INTRODUCTION TO LEGAL

FRAMEWORK OF PUBLIC
PROCUREMENT IN PAKISTAN
(PAST & PRESENT)
 Sequence
 Introduction
 Introduction; Need for Procurement Reforms
 Findings of W.B Country Procurement
Assessment Report 2000
 Word Bank Recommendations
 Public Procurement Regime in Pakistan
 Overview of Procurement Cycle .

3
 Introduction
 Public Procurement Regulatory Authority
(PPRA) is an autonomous body endowed
with the responsibility of Framing rules,
prescribing regulations and procedures
for public procurements by Federal
Government owned public sector
organizations
 Introduction; Need for Procurement
Reforms
General Financial Rules (issued 1951/2nd
edition 1979) (Stores etc.)
Purchase Manual of Deptt. of Supplies and
Disposals, under MOIP(centralized)
Delegation of Powers to Ministries
(Overlapping)
Autonomous Bodies had their own Rules

Various Circulars of Ministry of Finance

Reforms in Pakistan
5000
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Reviewed
Deficiencies
 Findings of W.B Country Procurement
Assessment Report 2000
1. Pakistan’s procurement practices are
governed by a set of outdated rules and
regulations
2. Public procurement suffered from
inefficiency, and poor management.
3. Inadequately trained and poorly paid public
sector procurement professionals
4. Complicated and non-transparent
procurement procedures discouraged sound
planning, thorough evaluation
 Word Bank Recommendations
1. Enacting a modern, transparent public
procurement law based on UNCITRAL;
Model Law for Procurement;
2. Creating a small, professionally staffed,
independent regulatory agency
3. The regulatory body to be mainly confined
to policy, documentation, development of
rules, etc.

4. Not to involve in line clearance functions for

award of contracts
 Functions of PPRA
Role of PPRA is mainly advisory and facilitative, i.e.,
To improve governance, transparency, accountability and

quality of public procurement.

To supervise the application & implementation of relevant

laws, rules, policies and procedures.

To recommend revision/formulation of laws, rules and

policies related to public procurement.

To formulate regulations on public procurement.

To monitor performance of procuring agencies for

improvements in their institutional set up.
 Members of PPRA Board
1. Secretary, Finance Division (Chairperson)
2. Secretary, Ministry of Industries and
Production
3. Secretary, Defence Production Division
4. Secretary, Ministry of Water and Power
5. Secretary, Ministry of Housing and Works
6. Secretary, Ministry of Communications
7. Member from private sector
8. Member from private sector vacant since 2012
9. Member from private sector
10. Managing Director, PPRA
(member/secretary)
 Administrative Setup
 PPRA is a lean organization working with
09 officers and 40 supporting staff.
 Existing staff strength is 49 against the
required strength of 163.
 Among existing 49 staff members, 5
officers and 5 officials are working on
deputation basis.
 Achievements
 Hosted the 2 South Asia Conference on Public Procurement in March 2014,
nd

inaugurated by the President of Pakistan.

 Chair of the South Asia Conference transferred to Pakistan for 2 years.
 South Asia Public Procurement Network (SAPPN) website developed.
 Regular meetings through Global Distance Learning Network (GDLN) with
all the South Asian countries for knowledge sharing.
 Advisory Group on Public Procurement established to harmonize legal
framework of federal & provincial PPRAs.
 National Procurement Strategy 2013-16 finalized .
 E-Procurement Strategy finalized .
 Training Strategy for capacity building of procuring agencies finalized.
 PPRA Accounting Procedure (Regulations) 2014.
 Draft amendments in Public Procurement Rules, 2004 finalized.
 Since inception 2,27,991 tenders uploaded on PPRA website; 75,163
 violations of PP Rules were indicated.
 Since inception 5141 officials of public & private sector have been trained in
Procurement Rules since 2006.
 Legal Frame work
 Public Procurement Regulatory
Authority(PPRA) was established on 15 th May,
2002.
 PPRA Ordinance, 2002
 Public Procurement Rules, 2004
 Six Public Procurement Regulations are
notified.
 Based on UNCITRAL - a model Procurement
Law
 Compliance with World Bank and ADB
Procurement Guidelines 13
 Public Procurement Regulations
Regulations making powers are derived from Section 27 of the Ordinance.
Following Six Regulations are issued so far:
1.PPRA Regulations, 2008 (BD Works+Record)
2.PPRA Regulation, 2009 (posting of Contract Awards; Rs. 50 million)
3.Consultancy Services Regulations, 2010
4.PPRA Regulation, 2011 (Rule 5)
5.Eligible Bidders (Tax Compliance) Regulations, 2015
6.Public Procurement (Specimens for advertisement) Regulations, 2015
 Public Procurement Regime in
Pakistan
 Punjab PPRA (Established in 2008)
 Sindh PPRA (Established in 2010)
 Baluchistan PPRA (Established in 2012)
 KP PPRA (Established in 2014)

