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Public Procurement Reforms and

Procurement Regulations in Pakistan


BY
Khalid Mahmood Lodhi
Director
Public Procurement Regulatory Authority
Islamabad

Format of Presentation

Ills of the Old system


Previous Procurement Practices
Old Regulatory Regime
The GOPs Initiative in Procurement Reforms
Objectives, status, applicability of PP Rules &
Regulations
Objectives of Procurement Reforms
Salient Features of Public Procurement
Framework
Monitoring and evaluation
Capacity Building
Way Forward

Ills of Old System


Att ib t bl tto R
Attributable
Regulations
l ti
&P
Procedures
d

Multiple Procurement Regulations mostly


outdated
td t d
Non Transparent Procurement procedures
th
thwart
t genuine
i b
business
i
Complicated procedures discourage sound
planning thorough evaluation & due diligence
planning,
Restrictive bidding on contracts
L
Low
overallll efficiency
ffi i
In-efficient and corrupt contractors and buyers

Ills of Old System


y
Attributable to Human Resource

Poorly paid and ill trained Procurement staff


Overall inefficiency, poor management
Inadequate record keeping
g
In ordinate delays in decision making
Misuse of p
prequalification
q
criteria
Registration makes collusion extremely easy
Preparation of bid documents by non
professionals

Ills of old System


y

Bid negotiation often leads to kick back


negotiation
Bid negotiations discourage bidders to
quote
t their
th i b
bestt prices
i
In efficient dispute resolution mechanism
No law providing effective protection
g
collusion & corruption
p
against
Most of the Govt. projects had Cost
overruns

Previous procurement practices

Procurements under General Financial Rules

Procurements by Corporate Sector

Procurements by Statutory Bodies

D f
Defense
Procurements
P
t (Unclassified)
(U l
ifi d)

Old Regulatory Regime

No Procurement Law
Multiplicity of Procurement Regulatory regimes
General Financial Rules
Procedures of the Public Sector Enterprises
Procurement Regulations of International
lending Agencies
No
N regulations
l
for
f procurement off Services
S
&
Works
Limited Options for Dispute Resolution
Arbitration Act 1940
Civil Courts inefficient & time consuming

Reform Initiatives

Establishment of Public Procurement


Regulatory Authority by PPRA Ordinance 2002
Promulgation of PP Rules 2004 Procurement
Law
Monitoring and Implementation of PP Rules2004
Re engineering of Procurement Manuals /
Procedures of Public Sector Entities
E t bli h
Establishment
t off Web
W b Portal
P t l
(www.ppra.org.pk)
Public Sector Capacity Building Training

Status, Objectives & Applicability of Reforms

Procurement Reforms enacted by Law

Public Procurement Regulatory Authority


Ordinance 2002
Public Procurement Rules 2004

Rules Applicable
pp
to:

Federal Government Agencies


Authorities,, Corporations
p
established by,
y, or
owned or controlled by the Fed Govt

Objectives
Object
ves of
o Procurement
ocu e e t Reforms
eo s

Economy (Value for money).


Efficiency.
Transparency
Transparency.
Accountability.
F i Competition.
Fair
C
titi
Good Governance.

Salient Features of Public Procurement Framework

Procurement Planning
Procurement Advertisement
Qualification/Disqualification

of Contractors
Methods of Procurements
Opening, Evaluation
& Rejection of Bids
Acceptance
p
& Award of
Contracts
Grievance Redressal

Rule-08
Rule-12
Rule-17-18
Rule-36
Rule-28,30
Rule
28,30 &33
Rule-38
Rule-48
Detail

Salient Features of Public Procurement Framework

Generic Specifications
Appropriate time limit for
bid preparation
Bid Evaluation Criteria to be
stated in Tender Documents
Evaluation Report to be
made public
Ban on Financial Negotiations

Rule-10
Rule 13
Rule-13
Rule 29 30
Rule-29-30
Rule 35
Rule-35
Rule 40
Rule-40

Detail

Monitoring
g & Evaluation

PPRA monitors all public procurement tenders in, published


in print media / uploaded on PPRA website,
website on daily basis.
basis
Deviations to PP Rules are regularly pointed out to the
respective procuring agencies for taking corrective
measures
Violations committed
by procuring agencies have
significantly reduced i.e.
i e 96% in 2004-05
2004 05 to 13% in 2011.
2011
The tenders uploaded in 2004-05 were 11,905 and it has
ggrown to 25,479
,
in 2010-11 with an increase of 46%.
%

