A Special Audit by the Royal Audit Authority (RAA) has revealed major procurement, planning, and implementation failures in the Bhutan Integrated Taxation System (BITS 1.0), resulting in an estimated loss of Nu. 587.54 million in public funds.
Originally designed to modernize Bhutan’s tax administration and support the implementation of the Goods and Services Tax (GST), the Nu. 610.11 million project was awarded directly to Thimphu TechPark Limited (TTPL), a subsidiary of Druk Holding and Investments (DHI), without an open competitive bidding process. The audit found that this approach reduced transparency and limited assurance that the government received value for money.
The report identified several weaknesses, including inadequate project planning, poorly defined system requirements, weak procurement governance, insufficient contractual safeguards, and ineffective project oversight. These issues led to repeated delays, increased costs, and ultimately the termination of the project in 2022.
A key finding was that most components developed under BITS 1.0 could not be reused in the replacement system, BITS 2.0, forcing the government to incur substantial redevelopment costs. The audit estimated total losses and avoidable expenditures at Nu. 587.54 million, including spending on the failed system, supporting infrastructure, replacement systems, and increased project costs.
Members of Parliament expressed concerns over accountability, transparency, and the absence of competitive bidding. They also questioned whether the project’s original objective of supporting Bhutan’s ICT sector had been achieved, noting that opportunities were concentrated among a limited number of firms.
The RAA concluded that BITS 1.0 failed to achieve its intended objectives primarily because of inadequate system requirement planning from the outset. The audit recommends stronger procurement governance, improved project management, enhanced accountability mechanisms, and better safeguards to ensure future digital transformation projects deliver value for public investment.
The findings have sparked renewed debate about public sector accountability and the importance of transparent, competitive procurement processes in Bhutan’s development projects.
TIL BDR GHALLEY | Thimphu
