Public Procurement Reforms and Procurement Regulations in PakistanProcurement Regulations in Pakistan

BYKhalid Mahmood LodhiKhalid Mahmood Lodhi

DirectorPublic Procurement Regulatory Authority

Islamabad

Format of Presentation Ills of the Old system Previous Procurement Practices Old Regulatory Regime The GOP’s Initiative in Procurement Reforms Objectives, status, applicability of PP Rules &

RegulationsObjectives of Procurement Reforms Objectives of Procurement Reforms

Salient Features of Public Procurement Framework

Monitoring and evaluation Capacity Building Way Forward

Ills of Old SystemAtt ib t bl t R l ti & P dAttributable to Regulations & Procedures

Multiple Procurement Regulations – mostly td t doutdated

Non Transparent Procurement procedures th t i b ithwart genuine business

Complicated procedures discourage sound planning thorough evaluation & due diligenceplanning, thorough evaluation & due diligence

Restrictive bidding on contractsL ll ffi i Low overall efficiency

In-efficient and corrupt contractors and buyers

Ills of Old SystemyAttributable to Human Resource

Poorly paid and ill trained Procurement staff Overall inefficiency, poor management Inadequate record keepingg In – ordinate delays in decision making Misuse of prequalification criteriap q Registration makes collusion extremely easy Preparation of bid documents by non Preparation of bid documents by non

professionals

Ills of old Systemy Bid negotiation often leads to kick back

negotiationnegotiation Bid negotiations discourage bidders to

t th i b t iquote their best prices In efficient dispute resolution mechanism No law providing effective protection

against collusion & corruptiong pMost of the Govt. projects had Cost

overrunsoverruns

Previous procurement practicesPrevious procurement practices

Procurements under General Financial Rules

Procurements by Corporate Sector

Procurements by Statutory Bodies

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

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 AgenciesN l f f S & No regulations for procurement of Services & Works

Limited Options for Dispute Resolution Limited Options for Dispute Resolution Arbitration Act 1940 Civil Courts – inefficient & time consuming 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 Rules-

2004 Re – engineering of Procurement Manuals /

Procedures of Public Sector Entities E t bli h t f W b P t l Establishment of Web Portal (www.ppra.org.pk)

Public Sector Capacity Building Training 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 to:pp Federal Government Agencies Authorities, Corporations established by, or , p y,

owned or controlled by the Fed Govt

Objectives of Procurement ReformsObject ves o ocu e e t e o s Economy (Value for money). Efficiency. Transparency Transparency. Accountability.

F i C titi Fair Competition. Good Governance.

Salient Features of Public Procurement Framework• Procurement Planning Rule-08• Procurement Advertisement Rule-12Procurement Advertisement Rule-12• Qualification/Disqualification Rule-17-18

of Contractorsof Contractors• Methods of Procurements Rule-36 • Opening, Evaluation Rule-28,30 &33Opening, Evaluation Rule 28,30 &33

& Rejection of Bids• Acceptance & Award of Rule-38p

Contracts• Grievance Redressal Rule-48

Detail

Salient Features of Public Procurement Framework Generic Specifications Rule-10

Appropriate time limit for Rule 13 Appropriate time limit for Rule-13bid preparationBid Evaluation Criteria to be Rule 29 30 Bid Evaluation Criteria to be Rule-29-30stated in Tender DocumentsEvaluation Report to be Rule 35 Evaluation Report to be Rule-35made publicBan on Financial Negotiations Rule 40 Ban on Financial Negotiations Rule-40

Detail

Monitoring & Evaluationg PPRA monitors all public procurement tenders in, published

in print media / uploaded on PPRA website on daily basisin print media / uploaded on PPRA website, on daily basis.Deviations to PP Rules are regularly pointed out to therespective procuring agencies for taking correctivemeasures

Violations committed by procuring agencies havesignificantly reduced i e 96% in 2004 05 to 13% in 2011significantly reduced i.e. 96% in 2004-05 to 13% in 2011.

The tenders uploaded in 2004-05 were 11,905 and it hasgrown to 25,479 in 2010-11 with an increase of 46%.g , %

Monitoring & EvaluationMonitoring & Evaluation

Capacity Building Capacity Building Centre of PPRA became an institution on

27th July, 2009 after completion of PSCBP in the form ofNational Institute of Procurement (NIP),

Up till now 135 training sessions have been held and more Up till now 135 training sessions have been held and morethan 4000 public procurement officials representing more than200 procuring agencies of Federal Government alongwith

i d NGO h il d i i f iliprivate sector and NGO sector have availed training facility tocreate awareness about the rules and ensure compliance.

