Getting value for money from public procurement

Abstract

Until 2003, there was no standard and legal framework for public procurement in Bangladesh and General Financial Rules (GFR) had regulated public procurement procedures and practices in Bangladesh. These rules were originally issued during the British period and slightly revised in 1951 under the Pakistani rule. After Bangladesh’s independence, few changes were made to these rules in 1994 and 1999 respectively (Islam, 2011). To ensure transparency ,accountability and better value for money in the procurement of goods, works or services using public funds, and ensuring equitable treatment and free and fair competition among all persons wishing to participate in such procurement, the Government of the People’s Republic of Bangladesh has enacted Public Procurement Act 2006 (hereinafter called PPA 2006) on 06 July 2006. Under the framework of PPA 2006, the government issued Public Procurement Rules 2008 (hereinafter called PPR 2008) which has come into effective on January 31, 2008. All these were the outcomes of the reform process taken by the government to streamline the public procurement. Earlier in 2003, Public procurement Regulations 2003 which was effective till the PPR 2008 was issued (Hoque, 2010). Among the government agencies, DPHE is subject to large amount of budget allocation against the projects in the Annual Development Programme (ADP). It is generally said that a total of 80% of ADP allocation are spent for procurement of goods, works and services which are administered by PPR 2008. Thus, it seems to be a good consideration to have a look at how DPHE is ensure value for money through using PPR 2008 in it’s procurement activities. The research has been designed under the questions get an idea about is present procurement practices in DPHE under PPR 2008 achieving value for money completely or not; and if not, then the causes behind that. The main objectives of the present study are to find out the extent of achieving value for money by DPHE and to find out the gap and scope of improvement for implementation. The related literatures and reports, particularly from DPHE , PPR 2008 and other international practices in public sector, have been thoroughly reviewed before conducting the main research work. The key findings of these reports have been compared and analyzed which helped to draw important conclusion of the study. The methodology of this study to undertake are (i) questionnaire survey for primary data (ii) key informant interviews (iii) Secondary data collect from project offices and DPHE website. Questionnaire survey was carried out to collect primary data from different stakeholders related to procurement activities of DPHE. For in-depth study on getting value for money different projects were studied carefully to collect the qualitative data too. In addition to survey, key informant interviews have been conducted to get the perceptions of few senior officers of DPHE . The study result shows a clear perceptions that DPHE is far away from better value for money procurement . However, the scenario is more or less similar in other government agencies. The main focus on compliance with the public procurement regulation and emphasizing the transparent use of competitive procedures, rather than necessarily achievement of competitive supply or added value outcomes lead DPHE as well as other government agencies not to always encourage in best practice procurement, in areas such as economic, efficiency and effectiveness. For improvement of these situations, four specific recommendations have been drawn. These are (i) to induce a mechanism for ensuring that TER is directly submitted to the contract approving authority as per Rule 36(3) of PPR 2008, (ii) to ensure the timely payment to the contractors, tender should be floated only after availability of sufficient fund, (iii) a liquidated damage clause and (iv) payment of interest in case of delayed payment should be considered carefully to protect the interests of both the parties.