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Transparency, competitiveness essential when using billions in public funds
View(s):The Government says it needs to attract different sources of funding since traditional partners (ADB, JICA, World Bank) are not forthcoming with colossal sums of money for infrastructure development. That is one reason for going the path of unsolicited proposals. A senior economist (who requested anonymity) said that’s well and good — but when it borrows on commercial terms, the Government must make every effort to introduce mechanisms to assure competition.
“Nobody should say that there is no way but to surrender to them,” he stressed. “The Government can, for instance, do ‘two envelope bids’. You have the option of calling for bids from potential donors with their financial package. You can also call for bids from India, China, Japan, South Korea, etc. All those will be unsolicited from their angle. If Korean money is used, there will be Korean contractors and so on.”“The technical evaluation and the financial proposal must be in separate envelopes,” he continued. “The Government must first go through the technical proposal. If that’s a justifiable, technically sound proposal, you can open the other envelope and evaluate the financial proposal.”
When selecting a company, the Government must make sure that it was not enlisting “a company that has never done a railway line, or has never constructed a power plant or is offering technology for which you can’t find spare parts anywhere else in the world”.“Look at Norochcholai,” he said. “The Government says nobody else offered to build the coal power plant there. Did it look around? It could have written to embassies with the proposal. It would not have been competition in the open market but some sort of competition, by our design. At least then they would have had some knowledge of the benchmark, as to what is available as technology in the world or what the going rate was per kilowatt hour of coal-power generated electricity.”
There is another option. “If the Government knows what it wants, whether it’s the Colombo-Kandy Expressway or the Kurunegala to Dambulla Railway Line, there is no restriction to it calling for open bids,” this economist said. “If you want to buy a car, what do you do first?” he asked. “You go to different suppliers, examine their specifications, select what you want and go for a suitable financial mechanism.”
Even if the only option was to select a single source bid, the economist said the technical evaluation committee must do sufficient study on international benchmarks based on available information. Prices of steel, of aggregate and other components can be found on the internet. There must be stringent negotiations. The economist agreed with one concern the Government had –that is, the current mechanism of open tender procedure is “so cumbersome and lengthy that you will never get a procurement done properly in time”.
“There is also a way out of that,” he stressed. “Why not open tenders before money is voted through. You can implement them later when the money is voted. You can always keep the tender procedure going.”Another official interviewed, also on the basis of anonymity, said the Government no longer had a plan. “Do we have a five-year plan, a ten-year plan?” he asked. “No. We used to have. They are now taking the Mahinda Chintanaya as a plan. That’s not a plan. That’s a policy statement!”“Whatever it is, you must first have an action plan,” he insisted. “Then you have to prepare a procurement manual according to that plan. If you execute the plan, there is no space for procurement delays.”
“Number one, these are public funds and you must have transparency,” he added. “Whether collected, received or borrowed they are public funds. You must have as many people in the country, if they are qualified, to compete. Any person who can compete must be given the opportunity to compete. Competition is always an advantage to the buyer, not the seller. You create competition to get something at a reasonable price.”