 AJK adopted Federal PPRA Rules in 2017,

GB follow Federal PPRA & FATA follows
Governor Directives.

15
 Public Procurement and some
basic concepts
Whether following subjects are Procurement?
 Recruitment

 Auction

 Lease of land/building

 Purchase of land/building

 Privatization of Units/Banks

 Basis of transparency & open competition should be

followed.
 Financial Control and Budgeting, 2006 issued by
Finance Division shall be consulted

16
INTRODUCTION TO PPRA
ORDINANCE, 2002
 INTRODUCTION TO PPRA ORDINANCE, 2002

 Public Procurement Regulatory

Authority(PPRA) was established on 15 th
May, 2002 under PPRA Ordinance, 2002

 Regulator of Public Procurement

 Role of NAB, PEC, TIP AND AGPR

 Basic Definitions

Public Procurement:
Means acquisition of goods, services or
construction of any works financed wholly or
partly out of the Public Fund, unless excluded
otherwise by the Federal Government;
 Basic Definitions

Goods:
Means articles and objects of every kind and
description including raw materials, products,
equipment, machinery, spares and commodities in
any form and includes services incidental to
installation, transport, maintenance and similar
obligations related to the supply of goods if the value
of these services does not exceed the value of such
goods;
 Basic Definitions

Works
Means any construction work consisting of erection, assembly,
repair, renovation or demolition of a building or structure or
part thereof, such as site preparation, excavation, installation
of equipment or materials and decoration, finishing and
includes incidental services such as drilling, mapping, satellite
photography, seismic investigations and similar activities, if
the value of those services does not exceed that of the works
themselves.
 Basic Definitions

Services:
Means any object of Procurement other than
goods or works;
 Basic Definitions
Public Fund:
means the Federal Consolidated Fund and the
Public Account of the Federation and includes
funds of enterprises which are owned or
controlled by the Federal Government;
 Basic Definitions

Procuring Agency:
 Any Ministry, Division, Department or any
Office of the Federal Government;
 Any authority, corporation, body or
organization established by or under Federal
law or which is owned or controlled by the
Federal Government;
 Basic Definitions

Mis-Procurement:
Means public procurement in contravention of
any provision of this Ordinance, regulations,
orders or instructions made there under or any
other law in respect of, or relating to, public
procurement.
 Basic Definitions

21. Power to exempt

The Authority may, recommended to the Federal
Government that the procurement in the national
interest be exempted from the operation of this
Ordinance or any rule or regulation and Federal
Government on such recommendations shall exempt
it from the operation of the laws and rules and
regulations made there under.
Procurement Cycle
Procurement Planning

Pre-Qualification Evaluation

Invitation of Bids

Bidding

Evaluation of Bids

Decision of Contract Award

Signing of Contract
 Public Procurement Cycle Checklist
 1. Identifying the need – is the purchase necessary?
 2. Writing the specifications
 3. Estimating cost
 4. Securing approvals and funding
 5. Determining the best procurement strategy
 6. Deciding on the tendering procedure that should be followed
 7. Preparing Request for Tender (RFT)
 8. Allowing sufficient time for submission of tenders
 9. Issuing tender documents, supporting documents and
clarifications without delay
 10. Receipting and opening tenders
 11. Evaluation of tenders
 12. Awarding the contract
 13. Managing the contract
Public Procurement Rules 2004
Rule.1
Short title and commencement
 Section 26, Public Procurement Regulatory
Authority Ordinance, 2002- power to make
rules.

