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The Financial Express
Dhaka, Sunday May 17 2009
M Alam
THE consequence of removing the head to get rid of headache beggars description. The same will apply to the public sector procurement if it is stripped of law or rule needed for keeping the bulk spending of the government on track every year.
Such an apprehension has cropped up in the concerned circle amid remarks and observations about the Public Procurement Act and the Public Procurement Rules by some incumbent and former functionaries of the present and the previous four-party governments.
The public procurement of goods, works and services with public funds by government entities constitutes about 70 per cent of the annual development expenditures. And the value of such procurement amounts to more than three billion US dollars a year.
Various development projects are taken up and implemented under the Annual Development Programme (ADP) of the government. The issue of public procurement is linked to implementation of ADP. If the projects are implemented on schedule, the level of ADP implementation will go up. The slow pace of ADP implementation has been a major concern of the previous governments as well as the present grand alliance government led by Awami League.
The Implementation, Monitoring and Evaluation Division (IMED) of the Ministry of Planning monitors implementation of ADP. In a recent submission to the government, IMED identified eight major reasons responsible for slow pace of ADP implementation.
According to IMED, inadequate manpower is a stumbling-block for ADP implementation. The workforce that handled TK Taka 30 billion (3000 crore) ADP in 1981-82 is still meant for implementation of the ADP of Taka 265 billion (26,500 crore). The other reasons are vacancies in granted positions, lack of logistics support or vehicles, non-compliance with recommendations of monitoring and evaluation report prepared by IMED, lack of training for IMED officials on this, lack of technically skilled personnel for maintaining management information system (MIS) with adequate facilities, non-availability of project related information in time according to notice of the IMED and absence of any structure of IMED at the field level that leads to problem in monitoring and evaluation of a large number of projects across country.
IMED also made some recommendations for overcoming the problem of slow pace of ADP implementation. These include giving up the tendency to acquire additional land for projects. If necessary, the land should be acquisitioned at the beginning of the projects while undertaking them justifying their feasibility and taking quick approval of the project, and starting implementation soon after their inclusion in ADP, completion of procurement at the beginning of the year by taking advance plan. Besides, formation of planning wing in the ministries or divisions for the sake of adoption of projects and their monitoring was also recommended.
For carrying out public procurement activities, Public Procurement Act (PPA)-2006 and Public Procurement Rules (PPR)-2008 are now in place. Both the act and rules were made effective since January 31, 2008.
Many a man now wants to pass the bug on to the PPA and PPR, saying that these are complex in nature and time- consuming that lead to delay in the implementation of projects. But the reality is that timely implementation of projects largely depends on the formulation of a prudent procurement plan in line with domestic realities.
It is true that compliance with any new system takes some time and all procuring officials and bidders do not have adequate knowledge on the aspects of PPR. Moreover, human nature tends to opting for the system used over a long period of time notwithstanding its having a lot of disadvantages. Interest groups who used to take advantage of the systematic lapses are also very strong critic of the new law and rules. But that should not be the basis of having public procurement devoid of any law or rules.
If the public procurement sector is not governed by any law or rule, who will take the responsibility of spending public funds and what will be the basis of spending money? How accountability and transparency will be maintained? One cannot get ones head removed for headache. The public procurement sector will land in a chaotic and haphazard situation without any legal framework. Because this is public money and ensuring best value for money is a bounden duty of the government.
Reforms in the area of public procurement started in 2003 in the wake of huge drainage of public money in absence of any legal policy guidelines. Bangladesh ranked first in the Corruption Perception Index (CPI) of the Transparency International for the five consecutive years since 2001 up to 2006. And unabated corruption in the public sector procurement, among others, is to blame for such a discredit.
Public procurement is a governance issue and a well-functioning system can improve governance to a large extent. Before 2003, transparency and accountability in public procurement process has been the biggest casualty. Due to reforms and introduction of Public Procurement Regulation-2003, and later the law and rule, the scope of unfair means has lessened to a great extent. The situation, among other actions, like increase in vigilance of the Anti-Corruption Commission (ACC) led to significant improvement in the status of Bangladesh in CPI in 2007 and 2008.
