Feature Stories
- How Bangladesh bridged the gap between amateur and professional in government procurement
- Rated Criteria: Promoting Value in World Bank Procurement
- Public Procurement Transformation in Bangladesh
- Achievement of Value for Money and Enhancement of Efficiency, Economy and Transparency in Procurement - Document Archive System
Archives
- End-to-End Procurement Planning and Maintenance System Integrated with Project MIS
- Application of Construction Milestones in Rural Road Contracts of Nepal
- Gross National Happiness Model for Pursuing Sustainable Public Procurement
- Government procurement is the basis of wide opportunities for enterprise development
- The Challenges of Procurement Training in a Fragile Country: the Afghanistan Experience
- When and How to Open Contracts: Transparency and Engagement through World Bank Projects
- Innovations and Best Practices in Procurement Processes of Disaster Recovery Projects
- World Bank Experts Discuss Global Procurement Trends and Armenia's e-GP system with the National Assembly
- Technology driving transparent and accountable public procurement reform in Bangladesh
- Prototype for Implementation of Framework Agreement via Blockchain
- Construction Project Planning and Management Capacity Building in India: A Wholistic Approach to Boost Infrastructure Development
- Zimbabwe: Public Procurement reform to catalyze greater transparency and development
- 15th Procurement, Integrity, Management and Openness (PRIMO) Forum
- e-Procurement World Map
- Preventing and controlling corruption: A modern approach to Procurement
- 6th South Asia Public Procurement Conference held in Thimphu, Bhutan
- South Asia Procurement Innovation Awards 2018 Announced
- Procurement iNET completes 5 years and new CPPP Fastest 100% Challenge Launched
- Risky Business: Does Debarring Poor Performers Mitigate Future Performance Risk?
- Global Procurement Summit 2019, New Delhi, India
- World Bank India launches Survey for International Civil Works Contractors
- World Bank launches new Complaints Module in Systematic Tracking of Exchanges in Procurement (STEP) System
- New Open Contracting Data Standard for e-Procurement Systems Launched
- Bangladesh's success in public procurement: Sustained reform really pays off
- The five drivers for improving public sector performance: Lessons from the new World Bank Global Report
- South Asia Public Procurement Innovation Awards 2018
- Conversation with Khaled Elarbi, President, High Authority for Public Procurement (HAICOP), Tunisia on the Digitalization of Public Procurement
- Breaking the glass ceiling in Africa: Rwanda E-Government Procurement System
- How government e-marketplace is revolutionizing procurement in India
- Ensuring Value for Money in Infrastructure Projects - The Botswana way
- Blockchain Lessons for Procurement
- Botswana’s Benevolent Move to Enhance its Procurement Profession
- Achieving Better Value for Money Using e-Auction for Procurement of Goods by Public Sector - A Success Case from DPDC
- Guide to Project Management and Contract Management (GPMCM) – New Approach to Improve Efficiency and Effectiveness of Procurement Outcomes
- Regional Winners of SAPIA 2017 participate in 8th International Public Procurement Conference (IPPC 8) Arusha, Tanzania
- The Future of Public Procurement in the Era of Digitalization
- World Bank Operations Procurement Helping Turkey to Procure a US$2 Billion Gas Storage Facility
- Unlocking Energy Efficiency Market in India - Through Innovative Procurement Business Model
- Getting value for money: Creating an automated market place for farmers in Pakistan
- Towards a Single Market for Public Procurement in Caribbean Small States
- Web-Based Online Evaluation Tool (e-Tool) for Procurement of Works by Royal Government of Bhutan
- Strengthening Health Sector Procurement System Offer Hopes for Universal Health Coverage in Nepal
- Morocco makes Strides in Modernizing its Public Procurement System— Operationalization of the Procurement Regulatory Body
- Innovations in Procurement Process and Selection that Lead to Improved Outcomes – Tenderers’ Database Management System
- Looking Back and Forward: The World Bank’s Procurement Framework
- Independent Monitoring and Evaluation of Contracted Health Services Leads to Improved Outcomes in Rural Areas of Afghanistan
- Fifth South Asia Region Public Procurement Conference brings focus on Procurement in Public Service Delivery
- 12 Procurement Innovations from South Asian Countries Celebrated
- Social Media is Improving Procurement in Lao PDR
- ASEAN meeting explores ways of professionalizing public procurement to meet development challenges
- Second International Training Program on the World Bank’s New Procurement Framework
- South Asia Procurement Innovations Award 2017 launched with Bigger and Better Prizes
- How to bid, finding opportunities, what makes a successful bid
- Pushing boundaries in procurement framework implementation
- Experience of Developing PPSD for the Assam Agribusiness and Rural Transformation Project (APART), India
