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Ensuring value for money

  • Published at 09:59 pm July 2nd, 2019
Ensuring value for money
Public procurement should be effective, efficient, economical Bigstock

Making a case for more innovation in public procurement reforms in Bangladesh

Public procurement affects virtually all aspects of our lives -- health, education, economic opportunities, and quality of life. About a third of the government budget and 70% of developmental budget is spent on public procurement. 

So, efficient, effective, and economical public procurement is instrumental to building a prosperous and equitable society. 

And value for money is created when public money is spent efficiently, effectively, and economically. Achievement of the 3Es is the aim of a public procurement reform through formulating appropriate regulations and governance structure and building necessary infrastructure.

The government has initiated public procurement reform with the same aim. For the last two decades, the World Bank has been supporting the government’s attempts to modernize its procurement sector. The first set of reforms came through the Public Procurement Reform Project (PPRP), which aimed to streamline public procurement rules and regulations. The Central Technical Procurement Technical Unit (CPTU) was established under the Ministry of Planning in 2002 to carry out and oversee the reforms.

Modernizing public procurement is a mammoth task which needs multiple investments. Again, with World Bank’s support, the government started developing an internet-based information management system, strengthening CPTU and four government agencies that agreed to try the new system. 

Eventually, the electronic government procurement (e-GP) was launched in 2011. The government also introduced a program for behavioural change and social accountability to further promote openness and transparency in public procurement, which is infamous for corruption and irregularities.

Replacing the age-old manual, paper-based system with electronic procurement was proven more difficult than what it appeared to be. At that time, almost all government systems were manual; it was not possible to predict the reaction of introducing an electronic system.

So, when the four agencies -- Local Government Engineering Department (LGED), Roads and Highways Department (RHD), Bangladesh Water Development Board (BWDB), and Bangladesh Rural Electrification Board (BREB) -- agreed to use the electronic procurement system on a pilot basis, there was a lot of interest to see how that would unfold. 

Initially, the agencies and the ministries showed minimal interest in e-GP as they were unfamiliar with this new procurement system and its potential benefits. So, the progress was very slow. By June 2012, only about 300 suppliers registered to the e-GP system. 

To address this challenge, the agencies and the suppliers were given intensive training and support. So, after the initial setback, the adoption rate soared; by the end of November 2013, the number of registered suppliers was 6,676 and by 2017, all four agencies processed more than 90% of their tenders through e-GP (87% in BREB). As of now, 50% of all procurement in Bangladesh is electronic.

Overall e-GP implementation trend (Till Nov 30, 2016) 

Period

Number of registered bidders/ suppliers

Number of bid invitations

(NCB and others)

Value of bid invitations (US$ M)

June 2012

294

14

3

December 2012

525

144

18

June 2013

1,067

498

62

December 2013

7,459

4,548

319

June 2014

9,238

8,436

713

December 2014

12,831

15,646

1,479

June 2015

15.580

26,102

2,643

May 2016

21,731

55,865

5,842

November 2016

26,000

73,000

8,000

















Overall, PPRP experience shows that introduction of e-GP increases the efficiency of procurement. Despite some technical challenges, e-GP has so far been quite successful to improve the timeliness of procurement process and most importantly, in enhancing competition in procurement with more bidder participation. 

E-GP has also reduced procurement price by improving transparency, efficiency, and competition. According to a recent World Bank report, procurement price has decreased by 13-20% compared to that of the manual procurement. Another research by BRAC Institute of Governance and Development (BIGD) studied the benefits and costs of e-GP implementation. The findings suggest that Tk1 investment in scaling up e-GP in Bangladesh results in a Tk400 return with the present adoption rate of 50%. If adoption rate is 100%, the return goes up to Tk755, the study further estimates. 

However, 100% e-GP adoption can be achieved only when certain conditions are in place. Currently, procurement of services and international tenders are not under e-GP; so these must be included in the system. Many public officials are still unwilling or unable to adopt e-GP, who need motivation and training. More training for tenderers is also crucial to scale it up, as many tenderers do not know how to use e-GP.  

E-GP, though crucial, is just a piece of the 3E puzzle; how the work is delivered after procurement is another important piece. Until recently, it was thought that public work was “technical” and thus, only the experts could oversee the process. To change the status quo, in the second phase of PPRP, citizens were engaged in monitoring whether the procured work is delivered according to specifications. 

To this end, a high level “Public Private Stakeholders Committee (PPSC)” was formed -- with stakeholders from different public and private offices -- to guide the public procurement reform process at the national level. 

More importantly, strategies were developed on how to directly engage citizens in implementation monitoring of public work. BIGD, on behalf of the government, initially tested the strategy in four upazilas of Rangpur and Sirajganj. Designated citizen groups in each upazila were assigned to monitor the implementation of public work after a brief orientation on basic monitoring and quality checking. Information on contract specifications and budget were also made available to local citizens. 

The findings indicate that the process of construction work improves substantially when citizens are engaged. At the same time, the process develops a sense of ownership and awareness among the local citizens. Impressed with the findings, the government has decided to scale up the project nationally. 

To accomplish this, BIGD was assigned to implement and further test citizen engagement in public work in 48 upazilas across all the divisions of Bangladesh. If proven successful, it will make a strong case for engaging citizens in monitoring public work throughout Bangladesh. 


Selina Aziz and Zeeshan Ashraf are researchers at BRAC Institute of Governance and Development (BIGD).