Collusion and syndication are still the main obstacles in getting rid of corruption in the procurement process
Political influence is still playing a central role in the process of obtaining work orders although the public procurement process was simplified through the introduction of e-Government Procurement (e-GP).
Moreover, collusion and syndication are still the main obstacles to ridding the procurement process of corruption, so reads a Transparency International Bangladesh (TIB) report.
The organisation added that e-GP – an online platform for conducting all public procurement activities – is an important and positive step, but the level of corruption has not decreased.
The report, titled "Governance in Public Procurement: Effectiveness of E-GP in Bangladesh," and published by the TIB through an online platform on Wednesday, claimed that the quality of projects is deteriorating due to the lingering corruption.
Md Sahidul Islam, deputy programme manager, Research & Policy at the TIB, presented the report at the online programme.
The introduction of e-GP has led to a shift from a manual to a technical government procurement system. However, some stakeholders still found new avenues of corruption.
There is no positive impact on the quality of projects because of issues such as selling the work, illegal sub-contracts and distribution of tenders through illegal negotiation, according to the report.
Besides, procuring entities still rely on manual methods in some cases, causing the purpose of e-GP – such as increasing participation and impartial evaluation – to become severely hampered.
It pointed out that the corruption which existed in the previous process is no longer possible through the current technical system, but a section of the stakeholders have already tracked down new ways to engage in irregularities.
Stakeholders who are currently engaging in corruption are now doing it in a more organised and planned way. But this issue cannot be viewed as the failure of the e-GP system, the report said.
The TIB report further stated that in some areas, the local political leaders of the ruling party, especially the incumbent lawmakers, decide who will submit a specific tender proposal. In many cases, a local political leader takes up a project using a big contractor licence, and then distributes it to his subordinates.
According to sources, when any project comes to an area, local lawmakers, municipality mayors or upazila chairmen distribute it to their followers. This is a common scene across the whole country, the report read.
There are also allegations that if by any chance the local public representative's nominated contractor does not get the tender, he/she then asks the working contractor to pay the nominated person a percentage of the block allocation or assign a portion of the work.
Besides, there are complaints that some lawmakers take commission or a percentage of the block allocation designated for the work, the report added.
The report further claimed that a project is sometimes divided into several packages. For example, a project costing Tk10 crore is distributed to five contractors after dividing it into five packages. But the project is taken and completed under one licence.
The contractor, who has the licence, sometimes does not pay any commission to the public representatives. Instead, the representative distributes parts of the project to the contractor and 4-5 other party members.
The TIB report claimed that some contractors regularly get projects from some institutions only because of their political influence. To achieve this goal, they employ a variety of tactics, such as preventing other contractors from submitting tenders through influence or negotiation.
Corruption in public procurement agencies
The TIB found allegations of several irregularities centering on the e-GP process of the public procurement agencies that are involved in the study.
In some cases, the procurement agencies illegally gave contractors information about the rate schedule. Besides, such agencies are using their computer operators for work that is outside of the regulations, which is elevating the risk of corruption.
There are complaints that some officials are showing negligence in evaluating the tenders, making computer operators prepare evaluation reports instead of doing it themselves, and manipulating the scores to give advantages to specific contractors.
There are also allegations that these officials are not properly evaluating the documents attached with the tenders. Sources said many contractors provide fake documents, but the papers are not being evaluated because of their connection with the agencies' officials.
A section of officials concerned, from an agency that calls the tender, illegally extort from contractors who receive the work, the TIB found during its study.
Firstly, the contractors have to pay the officials concerned to get the work order, otherwise they will not get it. Secondly, these officials extort from the contractors while supervising the implementation of a project, the TIB report read.
According to some contractors, the e-GP has put a stop to the tender manipulation activities, but the illegal payoffs have remained the same, and maybe even increased than before. The extortion racket pans out from the bottom to the very top, the TIB report said.
After completing the project, the contractors pay around 5%-10% of the bill to some officials while they collect it. They are also forced to cough up 2%-5% of the bill while submitting the project progress report. In some agencies, the rate of the payout is a set amount, the report added.
Corruption among contractors
In most cases, the contractors are already part of a syndicate. Such a move allows them to fix which contractor will get which project in advance. Such irregularities are more prevalent in the open tender process, the report read.
There are allegations that sometimes the contractors, local political leaders and officials from the public procurement agencies collaborate in illegal manner.
Contractors negotiate a deal with the agencies, which allow them to complete their projects with good reports, despite the poor quality or progress of their work. For such benefits, the contractors pay around 1.5%-5% of the project's cost as a bribe to the officials concerned.
The contractors also employ the widespread tactic of using a licence that has a lot of documented experience to get work. Then the contractors pay the licence owner a commission of around 10%-13%.
There is also a practice among contractors to use licences of other big contractors to get work, and then finish the project through sub-contractors.
The e-Government Procurement system was launched under the supervision of the Central Procurement Technical Unit (CPTU) on June 2, 2011 to ensure transparency and efficiency in the public procurement process.
The initiative is part of the government's promise to digitise all its services by 2021.
The TIB evaluated the implementation of e-GP process in four government organisations – Local Government Engineering Department, Roads and Highways Department, Bangladesh Water Development Board and Bangladesh Rural Electrification Board.
Under five categories – organisational capacity, e-GP implementation process, e-GP management, transparency and accountability, and efficiency – the TIB used 20 indicators to conduct its study.
Among the institutions involved in the study, the Roads and Highways Department scored the highest (50%), followed by Bangladesh Rural Electrification Board (44%), Bangladesh Water Development Board (43%), and Local Government Engineering Department (42%).
The TIB pointed out that when analysing the scores, all the institutions are doing well and quite close to each other in terms of organisational capacity (60%-70%), but the Roads and Highways Department and Bangladesh Rural Electrification Board are ahead of the others.
All the institutions have achieved similar scores (58%-64%) in terms of following the e-GP process. However, none of the institutions achieved any score in the e-GP management and efficiency categories. Besides, they achieved low scores (19%-30%) in the transparency and accountability categories.
The scores indicate an overall lack of performance regarding the e-GP process among the institutions. But the low scores in the management, transparency and accountability categories are alarming, the TIB report read.
The indicators which raised alarm in the TIB are – annual purchase plan, pre-tender meetings, e-contract management, supervision of work order implementation, evaluation, releasing wealth statements of the officials, irregularities and corruption and quality of work.
The Public Procurement Rules, 2008 state that the e-GP process must be used for all public procurement activities, but all institutions do not use e-GP for 100% of the procurements.
While researching, the TIB found that none of the four institutions involved in the study use the e-GP process for 2%-88% of the total procurements.
Commenting on the issue, TIB's Executive Director Dr Iftekharuzzaman said, "We will not get the benefits of the e-GP system unless it becomes free of political influence. Besides, public representatives should not engage in business activities."