Capacity BuildingGFR

Online ServicesOnline ServicesE-procurement

Procurement Law

Present

Future

Present

Training Programs on Training Programs on PP-Rules 2004

Way Forward Enact a modern transparent Public Procurement

Law Strengthening monitoring & Evaluation Procurement Audit by Auditor General Procurement Audit by Auditor General Consequences of Mis-procurement

Abolish price negotiations registration Abolish price negotiations, registration requirements, etc.Amend Arbitration Act 1940 Amend Arbitration Act 1940

Create own Procurement Standard Bidding D t & RFPDocuments & RFPs

Constitute a grievance redressal authority

Th k YThank 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 and value for money in public procurements., p y y p p

• Rule-05: International & inter-government commitments of the Federal Govt.Provisions of international treaty or agreement will override in case of conflict Provisions of international treaty or agreement will override in case of conflict with PP Rules, 2004.

• Rule-06: Language PA for communication can use English and Urdu for procurements of the PA, for 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 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 2004future within one year of commencement of PP Rules, 2004.

• Rule-09: Limitation on splitting or regrouping of proposed procurement PA to announce in appropriate manner all proposed procurements of financial yearwithout splitting or regrouping and advertise the annual requirements on PPRA’swithout splitting or regrouping and advertise the annual requirements on PPRA swebsite.

• Rule-10: Specifications Specifications should be generic ensuring widest possible competition and if p g g p pmentioning 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 advertisementProcurements over Rs.100,000 – 02 Million (advertise on PPRA website and mayadvertise in print media.Procurements over Rs.02 Million (advertised on the PPRA’s website andnewspapers, at least two national dailies, having wide circulation.

• Rule-13: Response time National Competitive Bidding --not less than 15 daysInternational Competitive Bidding not less than 30 daysInternational Competitive Bidding -- not less than 30 days .

• Rule-14: Exceptions Two exceptions to advertisement: Procurements of national security and proprietary items with approval of PPRAproprietary 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 civil works projects and expensive and complex procurementsof services, civil works, projects and expensive and complex procurements.

• Rule-16: Pre-qualification process PA to provide pre-qualification documents for a price and other pre-qualification instructions for bidders and suppliers.instructions for bidders and suppliers.

• Rule-17: Qualification of suppliers and contractors PA to demand information from the suppliers, whether already pre-qualified or not, based on the professional, technical, financial, legal or managerial , p , , , g gcompetence 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 contractorwho fails to provide satisfactory performance or indulged in corrupt practices and suchwho fails to provide satisfactory performance or indulged in corrupt practices and suchbaring action to be communicated to the Authority.

• Rule-20: Principal method of procurement PAs to use open competitive bidding as the principal method of procurement fors to use ope co pet t e b dd g as t e p c pa et od o p ocu e e t oprocurement of goods, services and works.

• Rule-21: Open competitive bidding PAs shall engage in open competitive bidding if the cost of object to be procured is moreg g g jthan the prescribed financial limit of Rs. OneRule-22: Submission of bidsBids to submitted in sealed package in a manner that the contents are fully enclosed andcannot be known until duly opened.

• Rule-23: Bidding documents PAs to formulate precise and unambiguous bidding documents to be made available to th bidd ft bli ti f i it ti t bidthe bidders after publication of invitation to bid.

• Rule-24: Reservations and preference PAs to allow prospective bidders to participate in procuring procedures without regard tonationalities except in cases where PA decide to limit such participation to nationalnationalities except in cases where PA decide to limit such participation to nationalbidders 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 bid 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 bidlidit i dvalidity period.

• 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.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

b i i f bidsubmission of bids.• Rule-29: Evaluation criteria

PA to formulate an appropriate unambiguous evaluation criterion listing all theinformation against which a bid is evaluated.information against which a bid is evaluated.

• Rule-30: Evaluation of bids All bids to be evaluated in accordance with the evaluation criterion and otherterms prescribed in bidding documents and save as provided for in sub-clause (iv)of cla se (c) of R le 36 no e al ation criterion shall be sed to e al ate bids thatof clause (c) of Rule 36 no evaluation criterion shall be used to evaluate bids thathas 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 mayseek 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 any condition difficult to meet and which discriminatesp y

between the bidders,• Rule-33: Rejection of bids

PA may reject all bids or proposals at any time prior to acceptance of a bid orPA may reject all bids or proposals at any time prior to acceptance of a bid orproposal. PA to give notice of rejection of all bids promptly to suppliers andbidders, communicate reasons for rejection upon request by the bidder but neednot justify them and incur no liability towards suppliers or contractors.j y y pp

• Rule-34: Re-bidding PA may call for re-bidding if it has rejected all bids under Rule 33. PA to assessreasons for rejection, revise specification, evaluation criterion or any otherreasons for rejection, revise specification, evaluation criterion or any othercondition as it may deem necessary.

