading and enhancing the existing e-PMIS system at IMED. The IMED e-PMIS System enhancement activities have started. The component aims at monitoring progress of project implementation electronically