Presentation on:

“ PROCUREMENT SYSTEM OF
PAKISTAN”

By:
Engr. M. Mazhar-ul-Islam
Chief Executive
Techno Legal Consultants (Pvt) Ltd.

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 Regulatory Documents
 Federal PPRA Ordinance 2002

 Federal PPRA Rules 2004 & Regulation 2010

 PEC Act 1976 as amended in 2011

 Procurement rules formulated by each of the provinces

 Construction and Operation of Engineering Works Bye-laws

 Conduct and Practice of Consulting Engineers Bye-laws

 19 PEC standard bidding/ contract documents

 3 construction docs. Notified by PPRA vide S.R.O 805(I)/2008

dated 11th July, 2008

 Pakistan Building Codes (Seismic, Energy, Electrical Safety &

Telecom Safety)

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List of PEC Bidding/ Contract Documents

1. Standard Form of Bidding Documents (Civil Works)

2. Standard Form of Tender Documents for procurement of

works (Electrical & Mechanical).

3. Standard Form of Tender Documents for procurement of

works For smaller contracts

4. Standard Form of Contract for Engineering Consultancy

Services (Time Based Assignments)

5. Standard Form of Contract for Engineering Consultancy

Services (Lump Sum Assignments)
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List of PEC Bidding/ Contract Documents
6. Standard Form of Contract For Engineering Consultancy
Services For Smaller Projects

7. Rules of Conciliation and Arbitration

8. Standard Procedure for Evaluation of Proposals for

Procurement of Engineering Services

9. Standard Procedure and Formula for Price Adjustment

10. Standard Procedure for Evaluation of Bids for

Procurement of Works

11. Standard Procedure for pre-qualification of constructors

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List of PEC Bidding/ Contract Documents

12. Standard Procedure for pre-qualification of consultants

13. Standard Form of Bidding Documents for Procurement of

Works on BOT Basis

14. Standard Form of Bidding Documents for Procurement of

Works on Design and Build Basis

15. Standard Form of Bidding Documents for Procurement of

Civil Works (SSTE)

16. Standard Form of Joint Venture/Consortium Agreements

and Memorandum of Understandings

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List of PEC Bidding/ Contract Documents

17. Standard Form of Bidding Documents for EPC/Turnkey

contracts

18. Standard Form of Bidding Documents for procurement of

Goods

19. Standard Form of Bidding Documents for Operation &

Maintenance Works

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Relevant Act/ Laws

1. The Contract Act, 1872

2. The Arbitration Act, 1940

3. The Limitation Act, 1908

4. The Specific Relief Act, 1877

5. The Partnership Act, 1932

6. The Stamp Act, 1899

7. Pakistan Environmental Protection Act, 1997

8. The Registration Act, 1908

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Relevant Act/ Laws

9. Income Tax Laws

10. Law of Conveyancing (Transferring)

11. Land Acquisition Act, 1894

12. Labour Laws

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Salient Provisions in PEC ACT
 PEC is to regulate whole of the engineering profession when
the Preamble read with Section 8 of the Act

 Pursuant to section 27 (5) & (5A) professional engineering

works can be carried out only by the professional engineer

 Section 25 when read in conjunction with Section 2(xii),

2(xiv) and 2(xxv) empowered PEC to regulate also
Engineering Procurements

 Section 2(xxv)(i) provides for standard bidding/contract

documentation and Arbitration rules

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Salient Provisions in PEC ACT
 Section 8(s) stipulates PEC as forum for Arbitration

 Section 8(p) entrusted PEC for development of construction

cost data (schedule of rates)

 Section 20(4) empowers PEC to take suo-moto action

against any organization

 Section 27(1) stipulates punitive action against non

compliance of PEC regulation

 PEC under Section 8(k) read with Section 2(xxxiv) can

create subsidiary like PICC created in 2009 to deal with cost
and contract matters
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Salient Provisions in PEC Construction
Bye-laws

 Engineering works can only be undertaken by PEC licensed

constructors

 Engineering works up to Rs. 4 million can be undertaken

w/o license

 PEC license is mandatory for eligibility of a bidder

 For the time being licenses are issued in eight categories

 License to a foreign constructor is given for specific

projects(s)

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Salient Provisions in PEC Construction
Bye-laws
 License to a foreign constructor is issued in two stages

 A foreign constructor can work in Pakistan only in joint

venture with Pakistani constructor in which Local share is
minimum thirty percent

 A constructor is allowed to undertake work of other

discipline up to 25%

 A constructor already licensed and applied for renewal can

enter into bidding process, however, submit valid license
before award (interpreted)

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 Salient Provisions in Consultancy Bye-
laws
 Only PEC registered consultants are eligible for providing
engineering consultancy services

 A consulting firm should have minimum 51% shareholding by

Professional Engineers and remaining by allied professionals; in
case of Government share above is exempted

 Chief Executive of a consulting firm must be a Professional

Engineer

 Unlike bidding for constructions; bid & performance security

are not required in Consultancy proposal (PEC Interpretation).

