Government procurement perceived as major area of fraud and corruption: Audit Report

The government procurement is still being perceived as a major area of fraud and corruption, inefficiencies and wastage involving huge public resources. This is as per the Auditor General’s Advisory Series on review of Government Procurement System. The report highlights that the current procurement process is restrictive to innovative solutions affecting the quality of goods and services procured.

As per the report, government procurement constituted 40 per cent of the government expenditures, meaning in the last five years, more than Nu 111 bn was spent on procuring goods and services.

Auditor General’s Advisory Series say the procurement system is plagued with irregularities.

As per the Annual Audit report 2020-2021, irregularities incurred due to non-compliance of procurement norms alone was over Nu 1.9 bn.

The agencies are seen accepting poor quality products, making excess payment and sometimes, goods are either not used or remained under-utilised resulting in wastage of funds.

For instance, the National Referral Hospital installed a chiller plant costing Nu 27.6 M which was not functional. It was later sold at scrap value of Nu 240, 000.

RAA also observed that lowest evaluated bids were higher than the market price and the evaluated price for the same product varied amongst different agencies.

The analysis showed the procurement price for HP printer cartridge in 16 agencies varied from Nu 899 to as high as Nu 4,400.

As per the report, all these were the result of fragmented policies and directives. RAA says the procuring agencies cannot opt for a best quality at competitive rates since the bidding rate or price is a determinant factor in deciding the award of contract. Also the agencies are encouraged to go for locally produced products without due regards to quality.

The Audit Authority also found procuring agencies buying goods and services at the end of the financial year based on the availability of the fund and not because of the actual requirement.

Weak enforcement, accountability and sanctions, lack of professional capacity and limited use of the ICT enabled procurement platforms also led to irregularities.

Hence, the RAA say the finance ministry should revise the Procurement Rules and Regulations 2019. It is to make the procurement process more efficient and responsive to changing market scenarios. For instance, RAA recommends that the procurement should be allowed through direct contracting or sourcing where they can get quality goods and services at lower cost. The report also recommends that Bhutan Schedule of Rates (BSR)  must be reviewed to provide a comprehensive guidance. BSR provides the basis for cost estimation of construction projects undertaken by the government. The report says the prices should be updated on continuous basis reflecting the current market prices.

RAA also recommends on strengthening monitoring and supervision, promoting professionalism of procurement officials and increasing defect liability period of goods and services based on value. Moreover, the Audit Authority emphasised on fixing accountability on individuals and parties involved in procurement process.

Sangay Chezom

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