Project implementers say the main reason for budget underutilization are some clauses in 128 pages Procurement Rules and Regulation 2023, drafted by the MoF
The Ministry of Finance (MoF) recently sounded the alarm on budget underutilization, revealing a stark reality—only 18% of the capital budget had been spent by midyear. The revelation was heavily debated and ignited a firestorm of criticism. Yet, on the ground, where projects are meant to take shape, civil servants paint a different picture. The real issue, they argue, is not inefficiency but the MoF itself—specifically, its rigid and cumbersome Procurement Rules and Regulations 2023. These bureaucratic hurdles, they claim, have turned the bidding process into a slow-moving nightmare, delaying project awards and making timely implementation nearly impossible.
“This has been a problem and we have told and submitted to almost every agency the reasons behind it,” a senior civil servant said. “Yes. We may not be able to complete the project in time, due to which the budget cannot be utilized. But can one complete a project which requires one year in just six months,” he asked, adding that they can do it if concerned agencies are really concerned about utilization of budget. “But we will be compromising with quality. We also want a project to be completed in time and the budget utilized, but it is sometimes impossible,” he added.
“This starts from the beginning, in July, when the approved budget is not as per the proposed ones. So, estimates have to be changed based on the approved budget, where we lose a significant amount of time. After that begins a series of events, where we lose something very important – time,” he said, adding that by the time work starts, the year ends. “Actual work begins by November and December only, due to unnecessary rules, wrong timing and other factors,” he said.
Speaking along the same lines, another civil servant said “there is no value for time.” “I agree that procurement should be done properly, but not like how it is done, especially in relation to time,” he said. For instance, he said that the submission deadline for bids in Bhutan depends on the type of procurement and the nature of the goods, services, or works being procured.
“For open bidding: 30 days from the day the bidding documents are made available; limited tendering: 21 days from the day the bidding documents are made available. Direct Contracting: 6 days from the day the bidding documents are made available. International Competitive Bidding: 30 days from the day the bidding documents are made available. National Competitive Bidding: 21 days from the day the bidding documents are made available. International Limited Bidding: 21 days from the day the bidding documents are made available. National Limited Bidding: 14 days from the day the bidding documents are made available.”
Further, these time limits may vary depending on the specific tender notice.
Meanwhile, the bid validity takes a chunk of time. According to Section
5.1.8.1. of the Procurement Rules and Regulation 2023, the bid validity period should generally be sixty days from the bid closing date. “However, the procuring agency may set a more appropriate validity period, considering the time needed for bid evaluation and contract award.”
Further, Article 5.1.8.2 says. “If the procuring agency cannot complete the bid evaluation and contract award within the specified period due to factors beyond its control, it may request the bidder’s consent for an extension of the bid validity period.”
He explained that the bid evaluation process comes next. “It typically takes about 30 to 60 days from the closing date of the bid, depending on the complexity of the procurement and the nature of the goods, services, or works being procured. However, the exact duration may vary depending on the specific requirements of the procurement and the efficiency of the procuring agency.”
For complex projects, or those that require additional preparation, the time for bid submission may be extended, and in some cases, the time frame can go up to 45 days or longer.
It does not end here. The Letter of Intent (LOI) to award the contract is generally issued within 5 days after the completion of the bid evaluation process. After the LOI is issued, there is typically a 5-day standstill period during which bidders can lodge complaints if aggrieved by the decision. However, there isn’t a fixed timeline specified for resolving complaints. The resolution period generally depends on the nature and complexity of the complaint. If the complaint involves substantial issues, it might take longer. In practice, the resolution should happen quickly to ensure that the procurement process is not unduly delayed.
Once this is completed, another letter, the letter of award (LOA) is issued to the one who gets the work within 15 days.
There is then the mobilization period allowed for contractors to begin work after the contract award. It varies depending on the nature of the project and the terms outlined in the contract. Typically, contractors are given a mobilization period of 7 to 30 days.
The mobilization period is meant to allow contractors time to organize resources, including manpower, equipment, materials, and any necessary permits or approvals. However, the exact duration can be influenced by factors prolonging implementation.
“So by the time, the work begins, it is November or December. And as work progresses, the monsoons step in, due to which work has to be stalled,” he said.
Another impediment is the “+20% and -20%” clause. According to this, bidders can be disqualified if bids fall in the above figure. “Sometimes, contractors do not fulfill these criteria and we have to again call for bids, again losing time.” He also said that contractors also disqualify when they are not able to meet the requirements as per the procurement rules. “When this happens, we again need to float tenders. This also leads to delay in implementation and thus under utilization of the budget,” he added.
When asked about recommendations, another civil servant said budget should be approved by March to April and tendering conducted by May and June. “Award work by July and let mobilization end by August. Contractors can then begin their works by September. Then only can work be completed in time and budget utilized.”
Meanwhile implementers say they understand the importance of responsible and effective budget utilization, and are committed to ensuring that allocated funds are used wisely to achieve our objectives through prioritizing key projects, removing bottlenecks, and conducting regular progress monitoring and reviews.
“We have been allocated a capital budget of Nu. 253.772 million (SDP fund Nu. 56.25 million) and have utilized 32% of that amount as of today. However, we have spent 60% of the total outlay, including secured advance payments and material advances. The expenditure statement reflects only running bills and does not include secured advance payments or material advances,” an officer from Samdrup Jongkhar said.
Another from Haa said, they are adhering to the guidelines, notifications, and regulations set forth by the Ministry of Finance (MoF). The allocated budgets are being fully utilized; however, certain budget items are facing delayed expenditure reporting. “Notably, our agency does not have any instances of underutilized budgets; if there is any balance we use it and adjust for other limited allocated budgeted activities from sector to sector within agency. On the contrary, we are encountering challenges due to insufficient budget allocations for several crucial activities, particularly in the recurrent budget for both Local Governments (LGs) and the Dzongkhag Administration,” the officer said.
From the Nu 48.584 million capital budget allocated, approximately 60% of the total budget has been utilized thus far. “However, it is important to note that pending bills are currently in the process of settlement, with ongoing efforts to receive payments from contractors and suppliers for the ongoing works and procurement,” the officer maintained.
Nidup Lhamo from Thimphu
