Sri Lanka’s double cab tender relaxes specifications to widen competition, while vehicle imports and tax leakage raise wider fiscal concerns.
COLOMBO — The Government’s new tender for 1,000 automatic-transmission, four-wheel-drive diesel double cabs substantially relaxes several specifications that drew criticism during last year’s procurement, potentially opening the contract to a broader range of suppliers.
Published by the Ministry of Finance, Planning and Economic Development on September 29, the tender closes on October 22, 2026.
Separate procurements are also underway for 175 tractors, 100 backhoe loaders, 100 gully bowsers and 160 tipper trucks for government operations.
The revised double-cab tender represents more than another large public-sector vehicle purchase. It provides an important test of whether changes to technical and commercial requirements can generate genuine competition while protecting public finances at a time when Sri Lanka is again importing significant numbers of vehicles.
Lessons From the 2025 Tender
The new specifications must be viewed against the controversy surrounding the Government’s previous attempt to purchase 1,775 double cabs.
That procurement drew strong criticism in 2025 after prospective bidders were initially given only 12 calendar days, or about seven working days, to prepare submissions.
Questions were also raised over whether the combination of engine capacity, power, torque, ground clearance, service-centre requirements and previous sales experience unnecessarily restricted the number of companies able to qualify.
Some industry participants alleged that the conditions effectively favoured a particular supplier.
Those allegations did not establish corruption or prove that the tender had deliberately been designed for one company. The procurement, however, did not proceed to implementation.
The Government has now returned with significantly revised requirements.
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Read MoreTechnical Barriers Lowered
Among the most important changes is the minimum engine capacity.
The earlier threshold of 2,500cc has been reduced to 2,400cc.
Minimum engine power has been lowered by approximately seven per cent, while the required torque has been reduced by around 12.5 per cent.
Ground clearance has also changed substantially, falling from more than 300 millimetres under the previous specifications to more than 220 millimetres.
Taken together, those revisions should allow a wider range of commercially available four-wheel-drive pickups to satisfy the technical requirements.
Whether they actually produce greater competition will only become clear after bids close.
Supplier Requirements Also Relaxed
Commercial eligibility conditions have also been revised.
The 2025 procurement required a bidder to maintain 10 company-owned service centres, including five outside the Western Province.
Under the current tender, access to 10 centres is still required, but only five need to be directly owned. The remainder may operate through authorised franchises or dealerships.
Previous sales experience has been reduced from 1,000 units of the proposed make to 500.
The required average annual turnover has also fallen from Rs. 10 billion to Rs. 8 billion.
These changes reduce barriers that may previously have excluded suppliers with adequate technical capability but smaller directly owned service networks or lower historical sales volumes.
They do not guarantee that smaller companies can compete, however, because the financial conditions have simultaneously become considerably stricter.
Rs. 250 Million Bid Security Raises the Financial Bar
While technical and operating conditions have been loosened, the bid security has increased fivefold.
Prospective suppliers must now provide Rs. 250 million in bid security, compared with Rs. 50 million previously.
They must also demonstrate access to at least Rs. 5 billion in liquid assets or credit facilities.
The rationale is understandable for a contract involving 1,000 vehicles. A successful supplier must have the financial capacity to procure, import, deliver and support a large fleet without disrupting the contract.
Yet the requirement creates a balancing act.
If the financial threshold becomes so demanding that only a handful of companies can qualify, some of the competitive benefit created by relaxing the technical specifications could be lost.
The real measure of the revised tender will therefore be the number of technically and financially responsive bids received.
Government Moves Away From Vehicle Ownership by MPs
The procurement also sits within a broader change in the Government’s approach to vehicles used by Members of Parliament.
The 2026 Budget provides for vehicles required by government institutions and machinery needed by provincial authorities, as well as vehicles to be provided to parliamentarians on the condition that they are returned when their terms end.
A total of Rs. 12.5 billion was allocated as the initial requirement for this wider programme.
That amount should not be described as an allocation solely for MPs’ vehicles. It covers a broader range of government vehicles and machinery.
The policy nevertheless marks an important departure from the traditional model under which parliamentarians could receive concessionary or duty-free vehicle permits that ultimately enabled private ownership.
Under the approach stated in the 2026 Budget, vehicles supplied to MPs are to remain part of the public asset base and be returned at the conclusion of their parliamentary terms.
That potentially offers a more defensible model for providing transport required for official duties, provided the vehicles are transparently allocated, maintained and subsequently accounted for.
Foreign Exchange Pressure Cannot Be Ignored
The procurement also comes at a sensitive time for vehicle imports.
Sri Lanka reopened the market after years of restrictions imposed during the foreign-exchange crisis, resulting in renewed demand for imported cars and commercial vehicles.
Government procurement of 1,000 double cabs alongside hundreds of tractors, tippers, backhoes and gully bowsers adds another source of demand for foreign currency.
It would be excessive to suggest that this procurement alone poses a severe threat to reserves without knowing the final contract prices, import schedule and financing arrangements.
The broader concern is cumulative.
Government imports are occurring alongside substantial private-sector demand for vehicles, meaning policymakers must consider how quickly foreign-exchange outflows associated with the automotive sector are expanding.
Motor Traders Warn of Revenue Leakage
A separate concern involves the way imported vehicles are valued for taxation.
The Ceylon Motor Traders’ Association has repeatedly criticised the 15 per cent depreciation applied to the Cost, Insurance and Freight value of used vehicle imports for duty purposes.
The association argues that virtually new vehicles can be registered abroad and imported as used vehicles, allowing them to receive a 15 per cent reduction in the value on which duties are calculated.
CMTA estimated in June that the system resulted in approximately Rs. 40 billion in lost government revenue during 2025 and warned that a similar loss could occur in 2026 if the mechanism remained unchanged.
More recent industry claims have suggested the potential 2026 loss could be substantially larger.
Those figures are estimates produced by the motor trade rather than confirmed Treasury assessments.
Still, the underlying question deserves examination: whether Sri Lanka’s customs valuation rules treat functionally similar vehicles consistently and whether the State is collecting the revenue legally due from the reopening of vehicle imports.
Competition Alone Is Not Enough
The revised double-cab specifications are a positive development if they produce a genuinely competitive procurement.
Removing unnecessarily restrictive technical requirements can reduce the risk of effectively designing a tender around one model or supplier.
But competition is only one test.
The Government must also demonstrate that the vehicles are operationally necessary, that the successful bid represents value over the fleet’s full working life, and that foreign-exchange and fiscal costs have been properly considered.
Maintenance, fuel consumption, warranties, parts availability and resale or residual value should form part of that calculation.
Transparency at the contract-award stage will be particularly important.
The public should be able to see how many bidders participated, which companies were technically responsive, what prices were offered and why the eventual supplier was selected.
A Better Tender Still Needs Stronger Fiscal Discipline
The new procurement appears to correct several weaknesses associated with last year’s specifications.
That does not make the wider economic questions disappear.
Sri Lanka is simultaneously managing renewed vehicle-import demand, foreign-exchange requirements, public-sector fleet needs and concerns over Customs revenue leakage.
The objective should therefore be broader than merely breaking a perceived supplier monopoly.
A successful procurement will be one that produces genuine competition, secures the vehicles at a defensible long-term cost, keeps ownership of public assets clearly with the State where applicable, and subjects every stage of the process to transparent scrutiny.
Once bids close on October 22, the number of qualified competitors and the prices they submit will provide the clearest indication yet of whether the revised tender has achieved that objective.