• Rule-35: Announcement of evaluation PA to announce the results of bid evaluation in the form of a report withPA to announce the results of bid evaluation in the form of a report withjustification for acceptance or rejection at least ten days prior to the award ofprocurement 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 andTECHNICAL PROPOSAL. TECHNICAL PROPOSAL shall be opened firstand FINANCIAL PROPOSAL later.

c) TWO STAGE BIDDING PROCEDURE(First stage) Bidder to submit TECHNICAL PROPOSAL alongwith thespecification without mentioning the price. PA to allow sufficient time i.e. notless than 15 days in case of national competitive bidding and 30 days in caseof international competitive bidding.(Second stage) Technically sound bidders who are willing to conform theirbids to the revised technical requirement of the PA shall be asked to submitFinancial bid and to be evaluated accordingly.

d) Two stage – two envelope bidding procedure(First stage) Bid containing single package having FINANCIAL PROPOSALand TECHNICAL PROPOSAL. The later shall be opened first. PA to discussthe TECHNICAL PROPOSAL with the bidder according to PA’s technical

irequirements.(Second stage) PA after discussion with the bidders on the technicalspecifications shall allow the bidders to submit a revised technical proposal

d l t fi i l l di t th t h i land supplementary financial proposal, according to the technicalrequirement 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 financialgrounds and price is considered after technical evaluationgrounds and price is considered after technical evaluation.Two stage bidding procedure (adapted in large and complex contracts wheretechnically unequal proposals are likely to be encountered and two or moreequally acceptable technically solution are available to the PAequally acceptable technically solution are available to the PA.Two stage two envelope bidding procedure (used where alternativetechnically proposals are possible e.g. machinery, equipment or manufacturingplant.

• 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

t t t ithi th i i l t d d i d f bid liditprocurement contract, within the original or extended period of bid validity.• Rule-39: Performance guarantee

If deemed necessary, PA shall require the successful bidder to furnish af t t di t t f th t tperformance guarantee not exceeding ten percent of the contract.

• Rule-40: Limitation of negotiations There shall be no negotiation with the lowest evaluated or any other bidder

• Rule-41: Confidentiality PA t k ll th i f ti di l ti fid ti l til thPA to keep all the information regarding evaluation confidential until theannouncement 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 financiala) Petty purchases: if the object of the procurement if below the financiallimit of twenty five thousand rupees provided that such petty purchase conformsto principles of procurements under Rule 4.b) Request for quotation: PA shall engage in this method of procurementwhere the cost of procurement is below the prescribed limit of Rs 100 000 andwhere, the cost of procurement is below the prescribed limit of Rs.100,000, andbelow Rs. 500,000 for Autonomous bodies with authorization of their boardsc) Direct contracting: PA can directly procure in this method: If procuringfrom single source / supplier; only one manufacturer or supplier. Repeat orders

t di 15% f th i i l t d l d bnot exceeding 15% of the original procurement, emergency declared by anappropriate fora, the Prices are fixed by the Government, The Purchase of MotorVehicle from Local original manufactures or their authorized agentsd) Negotiated tendering: Can be engaged with one or more suppliers with) g g g g ppor without prior publication of procurement notification, if procurement pertains tosupplies supporting study or research or for technical or artistic reason,intellectual property rights etc or in case of extreme urgency. Reasons to berecorded in writingg

• Rule-43: On account payment PA to make prompt payment to suppliers within the time mentioned in thecontract 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 alla) Formal signing of the contract: From date of signing of contract by allparties or from the date of fulfillment of certain conditions.b) No formal signing of contract: From the date of the notice of theacceptance of the bid, from the date of the purchase orderp , p

• Rule-45: Closing of contract On issuance of overall delivery certificate or taking over certificate required to be

issued within 30 days of final taking over of goods/receiving the deliverables ory g g gcompletion 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 proprietaryit bj t t i l f th A th ititems subject to prior approval of the Authority.

• Rule-48: Redressal of grievances by the PA PA to constitute committee containing odd number persons with powers andauthorization to address complaints of the bidders. Written complaint within 15 daysafter the announcement of the bid evaluation report. Decision by the Committeewithin 15 days of the receipt of the complaint. Appeal can be filed in the relevant

t f j i di ticourt of jurisdiction.• Rule-49: Arbitration

Arbitration can only be resorted to after coming into force of the procurementcontract. PA to provide methods of arbitration in the contract.

• Rule-50: Mis-procurement Any authorized breach of these rules shall amount to mis-procurement.y p

• Rule-51: Overriding effect Shall have effect notwithstanding anything to the contrary contained in any other

rules concerning public procurements.rules concerning public procurements.

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