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Salient Provisions in Consultancy Bye-
laws

 A foreign consultant can undertake consulting assignments

only with joint venture with Pakistani consultant with share
of lacking expertise except in technology transfer cases

 A licensed consultant applied for renewal can enter into

bidding process, however renewed license must be
produced before award

 A consultant can be a part construction consortium with his

relevant defined scope

 Professional liability for design is up to twice the design fee

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Overview of PPRA Act & Rules
 World Bank prepared CPAR in the year 2000

 PEC contested the CPAR and protested overlapping jurisdiction

 PPRA Ordinance promulgated in 2002 under PCO cover

 PPRA Rules 2004 needed basic documents

 PPRA having jurisdiction to Federal procurement only

 18th constitution amendment placed the regulations under

Federal list; Item-6, Part-II, SCH-4 of Article 143 of the
Constitution prohibit provinces to maintain conflicting
regulations

 PEC & PC notified standard procurement documents in 2002 &

2008
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Overview of PPRA Act & Rules
 PEC harmonized its detailed documents up to 2008

 PPRA issued consultants’ regulations in 2010

 PPRA adopted and notified PEC documents in July 2008

 PEC Act 2011 reinforced regulation on engineering

procurement
 Standardization of bidding/ contract documents,
development of construction cost data, Arbitration forum,
suo-moto action against organizations etc.
 Overlapping jurisdiction b/w PEC and PPRA is a source of
confusion

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PPRA Rules-2004

 Applicable for Federal Government procurement only - Rule-3

 International agreements by Federal Govt. shall prevail

 Specifications shall be generic – Rule-10

 Advertisement on PPRA website for Rs. 0.1m - 2m;

advertisement in news paper is optional – Rule-12

 Advertisement in Newspapers - one in English and Urdu and

PPRA website

 Minimum 15 days response time for LCB and 30 days for ICB
for bidding, EOI, PQs Rule-13

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 PPRA Rules-2004
 Advertisement not mandatory for National Security objective - Rule-14

 Rule-15 recommends PQs for large “expensive and technically

complex” procurement

 Rule - 19 requires PAs to specify mechanism for blacklisting

 Open competitive bidding except under Rule-42 – Rule-21

 Three quotations for Rs. 100,000 to 500,000 (with Board approval)

 Limiting bidding to National bidders and Domestic preference allowed -

Rule-24

 Bid Security not exceeding 5 percent - Rule-25

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PPRA Rules-2004
 Bid validity period depending on nature of procurement – Rule-26

 Can be extended equal to original period once – Rule-26(3)

 Re-advertisement for extension in bid submission - Rule-27

 Evaluation of bids under the specified criteria in the bidding

documents: Otherwise mis-procurement –Rule-29

 Clarifications of the Bid can be sought that do not change the

substance of bid-Rule-31

 Discriminatory and difficult conditions by PAs not permissible - Rule-

32

 PAs requires to state grounds for rejection but not justifications

 Rule 35 requires announcement results ten days prior to award

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PPRA Rules-2004

 Four modes of competitive bidding:

 Single stage single envelope-most bidding under this mode

 Single stage two envelope-technical and financial ground

 Two stage-in large complex projects where technically unequal

likely

 Two stage two envelope-where alternative technical proposals are

possible

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PPRA Rules-2004
 Lowest evaluated responsive is the accepted bid for award. Rule-38

 Performance Guarantee not exceeding ten percent. Rule-39

 Rule 40 limit PA/Bidder in negotiations, across the board reduction

is not permissible

 Evaluation process to remain confidential until announcement. Rule-

41

 Alterative Method of procurement. Rule - 42

 Petty Purchase: without bidding or quotation up to Rs. 25,000-

may be for enhanced amount with justifications. Rule-42(a)

 RFQs: minimum three quotations for up to Rs. 100,000-500,000

(with approval of Board), accept lowest price. Rule-42 (b)(i)

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PPRA Rules-2004
 Direct Contracting-Rule-42(c): (i) Spare parts or services from
original supplier/manufacturer (ii) only one manufacturer exists
(iii) matching specification required within three years of contract
duration (iv) 15% repeat order (v) In emergency declared by
appropriate (vi) When prices are fixed by the Government or any
other authorized Agents on his behalf (vii) purchase of motor
vehicles from Local Original Manufacturers

 Negotiated Tendering –Rule 42(d): with or without

advertisement for (i) study & research (ii)technical & artistic
reasons (iii) extreme urgency-for unforeseen reason not
attributable to PA

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PPRA Rules-2004
 Payment to the Contractors shall be made within 30 days

 Closing of contract-performance of contract deemed to close on

TOC except DLP (Rule - 45)

 Maintenance of record of procurement for minimum five years

(Rule - 46)

 Evaluation documents should have public access and transparency.

