Social and economical impact on the nation for the Delay in Public Procurement Processing.

In the developing countries, the key portion of the procurement, particularly from the international sources, takes place in the public sector. Major portion of this public sector procurement is financed out of the development credits, grants or loans, etc., extended to the Government (Borrower) by the Development Partners (DPs) on account of various development projects. A sizeable part of these credits, grants or loans are earmarked for procurement of goods, services or works or a combination of two or more of these in a particular project or a set of projects.

 Also all of the development projects contain a large volume of procurement for implementation of the project. Usually public sector procurement under a project has procurement of goods or works, which involve infrastructure of various kind and natures. Additionally in all projects involving infrastructure the common components are designed to provide contribution to the national economy either by creating employment opportunities, or by encouragement export-oriented production or by providing support to development of industry, crop growing or business, or as simple infrastructural framework to support added various type of existing infrastructures. 

However, important infrastructural examples which play important role in the financial system of a country include, but are not limited to, communication network (roads, railway, water-way, tele-communication, airline, etc.) utility services (like water supply, sewerage, drainage, in- city transportation facilities, etc.), energy (electricity, gas, renewable energy, etc.), housing, land development, etc. All of these works is calculated to contribute to the national economy in one or more ways. However, when procurement processing is involved, experience of public procurement produces the proof that in most cases, delay in project implementation is caused by lingering procurement processing of the relevant tendering, thus resulting into corresponding occurrence on the economy and society, both at the micro- and macro-levels. Procurement of all of these components usually face severe setback in the public sector impeding the desired and planned pace of implementation. The ultimate result shows up in non-utilization or under-utilization of the hard- to- obtain foreign exchange components of the project fund and/or abnormal increase in the total project cost both in local and foreign currencies. This occurrence can also be seen as a composite formation of two components:

(a)                increase in the cost of the project itself; and

(b) deficit to the national economy in term of negative impact on monetary income, creation of employment opportunities, growth of savings, growth of investment, fostering of domestic and export- oriented production, addition to the national production range or national income, rise in the volume and speed of economic activities, etc. If we choice to considering in an objective way, we will see that delay in project implementation by a single day ultimately results into a huge loss to the national economy in term of one or more of the above effects acting simultaneously.

 The whole chain of positive contributions of project implementation like increase in purchasing power of the low- income population thereby creating a demand -driven market, investment, income, savings, rise of standard of living, etc., are disrupted by delay in project implementation; monetary valuation of such negative impacts on the national economy.  This picture of negative impact is yet short of the most important factor of time frame being upset, the effect of which however cannot be quantified in terms of money or any other tangible yardstick. In any case, delay in procurement processing and completion of contract performance results into two-fold economic loss and sufferings of the mass people (i) increase in the project cost, and (ii) increase in the loss to national economy in term of economic return of the project.

If we take the instance of setting up power generation station , fundamentally the procurement exercises has a great significance. By the very plan, the relevant projects are expected to ensure a great economic return for the national economy. Delay in project implementation (delay in procurement processing) also has its indirect negative impact on the increase of purchasing power of the working population both at the micro- and macro- levels by way of risk money circulation through economic activities expected out of the implementation process and after –effects. Just as timely implementation would have all positive effects on the consequential sequence of economic activities, so would the untimely implementation have on the negative side? Best example is power sector procurement. BNP Jamat ruled last Past 5 years of Bangladesh had been totally failed to increase power generation mainly due to failure of established competitive and fair procurement procedures within the scheduled time. Due to the failure of BNP Jamat government  the whole nation has been suffering from remarkable  shortage of power supply.

Mohammad Alauddin, Freedom Fighter,  Liberation War of Bangladesh in 1971
and Procurement and Stores specialist. Worked for the Charles Kendall & Partners, ITC-ILO supported “Central Procurement Technical Unit”, SWAp funded CMS Malawi, IDA funded CMSD Bangladesh, UNICEF Bangladesh supported  and IDA/DFID & GFATM funded  HIV/AIDS Prevention program of Bangladesh, Rural Electrification Board, and UNDP assisted “Capacity Building project for the CSWs” .

E-mail: malauddin2003@yahoo.com