US embassy cable - 05DHAKA1407

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