Public Procurement Reforms and

Procurement Regulations in Pakistan Procurement Regulations in Pakistan

BY
Khalid Mahmood Lodhi 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 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 t R l ti & P d Attributable to Regulations & Procedures
Multiple Procurement Regulations mostly
td t d outdated
Non Transparent Procurement procedures
th t i b i thwart genuine business
Complicated procedures discourage sound
planning thorough evaluation &due diligence planning, thorough evaluation & due diligence
Restrictive bidding on contracts
L ll ffi i Low overall efficiency
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 keepingg
In ordinate delays in decision making
Misuse of prequalification criteria p q
Registration makes collusion extremely easy
Preparation of bid documents by non Preparation of bid documents by non
professionals
Ills of old System y
Bid negotiation often leads to kick back
negotiation negotiation
Bid negotiations discourage bidders to
t th i b t i quote their best prices
In efficient dispute resolution mechanism
No law providing effective protection
against collusion & corruption g p
Most of the Govt. projects had Cost
overruns overruns
Previous procurement practices Previous 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 Agencies
N l f f S & No regulations for procurement of Services &
Works
LimitedOptionsfor DisputeResolution 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 bP t l Establishment of Web Portal
(www.ppra.org.pk)
PublicSector CapacityBuildingTraining 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 Reforms Object 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-12 Procurement Advertisement Rule-12
Qualification/Disqualification Rule-17-18
of Contractors of Contractors
Methods of Procurements Rule-36
Opening, Evaluation Rule-28,30 &33 Opening, Evaluation Rule 28,30 &33
& Rejection of Bids
Acceptance & Award of Rule-38 p
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-13
bid preparation
Bid Evaluation Criteria to be Rule 29 30 Bid Evaluation Criteria to be Rule-29-30
stated in Tender Documents
Evaluation Report to be Rule 35 Evaluation Report to be Rule-35
made public
Ban on Financial Negotiations Rule 40 Ban on Financial Negotiations Rule-40
Detail
Monitoring & Evaluation g
PPRAmonitorsall publicprocurement tendersin, published
in print media / uploaded on PPRAwebsite on daily basis in print media / uploaded on PPRAwebsite, on daily basis.
Deviations to PP Rules are regularly pointed out to the
respective procuring agencies for taking corrective
measures
Violations committed by procuring agencies have
significantlyreducedi e 96%in2004 05to13%in2011 significantlyreducedi.e. 96%in2004-05to13%in2011.
The tenders uploaded in 2004-05 were 11,905 and it has
grownto25,479in2010-11withanincreaseof 46%. g , %
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 Instituteof Procurement (NIP),
Up till now 135 training sessions have been held and more 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
i d NGO h il d i i f ili private sector and NGOsector have availed training facility to
createawarenessabout therulesandensurecompliance.
Capac i t y Bui l di ng
GFR
Onl i ne Ser vi c es Onl i ne Ser vi c es
E-pr oc ur ement
Pr oc ur ement Law
Present
Future
Present
Tr ai ni ng Pr ogr ams on Tr ai ni ng Pr ogr ams on
PP-Rul es 2004
Way Forward
Enact a modern transparent Public Procurement
Law
Strengthening monitoring & Evaluation
Procurement Audit byAuditor General Procurement Audit by Auditor General
Consequences of Mis-procurement
Abolishpricenegotiations registration Abolish price negotiations, registration
requirements, etc.
AmendArbitrationAct 1940 Amend Arbitration Act 1940
Create own Procurement Standard Bidding
D t & RFP Documents & RFPs
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 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 2004 future within one year of commencement of PP Rules, 2004.
Rule-09: Limitation on splitting or regrouping of proposed procurement
PAtoannounceinappropriatemanner all proposedprocurementsof financial year
without splitting or regrouping and advertise the annual requirements on PPRAs without splitting or regrouping and advertise the annual requirements on PPRAs
website.
Rule-10: Specifications
Specifications should be generic ensuring widest possible competition and if p g g p p
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 PPRAwebsite and may
advertiseinprint media.
