Transforming Bangladesh’s Public Procurement: From Lowest Price to Value for Money

Tanjila Marjahan
Research Associate, Business Initiative Leading Development (BUILD)

Bangladesh spends an estimated 25 billion Taka annually on government procurement, roughly 40 per cent of the national budget, making public procurement one of the most powerful levers for shaping markets, improving governance, and driving sustainability. However, under the current legal framework, government procurement has largely been based on the ‘lowest price’ contract standard. While this approach minimises upfront costs, it often fails to deliver optimal long-term benefits because it overlooks hidden or lifecycle costs such as maintenance, replacement, and environmental impact. Recognising these shortcomings, the Government adopted the Sustainable Public Procurement (SPP) Policy on 10 December 2023. This landmark policy moves beyond lowest-price contracts to a value-for-money framework that evaluates the usefulness of goods and services across their entire lifecycle. It also introduces sustainability impact assessments covering equipment retirement, waste disposal, and broader social and environmental implications.

The critical question now is how to operationalise this shift. Bangladesh introduced the e-Government Procurement (e-GP) system in 2011 to automate procurement processes and improve transparency and efficiency. Fourteen years on, however, key functions such as user registration remain partially automated. Prospective tenderers must still visit banks in person to pay registration fees and submit hard copies of documents to the Bangladesh Public Procurement Authority (BPPA) for verification. This semi-automated process slows registration, increases transaction costs, and creates significant barriers to entry, particularly for women-led businesses and SMEs in rural or underserved areas.

These hard-copy submissions are required because BPPA continues to conduct physical verification of critical documents, including company registration, trade licenses, TIN/VAT certificates, and authorisation letters. The underlying issue is that the e-GP platform has not yet been integrated with the databases of relevant authorities, such as the Registrar of Joint Stock Companies, the National Board of Revenue, or local government offices that issue trade licenses. In the absence of interoperability, manual submission and verification remain necessary, introducing extra steps, delaying registration, increasing the risk of errors, and undermining the efficiency gains that e-GP was meant to deliver.

Despite these constraints, the e-GP system has already produced tangible benefits. Registered tenderers no longer have to pay to view tender documents and can first check eligibility criteria before making payments, reducing costs. The platform also reduces paperwork, travel, and manual processes, enabling better resource allocation within government agencies. By making procurement data publicly accessible, it strengthens transparency, curbs corruption through greater accountability, and levels the playing field by instantly publishing tenders and alerts online. This opens new opportunities for SMEs and local suppliers while reducing paper usage and carbon emissions, thereby supporting environmental sustainability and enhancing citizen engagement and social accountability.

Nevertheless, the bidding process is still not fully automated, especially in post-award contract management. Without full automation and system-wide integration, the platform cannot deliver a completely seamless procurement cycle. Implementing the SPP policy through the e-GP system will therefore require significant adjustments. The system was originally designed to support lowest cost tendering and needs to be re-engineered to adopt the ‘Most Economically Advantageous Tender’ (MEAT) approach, which factors in social, environmental, and lifecycle considerations alongside price. Key technical challenges include an inadequate bidder database, insufficient integration with other government systems, and insufficient data for sustainability assessments. On the policy and institutional side, capacity gaps and resistance to change among officials and suppliers, limited readiness of suppliers to comply with new sustainability standards, and low awareness of SPP requirements could hinder uptake.

On the legal front, significant progress has already been made. The Public Procurement Act 2006 was amended by ordinance on 4 May 2025 to make e-GP mandatory for all procuring entities and to recognise SPP formally. The new Public Procurement Rules 2025, published on 28 September 2025, likewise embed SPP provisions, providing the legal basis for this shift. BPPA is also preparing to pilot SPP implementation in six initial product categories: paper and paper products, office supplies, computers and electronics, office furniture and wooden appliances, vehicles and transportation equipment, and official publications. These categories prioritise recycled content, energy efficiency, extended product lifecycles, and sustainable sourcing. In addition, plans are underway to expand the pilot to four high-impact sectors: building construction, road construction, water, and energy, where sustainability criteria can have an even greater effect on public spending and environmental outcomes.

Capacity-building initiatives are already in motion. A master trainer program on SPP was conducted in June 2024 under a World Bank-funded program, aimed at equipping procurement officials and suppliers with the skills and knowledge required for SPP implementation. To unlock the full potential of automation, e-GP could be integrated with the National Single Window, creating a unified digital ecosystem instead of fragmented systems across government agencies. This integration would make registering in e-GP as seamless as signing up for a social media account, eliminating redundant steps and dramatically reducing time and cost for suppliers.

Finally, inclusiveness must be a central priority. Currently, only about 4 per cent of registered tenderers in the e-GP system are women entrepreneurs. Streamlining processes, integrating databases, and actively disseminating information about SPP could increase participation by women-led businesses and SMEs, thereby multiplying the social and economic benefits of public procurement. With sustained investment in technology, capacity building, and stakeholder engagement, Bangladesh can transform its procurement system from a lowest-price mechanism into a powerful driver of sustainable development, market innovation, and equitable growth.