e-Procurement in Bangladesh
THE current drive against systematic corruption, spearheaded by the Anti- Corruption Commission (ACC), has received wholehearted support from the general people. The media, civil society, TIB, and other organisations are working tirelessly to make corruption a difficult undertaking for the practitioners. However, all these efforts are not producing the expected result as the government machinery has tailored itself to absorb corruption through years of practice. It has been witnessed that, as pressure increased, the corrupt adapted new methods, and overt corruption is now taking place through covert means.
Public procurement through government contracts has always been the primary source of corruption. Some experts suggest that, in government procurement and work tender, only 15% of the money reaches its intended destination as 85% is siphoned away through systematic leakages.
The manual tendering based public procurement system presents many oppurtunities for manipulation by corrupt civil servants and tender "mafias." Killing of tender rivals and cinema style kidnapping and violence have always been part of the tendering process in our country. In some cases, cartels distribute the works within themselves and seek exorbitant price. Politicians and public employees also collaborate to award contracts to the payer of the highest bribe or to their favoured contractor. They also indulge in corruption by systematically leaking information and manipulating papers during the tender approval process.
An overall reform is required to address these issues. An e-procurement system based on a public-private partnership model can be the best way to restrain these malpractices, because it takes away the power of awarding contracts from corrupt civil servants and transfers it to a neutral software based system that allows transparency, competition and equal opportunity for all eligible vendors. The e-procurement system provides an internet-based interface where buyers and sellers of all government procurements and contracts can participate in a fair and transparent manner.
In this model, all the government wings and agencies post their tenders in a web portal or website, which can be downloaded by all eligible vendors and other stakeholders from the internet. The suppliers can remain anonymous, and they can place their bids anytime from anywhere. Bids are evaluated automatically, based on parameters of capacity assessment and a predefined quality assurance plan. Based on this evaluation, the contract is offered to the most appropriate contractor electronically. The system ensures that there is no interaction between the public employees and the contractors during the whole process of bidding, the awarding of the contract, and in the post-bid stage.
An e-procurement system ensures better resource utilisation by providing competition and equal opportunity for all qualified vendors. It dramatically reduces cycle time for processing of tenders and task completion, and can also standardise the procurement process across all government departments and agencies. It increases purchasing power by demand aggregation, and empowers the small and medium bidders because the entire content and bid submission is online. A centralised registration of suppliers can be an integral part of the system, where rogue suppliers can be identified and quality of service and post- bid contract evaluation can be ensured. Ultimately, it brings transparency in the procurement process and drastically reduces corruption in public procurement .
Faced by the problems of manual tendering systems, many governments around the world have resorted to the e-procurement system. The experience of the Indian state of Andhra Pradesh is probably most relevant for us. In the year 2000, the state of Andhra Pradesh identified e-procurement as the core e-governance project. The legal framework came from the Indian IT Act 2000. After implementation of the project, only 11 tenders took place in 2003, which raised doubts about the success of the project. But, with strong political will and drive, the portal became a massive success and, in 2007, it handled 16084 contracts worth Rupee 27143 cores, which is around 70% of the states total public expense. The portal is saving around Rupee 2700 crore of the Andhra Pradesh government due to competitive bidding by suppliers.
Currently, 57 municipalities, 4 universities, and 8 government departments, including roads and highways, irrigation, public health, tribal welfare and local government, carry out all their transactions through the portal. The automated workflow has shortened the tender lead time from 180 days to 36 days. It has completely eliminated cartels and syndicates and reduced the cost of doing business for the contractors.
After its successful implementation, other state governments and the Indian central government have adopted the e-procurement model. The initiative has received the UN Public Service Award 2007 and Harvard University's Ash Institute Award. The project has been identified as the best model for developing countries by the World Bank.
The Indian railway has also been successful in implementing an e-procurement system. 13 units of the Indian railway now procure goods and services worth Rupee 9000 crore through the web-based procurement system. The project was implemented in four stages after a successful pilot scheme. The total implementation cost only Rupee 8 crore, including Rupee 5 crore for hardware.
If we look at other countries, we will see that S. Korea runs a very successful e-procurement system. At present, 93% of all government contracts are carried out through e-procurement. Last year, 18 million businesses participated in 120,000 biddings, amounting to contracts worth $ 25 billion. It saved annual transaction costs of around $ 4.5 billion.
S.Korea received the UN Public Service Award in 2003, and the model was described as the best model for transparency enhancement by OECD in 2004. Currently, Pakistan and Vietnam are collaborating with the Korean government to implement the e-procurement model.
Various ministries of Japan have different e-procurement portals. Ireland's centralised e-tender portal integrates all public sector procurement opportunities in one place, as opposed to having separate sites.
Mexico has also developed Compranet, an online system for government contracting that contains bidding instructions, forms and support services. Gatetrade by Denmark and GeBiz Singapore are also other successful examples of e-procurement by the government. As a matter of fact, almost all the governments in the western hemisphere and Latin America have installed e-procurement at different levels.
However, the mere fact that tendering is done online does not guarantee the success of an e-procurement initiative, as seen in the case of the Indian state of Madhya Pradesh. The state spent millions of dollars, but the project could not be implemented due to barriers of management and technological failures.
From the successful implementation of the project in the state of Andhra Pradesh, key lessons have been identified in a World Bank report. "The support of political leadership, and the formation of a high-powered steering committee and a project implementation committee, with a mandate to take decisions on all issues, were important factors for successful implementation of the e-procurement project." The report noted that a single mode of bid submission throughout the e-procurement platform, participative design process, enormous efforts in change management, full-time help desk, and strong security features contributed to the overall success of the e-procurement platform in Andhra Pradesh.
Setting up an e-procurement site is not a difficult technological task, rather, the huge scale of the project and the massive change management are the most difficult challenges. But if we learn from the experience of other countries and adopt a phase-wise implementation plan, these challenges can always be met.
For a long time, successive governments had been talking about e-governance, without identifying core applications that would serve the people and bring transparency in the corruption plagued government enterprises. The time is now just right to shed the rhetoric and adopt core e-governance applications like e-procurement, which can significantly increase our national productivity by eliminating corruption in public procurement.