Govt ready with draft disposal policy

The government has come up with a uniform policy that will help its offices follow specific methods to dispose of any kind of assets that have crossed its economic life and become a burden.

This policy will stop the practice of dumping out-of-order government assets that are beyond repair or economically unviable but still occupying office space. Following this, the government can also earn money by selling them.

The owner entity can dispose of the assets through public tendering, public auction, destruction, trade-in, direct negotiation and/or transfer to another disposal entity. It will need to choose one appropriate method after proper evaluation, according to the draft of the new policy.

The Central Procurement Technical Unit (CPTU) of the Implementation, Monitoring and Evaluation Division has formulated the draft of the Assets Disposal Policy. It sent it to different stakeholders on December 27 last year for their opinions.

“We have received opinions from several government organisations. More feedback is expected to arrive as this is important for all government entities,” CPTU Director General Mohammed Shoheler Rahman Chowdhury told The Business Post.

It costs money to keep unusable assets stored for a long time without any valid reason. So, during the procurement process of any asset, the authorities will have to assess the disposal value as well. This policy will help them to do that, he said.

According to the policy, government offices procure different kinds of goods under development and operational budget and many of those need to be disposed of when they become surplus to requirements, arrive at the end of their lifecycle, are beyond economic repair or are no longer fit for purpose.

The expectation is that public entities will dispose of these goods in a manner that is efficient, consistent and equitable, and seek to achieve value for money following the relevant principles of the Public Procurement Act as well as the Public Procurement Rules, says the draft.

CPTU officials said that until now, out-of-order goods have often been dumped at storage rooms and parking lots and they only occupy spaces without any economic return as there was no uniform policy.

Disposal processes

According to the proposed policy, there will be a survey committee that will guide the disposal process if the assets are not fit for purpose, at the end of useful life, are unserviceable, obsolete, have a limited shelf life, occupying storage space, in surplus quantities, not needed during the remaining period of their useful life, and/or reached their optimum selling time to maximise the returns, etc.

Assets can be disposed of as well if they are found to contain hazardous material and no longer comply with occupational health and safety standards.

The head of the user department will initiate the disposal proposal by requesting in writing to the procurement department or the department responsible for disposal to assess the assets’ condition.

The procurement department or the department responsible for asset disposal will initiate the process by sending the request to the Head of the Disposal Entity (HODE) for approval of the list of items and send the approved list to the Disposal Survey Committee.

The committee will inspect the assets, determine their serviceability condition and market value, and propose the disposal method. The procurement or the responsible department will then follow through.

Disposal methods

The government may choose to sell through the public tendering method for high-value and uncommon assets, assets located in remote areas, assets that have geographically dispersed potential markets, and/or assets with end-use or export restrictions attached to the sale, reads the draft policy.

The sale through public auction can be selected if analysis reveals that there is a large number of potential tenderers, no conditions or export restrictions of the end-user for an asset sale, a possibility of achieving higher selling value, or the Disposing Entity (DE) needs to complete the process within a short period or the assets are of lower market value.

This process can be done directly by the DE or by appointing licenced professional auctioneers. For both public tendering and public auction, the authorities will need to advertise to ensure participation from a wider range of people.

Assets can be transferred as well when an asset may have no use for one DE but be of value to and of further use by another DE. Transfer of assets may cost either entity nothing [other than admin or transaction cost] or this may entail a fee, in which case the two entities will negotiate and decide the amount.

The trade-in disposal method can be used if the DE’s procurement staffs determine that the trade-in of surplus items to balance the purchase price of new assets is feasible and provides an economic and efficient way of upgrading equipment. But it cannot be followed if it prevents fair competition and reduces the value for money in procurement processes, according to the policy.

The authorities can also follow the direct negotiation method to dispose of/sell the assets if the market is limited and the DE has identified a single buyer willing to pay the reserve price or the assets will be sold to a specific company, group or individual because of national security, public interest, legal, human rights or environmental considerations.

Special conditions

An asset can also be destroyed but this disposal method can only be followed if the asset is considered as scrap, has no value, cannot be transferred to any other DE, pose risk to national security or the public interest, health and safety, or destruction is required on the grounds of legal or human rights issues or environmental considerations.

These assets also can be essentially dangerous, may become dangerous through external factors, or may affect people or the environment.

Before destruction, such assets shall be classified into hazardous/toxic or non-hazardous/non-toxic categories. The destruction of hazardous assets will be done by maintaining proper caution.

All destructions will be documented properly. To carry them out, the DE will appoint an appropriately competent authority or a qualified/licenced provider, according to the draft policy.