Monitoring & Evaluation


Monitoring & Evaluation

Capacity Building

Capacity Building Centre of PPRA became an institution on


27th July, 2009 after completion of PSCBP in the form of
National Institute of Procurement (NIP),
Up till now 135 training sessions have been held and more
than 4000 public procurement officials representing more than
200 procuring agencies of Federal Government alongwith
private
i
sector andd NGO sector have
h
availed
il d training
i i facility
f ili to
create awareness about the rules and ensure compliance.

Capacity Building
GFR
Online Services
E-procurement
Procurement Law

Future
Present
Training Programs on
PP-Rules 2004

Way Forward

Enact a modern transparent Public Procurement


Law
Strengthening monitoring & Evaluation
Procurement Audit by Auditor General
Consequences of Mis-procurement
Abolish price negotiations,
negotiations registration
requirements, etc.
Amend Arbitration Act 1940
Create own Procurement Standard Bidding
D
Documents
t & RFPs
RFP
Constitute a grievance redressal authority

Th k Y
Thank
You

Public Procurement Rules, 2004

Rule-03: Scope and applicability


The rules are applicable to all the procuring agencies of the Federal
Government.
Rule-04: Principles of procurements
Fairness,, transparency
p
y and value for moneyy in ppublic pprocurements.
Rule-05: International & inter-government commitments of the Federal
Govt.
Provisions of international treaty or agreement will override in case of conflict
with PP Rules, 2004.
Rule-06: Language
PA for communication,
PA,
communication can use English and Urdu for procurements of the
Federal Govt. and may use a local language in addition to English and Urdu if
situated outside Pakistan.
Rule 07: Integrity Pact
Rule-07:
Integrity pact to signed by PA and contractor in procurements contracts
exceeding Rs.10 million.

Rule-08: Procurement Planning


PA to devise a mechanism for planning in detail for proposed procurements in
future within one year of commencement of PP Rules,
Rules 2004
2004.
Rule-09: Limitation on splitting or regrouping of proposed procurement
PA to announce in appropriate manner all proposed procurements of financial year
without splitting or regrouping and advertise the annual requirements on PPRA
PPRAss
website.
Rule-10: Specifications
Specifications
p
should be ggeneric ensuringg widest ppossible competition
p
and if
mentioning the brand name is essential, the words or equivalent should be used.
Rule-11: Approval mechanism
PA to provide clear authorization and delegation of powers for different
procurements
Rule-12: Methods of advertisement
Procurements over Rs.100,000 02 Million (advertise on PPRA website and may
advertise in print media.
Procurements over Rs.02 Million (advertised on the PPRAs website and
newspapers, at least two national dailies, having wide circulation.

Rule-13: Response time


National Competitive Bidding --not less than 15 days
International Competitive Bidding -- not less than 30 days .
Rule-14: Exceptions
Two exceptions to advertisement: Procurements of national security and
proprietary items with approval of PPRA
Rule-15: Pre-qualification of suppliers and contractors
PA may engage, prior to floating of tenders, in pre-qualification of bidders in case
of services
services, civil works
works, projects and expensive and complex procurements
procurements.
Rule-16: Pre-qualification process
PA to provide pre-qualification documents for a price and other pre-qualification
instructions for bidders and suppliers.
Rule-17: Qualification of suppliers and contractors
PA to demand information from the suppliers, whether already pre-qualified or
g or managerial
g
not,, based on the pprofessional,, technical,, financial,, legal
competence to determine their credibility.
Rule-18: Disqualification of suppliers and contractors
PA may disqualify a supplier or contractor if he submits false and incomplete
information regarding his qualification.