- An Electronic Approach: Streamlining Georgia's Procurement
- South Asia Heads of Procurement Knowledge Exchange Program to U.S. Government Procurement Systems started
- 13th Procurement, Integrity, Management and Openness (PRIMO) Forum - a Documentary
- Bangladesh to strengthen public procurement with World Bank supported Project
- Establishment of Technology-Based Health Procurement and Supply Chain Management System, and Capacity Development in Tamil Nadu Medical Services Corporation
- Towards a Single Market for Public Procurement in Caribbean Small States
- Redefining Procurement as an Innovative and Collaborative Centre of Excellence for Best-in-Class Sourcing Solution
- India’s PowerGrid Endorsed for Alternative Procurement Arrangements by the World Bank
- Achieving Value for Money in Indonesia’s Geothermal Project
- Citizen Monitoring of Rural Roads Under Pradhan Mantri Gram Sadak Yojana (PMGSY), India
- Establishment of Grant and Service Contract Management Unit (GCMU) to Manage Contracting Out of Health Services in Afghanistan
- Procurement for Regional Development–Public Policy Initiative in Sri Lanka
- PPAF Community-Driven Development (CDD) Procurement Model, Pakistan
- Making Successful Procurement of IT Systems - An Experience from Vietnam
- Procurement Observatories continue to deliver in India
- Implementation of National e-GP System in Nepal
- Government e-Marketplace (GeM), India
- Africa High Level Public Procurement and Electronic Government Procurement Forums
- Development of Procurement Cadre as Part of Holistic Procurement Reforms in Bhutan
- Modernizing Public Procurement in Zimbabwe, one Step at a Time
- Citizen Engagement During Public Procurement Implementation in Bangladesh
- Winter 2017 Virtual Procurement, Integrity, Management, and Openness (PRIMO) Forum on Sanctions and Debarment Systems
- Close and Personalized Procurement Monitoring, Leading to Procurement Efficiency in Irrigation Sector in Fragile and Challenging Environments of Afghanistan
- Procurement Framework 2016 offers wider choices to ‘Go to Market’ based on PPSD
- Procurement Framework 2016 - Benefits, Status of Roll-out and M&E Arrangements
- PPSD offers Fit for Purpose Procurement Solutions
- Global Procurement Summit
- Fourth South Asia Region Public Procurement Conference
- The World Bank e-Procurement Tools
- South Asia Procurement Innovations Awards, 2016
- Learning Videos launched on STEP, online tracking tool on procurement for World Bank Projects
- Open e-Learning is Building a Cadre of Procurement Experts
- South Asia Region Public Procurement Conference, 2017
- Online Certificate Program in Public Procurement in Arabic Launched in Egypt
- First Procurement Knowledge Exchange Forum among ASEAN Countries
- Nobel Prize in Economics for contribution to Theory of Contract
- The Africa Region Harnesses Integrated e-Government Procurement (e-GP) Systems in Pursuit of Transparency and Integrity
- Procurement Reform for Humanitarian and Development Challenges in Kurdistan Region of Iraq (KRI)
- Successful Procurement is not just a set of Activities, it is a Strategy
- Afghanistan - Trends and Recent Developments in Governance
- PPSD is an Opportunity for clients and staff for Improved Procurement Management
- Procurement Reform Advances in the MENA Region
- Data Analysis and Collaborative Work in Action for Expedited Disbursements in Africa
- Ensuring Good Governance in Procurement in Sri Lanka
- New Procurement System to Improve Development Impact and Transparency in South Asia
- World Bank, USTDA Formalize Procurement Partnership
- How the New Procurement Framework Will Benefit 45.6 Million People in India
- Procuring the Future
- Reasons to Bid, Finding Business Opportunities
- New World Bank Procurement Framework Promotes Strengthened National Procurement Systems
- The readiness for Procurement Framework 2016
- 6 Things to know about New Procurement Framework
Achieving Better Value for Money Using e-Auction for Procurement of Goods by Public Sector - A Success Case from DPDC
Summary
One of the ways to get better value for money for goods procured using public money is to ensure a better selling price for these goods when they come to the end of their usable lifespan. Traditionally, Dhaka Power Distribution Company (DPDC), a government-owned company of Bangladesh, like the country’s other public sector organizations, had been disposing ‘end-of-life’ goods through manual auction system (forward auction), which hinders better returns. DPDC, for the first time in the history of public sector auctions in Bangladesh, introduced an electronic ‘e-auction’ platform that has proved to be a very successful innovation by achieving the desired results. The system is highly scalable and adoptable by all public sector organizations of Bangladesh. It is also sustainable in terms of profitability, is pro-people and environment friendly. Still very new in Bangladesh, there is, however, room for improvement in this e-auction system.