The PPR is the operating document under the Public Procurement Act (PPA). So, discrepancies, if any, found in the operation of the public procurement process under the PPR can be settled upon discussion.
The government has already initiated the process of adjustment in the provisions of the PPR. In a recent meeting, the National Economic Council (NEC), with the Prime Minister in the chair held that the PPR should be amended through a committee to be constituted under IMED taking representatives from the ministries and divisions associated with the mid-term budgetary framework(MTBF) and the report should be submitted directly to her. This committee is yet to be constituted. For the sake of increase in ADP utilisation, the IMED and the Central Procurement Technical Unit (CPTU) have formed another committee in connection with adjustment in the PPR. It held several meetings to finalise its recommendations on the basis of observations received from different government entities. Such adjustment can be done as per need of the time.
But there must be a law and associated rules for maintaining the public procurement system in the country, because efficiency, transparency, accountability and fairness are the basic principles of the PPA. If it is implemented in its right perspective and understanding can be raised, the level of ADP implementation and well-functioning of the public procurement system can be enhanced.
All the necessary activities are in progress towards that goal under the Public Procurement Reform Project-II. Under four components of this project, reforms in public procurement system is being implemented. It is expected that after the implementation, knowledge and skills of all concerned will increase and the system will get a good ground.
But the PPA and the PPR are not to blame solely for slow pace of ADP implementation. Rather transparency and accountability have been ensured in the provisions of the law and the rule. Nowadays a common allegation against the PPR is that there is a scope to award contract to the highest bidder, instead of the lowest one on the ground of qualification. And this way government has to count huge extra money for public procurement. But what will happen if the less qualified bidder is awarded the job? Then loss will be on two fronts. On the one hand, money will be wasted and the other hand, the quality will suffer. That means the purpose of public procurement will not be served.
Every safeguard is ensured in the PPA and this law provides such flexibility in the area of public procurement that the government can follow any method for procurement under its purview. Only requirement is that the adoption of that particular method has to be approved by the appropriate authority under logical grounds on record.
And the other day the present government has done the same for importing five essential items to keep their prices stable during the month of Ramadan. The government deserves appreciation for the timely decision as the price hike of these items during Ramadan exacts a heavy toll on the common man.
The government took the decision for direct purchase of five essentials for one year through Trading Corporation of Bangladesh (TCB) without changing, relaxing or modifying any single provision of the PPR. In the meeting of the Cabinet Committee on Economic Affairs headed by the Finance Minister it was decided that under the provision 76(2) of the PPR the TCB will procure the essentials directly. This method does not require floatation of any formal tender but price quotation will be needed.
It is clearly mentioned in the provision 68 of the PPA that the government can opt for direct purchase in the shortest possible time or any other method for public procurement in case of emergency, disastrous situation or in public interest as per the recommendation of the Cabinet Committee on Economic Affairs (CCEA). Regarding the TCB, the CCEA recommended direct purchase of the essentials for one year in public interest.
But in the next morning what appeared in all but one newspaper is interesting. The newspapers made headline that PPR is relaxed, TCB exempted of PPR provisions, PPR provisions changed and so on. Only the daily Amader Somoy in its content rightly quoted the Finance Minister as saying that without any change, the government took the decision for direct procurement by the TCB under the provision 76(2) of the PPR.
At the same time, the Finance Minister said that some provisions of the PPR would be modified and this would be done soon. Since PPR is the operating document under the law, the government can modify it under the executive order through consultation.
Media does not have enough time to look into the provisions of the PPR and then write spot reports like that of TCB. But for filing exclusive reports the PPA and the PPR should be consulted to justify any observations of any sources. Only wholesale comments can be the part of media reports as far as the journalistic ethics are concerned. If one says that the Public Recurrent Act (PPA) and the Public Procurement Rules (PPR) are not good that cannot be taken into cognizance, it has to be specified then which part or provision is not good and how it can be replaced with sufficient justification, of course. Because transparency in the process of public procurement cannot be compromised with any motivation.
