Govt to scrap 10% margin rule for more transparent, competitive procurement

The interim government will abolish the provision of cancelling tenders with bids 10% higher or lower than the estimated price. The aim is to dismantle syndicates of contractors, politicians and corrupt officials while promoting transparency in public procurement.

This move also seeks to boost competition, create opportunities for new bidders and fulfil conditions for receiving ongoing budget support from the World Bank.

The decision was made during a meeting on "Identifying Limitations and Determining Actions for Implementing the Rules and Regulations of PPA 2006 and PPR 2008 in the Procurement Process". The meeting was chaired by Planning Adviser Wahiduddin Mahmud.

The meeting was attended by three other advisers, secretaries to ministries and departments and chief engineers from key construction and engineering entities.

Subhas Chandra Biswas, additional secretary of the Implementation Monitoring and Evaluation Division, explained that while various transparency measures were discussed, the main focus was on the rule that led to tender cancellations for bids exceeding the 10% margin.

He added that this rule had encouraged contractors to consistently bid 10% below the quoted price, undermining fair competition.

Iftekharuzzaman, executive director of Transparency International Bangladesh (TIB), told The Business Standard the 10% provision had fuelled corruption in government procurement, and while its removal was positive, further reforms are necessary.

He emphasized that e-GP, though introduced, is still misused, and full digitalisation in procurement is crucial.

A TIB research report revealed that under the Public Procurement Act 2006, tenders are rejected if the bid price deviates by 10% from the estimated price.

Some Roads and Highways Department officials exploited this rule by leaking estimated prices to select contractors, who then colluded on which institutions would participate in the tender process. Political leaders and senior officials sometimes instructed bidders to refrain from submitting tenders, it added.

Mirza Ashfaqur Rahman, chief executive officer of the Bangladesh Public Procurement Authority (BPPA), said the meeting suggested holding an inter-ministerial meeting with stakeholders to discuss further steps on abolishing the 10% provision.

It was also decided that PPA 2006 would be amended and e-GP guidelines revised, he added.

Rahman said removing the 10% provision could lead to collusion and abnormally low bids. To address this, BPPA has formed a technical working group to prevent Abnormally Low Bids.

BPPA has been working on amending the law since 2021 to address limitations in the procurement process. A draft of the amended law was presented to the Cabinet Committee on Economic Affairs but was returned, he added.

The 10% provision had fuelled corruption in government procurement, and while its removal was positive, further reforms are necessary.

Iftekharuzzaman, executive director, TIB

Rahman added that the Finance Division recently made it known that the World Bank has requested the Bangladesh government to implement various policy reforms in the financial, revenue and public service sectors as part of the Development Policy Credit (DPC) budget support.

These reforms include abolishing the 10% provision and completing all government purchases through the e-GP system, he added.

BPPA has already organized a stakeholder meeting with 32 organizations to discuss these issues and amend the law.

According to the minutes of the meeting, Wahiduddin Mahmud emphasized identifying challenges faced by ministries and departments in implementing procurement rules to ensure transparency, accountability, fair treatment and competition.

The finance adviser also expressed concerns about companies with the same name securing multiple contracts and called for greater transparency and competition in procurement.