PSI of govt purchase contrary to import policy

Different Ministries very often let their officials of different purchasing authorities including few officials of the ministry to go abroad for pre-shipment inspection (PSI) at the “expenses of suppliers” with the condition that these inspection period as official duty and they will submit a report after return about the inspection before shipment.

The government officials are not technical experts on specification and quality of all goods and services but they inspect the consignments before shipment. They don’t undertake the liability of supply of poor quality materials. This is an opportunity of government officials to go abroad but without apparently any liability.

In an inspection, supply of poor quality equipment has been surfaced with the intervention of Trade Union Leaders. General Secretary of BIWTC Sramik Union sent letters to shipping minister, shipping ministry’s parliamentary standing committee Chairman, shipping secretary and BIWTC Chairman on November 23, 2020 demanding punishment against corrupt officials involved in procuring non-functional fog lights. The authority became active upon such disclosure.

This dispute of supply of interior quality equipment of BIWTC went to court against confiscation of security money of the supplier. It appears that government is not holding the team of inspectors consisting of officials of ministry for the supply of poor quality equipment. In this occasion, one official from the Corporation and three officials from the shipping ministry went to USA for inspection.

There is no provision in the Public Procurement Rule 2008 about PSI by officials of purchasing authority or relevant ministry. As per Import policy order of Bangladesh government, pre-shipment Inspection of goods for import in the public sector for the value of a single item authorized for import is Tk 50 lac or above. The importing department  shall arrange Pre-shipment Inspection. The PSI shall be entrusted to internationally reputed surveyors only.

In a few situation public sector agencies may however, be allowed to clear goods on production of a certificate from their Administrative Ministry to the effect that pre-shipment inspection requirement has been waived by that Ministry in respect of the imported goods or that no pre-shipment in respect of a particular consignment was considered necessary. Therefore, no such arrangement of inspection by government or departmental officials but only by internationally reputed surveyor as this is a technical job and need expert knowledge.

The purchasing authority insert a clause of PSI in the tender document to read as “to ensure quality, quantity, packing, marking, and loading, etc, as per purchase order, inspection of the imported goods shall be arranged at suppliers cost prior to shipment through inspection officials. Such a rule of tender is contrary to the Import Policy order of the government.

According to procurement policy, the purchaser shall have the right to test the goods to confirm their conformity to the contract specifications. The technical specifications of the materials shall specify what tests the purchaser requires and where they are to be conducted. The supplier shall at its own expense and at no cost to the purchaser, carry out all such tests of the goods and related services as are specified in the Contract. The purchaser may reject any goods or any part thereof that fail to pass any test and/or inspection or do not conform to the specifications. The supplier shall either rectify or replace such rejected goods or parts thereof or make alterations necessary to meet the specifications at no cost to the purchaser, and shall repeat the test and/or inspection, at no cost to the purchaser, upon giving a reasonable advance notice.

As of global practice, the standard pre-shipment practice to inspect and keep mark of inspection and usually put the material/equipment into the containers and lock and seal the container. During the unloading of the consignment from the same inspectors will present at the port to open the seal and lock. There is no such policy or guideline of PSI of government procurement in Bangladesh.

In case of Bangladesh, the high officials do not remain present during loading of consignment in the container and not personally put seal on the lock. They never go to the place of opening of the container either at the port or at the site of the project. The PSI is meaningless without presence of inspectors or their representative during loading and unloading of the consignment from the container. The visiting high officials only give a report to the ministry. The process has many loopholes for manipulations.

There is an argument that the visit cost nothing to the government but while the suppliers offer free trips these are not free as any such expenses are included in the cost of products as contingency expenses by the suppliers usually for corrupt countries.

The procurement process has rule for determination of specification of the products, scrutiny of technical offer and PSI of the products. The preparation of specification and evaluation of technical documents for international procurements vested to the experts but the PSI in other country is reserve for the non-technical high officials. The procurement rule also allowed outsourcing of external export to support the procurement.

On the other hand, the PSI needs very specialised knowledge and there are many reputed local, regional and multinational companies. They usually don’t travel to other countries to avoid the cost. The surveyor(s) inspect the consignment before shipment and their representative(s) in the destination country present personally during opening of the container to confirm the intact seal and lock to ensure the delivery of inspected materials. The inspecting company also liable for quality and quantity of the consignment.

In case of Bangladesh government purchase, inspectors are not responsible for the wrong delivery of the consignment due to lack of proper inspection. The purchasing authority usually shift the responsibility on the supplier despite having inspection report of high government officials.

The inspection by government official is against the Import Policy Order as well as it is expensive for the nation and not serving the real purpose. The inspectors are not liable for any incidence of wrong delivery. According to a research article on purchase of LGED - “In many cases, project officials and ministry officials enjoy the foreign trips in the name of PSI which is simply misuse of public fund”. The best value for money is not always achieved in case of procuring goods in the public sector organizations.

The writer is a legal economist