Under the Communication and Behavior Change component of the PPRP-II, a wide awareness campaign and training for all concerned, including the mass media, is going to be launched soon to overcome such shortcomings.
Now let us see the background of the reform in public procurement process and why it was felt necessary.
Before 2003, public procurement activities used to be carried out as per the formats 2911/2908 prepared during the British period and the Purchase Manual formulated during the World War II. Later, public procurement continued with some incremental changes at times and inadequate guidelines of Economic Relations Division (ERD) in 1992. But there was no competent and comprehensive policy or rule for public procurement. Goods, public works and services now procured in the public sector are more complex in nature than before and the fact is that the old system of purchase could no more work.
In order to infuse dynamism, ensure transparency and accountability, and raise capacity of the concerned in the activities of public procurement, the Government of Bangladesh and the World Bank jointly took an initiative in May, 1998 to formulate a Country Procurement Assessment Report (CPAR). The activities of CPAR were carried out mainly from January 1999 up to December 1999. The report of the CPAR was finalised on September 6 in 2000.
The main lapses and weaknesses identified by CPAR in the affairs of public procurement are:
• Absence of sound legal framework governing public sector procurement;
• Complex bureaucratic procedures causing delay;
• Lack of adequate professional competence of staff to manage public procurement;
• Generally poor quality tender documents and tender evaluation;
• Ineffective administration of contracts;
• Absence of adequate mechanisms for ensuring transparency and accountability;
The Public Procurement Reform activities were adopted with the assistance of the World Bank as per the decision of the Executive Committee of the National Economic Council (ECNEC) meeting held with the Prime Minister in the chair on February 06, 2001, considering comments of different ministries/ departments and development partners on the Action Plan of the CPAR report.
The decision to implement Public procurement Reform Project (PPRP) and establish Central Procurement Technical Unit (CPTU) was made in the above mentioned ECNEC meeting.
Accordingly, the uniform standard Public Procurement Regulation- 2003 was formulated / promulgated and made effective. The fundamental objectives of the regulation were:
(i) Raising efficiency in the activities of public procurement;
(ii) Ensuring transparency and accountability;
(iii) Ensuring equal treatment to all bidders and neutrality in the activities of public procurement;
(iv) Encouraging competition among bidders;
(v) Creating a business-friendly environment in the country;
(vi) Achieving the best value for money and;
(vii) Introducing a standard quality regulation in public procurement for all organisations in the public sector.
Later, to be in conversant with international practices, donor community, ensure international standard and to make procurement system easier and modern, the Public Procurement Act was passed by the Parliament on July 02, 2006 ( 24th law of 2006). Under the Clause 1(2) of the law, the Public Procurement Rules-2008 was made effective from January 31, 2008.
The advantages achieved from the Public Procurement Act (PPA) and the Public Procurement Rules (PPR) are:
* Economy/ efficiency/ transparency/ fairness ensured;
* Application of standard tender documents(STDs) in all domestic and international purchases ensured;
* Framework contract has been envisaged instead of repeated invitation of tenders for the same goods;
* Pre-qualification criteria has been exempted for the procurement worth up to Taka 350 million (35 crore) so that the general bidders and suppliers are not deprived;
* For procuring essential food items in the shortest possible time, provisions have been made for international quotation system and low-level tender security;
* The provision of administrative complaint and review panel has also been made for the bidders aggrieved in the process of public procurement;
* The provision has been made for introducing e-government procurement (e-GP/ online tendering) to make pubic procurement process transparent and free from any influence; and
* Above all, to tackle any disastrous situation, or in the interest of the state and the people, the government can carry out public procurement under the direct or any other convenient procurement method by following the clause 68 of the Public Procurement Act(PPA) 2006. |
