Public Procurement: Focus to shift from lowest offer in tender

GBNEWS24DESK//

The government is poised to adopt a set of guidelines that will fundamentally change the way 40 percent of the annual budget is spent, focusing on the whole life cycle cost of goods and services rather than the lowest tender offer in public procurement.

“Whilst existing procurement framework and practices are pursued to choose the ‘lowest-cost’ contract with some ‘quality’ check, lowest-cost purchase does not necessarily ensure maximum benefit in the long run,” said a policy paper.

The reason being there are additional expenditures involved during the lifetime of the product in maintenance and then for the disposal of the product once its functionality expires.

So in many cases, the lowest offer in a tender does not end up being the cheapest in the long run. Besides, the costs to the environment are also not factored in.

Subsequently, the planning ministry, the Central Procurement Technical Unit (CPTU) and the Implementation Monitoring and Evaluation Division (IMED) have prepared the Sustainable Public Procurement Policy paper.

The policy paper has been prepared to ensure that the $25 billion that Bangladesh spends annually on public procurement “achieves value for money on a whole life basis in terms of generating benefits not only to the organisation but also to society and the economy whilst minimising damage to the environment”.

The International Monetary Fund has marked it down as a top reform priority and the government has committed to adopting the policy paper and an associated action plan by September as part of the conditions agreed upon for the $4.7 billion loan programme.

The policy would be piloted in the procurement of: paper and paper products; office supplies; computer and other electronic equipment and supplies; office and other furniture or related wooden appliances; vehicles and other transportation equipment; food services and catering; hotel materials like towels and bed covers; and official paper-made publications.

As part of the policy, the procurement agencies must go for competitive bidding and take a flexible approach if small and medium enterprises (SMEs), including women-owned enterprises (WOEs), are participating in the bidding.

To attract more SMEs and WOEs, the procurement agencies can minimise the complexity of tender documentation, divide contracts into smaller lots, limit the number of lots that will be awarded to one bidder and allow more time for submission of expression of interest and tenders.