In a sweeping reform aimed at combating corruption and improving efficiency in public spending, the government has enacted the Public Procurement (Amendment) Ordinance-2025, introducing a series of changes designed to align Bangladesh’s procurement framework with international best practices.
The ordinance, issued via a gazette notification on May 4, removes the long-debated 10 percent price cap on tender bids, makes the use of the electronic government procurement (e-GP) system obligatory for all public procurement, and allows non-governmental Oraganization (NGOs) to contest for government tenders for the first time.
“These reforms are intended to curb project cost overruns and prevent price manipulation during implementation,” said Shah Eyamin-Ul Islam, director of the Bangladesh Public Procurement Authority (BPPA), formerly known as the Central Procurement Technical Unit (CPTU).
The price range provision, introduced in 2016 under the previous Public Procurement Rules 2008, had allowed tender prices to vary by 10 percent from government estimates. While intended to prevent abnormally low bids, the mechanism was often exploited by contractors to manipulate prices through collusion. Its withdrawal, Islam said, responds to long-standing professional concerns.
“Although the ordinance does not explicitly state that the price range no longer exists, this will be clarified through new rules currently being drafted,” he added.
The reforms come at a time when less than 65 percent of government procurement is conducted through the e-GP system, introduced in 2011 to digitise and streamline public spending. Making the system mandatory is expected to boost transparency and reduce discretionary practices in awarding contracts.
The government allocates approximately $30 billion annually for public procurement, underscoring the significance of a well-regulated, efficient procurement framework.
Structural Changes in Procurement Categories
One of the major structural reforms under the new ordinance is the reclassification of services in procurement. Previously, government procurement was divided into three categories—goods, works, and services. The revised system now separates “services” into two broad categories: physical services and intellectual services.
“Over time, it became evident that grouping all services together was too narrow,” said Faruque Hossain, procurement policy consultant for the Ministry of Power, Energy and Mineral Resources.
Physical services now include outsourced tasks such as event management, operations and maintenance, and workshop services, while intellectual services continue to encompass consultancy, auditing, and software development.
The previous framework, Hossain explained, forced procuring entities to follow procedures tailored for intellectual services, even when acquiring physical services. This led to many complication . The new classification allows more appropriate mechanisms for different service types.
NGOs, International Standards, and Flexibility
Another landmark change is the inclusion of NGOs as eligible bidders. Previously, structural differences in funding and disbursement models had excluded them. NGOs naturally get money before spending, unlike contractors who spend first and are reimbursed later.
“This discrepancy barred many capable NGOs—especially in sectors like health, education, and social services—from participating in tenders,” Hossain said. Under the new ordinance, registered and authorised NGOs can now compete for tenders, expanding the pool of qualified service providers.
The ordinance also introduces greater flexibility in documentation. While government-standard tender documents remain the default, procuring entities can now use internationally recognised documents—such as those from FIDIC (International Federation of Consulting Engineers) or British standards—subject to BPPA approval. This provision aims to accommodate complex infrastructure projects where local documentation may fall short.
Additionally, negotiation, previously limited to intellectual services, is now permitted under specific conditions for physical services. This change is expected to benefit areas such as event management and operational support.
Sustainable Procurement and Global Alignment
The ordinance also marks a significant shift toward sustainable procurement. Unlike the 2008 rules, the new law mandates that energy efficiency, ecological impact, and social inclusion be considered when evaluating bids.
“This expansion brings long-overdue recognition to services that were growing but not clearly classified,” said Islam, noting that the reforms were recommended by longstanding development partners such as the World Bank.
Transparency International Bangladesh (TIB) has felicitated the changes, mainly the inspiration of joint ventures (JVs) between domestic and overseas firms in large projects.
“Such partnerships can bolster ability and shrink wastage—if done with cohesiveness,” said TIB Executive Director Iftekharuzzaman. However, he cautioned that NGO participation must be closely monitored to prevent abuse of nonprofit status for commercial gain.
“Without monitoring safeguards, organization may shadow the line between improvement and profit, surpassing accountability,” he advised.
While the reforms signal a bold policy shift, experts agree that implementation will be the true test.
“Even well-decorated laws can be dented without stringent checking and organizational cohesiveness,” Iftekharuzzaman concluded.
