The Planning Commission has directed the Rural Electrification Board (REB) to abandon the limited tendering method (LTM) – which allows procuring agencies to invite bids from a limited number of enlisted contractors – for electricity distribution line construction.
The commission said the work should be procured through the open tendering method in line with the Public Procurement Act and Rules, to ensure fair competition and transparency.
The directive was issued at a project evaluation meeting on 1 October to review a proposal to modernise power distribution systems in 21 areas across Rajshahi and Rangpur divisions.
Under the project proposal, REB planned to divide distribution line construction work worth Tk461.99 crore into 73 packages and award them through limited tendering.
At the meeting, the Planning Commission and the General Economics Division said it would not be appropriate to break up a large body of work into smaller packages to use the limited tendering method. The commission took its decision based on this assessment.
Planning officials said they had consulted procurement experts before issuing the directive, alleging that REB had long split similar works into small packages and awarded them to enlisted contractors, leaving little room for competition.
“REB has built a pool of contractors and awards them work through LTM. Even inexperienced contractors get jobs, compromising the quality of some packages,” an official said.
He also alleged that some contractors took contracts and then sold the work to others. He added that Bangladesh Power Development Board uses open tendering for similar works.
A procurement expert, requesting anonymity, said procurement laws do not allow large works to be split into smaller packages merely to bring each within LTM’s financial ceiling.
The procurement rules permit LTM for contracts worth up to Tk5 crore, encouraging some procuring agencies to break larger projects into smaller packages, the expert said.
Such fragmentation raises costs and causes delays, as each package requires separate documents, tenders and evaluations, while adding contractors’ profit margins, he said.
TBS contacted several REB officials for comment, but they declined to comment.
Procurement rules on splitting packages
Rule 25(8) of the Public Procurement Rules requires procuring entities to consider market capacity, potential competition and implementation convenience when dividing procurement into smaller packages or combining them into larger ones.
Before splitting a procurement, agencies must assess market capacity to ensure sufficient responsive bids and qualified contractors or suppliers for effective competition.
Rule 25(6) prohibits deliberately splitting a project or procurement requirement into smaller packages to avoid a prescribed procurement method or approval from a higher authority.
Work that can reasonably be procured as a single package cannot be split merely to lower its estimated value and qualify for a less stringent procurement method.
Md Faruque Hossain, former director general of the Central Procurement Technical Unit, said splitting large procurement packages could be justified by geographical location, implementation convenience or market capacity.
“LTM is also legally valid if each package stays within the prescribed financial limit,” he said.
Although procurement plans form part of Development Project Proposals (DPPs), the Planning Commission has no authority to prescribe the method, he added.
The commission may discuss or raise objections to procurement plans submitted by project proponents, but deciding the procurement method falls outside its jurisdiction, he said.
Commission questions consultancy costs
The meeting also questioned a proposed Tk70.6 crore allocation for electrical consultancy services for routine works such as building substations and installing distribution lines.
The meeting, chaired by Nurunnahar Chowdhury, member (secretary) of the Planning Commission’s Industry and Energy Division, said there was no justification for spending such a large amount on consultants for routine work.
The meeting decided that REB should gradually build its own capacity and avoid such consultancy expenses. If consultants are essential in specific cases, their fees should be limited and calculated based on clearly defined person-months and remuneration.
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