Rule-19: Blacklisting of suppliers and contractors


PAs to devise a mechanism to permanently or temporarily bar a supplier or contractor
who fails to provide satisfactory performance or indulged in corrupt practices and such
baring action to be communicated to the Authority.
Rule-20: Principal method of procurement
PAss to use ope
open co
competitive
pet t e bbidding
dd g as tthee pprincipal
c pa method
et od oof pprocurement
ocu e e t for
o
procurement of goods, services and works.
Rule-21: Open competitive bidding
PAs shall engage
g g in open competitive biddingg if the cost of object
j to be procured is more
than the prescribed financial limit of Rs. One
Rule-22: Submission of bids
Bids to submitted in sealed package in a manner that the contents are fully enclosed and
cannot be known until duly opened.
Rule-23: Bidding documents
PAs to formulate precise and unambiguous bidding documents to be made available to
th bidders
the
bidd after
ft publication
bli ti off invitation
i it ti tto bid
bid.
Rule-24: Reservations and preference
PAs to allow prospective bidders to participate in procuring procedures without regard to
nationalities except in cases where PA decide to limit such participation to national
bidders or prohibits some nationalities in accordance with the policy of Federal Govt.

Rule-25: Bid security


The PA may require the bidder to furnish the bid security not exceeding 5% of the
bid price.
price
Rule-26: Bid validity
Bid validity period must be specified. Bids shall be valid for the time period
specified in the bidding documents. P.A shall process the bid within the bid
validity
lidit period.
i d
Rule-27: Extension of time for submission of bids
PA can extend the deadline for the submission of bid if it finds the extension
necessary subject to recording the reasons for extension.
Rule-28: Opening of bids
The date of opening and the last for the submission of the bid shall be the same.
The bids shall be opened at least thirty minutes after the deadline for the
submission
b i i off bids.
bid
Rule-29: Evaluation criteria
PA to formulate an appropriate unambiguous evaluation criterion listing all the
information against which a bid is evaluated.
Rule-30: Evaluation of bids
All bids to be evaluated in accordance with the evaluation criterion and other
terms prescribed in bidding documents and save as provided for in sub-clause (iv)
of clause
cla se (c) of Rule
R le 36 no evaluation
e al ation criterion shall be used
sed to evaluate
e al ate bids that
has not been specified in bidding documents.

Rule-31: Clarification of bids


Bidder shall not alter or modify the bid after the bids have been opened. PA may
seek clarification in writing to the bid that do not change the substance of the bid.
Rule-32: Discriminatory and difficult conditions
PA not to impose
p
anyy condition difficult to meet and which discriminates
between the bidders,
Rule-33: Rejection of bids
PA may reject all bids or proposals at any time prior to acceptance of a bid or
proposal. PA to give notice of rejection of all bids promptly to suppliers and
bidders, communicate reasons for rejection upon request by the bidder but need
not jjustifyy them and incur no liabilityy towards suppliers
pp
or contractors.
Rule-34: Re-bidding
PA may call for re-bidding if it has rejected all bids under Rule 33. PA to assess
reasons for rejection, revise specification, evaluation criterion or any other
condition as it may deem necessary.
Rule-35: Announcement of evaluation
PA to announce the results of bid evaluation in the form of a report with
justification for acceptance or rejection at least ten days prior to the award of
procurement contract.

Rule-36: Procedures of open competitive bidding


a) Single stage One envelope procedure (bid containing one single envelope
with separate FINANCIAL PROPOSAL and TECHNICAL PROPOSAL).
b) Single stage Two envelope procedure (bid containing single package
having two separate envelopes marked as FINANCIAL PROPOSAL and
TECHNICAL PROPOSAL. TECHNICAL PROPOSAL shall be opened first
and FINANCIAL PROPOSAL later.
c) TWO STAGE BIDDING PROCEDURE
(First stage) Bidder to submit TECHNICAL PROPOSAL alongwith the
specification without mentioning the price. PA to allow sufficient time i.e. not
less than 15 days in case of national competitive bidding and 30 days in case
of international competitive bidding.
(Second stage) Technically sound bidders who are willing to conform their
bids to the revised technical requirement of the PA shall be asked to submit
Financial bid and to be evaluated accordingly.

d)

Two stage two envelope bidding procedure


(First stage) Bid containing single package having FINANCIAL PROPOSAL
and TECHNICAL PROPOSAL. The later shall be opened first. PA to discuss
the TECHNICAL PROPOSAL with the bidder according to PAs technical
requirements.
i
(Second stage) PA after discussion with the bidders on the technical
specifications shall allow the bidders to submit a revised technical proposal
andd supplementary
l
t
fi
financial
i l proposal,l according
di
t the
to
th technical
t h i l
requirement which shall be opened at a given date, time and venue.