 Public Procurement Rules, 2004

S.R.O.432(1)/2004.Finance Division ,8th June,2004
 General Provisions
Rule 2.
Definitions
Rule,2 (1) & (2), PP Rules, 2004
Section, 2, PPRA
Ordinance, 2002

Bid/ Bidder
 Public
 Competitive bidding
Procurement
 Contract
 Corrupt and Fraudulent
 Mis-procurement Practices
 Procuring Agency  Emergency
 Public Fund  Lowest Evaluated Bid
 Goods  Repeat Order
 Services  Supplier
 Works  Value for Money
 Rule. 2
GENERAL PROVISIONS
2. Definitions.-

“emergency” means natural calamities, disasters, accidents, war and

operational emergency which may give rise to abnormal situation requiring
prompt and immediate action to limit or avoid damage to person, property or the
environment;

“lowest evaluated bid” means,-

a bid most closely conforming to evaluation criteria and other conditions specified
in the bidding document; and having lowest evaluated cost;

“value for money” means best returns for each rupee spent in terms of quality,
timeliness, reliability, after sales service, up-grade ability, price, source, and the
combination of whole-life cost and quality to meet the procuring agency’s
requirements.
 Rule. 3
Scope and Applicability
Public Procurement Rules, 2004
apply to all procurements made by
all procuring agencies of the
Federal Government whether
within or outside Pakistan.
*Procurement of
Goods.
Services.
Works.
*PPRA Ordinance 2002
 Rule. 4
Principles of Procurement
 procurements are conducted in a fair and
transparent manner
 the object of procurement brings value for money
to the agency
 the procurement process is efficient and
economical.
 Rule. 5
International and Inter-governmental
Commitments
 Whenever these rules are in conflict with an
obligation or commitment of the Federal
Government arising out of
 an international treaty or
 an agreement with a State or States, or
 any international financial institution
 the provisions of such international treaty or
agreement to prevail to the extent of such
conflict.
Prior Approval of ECC(PP Regulations, 2011)
 Rule. 6
Language
 All communication and documentation in Urdu
or English or Both.

 Outside Pakistan and local procurement in

local language.
 Rule. 7
Integrity Pact

Integrity Pact to be made a part of all

contracts exceeding Rs. 10 Million in
value.
 Rule 8
Procurement Planning
Procurement Planning for realistically
determining the requirements of the procuring
agency ,within its available resources, delivery
time or completion date and benefits that are
likely to accrue to the procuring agency in
future.
 Rule 9
Limitation on splitting or regrouping
A procuring agency to announce in an
appropriate manner all proposed
procurements for each financial year,

 To proceed accordingly without any

splitting or regrouping of procurement so
planned; and

 To advertise in advance on the Authority’s

website and procuring agency’s (if any) own
website.
 Rule 10
Specifications
 to be generic without references to brand names,
model numbers, catalogue numbers or similar
classifications.

 if essential to complete an otherwise incomplete

specification, such use or reference to be qualified
with the words “or equivalent” .
 Rule 11
Approval Mechanism

All procuring agencies to provide clear

authorization and delegation of powers for
different categories of procurement and to
only initiate procurement once approval of
the competent authorities obtained.
 Rule 12
Advertisement Methods

 Rs.100,000 – Rs. 2 Million :to be

advertised on the Authority’s website

 over Rs.2 Million : to be advertised on the

PPRA’s 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 .

 The response time to be calculated from the date of first
publication of the advertisement in a newspaper or posting
on the website.
 Where publication of such advertisements or notices has
occurred in both electronic and print media, the response
time to be calculated from the day of its first publication in
the newspapers.
 Proviso; in emergency
 Rule 14
Exceptions

Exceptions with prior approval of

Authority;

 If the procurement relates to national security

and its publication could jeopardize national
security objectives; and

 If the publication of procurement in any manner,

relates to disclosure of information, which is
proprietary in nature or falls within the
definition of intellectual property which is
available from a single source.
 Rule 15
Pre-qualification of
Suppliers/Contractors

 Suitable in case of Services, Civil Works, Turnkey

Projects, Expensive Technically Complex Equipment.

