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Bangladesh: Transforming Procurement Outcomes Through Capacity Development and Performance Monitoring

April 15, 2013

Despite a challenging context, Bangladesh has been transforming its procurement environment for better outcomes in public contracting with improved efficiency, effectiveness, and transparency at key sectoral ministries and agencies. This has been demonstrated by: reduced procurement delays; improved competitiveness; and enhanced transparency. About 65% of small value large number of contracts at decentralized level are now awarded within initial bid validity period, the average number of bidders has increased to six, and around 60% of the contract awards are published in the website.
65%

small value contracts at decentralized levels have been awarded within the initial bid validity period in 2012, up from only 10% in 2007

PROJECT MAP

Challenge

The Country Assistance Strategy 2000 identified governance and institutional constraints as the most serious impediments preventing Bangladesh from achieving its full economic potential and accelerating the pace of poverty reduction. Major constraints identified were: outdated procurement rules and procedures, protracted bureaucratic process, inadequate capacity to manage public procurement, and corruption.

The Public Procurement Reform Project II (PPRP II) follows up the successes of PPRP since 2007 to progressively improve performance of the public procurement system, particularly focusing on large spending sectors, ministries and agencies. The project has an extensive capacity building program combined with the introduction of procurement performance monitoring system and rolling out  of electronic government procurement (e-GP).

Solution

The PPRP II has taken a systemic approach covering both supply and demand side of governance in procurement: capacity development, performance monitoring, electronic procurement, and social accountability with communication targeted to four key government agencies: Roads and Highways Department, Local Government Engineering Department, Rural Electrification Board, and Bangladesh Water Development Board.

The capacity development program is now recognized as an emerging model because of its unique features. These include developing a critical mass of about 35 national trainers; establishing a procurement faculty at a local institute; implementing procurement training for about 20 different audiences, such as policy makers, procurement practitioners, bidding community and auditors; providing three-week training to about 2100 staff of the four agencies in a way so that each procuring entity within those organization has at least one trained staff; and introducing a built-in incentive mechanism for the top-performers (international procurement accreditation by the Chartered Institute of Purchasing and Supply, UK and Masters programme in procurement).

Use of IT tools in procurement is further contributing to bringing about positive changes as procurement information becomes more accessible and competition and transparency are enhanced. This is making collusive and coercive practices in bidding difficult.

In addition, the project has launched an effective social accountability and communication campaign through the public-private stakeholders committee (PPSC) with services of a leading think-tank organization and has formed a government-contractors forum to demystify procurement at the grass-root level. It followed a three-pronged approach using media campaigns, capacity building, and advocacy interventions.  About 2700 participants from 64 districts joined advocacy related activities; mass media was used to create awareness and to popularize reform agenda using TV and radio commercials, popular songs, music videos, newspaper cartoon series and a 6-episode reality show where the bidders and procuring agencies competed.

Results

  • Improved efficiency and effectiveness of procurement with reduced procurement delays:  About 65% small value contracts at decentralized levels have been awarded within the initial bid validity period in 2012, up from only 10% in 2007.
  • Enhanced transparency:  About 60% contracts awards in 2012 were published at the Central Procurement Technical Unit (CPTU) website, up from only 15% in 2007. Invitation for bids published in newspaper has increased to almost 100% in 2012 from 70% in 2005. In addition, complaints handling mechanism using the independent review panel’s approach and administrative reviews has contributed significantly in improving the accountability of public sector organizations. This has brought about better confidence of the bidding community in the public procurement system. Furthermore, all policy related documents are available on the website of CPTU including laws, rules, bidding documents, guidance notes.
  • Increased competitiveness: The reform has resulted in more competition among bidders as demonstrated by increased number of bidders; average number of bidders at the key sectoral agencies increased to six in 2012 from four in 2007.
  • Improved capacity development: Developed a core group of about 35 national trainers; provided three-week procurement training to over 2900 officials; about 35 staff received international procurement accreditation in core competence from the Chartered Institute of Purchasing and Supply (CIPS/UK), MCIPS, and all of them are also completing  Masters in Procurement and Supply Management from a leading local university (BRACU- Institute of Governance).
  • Increased electronic tendering: Four key agencies, after completing the pilot phase, has rolled out the e-GP across all of their procuring entities, and as of December 2012 covered at least one e-GP tender in 50% of the procuring entities of each agency.
  • Increased stakeholder participation: Public-private stakeholders committee (PPSC) made fully functional; government-contractors forum established; communication workshops held in all districts.
Open Quotes

The use of modern information technology makes public procurement easier and more transparent. All bidding information is available online, and the application can be sent from anywhere with the click of a button. Close Quotes

World Bank Group Contribution

International Development Association (IDA) financing of $23.6 million for the Public Procurement Reform Project II (PPRP II) was approved on July 5, 2007. The current credit closing date is September 30, 2013, which is expected to continue up to December 31, 2016 with the finalization of the additional financing.

Partners

The reform interventions have been broadly agreed on by the Joint Strategic Partners, including Asian Development Bank (ADB), DFID and Japan in technical assistance.

Moving Forward

To ensure sustainability of the reform initiatives, at the request of the government, the Bank is processing an additional financing to PPRP II to enhance the impact of a well-performing project. The additional financing with a cost of about $35 million is at the Board approval stage now. The following major areas would be covered:

Scaling up procurement management capacity:  The capacity development component will be scaled up beyond the four target agencies of PPRP-II to cover health, education, power and public works.

Enhancing electronic government procurement (e-GP) and sectorial management: The e-GP and its associated sectoral procurement performance monitoring will be scaled up. Within three years, it is expected that the four key agencies will have 100% implementation of the e-GP and the procurement performance monitoring (PROMIS).

Financing based on performance: Part of the funds will be given in tranches to the four target agencies upon meeting specified targets relating to e-GP and procurement performance.