Procurements over Rs.02 Million (advertised on the PPRAs website and
newspapers, at least twonational dailies, havingwidecirculation.
Rule-13: Response time
National Competitive Bidding --not less than 15 days
International CompetitiveBidding not lessthan30days International CompetitiveBidding-- not lessthan30days.
Rule-14: Exceptions
Two exceptions to advertisement: Procurements of national security and
proprietary items with approval of PPRA 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 civil works projects and expensive and complex procurements of 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 g
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 mechanismto permanently or temporarily bar a supplier or contractor
who fails to provide satisfactory performance or indulged in corrupt practices and such who fails to provide satisfactory performance or indulged in corrupt practices and such
baringactiontobecommunicatedtotheAuthority.
Rule-20: Principal method of procurement
PAs to use open competitive bidding as the principal method of procurement for s to use ope co pet t e bdd g as t e p cpa et od o p ocu e e t o
procurement of goods, servicesandworks.
Rule-21: Open competitive bidding
PAs shall engageinopencompetitivebiddingif thecost of object tobeprocuredismore g g g j
thantheprescribedfinancial limit of Rs. One
Rule-22: Submission of bids
Bidstosubmittedinsealedpackageinamanner that thecontentsarefullyenclosedand
cannot beknownuntil dulyopened.
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 bid the bidders after publication of invitation to bid.
Rule-24: Reservations and preference
PAs toallowprospectivebidders toparticipateinprocuringprocedures without regardto
nationalities except in cases where PA decide to limit such participation to national nationalities except in cases where PA decide to limit such participation to national
biddersor prohibitssomenationalitiesinaccordancewiththepolicyof 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 bid
lidit i d validityperiod.
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 thelast for the submission of the bidshall bethe same.
The bids shall be opened at least thirty minutes after the deadline for the
b i i f bid submissionof bids.
Rule-29: Evaluation criteria
PA to formulate an appropriate unambiguous evaluation criterion listing all the
informationagainst whichabidisevaluated. informationagainst whichabidisevaluated.
Rule-30: Evaluation of bids
All bids to be evaluated in accordance with the evaluation criterion and other
termsprescribedinbiddingdocumentsandsaveasprovidedfor insub-clause(iv)
of cla se(c) of R le36noe al ationcriterionshall be sedtoe al atebids that of clause(c) of Rule36noevaluationcriterionshall beusedtoevaluatebids that
hasnot beenspecifiedinbiddingdocuments.
Rule-31: Clarification of bids
Bidder shall not alter or modify thebidafter thebids havebeenopened. PAmay
seekclarificationinwritingtothebidthat donot changethesubstanceof thebid.
Rule-32: Discriminatory and difficult conditions
PA not to impose any condition difficult to meet and which discriminates p y
betweenthebidders,
Rule-33: Rejection of bids
PA may reject all bids or proposals at any time prior to acceptance of a bid or 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, communicatereasons for rejectionuponrequest by thebidder but need
not justifythemandincur noliabilitytowardssuppliersor contractors. j y y pp
Rule-34: Re-bidding
PAmay call for re-bidding if it has rejected all bids under Rule 33. PAto assess
reasons for rejection, revise specification, evaluation criterion or any other reasons for rejection, revise specification, evaluation criterion or any other
conditionasit maydeemnecessary.
Rule-35: Announcement of evaluation
PA to announce the results of bid evaluation in the form of a report with 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
withseparateFINANCIALPROPOSALandTECHNICALPROPOSAL).
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
andFINANCIALPROPOSALlater.
c) TWO STAGE BIDDING PROCEDURE
(First stage) Bidder to submit TECHNICAL PROPOSAL alongwith the
specification without mentioning the price. PA to allowsufficient time i.e. not
less than15days incaseof national competitivebiddingand30days incase
of international competitivebidding.
(Second stage) Technically sound bidders who are willing to conformtheir
bids to the revised technical requirement of the PAshall be asked to submit
Financial bidandtobeevaluatedaccordingly.
d) Two stage two envelope bidding procedure
(First stage) BidcontainingsinglepackagehavingFINANCIALPROPOSAL
andTECHNICALPROPOSAL. Thelater shall beopenedfirst. PAtodiscuss
the TECHNICAL PROPOSAL with the bidder according to PAs technical
i requirements.
