Thukten Zangpo
Following a wave of concerns raised by Bhutan’s private IT firms regarding the government’s decision to directly award contracts for procurement of laptops and desktops to the State Trading Corporation of Bhutan Limited (STCBL), Finance Minister Lekey Dorji said that the ministry will implement a new approach for future procurement cycles.
The finance minister confirmed that the issue has been amicably resolved after a meeting on November 6 between representatives of the IT Association of Bhutan (ITAB) and the finance ministry.
The new framework will see closer collaboration between the government, ITAB, and the Department of Procurement and Properties (DPP) in drafting tender specifications and terms for future procurements.
“We have agreed that for this procurement cycle, the process will proceed as planned, but moving forward, the DPP will work closely with ITAB and GovTech to ensure that Bhutan’s public sector receives only genuine products, leaving out any spurious goods,” Lyonpo said.
The ITAB has agreed to assist in refining the specifications for printer cartridges as part of this collaboration.
The finance ministry has already executed the contract agreement with the STCBL for purchase of laptops and desktops for the fiscal year 2024-25.
According to the finance ministry, all purchase and management of laptops and desktops shall be carried out in line with the ICT (Laptop and Desktop) Guideline 2024, issued by the DPP.
Following this, there was a backlash from the private IT sector, which voiced concerns over the exclusion of private companies from a key government procurement process. Several firms, including those affiliated with the Bhutan Chamber of Commerce and Industry (BCCI), contended that the direct awarding of contracts to STCBL violated the principles outlined in the Procurement Rules and Regulations (PRR) 2023.
According to the PRR, open tendering is mandated for procurement above Nu 15 million, with limited tendering applicable in certain price ranges. The limited tendering of works is between Nu 10 million to Nu 15 million, and between Nu 50,000 and 1 million for goods. However, the direct contract of work is up to Nu 10 million, and up to Nu 50,000 for goods.
BCCI President Tandy Wangchuk criticised the decision, claiming it would disrupt the market for IT businesses, particularly at a time when the sector is already struggling to remain viable amid the growing influence of State-Owned Enterprises (SOEs). “This decision could exacerbate the challenges faced by the private IT sector, with potentially devastating consequences for its growth and sustainability,” he said.
BCCI’s letter to the prime minister on October 25 stated that the private sector is already facing significant challenges to remain sustainable, especially in light of the expanding roles of SoEs.
“With private firms being squeezed out of such critical sectors, this decision will further exacerbate the difficulty for private IT businesses and have devastating consequences on the overall health and sustainability of the private sector of Bhutan,” it added.
The letter also stated that the private IT firms have made substantial investments in training and certifying engineers, procuring specialised equipment and spare parts, setting up necessary infrastructure to deliver efficient services to government agencies.
“A monopoly arrangement such as the one entered into between the finance ministry and STCBL runs contrary to Bhutan’s transformation initiatives aimed at private sector development. Such monopolistic tendencies will deplete the growth and sustainability of the IT industry in Bhutan, which has historically been driven by private firms, the letter stated.
An owner of the private IT firm said that the efficiency and quality of service delivery, including after sales services, and warranty commitments, may be compromised with such a monopolistic arrangement.
The private sector has a proven track record of delivering prompt services, and any shift away from this competitive environment may lead to delays and inefficiencies that could adversely impact government operations and the overall development of the IT sector of Bhutan, another IT firm owner said.
They also said that no prior consultation or involvement of the private sector was undertaken, which undermines the collaborative approach needed for a fair and transparent procurement process, as emphasised in the PRR 2023.
An owner of the IT firm said that the private IT firms, as official dealers of the brands they carry, have consistently supplied genuine products directly from Original Equipment Manufacturers (OEMs), with all products subjected to stringent quality checks by the DPP and the GovTech agency before delivery to user agencies.
As authorized OEM partners, private IT firms have made substantial investments in training and certifying engineers, purchasing equipment and spare parts, and setting up business infrastructures to ensure the timely and effective delivery of services to government agencies.
The private firms also seeked clarity on the pricing and specifications outlined in the ministry’s notification, questioning the exclusion of reputable OEM brands such as Acer, HP, Fujitsu, Asus, and Microsoft.
They also argue that the previous centralised procurements coordinated by the DPP required private firms to meet stringent conditions, such as providing a three-year warranty (as opposed to the one-year warranty offered by STCBL), submitting Manufacturer Authorization Forms (MAFs), and providing OEM-trained technical certifications.
There are a total of over 35 IT firms in the country.