Bangladesh: Public Procurement Reform Stuck Even After the Ordinance Issued!

The Government of the People’s Republic of Bangladesh issued the “Public Procurement (Amendment) Ordinance, 2025” on May 4, 2025. Its main objective was to further emphasize transparency, accountability, efficiency, competition, and sustainable public procurement in government purchases and to break syndicates.

One of the most important decisions of this ordinance is the cancellation of the provision that allowed for the rejection of tender proposals for domestic works procurement under the Open Tendering Method if the bid was less or more than 10% of the estimated value. This decision was taken at the Advisory Council meeting on March 20.

However, for the full implementation of this ordinance, necessary amendments to the relevant rules of the Public Procurement Rules 2008 (PPR-08) are still pending. As the amendments of the ordinance have not been reflected in PPR-08 for almost two and a half months, no benefits are being realized at the field level.

Even though there are new guidelines for preparing procurement strategies and plans, officials are hesitant to follow the correct procedures due to the absence of rules. As a result of the unamended rules, duality and confusion are arising among users regarding which rule will apply – the old policy of 2008 or the new ordinance? Consequently, the documented process is being hampered.

Background of 10% Margin Cancellation

According to sub-section (3) of section 31 of the Public Procurement Act, 2006, in the case of domestic government procurement of works through open tender, if a bidder quoted a price less or more than 10 percent of the official estimate of the tender, the tender would be cancelled. Since the enactment of this law, various controversies and movements arose, demanding its repeal. Setting this price limit was creating various problems in government procurement. It reduced competition in the tender invitation process, and large contractors repeatedly received more work, which facilitated the creation of syndicates.

Various reports published by the World Bank also highlighted these weaknesses in government procurement. The previous evaluation matrix for past work, which helped the same institutions repeatedly get work, has been decided to be replaced with a new capacity matrix, which will help break syndicates.

Problems & Risks of Non-Implementation of the Ordinance

This ordinance has brought several significant changes to Act No. 24 of 2006, i.e., the Public Procurement Act, 2006 (PPA 2006).

Although the “Public Procurement (Amendment) Ordinance, 2025” has been issued and is supposed to be effective immediately, its full implementation requires necessary amendments to the relevant rules of the Public Procurement Rules 2008 (PPR-08).

If these rules are not amended, the following problems and risks may arise:

• Risk of abnormally low bid proposals: If the 10% related provision is withdrawn, there might be a risk of abnormally low bid proposals due to collusion among contractors. Although the ordinance has included new provisions for evaluating bids with “significantly low price” and rules for negotiation, it may be difficult to effectively address this if the detailed procedures and application methods for these provisions are not clearly outlined in the rules.
• Delay in achieving the full benefits of the ordinance: The objective of the ordinance is to ensure transparency, accountability, efficiency, competition, and sustainable public procurement in government purchasing activities. If the necessary amendments are not made to the rules, the full achievement of these noble objectives will be hindered or delayed, as detailed rules and regulations are essential for implementing the new aspects of the law at the field level.
• Ineffectiveness of new additions and processes: The ordinance has newly incorporated procurement strategies, framework agreements, reverse auctions, beneficial ownership, and changed rules for various procurement methods. Without amendments to PPR-08, it will be difficult to effectively implement these new additions and processes in practice, which will prevent the law’s objectives from being fully successful.
• e-GP is not being mandatorily applied: Although e-GP (Electronic Government Procurement) has been declared mandatory in the ordinance, its practical use is being hindered due to the non-deployment of the relevant PPR-08. In current directorates, 35-65% of procurement is still being done without e-GP.

Rapid Amendment of PPR-08 is Essential

Rapid amendment of PPR-08 is essential for the quick implementation of the Public Procurement (Amendment) Ordinance, 2025, because:

• The role of this ordinance is extremely important in breaking syndicates and ensuring true transparency and competition in government procurement. Without the amendment of the rules, its full benefits will not be realized.
• Detailed and clear guidelines in the rules are necessary to effectively tackle potential risks such as abnormally low bid proposals.
• It is extremely important to align the rules with the changes brought by the ordinance for implementing those changes to make the public procurement system more modern, efficient, and competitive.
• The amendment of PPR-08 is essential to materialize the new dimensions added to government procurement activities through the ordinance.

Conclusion

The “Public Procurement (Amendment) Ordinance, 2025” is an important step towards bringing positive changes in government procurement. Rapid amendment of the Public Procurement Rules 2008 (PPR-08) is extremely essential to achieve the full benefits of this ordinance and to succeed in its objectives.

If the rules are amended quickly and the law is fully implemented, the desired transparency, accountability, efficiency, and competition in government procurement can be ensured. Not only that, but necessary reforms must also be made in the e-GP portal alongside the amendment of the rules to achieve effective results.