 Ensure that technically and financially capable firms

having adequate managerial competency are invited.
 Rule 15
Factors for Consideration for
Pre-qualification of
Suppliers/Contractors
 (a) relevant experience and past performance;
 (b) capabilities with respect to personnel, equipment, and
plant;
 (c) financial position;
 (d) appropriate managerial capability; and
 (e) any other factor that a procuring agency may deem
relevant, not inconsistent with these rules.
 Rule 16
Pre-qualification Process
 all information is required to be announced through the
pre-qualification documents for preparation and
submission of applications

 Price of Pre-qualification documents not to exceed the cost

of printing and providing the documents
 Rule – 17
Qualification

 A procuring agency, at any stage of the procurement

proceedings, may require the suppliers or contractors to
provide information concerning their professional,
technical, financial, legal or managerial competence whether
already pre-qualified or not:

Reasons to be recorded in writing by the P.A.
 Rule – 18
Disqualification
The procuring agency shall disqualify a
supplier or contractor if it finds, at any time,
that the information submitted by him
concerning his qualification as supplier or
contractor was false and materially
inaccurate or incomplete.
 Rule 19
Blacklisting
 Specify a mechanism and manner to
permanently or temporarily bar.
 Such barring action shall be duly
publicized and communicated to the
Authority:
 Adequate opportunity of being heard.
 Rule 20
Principal method

Open competitive bidding is the principal

method of procurement for all procurement of
goods, services and works.
 Rule 21
Open Competitive Bidding
The procuring agencies shall engage in open
competitive bidding if the cost of the object
to be procured is more than Rs.100,000.
 Rule 22
Submission of Bids.-
The bids shall be submitted in a sealed
package or packages in such manner that
the contents are fully enclosed and cannot
be known until duly opened.

(2) A procuring agency shall specify the

manner and method of submission and
receipt of bids in an unambiguous and clear
manner in the bidding documents.
 Rule 23
Bidding Documents
Procuring agencies shall formulate
precise and unambiguous bidding
documents that shall be made available to
the bidders immediately after the
publication of the invitation to bid.

(2) For competitive bidding, whether

open or limited, the bidding documents shall
include the following namely.-
(a) invitation to bid;
(b) instructions to bidders;
(c) form of bid;
(d) form of contract;
(e) general or special conditions of contract;
(f) specifications and drawings or performance
criteria (where applicable);
(g) list of goods or bill of quantities (where
applicable);
(h) delivery time or completion schedule;
(i) qualification criteria (where applicable);

(j) bid evaluation criteria;

(k) format of all securities required (where applicable);

(l) details of standards (if any) that are to be used in

assessing the quality of goods, works or services
specified; and

(m) any other detail not inconsistent with these rules

that the procuring agency may deem necessary.
 Rule 24
Reservations and Preference
 Allow participation to all bidders without regard to
nationality

 Exception only in accordance with the policy of the

Federal Government

 Price preference to domestic or national bidders as per

policy of the Federal Government

 Magnitude to be mentioned in bid evaluation criteria

 Rule 25
Bid Security
The procuring agency may require the
bidders to furnish a bid security not
exceeding five per cent of the 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 validity
period
 Extensions under exceptional circumstances, by
recording the reasons
 All the applicants shall be asked to extend their
bid validity period
 Rule 27
Extension of Time for Submission of
Bids
 Reasons to be recorded

 Equal opportunity basis

 Manner similar to original advertisement

 Rule 28
Opening of bids

i. The date for opening of bids and the last date for
the submission of bids shall be the same.

ii. The bids shall be opened at least thirty minutes

after the deadline for submission of bids.
iii. All bids shall be opened publicly in the presence of
the bidders or their representatives who may
choose to be present.
iv. The procuring agency shall read aloud the unit
price as well as the bid amount and shall record the
minutes of the bid opening.

v. All bidders in attendance shall sign an attendance

sheet.

vi. All bids submitted after the time prescribed shall

be rejected and returned without being opened.
 Rule 29
Evaluation criteria
i. Procuring agencies shall formulate an appropriate
evaluation criterion listing all the relevant information
against which a bid is to be evaluated.