Rule-37: Conditions for different bidding procedures


Single stage two envelope (bids are to be evaluated on technical and financial
grounds and price is considered after technical evaluation.
evaluation
Two stage bidding procedure (adapted in large and complex contracts where
technically unequal proposals are likely to be encountered and two or more
equally acceptable technically solution are available to the PA.
PA
Two stage two envelope bidding procedure (used where alternative
technically proposals are possible e.g. machinery, equipment or manufacturing
plant.
Rule-38: Acceptance of bids
The bidder with the lowest evaluated bid, if not in conflict with any other law,
rules, regulations or policy of the Federal Government, shall be awarded the
procurementt contract,
t t within
ithi the
th original
i i l or extended
t d d period
i d off bid validity.
lidit
Rule-39: Performance guarantee
If deemed necessary, PA shall require the successful bidder to furnish a
performance
f
guarantee
t nott exceeding
di ten
t percentt off the
th contract.
t t
Rule-40: Limitation of negotiations
There shall be no negotiation with the lowest evaluated or any other bidder

Rule-41: Confidentiality
PA to
t keep
k
allll the
th information
i f
ti
regarding
di
evaluation
l ti
confidential
fid ti l until
til the
th
announcement of evaluation report as per Rule 35.
Rule-42: Alternative methods of procurements
a)
Petty purchases: if the object of the procurement if below the financial
limit of twenty five thousand rupees provided that such petty purchase conforms
to principles of procurements under Rule 4.
b) Request for quotation: PA shall engage in this method of procurement
where the cost of procurement is below the prescribed limit of Rs.100,000,
where,
Rs 100 000 and
below Rs. 500,000 for Autonomous bodies with authorization of their boards
c)
Direct contracting: PA can directly procure in this method: If procuring
from single source / supplier; only one manufacturer or supplier. Repeat orders
nott exceeding
di 15% off the
th original
i i l procurement,t emergency declared
d l d by
b an
appropriate fora, the Prices are fixed by the Government, The Purchase of Motor
Vehicle from Local original manufactures or their authorized agents
g
tendering:
g Can be engaged
g g with one or more suppliers
pp
with
d)) Negotiated
or without prior publication of procurement notification, if procurement pertains to
supplies supporting study or research or for technical or artistic reason,
intellectual property rights etc or in case of extreme urgency. Reasons to be
recorded in writingg
Rule-43: On account payment
PA to make prompt payment to suppliers within the time mentioned in the
contract which shall not exceed 30 days.

Rule-44: Entry into force of the procurement contract


a)
Formal signing of the contract: From date of signing of contract by all
parties or from the date of fulfillment of certain conditions.
b) No formal signing of contract: From the date of the notice of the
acceptance
p
of the bid,, from the date of the ppurchase order
Rule-45: Closing of contract
On issuance of overall delivery certificate or taking over certificate required to be
y of final takingg over of ggoods/receivingg the deliverables or
issued within 30 days
completion of work.
Rule-46: Record of procurement proceedings
PA shall maintain the record for a minimum period of 05 years.
Rule-47: Public access and transparency
A document relating to evaluation and award of contract to be made public. PA
to withhold any information which is against the public interest or proprietary
it
items
subject
bj t to
t prior
i approvall off the
th Authority.
A th it

Rule-48: Redressal of grievances by the PA


PA to constitute committee containing odd number persons with powers and
authorization to address complaints of the bidders. Written complaint within 15 days
after the announcement of the bid evaluation report. Decision by the Committee
within 15 days of the receipt of the complaint. Appeal can be filed in the relevant
courtt off jurisdiction.
j i di ti
Rule-49: Arbitration
Arbitration can only be resorted to after coming into force of the procurement
contract. PA to provide methods of arbitration in the contract.
Rule-50: Mis-procurement
Anyy authorized breach of these rules shall amount to mis-procurement.
p
Rule-51: Overriding effect
Shall have effect notwithstanding anything to the contrary contained in any other
rules concerning public procurements.

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