Innovation Details

Innovation Title :

Regional Development through Public Policy

Innovation ID :


Relevant Focal Theme:

Performance focused Procurement Reforms and Capacity Development

Proposer Details


Proposer Name:

Priyanga Algama

Proposer Designation:

Director General

Proposer Official Address:

Challenge Addressed:


Regional Development is a broad term widely used in countries to reduce disparities by supporting economic activities such as employment and wealth generating in the regions. In the past, in Sri Lanka, the regional development policy tended to achieve these objectives by means of large scales infrastructure developments by attracting inward investments where investors and contractors were from other regions or countries.Although there are a sufficient number of regional contractors who are capable of undertaking various construction and renovation projects, it has been reported that such contracts are awarded to the large scale national level contractors coming from outside the respective regions. Also the reforms on trade, industrial and investment areas which disproportionately benefited the Western Province to take advantage of blooming more established industrialists in the country. Consequently, the absence of adequate comprehensive development policies and programs for sub-national regions in the periphery of the country has helped the following major issues which are well marked today in spatial development in Sri Lanka. • Growing polarization between the Colombo Metropolitan Region • Lagging and slow growth of some regions • Spatially imbalanced growth patterns Thus, past policies have failed to reduce regional disparities significantly and have not been able to help individual lagging regions to catch up development objectives despite the allocation of significant public funding. These have resulted in underused economic potential, poor quality infrastructure and weaken social cohesion and moreover, territorial strength and opportunities were remained unused.



The Government of Sri Lanka has taken a policy decision to limit the invitation of bids for construction contracts of small scale with a value up to Rs.50 million within regional contractors under the equivalent Construction Industry Development Authority (CIDA) Registration Grades of Sri Lanka mentioned below to ensure that the regional contractors will be able to participate in constructions of such limits implemented under domestic funds. Total Cost Estimate of the Procurement CIDA Grade Value below or equal Rs. 2 million C9 Value below or equal Rs. 5 million C8 Value below or equal Rs. 10 million and above Rs. 5 million C7 Value below or equal Rs. 25 million and above Rs. 10 million C6 and C5 Value below or equal Rs. 50 million and above Rs. 25 million C5 and C4 In such procurements coming under the value up to Rs.50 million bidding process should be conducted through National Competitive Bidding and limited to the bidders who registered within the administrative boundary of the relevant Province of Sri Lanka. The administrative boundary of the word “Regional” is defined as the respective Provincial territory which is included by nine provinces of Sri Lanka.

Lessons Learned:


Though the focus of the Government of Sri Lanka is to ensure the ability to participate in the regional procurements up to Rs. 50 million by regional contractors, it was not able to successfully achieved in the first instance as it was not clearly defined the eligible Grade with the total cost estimate. Therefore, action had to be taken to rectify this situation and accordingly instructions were issued to all Ministries, Departments, Provincial Councils, District Secretariats, Local Government Authorities, Government Corporations, Statutory Boards and Government Owned Companies to execute the policy directive. At present, regional contractors who had rejected when competing with the large scale contractors previously, have received the opportunity to participate in the regional contracts up to Rs. 50 million. The strategy developed and the results achieved through this change demonstrate the possibility of progressing toward the fulfillment of regional development. The expansion of the opportunity for regional contractors to participate in regional procurement activities, coupled with public investment on regions, may help reduce the serious economic inequalities amongst regions.

Level of Innovation:


The introduced new mechanism to limit the invitation of bids for construction contracts of small scale with a value up to Rs.50 million within regional contractors, immensely help for the promoting regions development by encouraging contractors in respective regions to participate in small and medium scale construction work of the government and thereby increasing employment opportunities in regions, develop capacity of regional contractors, reduce income inequalities and minimizes delays in construction and utilized local recourses at competitive cost within the region while maximizing the value for money in constructions in respective region. In order to enhance economic well-being and living standards in all regions from cities to rural areas and improve their contribution to national development and inclusive and resilient societies. Further, this Government policy to encourage the regional contractors to ensure the regional development are focused on the objectives mentioned below. ? Sustain competitive advantage in the regions ? Create livable regional economies ? Promote efficient and innovative/transparent governance at ? Increase employment opportunities in regions Provincial / regional level. ? Develop capacity of the regional contractors ? Minimize delays in constructions and to utilize local resources at competitive cost within the regions while maximizing the value for money ? Professionalizing the regional procurement process ? Providing fair, equal and maximum opportunity for eligible interested parties in region to participating procurement through competition ? Maximizing economy timelines and quality in procurement resulting value for money



Financial disciplines and Government Procurement procedures have a significant impact on economic and social development in any country. The use of public procurement to achieve social outcomes is widespread. Regional development through public policy; public procurement in Sri Lanka is a mapping exercise describing the current use of government contracting as a tool of social regulation. Efficient, effective and competitive public procurement is a touchstone for a well- functioning market as well an important opportunity for gaining the reputation for the public sector as public procurement could be used for achieving the social well -being with addressing for sustainable development through public procurement. Regional development strategies are inherently complex because of the need to involve and coordinate provinces and their various agencies and a multitude of stakeholders. However, they constitute a cost-effective approach to helping regions to achieve development. Public authorities in all countries design and administer various forms of financial support to incentivize organizations to reach development targets such as growth and employment. Rather than giving incentives, this strategy enhanced the promotion of regional contractors by facilitating them to access to markets. This case can be easily replicable to public agencies in any country which has regional disparity among the contractors in the participation in contracts thereby hinders the development of regions and utilization of its own resources by the regions such as labour. Therefore, the policy directive of the Sri Lankan Government on “Procurement of Works up to Rs. 50 Million from Regional Contractors under Domestic Funds” is an effective means to address the constraints.

Other Background:



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Submission Place:
Colombo, Sri Lanka

Submission Date:
07 Jan, 2017

Submission By:
Priyanga Algama