Background
One of the major goals of public procurement is to ensure 'value for money', which means buying goods that are effective and 'economic'. Getting lowest price for goods procured is important but not enough. To achieve economic cost, lowest ‘life cycle cost’ is to be attained. One of the ways to ensure this is getting a better selling price for goods sold at the end of their usable lifespan. If the return from such salvage is high and disposal cost is low, then the net cost decreases, resulting in higher 'value for money'. Traditionally, in DPDC, like in other public sector organizations of the country, disposal of 'end-of-life' goods had been made by selling them through manual auction system. The manual system has multiple problems, including lack of sufficient competition or no competition at all, resulting in lower than the expected price offer. It is often reported that some unscrupulous bidders manipulate the offer price by making unholy alliances among themselves or applying coercive power to prevent other interested parties from biding. In this backdrop, DPDC decided to do things differently.
Challenges Addressed
For the first time in the history of public sector auctions in Bangladesh, DPDC introduced an electronic 'e-auction' platform for selling used goods; moving the whole auctioning process from the manual mode to electronic mode. This way, till date, DPDC has completed 7 e-auctions. Against the expected value of BDT 7.2 million, a total of BDT 8 million was received, an amount that is 10.77% higher. It is also worth mentioning that even the level of competition has increased.
Impacts Generated
Introduction of the new e-auction system has made a positive impact in many ways. Now, 'end-of-life' goods are being sold in less time compared to previously, when there was manual auction. Competition has increased - resulting in better prices for goods sold through e-auction. There is reliable and clear audit trail, accountability, transparency, and fairness within the auction process. Store management has become easier and space is now free due to timely disposal of used goods.
Level of Innovation
In the newly introduced system, interactions between sellers, buyers, and banks are electronic. Banks connected with the DPDC auction system have played a very important role in the system becoming a success. Bidders can transact with DPDC through the designated banks. Received bids are evaluated and a work order issued to the highest qualified bidder through the e-auction site. Then, the winning bidder pays the remaining amount, except the security money deposited earlier, using a payment slip generated by the system at the designated organizations of other countries, as well as private sector organizations, for selling their used goods.
Scalability and Sustainability
Any system becomes sustainable if it successfully meets 3 Basic Ps - People, Planet and Profit. The newly introduced e-auction system in DPDC has successfully met these three criteria, apart from being economically beneficial. The system is consistently generating more than average returns from selling of used goods, thereby bank. A delivery order is issued by the system to the winner for delivery of goods from stores.
Replicability
The emerging picture clearly shows that the new system is very suitable and highly replicable in all public sector organizations of Bangladesh, as almost the same context like DPDC prevails in them. DPDC is hopeful that this e-auction system will be adopted by all other public sector undertakings of the country with some customization. This auction system may even be adopted by public sector ensuring capital for future investment. This system has also had a positive impact on macro-economic levels, as goods sold though e-auctions are reused or recycled, thereby boosting the recycle industry and improving the environment. It is also generating more business in the SME sector, leading to employment and contributing to GDP growth.
DPDC represents only a very small portion of the total public sector auction requirement. If all public sector organizations of Bangladesh start working using this type of e-auction system, then overall positive impact on national economy will be significant. As recycling or reuse of goods uses less energy, it also helps the planet by putting lesser burden on its energy resources. The system is also pro-people, as automation reduces their workload. Further, record keeping is organized and easy.
Lessons Learned
The following are the lessons learned:
- Although a 'user manual' provided in the system explains the bidding procedure step by step, it has been reported that a few bidders have failed in bidding for some auctions even after depositing their security money with the bank. When probed, it was found that they attempted to bid at the eleventh hour, and they were not acquainted with the platform. From this experience, DPDC has decided to appoint a 'Help Desk' or person with dedicated phone line when any auction is in ‘live’ status. Help desk/designated person will support any bidder who is facing difficulties to bid through the system.
- The system has been designed with a goal that the potential bidder need not physically come to the DPDC office, except for taking delivery of auctioned goods. It has been found that some bidders prefer to physically inspect the materials under auction, so that they can offer a realistic price. To address this, DPDC is actively onsidering uploading of video clips of materials under auction in the system.
- Banks connected with the DPDC auction system play a very important role in the system being successful. Only one bank - EBL - is playing that role so far. This limits the level of competition as many bidders may not find it comfortable to transact through any other bank than their current bank. So, more banks will be given access, thereby ensuring better competition.
- In this e-auction system, a bidder cannot see the offered price of other bidders when the system is in live status. It is possible to redesign the system in such way that any participating bidder can see the current highest price on offer without knowing the highest bidder. This will increase competition, resulting in a more competitive price.
- The system has been designed by DPDC using its own IT experts. This system is less secure and may be attacked / hacked any time. To overcome this risk, a high level security system is to be designed in future.