(Second stage) PA after discussion with the bidders on the technical
specifications shall allowthe bidders to submit a revised technical proposal
d l t fi i l l di t th t h i l and supplementary financial proposal, according to the technical
requirement whichshall beopenedat agivendate, timeandvenue.
Rule-37: Conditions for different bidding procedures
Single stage two envelope (bids are to be evaluated on technical and financial
groundsandpriceisconsideredafter technical evaluation groundsandpriceisconsideredafter technical evaluation.
Two stage bidding procedure (adapted in large and complex contracts where
technically unequal proposals are likely to be encountered and two or more
equallyacceptabletechnicallysolutionareavailabletothePA equallyacceptabletechnicallysolutionareavailabletothePA.
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
t t t ithi th i i l t d d i d f bid lidit procurement contract, withintheoriginal or extendedperiodof bidvalidity.
Rule-39: Performance guarantee
If deemed necessary, PA shall require the successful bidder to furnish a
f t t di t t f th t t performanceguaranteenot exceedingtenpercent of thecontract.
Rule-40: Limitation of negotiations
Thereshall benonegotiationwiththelowest evaluatedor anyother bidder
Rule-41: Confidentiality
PA t k ll th i f ti di l ti fid ti l til th PA to keep all the information regarding evaluation confidential until the
announcement of evaluationreport asper Rule35.
Rule-42: Alternative methods of procurements
a) Petty purchases: if the object of the procurement if below the financial 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
toprinciplesof procurementsunder Rule4.
b) Request for quotation: PA shall engage in this method of procurement
where the cost of procurement is belowthe prescribed limit of Rs100000 and where, the cost of procurement is belowthe prescribed limit of Rs.100,000, and
belowRs. 500,000for Autonomousbodieswithauthorizationof their boards
c) Direct contracting: PA can directly procure in this method: If procuring
fromsingle source / supplier; only one manufacturer or supplier. Repeat orders
t di 15% f th i i l t d l d b not exceeding 15% of the original procurement, emergency declared by an
appropriatefora, thePrices arefixedby theGovernment, ThePurchaseof Motor
VehiclefromLocal original manufacturesor their authorizedagents
d) Negotiated tendering: Can be engaged with one or more suppliers with ) g g g g pp
or without prior publicationof 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
recordedinwritingg
Rule-43: On account payment
PA to make prompt payment to suppliers within the time mentioned in the
contract whichshall not exceed30days.
Rule-44: Entry into force of the procurement contract
a) Formal signing of the contract: Fromdate of signing of contract by all a) Formal signing of the contract: Fromdate of signing of contract by all
partiesor fromthedateof fulfillment of certainconditions.
b) No formal signing of contract: From the date of the notice of the
acceptanceof thebid, fromthedateof thepurchaseorder p , p
Rule-45: Closing of contract
Onissuanceof overall deliverycertificateor takingover certificaterequiredtobe
issued within 30 days of final taking over of goods/receiving the deliverables or y g g g
completionof work.
Rule-46: Record of procurement proceedings
PAshall maintaintherecordfor aminimumperiodof 05years.
Rule-47: Public access and transparency
Adocument 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 bj t t i l f th A th it itemssubject toprior approval of theAuthority.
Rule-48: Redressal of grievances by the PA
PA to constitute committee containing odd number persons with powers and
authorizationtoaddresscomplaintsof thebidders. Writtencomplaint within15days
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
t f j i di ti court of jurisdiction.
Rule-49: Arbitration
Arbitration can only be resorted to after coming into force of the procurement
contract. PAtoprovidemethodsof arbitrationinthecontract.
Rule-50: Mis-procurement
Anyauthorizedbreachof theserulesshall amount tomis-procurement. y p
Rule-51: Overriding effect
Shall have effect notwithstanding anything to the contrary contained in any other
rulesconcerningpublicprocurements. rulesconcerningpublicprocurements.
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