UNCLAS DHAKA 001407

SIPDIS

E.O. 12958: N/A
TAGS: ECON EAID KCRM PREL BD
SUBJECT: SENIOR-LEVEL BDG PROCUREMENT COMMITTEE REJECTS
SUSPECT TENDERS



1. The BDG Cabinet Purchase Committee on March 22 rejected
two tender awards, explicitly citing corruption in one case
and serious irregularities in the other. The action was a
welcome demonstration that the BDG can act against corruption
when it chooses to do so. In a highly unusual move, the
Purchase Committee also recommended the relevant ministry
take action against the officials involved in manipulating
the tender.


2. The first procurement was for a high-speed fiber optic
connection from Cox's Bazaar to Chittagong to interconnect
the telephone network to the South East Asia-Middle
East-Western Europe-4 undersea cable, a terabit Internet
backbone cable. Bangladesh's connection to the cable will
originate at Cox's Bazaar and is expected to be completed by
October, providing Bangladesh with 10 gigabytes of bandwidth,
which is expected to meet the country's needs for the next 10
years. Canada's Nortel was awarded the highest technical and
financial score by an evaluation subcommittee of the
Bangladesh Telegraph and Telecommunications Board (BTTB);
however, the full committee recommended Germany's Siemans,
despite a price premium of nearly 50 percent. The
Communications Ministry endorsed the BTTB recommendation and
sent it to the Purchasing committee for approval. The
committee rejected the recommendation, citing corruption and
violations of the Public Procurement Regulations (PPR), and
ordered the project retendered. Asked to comment, a local
Nortel official told Embassy FSN that the evaluation had
taken over 13 months and was referred back to the evaluation
committee four times because of corruption in the evaluation
process.


3. The second tender was for procurement of the power plant
for phase two (of three) of the Meghnaghat power complex.
The Power, Energy and Natural Resources ministry was
initially authorized to negotiate with a UAE-Bangladesh Joint
Venture with a Japanese company as the "lead sponsor"
providing the actual technical expertise. Following
prequalification, however, the Japanese sponsor was replaced
by a German company. Despite this significant alteration to
the composition of the consortium, the Power Ministry
negotiated an agreement to conclusion and presented it to the
Purchase Committee for approval. The Purchase Committee
rejected the faulty proposal, essentially requiring
prequalification of the revised consortium before an
agreement could be negotiated.


4. The Cabinet is involved in procurement decisions at two
stages. The Cabinet Committee on Economic Affairs makes an
initial, prequalification decision before referring major
projects to a particular ministry for procurement. Following
technical and financial evaluations of the bids, the ministry
then makes a recommendation, which is referred back to the
Cabinet Purchase Committee for review and approval. Proposed
awards approved by the Purchase Committee are submitted to
the full Cabinet for final approval, before going to the
Prime Minister for signature of the award document. The
Prime Minister is the official chair of the Purchase
Committee, although the Finance Minister in fact holds the
chair on her behalf. Other members of the committee are
drawn from ministers and state secretaries, and sometimes
vary according to the nature of the procurement under review.
THOMAS