Rule-47

 Redressal of grievances under Rule-48: Committee with odd

number of persons to address complaints prior to entry into force
of contract

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PPRA Rules-2010 (Consultancy)
 Regulation 2010 is contingent on PPRA Rule-2004. Sec-2(2)

 Introduced five methods of selection of consultants, Sec-3:

 Quality based (QBS)

 Quality and Cost based (QCBS)

 Least Cost

 Single Source or direct selection

 Fixed budget

 Eligibility under Section 4 to avoid conflict of interest-Constructors

& Consultants
 EOI requires 15 days notice to National and 30 days for
International, Sec-5

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PPRA Rules-2010 (Consultancy)
 Short listing under-Rule-6 (not less than three) except Single
Source; and pre-qualification under Rule-7 of consultants

 Components for RFP, Sec-8:

 Letter of Invitation

 Instructions to consultants

 TOR

 Evaluation criteria

 Proposed Contract Format

 Special Provision where needed

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PPRA Rules-2010 (Consultancy)
 Selection Committee composed of three relevant persons. Sec-9
 Negotiation is limited to clarification and no changes in rates. Sec-
10
 Professional liability equal to remunerations up to twice the design
fees; for design error and omission (Section-5 of Pec Byelaws).
Sec-11(1)
 PA may demand Professional Indemnity Insurance (PII) to cover
above Risks; PA to reimburse cost under Out of Pocket Expenses,
Sec-11(2)
 Consultant is responsible for misconduct or unsatisfactory
performance. Sec-11(3)
 PPRA Rule-2004 and Regulations-2010 are mutually explanatory
but Rule-2004 shall have precedence
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CRITICAL REVIEW OF PUNJAB PPRA RULE
 Rule -13: Advertisements not required in case of National Security
& Intellectuals’ Property

 Punjab PPRA Rules have been reshuffled with motive- Example:

Rule-42 shifted to 49.

 Chapter –VII: Consultancy rules are not exhaustive.

 Rule 31(3): Procuring Agencies refer this rule to ask for LCM
without having minimum slab for the procurement.

 Rule 34 is often misinterpreted to impose difficult conditions such

as, high bid security and turn over even for consultancy.

 Rule 35: Rejection of bid to be notified to each of the bidders and

not just hoisting to website.
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CRITICAL REVIEW OF PUNJAB PPRA RULE
 Rule 48(2) & 14 : Separate response time of 14 or 30 days
required for PQ and proposals – often confused & not followed.

 Rule-55 (A): Single complying proposal may be awarded

 Rule 58: Re-bidding process shall not be permitted after

announcement of the Evaluation Report.

 Rule 59 (c)(iv): 15% repeat order is not synonymous to VO but for

goods and spare parts; however, often misinterpreted to deny VO
& continuity of Consultancy.

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MIS-INTERPRETATIONS & MANIPULATIONS -
PPPRA

 Rule 4: Principles of procurement are often compromised.

 Rule 13: National Security often misused.

 Rule 15: Frame of Contract or Notified SBD.

 Rule 16(6 & 8): P & D sole jurisdictions for pre-qualification on

yearly basis - also Line Departments are not bound- departmental
precedence over spirit of regulations.

 Rule 31(3): Procurement through direct request – confusing

 Rule 45 (5): Awarding contract to Govt. organizations through

direct contracting- Manipulative and Conflicting
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MIS-INTERPRETATIONS & MANIPULATIONS-PPPRA

 Rule 57: Negotiation often sought across the board reduction – not
permitted in any good practice

 Rule 59: Alternative method of procurements.

 (c)(iv) - 15% rule shall be for goods & spare parts only.

 (c)(v) – declaration of emergency by “authority” – manipulated

 (d) – negotiated tendering “with or without” prior publication of notification

 (d)(iii) – Extreme urgency – another manipulation

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MIS-INTERPRETATIONS & MANIPULATIONS-
PPPRA

 Rule-60: Unsolicited proposal – additional 5% weightages to the

original proposer leads to manipulation

 Rule 61(3): Post bid participation of public sector manufacturers

with lowest bid matching price -( ill- conceived)

 Announcement of cost proposal should annul PA rights for re-

bidding unless failure of faithful negotiation.

 Violates relevant country laws such as PPRA, PEC, CCP.

 Genuine bidders refrain from participation.

 Time line and quality are compromised.

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MIS-INTERPRETATIONS & MANIPULATIONS-
PPPRA

 Loss of investors confidence.

 Promote malpractices.

 Increase in claims & litigation.

 Loss in national exchequer.

 Earned bad reputation Globally.

 Destroy moral character of the Nation.

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THANK YOU

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