Wind of Change: Digital Procurement Transforms Bangladesh

October 6, 2015

  • The government of Bangladesh spends around $10 billion dollars every year on public procurement, a substantial portion of its annual development program to build and maintain schools, hospitals, roads and other development works.
  • In the past, there was no uniform procurement regulatory framework. Inefficiencies and inappropriate use of funds reportedly cost the country over 1.5% GDP growth per year.
  • The government of Bangladesh has initiated an electronic government procurement (e-GP) system that has been rapidly transforming the public procurement environment in Bangladesh. It has reduced contract processing time, increased competition, and enhanced transparency. As a result, the cost of doing business and risk of collusive practices has decreased substantially.

Every year, the Bangladesh government spends around $10 billion dollars on public procurement, a major part of its annual development program. In the past, no uniform regulatory framework for procurement existed. Inefficiencies and inappropriate use of funds reportedly cost the country over 1.5% of GDP growth a year. Out-dated, lengthy, confusing and complex bureaucratic processes made public procurement cumbersome.

“Purchasing reams of tender documents and physically submitting them to government procurement entities was difficult for me, let alone winning any contracts. I lost interest in bidding after such a lengthy exercise,” says Ashraful Alam, Sherpur district, while recounting his experience in the early 2000s.

Public funds can be used effectively for the people only when the procurement system is transparent and efficient.  In the last few years, the country has been shifting away from traditional procurement practices to digitizing the process.

Public Procurement reforms increase efficiency and transparency

The Government of Bangladesh has brought sustained and systematic changes to transform its public procurement environment under Public Procurement Reform Project II (PPRPII).  The government introduced four pillars of change:

  • Institution Building: It established the Central Procurement Technical Unit to regulate public procurement.
  • Regulatory Framework: The Parliament passed a Public Procurement Act detailing out rules for all types of procurements. 
  • Institutionalization & Professionalization of Capacity: The government instituted a pioneering capacity development program with 18 courses for government and non-government actors; an international accreditation program; and a Masters in Procurement. So far,15,500 government and non government officials have received trainings.
  • Digitizing Procurement: In 2011, the government launched electronic government procurement (e-GP) which was rolled out in 2012 across four key public sector agencies: the Bangladesh Water Development Board, the Bangladesh Rural Electrification Board, Local Government Engineering Department, Roads and Highways Division. These sectors together spend about half of Bangladesh’s annual development program.

e-GP – A new era in public procurement:

e-GP has changed the face of public procurement in Bangladesh. Now, public procurement is conducted through a single web portal from beginning to end. Bidders do not need to submit realms of papers anymore. They can submit tender applications and track key milestones online from anywhere in the world, at any time. The tenders are also opened, evaluated and approved on line. Once a contract is awarded; winners' details, tender numbers, and contract values are all published on the web. Even procurement system performance is electronically measured. The tenders can access 24/7 helplines if needed. With greater transparency and increased competition among bidders and decreased award contracting time, the e-GP has paved a new way of doing business by the private sector. The cost of doing business and risk of collusive practices is also going down significantly.

Winds of change

The e-GP system is gradually becoming self-sustaining with the revenues it generate. As of August 2015, e-GP processed over 28,000 tenders worth about US$3 billion.

"e-GP has been a blessing for me. Now I can submit tenders online, even from home without any hassle and undue influence or obstruction. I deliver in time and maintain the required quality," says Ashraful Alam, the same bidder from Sherpur district.

Over years, procuring entities, the business community, civil society, and the media have all embraced e-GP, which has helped spur growth of the system. Thegovernment has also initiated a grass roots campaign to change the behavior of those involved with public procurement. As a consequence, computer literacy has gone up; creating new job opportunities at the local level with reforms accelerating growth and improving people’s standard of living.

Results in numbers:

  • 15,500 government and nongovernment officials have received trainings on public procurement
  • Over 28,000 tenders valued at about US$3 billion have been processed through e-GP as of August 2015.
  • The time needed for tender opening to award is projected to decrease from 51 days in 2012 to 29 days 2015.
  • The number of registered tenderers with e-GP has grown 25-fold, from 525 in 2012 to 13000 in 2014.
  • e-GP has led to increased competition – the number of average tenderers per bid has gone up from four (non e-GP) in 2007 to seven (e-GP) in 2004.