CAG audit reveals Tk5cr loss in BCIC software purchase, management denies claim
BCIC has rejected the finding, saying that the audit failed to take into account changes to the project’s scope and that no financial loss occurred.
A software procurement by the Bangladesh Chemical Industries Corporation (BCIC) caused a financial loss of nearly Tk5 crore to the government, according to an audit by the Comptroller and Auditor General (CAG), which found major irregularities in the procurement process.
BCIC, however, has rejected the finding, saying that the audit failed to take into account changes to the project's scope and that no financial loss occurred.
The CAG, the constitutional body responsible for auditing public expenditure, found that BCIC incurred a loss of Tk4.99 crore while procuring a Design, Development, Implementation and Maintenance of a Comprehensive Web-Based Integrated Business Process Automation Platform (IBPAP).
The finding emerged during the CAG's audit of BCIC's financial statements for the 2024-25 fiscal year under the 2025-26 audit cycle.
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According to the audit report, the software's initial estimated cost was fixed at Tk2.90 crore in 2022. Within two years, that estimate was revised to Tk9.07 crore – more than three times the original amount – a rise the auditors described as abnormal.
The report, a copy of which has been seen by The Business Standard, said BCIC created limited competition despite the availability of qualified consulting firms, resulting in the software being procured at a price above the market rate and causing a financial loss of Tk4.99 crore.
The auditors recommended an investigation into the officials involved in the procurement and the evaluation committee that approved the purchase.
They also called for appropriate administrative and legal action in accordance with the rules and urged greater transparency and accountability in future tender evaluation processes to prevent similar irregularities.
BCIC rejects audit findings
When contacted by TBS about the audit findings, BCIC said the software initially planned was different and that more advanced features were added later, increasing the cost. It added that the procurement committee had approved the revised expenditure.
In its formal response to the audit team, BCIC said the official estimated cost of the software was Tk9.07 crore, while the contract value, including VAT and tax, stood at Tk7.89 crore. It argued that the contract price was Tk1.17 crore lower than the approved estimate and therefore represented a saving rather than a loss.
"The claim of financial loss based on an estimated cost of Tk2.90 crore is incorrect," BCIC noted.
Responding to the audit's allegation of limited competition, the corporation said, "A total of 16 firms participated in the tender process for the software, which doesn't support the claim of limited competition."
The CAG, however, rejected BCIC's explanation, saying its response did not resolve the audit objection because it was based on an incorrect interpretation.
According to the audit report, BCIC's approved records in 2022 showed an official estimated cost of Tk2.90 crore. Although that estimate was later revised to Tk9.07 crore, the auditors said they found no approved documents supporting the increase after examining all relevant files.
Questions over tender conditions
The audit report said BCIC invited expressions of interest for the IBPAP software in April 2024.
Although 16 firms responded to the invitation, the evaluation committee, acting on recommendations from the consultant, shortlisted only four companies for the next stage. The contract was eventually awarded to Dynamic Solution Innovators and Devnet Ltd (JV).
The report cited Section 15(2) of the Public Procurement Act, 2006, which requires procuring entities to ensure fair and open competition by providing a proper and complete description of consultancy services. It also prohibits conditions that unnecessarily restrict competition.
According to the audit, the tender required bidders to have an annual turnover of Tk18 crore in each of the previous three years, liquid assets of Tk6 crore within three months before the tender submission date, and Capability Maturity Model Integration (CMMI) certification.
The auditors said these requirements reduced competition and could have been designed to favour a preferred bidder.
BCIC's explanation
When approached for comment on the CAG's report, BCIC officials from their ICT department showed TBS various files and documents related to the software procurement.
The officials further said the project was originally intended to procure an off-the-shelf software product. Following recommendations from the procurement committee and an expert from the Buet, the plan was changed to develop a customised system instead.
"We sought the opinion of the Bangladesh Computer Council on developing software tailored to our requirements. The council estimated that the project could cost Tk9.50 crore and would require 36 months to complete. BCIC then reduced that estimate by a further 4.5% and fixed the official estimated cost at Tk9.07 crore," the officials said.
They added that the software was completed and made operational within 15 months, much earlier than the projected 36 months, and that data entry is now under way.