ii. Such evaluation criteria shall form an integral part of the

bidding documents.

iii. Failure to provide for an unambiguous evaluation

criteria in the bidding documents shall amount to mis-
procurement.
 Rule 30
Evaluation of Bids
i. All bids shall be evaluated in accordance with the
evaluation criteria and other terms and conditions set
forth in the prescribed bidding documents.

ii. Save as provided for in clause (iv) of clause (c) of rule 36

no evaluation criteria shall be used for evaluation of bids
that had not been specified in the bidding documents.

iii. For the purposes of comparison of bids quoted in

different currencies, the price shall be converted into a
single currency specified in the bidding documents.
iv. The rate of exchange shall be the selling rate,
prevailing on the date of opening, as notified by the
State Bank of Pakistan on that day.

v. A bid once opened in accordance with the prescribed

procedure shall be subject to only those rules,
regulations and policies that are in force at the time of
issue of notice for invitation of bids.
 Rule 31
Clarification of bids

i. No bidder shall be allowed to alter or modify his bid after

the bids have been opened.

ii. The procuring agency may seek and accept clarifications

to the bid that do not change the substance of the bid.

iii. Any request for clarification in the bid, made by the

procuring agency shall invariably be in writing.

iv. The response to such request shall also be in writing.

 Rule 32
Discriminatory and Difficult
Conditions

i. No procuring agency shall introduce any condition, which

discriminates between bidders or that is considered to be
met with difficulty.

ii. In ascertaining the discriminatory or difficult nature of

any condition reference shall be made to the ordinary
practices of that trade, manufacturing, construction
business or service to which that particular procurement
is related.
 Rule 33
Rejection of bids

i. The procuring agency may reject all bids or proposals at

any time prior to the acceptance of a bid or proposal.
ii. The procuring agency shall upon request communicate
to any supplier or contractor who submitted a bid or
proposal, the grounds for its rejection of all bids or
proposals, but is not required to justify those grounds.

iii. Notice of the rejection of all bids or proposals shall be

given promptly to all bidders.

iv. The procuring agency shall incur no liability.

 Rule 34
Re-bidding

i. If the procuring agency has rejected all bids under rule 33

it may call for a re-bidding.

ii. The procuring agency before invitation for re-bidding shall

assess the reasons for rejection and may revise
specifications, evaluation criteria or any other condition for
bidders as it may deem necessary.
 Rule 35
Announcement of evaluation
Reports

Procuring agencies shall announce the results of bid

evaluation in the form of a report giving justification for
acceptance or rejection of bids at least ten days prior to the
award of procurement contract.
 Rule 36
Procedures of Open Competitive Bidding

a. Single stage – one envelope procedure.

b. Single stage – two envelope procedure.

c. Two stage bidding procedure.

d. Two stage – two envelope bidding procedure.

 Rule - 37
Conditions
i. Single stage one envelope bidding procedure shall
ordinarily be the main open competitive bidding
procedure used for most of the procurement.

ii. Single stage two envelope bidding procedure shall be

used where the bids are to be evaluated on technical and
financial grounds and price is taken into account after
technical evaluation;

iii. Two stage bidding procedure shall be adopted in large

and complex contracts where technically unequal
proposals are likely to be encountered or where the
procuring agency is aware of its options in the market
but, for a given set of performance requirements, there
are two or more equally acceptable technical solutions
available to the procuring agency; and
iv. two stage two envelope bidding method shall be used
for procurement where alternative technical proposals
are possible, such as certain type of machinery or
equipment or manufacturing plant.

********
 Rule 38
Acceptance of Bids
 lowest evaluated bid to be accepted

 If not in conflict with any other law, rules,

regulations or policy of Government.

