• Issues in procurement processes affect meds, fertiliser, food supplies
• Emergency purchases lacked transparency, accountability: NAO
• Procurement guidelines introduced in 2024 effective 1 Jan. 2025  

The Government procurement practices have long been a contentious issue, criticised for their inefficiency, lack of transparency, and frequent delays. These systemic flaws disrupt the timely acquisition of essential goods and services, resulting in significant financial losses for the State and immense frustration for the public. 

While procurement guidelines and the committees tasked with overseeing them are designed to ensure accountability and efficiency, the reality often tells a different story. 

Recent controversies, including irregularities in fertiliser imports and delays in acquiring medicines and food supplies, have reignited public anger. These incidents expose glaring lapses in the system, with experts, procurement committees, and Government entities passing the blame while taxpayers bear the financial burden. 

Alleged fertiliser procurement mismanagement

Among the most glaring examples of alleged procurement mismanagement is the importation of nano-nitrogen liquid fertiliser. The Government approved an unsolicited proposal from United Farmers Trust (UFT), a Sri Lankan company acting as an agent for India’s Indian Farmers Fertiliser Cooperative (IFFCO). 

By December 2021, Sri Lanka had imported 153,227 litres of this fertiliser at a staggering cost of Rs. 711,863,096. However, the imports were soon suspended amidst widespread criticism over the high costs and irregularities surrounding the transaction. 

The National Audit Office (NAO) had revealed that the procurement process violated multiple guidelines, highlighting the lack of accountability within Government procurement systems. 

Key issues included the importation of fertiliser before formal agreements were signed and the transfer of funds to the supplier before the procurement was officially awarded. 

For example, Colombo Commercial Fertilizers Ltd. had received two shipments of fertiliser on 20 October and 4 November 2021, even though the agreement with UFT was only finalised on 22 November 2021. Moreover, Rs. 253,301,126 was paid to UFT via electronic funds transfer on 18 October 2021, weeks before any formal agreement or delivery of goods. 

These actions contravened established procurement guidelines, which mandate that a certificate confirming the supply of goods be attached to payment vouchers. Furthermore, no evidence was presented to show that Colombo Commercial Fertilizers Ltd. had responded to UFT’s initial commercial offer, raising questions about whether the supplier selection process was conducted transparently. 

The timing of the imports also raised eyebrows. Critics pointed out that the Maha season, which required the fertiliser, had already ended by the time the shipments arrived. This mismanagement not only wasted taxpayer money but also undermined public confidence in the Government’s ability to manage essential resources effectively. 

A recurring issue

The fertiliser scandal is not an isolated incident. Delays in procuring essential medicines have sparked widespread concern, with procurement committees accused of stalling processes that directly impact public health. 

Similarly, the State Trading Corporation (STC) has faced criticism for its inability to secure rice imports on time despite floating tenders early. 

While private importers managed to import 70,000 MT of rice, the STC could only deliver 1,000 MT during the same period. Suppliers blamed these delays on cumbersome procurement guidelines and a lack of coordination within Government entities. These inefficiencies have led to supply shortages, driving up prices, and exacerbating public frustration. 

Procurement Guidelines 2024

The Covid-19 pandemic added another layer of complexity to Sri Lanka’s procurement woes. Recognising the need for swift action, the Government temporarily relaxed procurement guidelines in April 2020 to facilitate emergency purchases of essential items. 

Under these relaxed guidelines, procurement entities were allowed to bypass certain procedures to expedite transactions. However, the NAO later found that many of these emergency procurements lacked transparency and accountability. Instances of overpricing, substandard goods, and unnecessary purchases were reported, further eroding public trust. 

In response to mounting criticism, the National Procurement Commission (NPC) introduced the Procurement Guidelines 2024, which took effect on 1 January. 

These updated guidelines aim to modernise Sri Lanka’s procurement framework, replacing the outdated 2006 guidelines and addressing longstanding issues such as inefficiency, lack of transparency, and unethical practices. 

Key features of the 2024 guidelines include: 

• Value for Money (VfM): The new guidelines emphasise achieving VfM by considering cost, efficiency, sustainability, and equity in procurement. 
• Electronic Government Procurement (e-GP): Technology integration will streamline processes, enhance transparency, and reduce opportunities for fraud.
• Sustainability: The guidelines introduce provisions for sustainable public procurement, which consider environmental and social impacts alongside economic factors. 
• Enhanced governance: Detailed provisions on contract management, sanctions for non-compliance, and blacklisting unethical suppliers aim to strengthen accountability. 

Future of public procurement 

When contacted by The Sunday Morning, NPC Director – Policy A.D.P.I. Prasanna said: “With the introduction of the 2024 guidelines and manuals, the issues faced by procurement committees will be rectified. These updated guidelines prioritise transparency, efficiency, and sustainability, aligning our procurement practices with global standards.” 

A senior official attached to the Ministry of Finance who wished to remain anonymous told The Sunday Morning that all new procurements would be conducted under the new procedures and that the issues that had prevailed previously would be resolved through the new guidelines. 

The 2024 guidelines also emphasise ethical standards, introducing stricter measures to prevent fraud, collusion, and other prohibited practices. By shifting authority from the National Procurement Agency (NPA) to the NPC, the new framework reflects a more centralised and accountable governance structure. 

As the country prepares for the rollout of the 2024 guidelines, all eyes are on the Government to deliver on its promises. Will these reforms mark the beginning of a new era or will they become yet another chapter in the long history of procurement failures? 

For now, Sri Lanka’s taxpayers can only hope that the lessons of the past have been learnt and that the future of public procurement will prioritise efficiency, transparency, and the public good.