 Within the original or extended period of bid

validity
 Rule – 39
Performance guarantee

 If required ,to be furnished by the

successful bidder

 shall not exceed 10% of the contract

amount

 should be clearly expressed in the

bidding documents.
 Rule – 40
Limitation on negotiations


No negotiations with the bidder
having submitted the lowest
evaluated bid or with any other
bidder.
 Rule – 41
Confidentiality

 All information regarding the bid

evaluation shall be kept confidential

 until the announcement of evaluation

report under Rule - 35
 Rule – 42.
Alternate Methods of
Procurements .
(a) Petty Purchases

 if below the limit of Rs. 25,000

 exempted from the requirement of bidding or
quotation of Prices.
 Should be in conformity with Principles of
Procurement prescribed under Rule 4
 Financial limit of Rs. 25,000 is extendable, if
justified.
 (b) Request for quotations

 Below the financial limit of Rs. 100,000

 Below Rs. 5oo,000 for Autonomous bodies

(required to be approved by concerned

Board of Directors)
 Standard specifications

 Minimum of 03 quotations required

 Purchase from the supplier offering the

lowest price
 Financial limit of Rs. 100,000 is extendable

if full justification is provided.

 (C) Direct Contracting
A PA may engage in direct contracting if the
following conditions are met:
 Acquisition of spare parts or supplementary

services from the original manufacturer or supplier

if not available from alternate sources
 Only one manufacturer or supplier exists

(specification of appropriate forum for

authorization )
 Repeat orders not exceeding 15% of the original

procurement
 Where a change of supplier would oblige the

procuring agency to acquire material having

different technical specifications or characteristics
 In case of an emergency declared by an appropriate
fora.
 The Prices are fixed by the Government.
 The Purchase of Motor Vehicle from Local original
manufactures or their authorized agents.
 (d) Negotiated Tendering

 A procuring agency may engage in negotiated

tendering with one or more suppliers or contractors
with or without prior publication of a procurement
notification. This procedure shall only be used when:

i. The supplies involved are manufactured purely for the

purpose of supporting a specific piece of research or an
experiment, a study or a particular development;
ii. For technical or artistic reasons, or for reasons connected
with protection of exclusive rights or intellectual properly,
the supplies may be manufactured or delivered only by a
particular supplier;
iii. For reasons of extreme urgency brought about by events
unforeseeable by the procuring agency, the time limits laid
down for open and limited bidding methods cannot be met.
The circumstances invoked to justify extreme urgency must
not be attributable to the procuring agency;

Provided that any procuring agency desirous of

using negotiated tendering as a method of procurement shall
record its reasons and justifications in writing for resorting to
negotiated tendering and shall place the same on record.
 Rule – 43
On Account Payments
 Prompt Payments to suppliers/contractors
within the time given in the conditions of
the contract, which shall not exceed 30
days
 Rule – 44
Entry into force of the Contract

 If formal signing of a written contract is required:-

 From the date of signing the contract by all parties

concerned. Or
 From the date of fulfillment of certain condition(s) –
Contingent Contracts.

 If no formal signing of contract is required:-

 From the date of the notice of the acceptance of the bid

 From the date of the purchase order
 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 or completion of work.
 In case of defect liability or maintenance period;

• Completion certificate to be issued within 30 days of

expiry of defect liability or maintenance period (except
for unsettled claims) and payments to be made as per
condition of contract but not exceeding 60 days.

 Rule – 46
Record of Procuring Proceedings
• To be maintained by all P.As for a minimum period of
05 years

• Detail of record obtaining of record etc. in accordance

with Regulation 4,5,6 of PP Regulations, 2008.
 Rule – 47
Public Access and Transparency
A document relating to evaluation and award
of contract to be made public;
• as soon as the contract is awarded
• exceptions – proprietary nature or against the Public
Interest
• Prior approval of PPRA required to withhold the
information from public disclosure
• Procurement contract over Rs.50 million are required
to be uploaded on PPRA Website on specified forms
(PP Regulations, 2009)
 Rule – 48.
Redressal of Grievances by the
Procuring Agency

• On receipt of complaint of an aggrieved bidder prior

to the entry into force of the procurement contract
• PA to Constitute a Committee
• Complaints
• 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 court of
jurisdiction
 Rule – 49
Arbitration
• only after coming into force of the procurement
contracts
• method of arbitration to be provided by the
procuring agency
 Rule – 50
Mis-procurement
 Un-authorized breach of Procurement Rules
 Rule – 51
Overriding Effect
 Shall have effect notwithstanding
anything to the contrary contained
in any other rules concerning public
procurements
THANK YOU