11

In the name ofIn the name of

AllahAllahMost Gracious Most Most Gracious Most

MercifulMerciful

TRANSPARENCY INTERNATIONAL - PAKISTANStrives to make Pakistan a better Country to live in

22

Public Procurement Rules-2004Implemented in Sindh Province on 1st November 2006

Presentation in CDGK on 7 January 2007, by Engr. Syed Adil Gilani, Chairman

TRANSPARENCY INTERNATIONAL PAKISTAN 5-C 3rd Floor, Kh-e-Ittehad,, Defence Housing Authority – Phase VII, Karachi

Tele: (0092-21) 5390408-9, Fax: 5390410email: ti.pakistan@gmail.com.

Website: www.transparency.org.pk

33

What does “Procurement” Means

Procurement is the engineering term for all purchases, supplies, tendering of construction works, turnkey projects and consultancy services.

PPRA definition of Contractor as contained in Public Procurement Rules 2004 clarifies this in more appropriate manner;

“contractor” means a person, consultant, firm, company or an organization who undertakes to supply goods, services or works;

44

GOVERNMENT OF SINDH GOVERNMENT OF SINDH SERVICES, GENERAL ADMINISTRATION & SERVICES, GENERAL ADMINISTRATION &

COORDINATION DEPARTMENT COORDINATION DEPARTMENT Karachi, dated 1 November 2006Karachi, dated 1 November 2006

NOTIFICATIONNOTIFICATION NO.SO(C-)SGA&CD/4-80/2006 : The Government of Sindh is pleased to adopt NO.SO(C-)SGA&CD/4-80/2006 : The Government of Sindh is pleased to adopt

the Public Procurement Regularity Authority (PPRA), Public Procurement the Public Procurement Regularity Authority (PPRA), Public Procurement Rules 2004 with immediate effect and till further orders to improve Rules 2004 with immediate effect and till further orders to improve transparency in procurement of goods, services and consultancies. transparency in procurement of goods, services and consultancies. According!y following guide lines are issued for strict compliance by all According!y following guide lines are issued for strict compliance by all departments/attached departments, autonomous semi autonomous bodies, all departments/attached departments, autonomous semi autonomous bodies, all offices and subordinate offices of the Sindh Government, District offices and subordinate offices of the Sindh Government, District Governments/TMAs/UCs and all establishments associated with Government Governments/TMAs/UCs and all establishments associated with Government of Sindh.of Sindh.

a) The Public Procurement Rules 2004 shall have overriding effect on all existing Procurement Rules, Regulations ;Manuals, Instructions I Orders issued by the Government from time to time and shall apply to all departments, District Governments, autonomous, semi autonomous Organizations I commissions and all offices being paid directly and indirectly out of or through finances of Govt. of Sindh.

Contd:Contd:

55

b) All tenders, as required under PPRA, Public Procurement Rules 2004 b) All tenders, as required under PPRA, Public Procurement Rules 2004 biddingbidding documents, processing of bidding documents and final decisions documents, processing of bidding documents and final decisions taken by the procuring departments taken by the procuring departments I I officers of Government of Sindh officers of Government of Sindh including District Governments must be including District Governments must be placed on the website of the Government of Sindh ‘ placed on the website of the Government of Sindh ‘ / / www.sindh.gov.pk www.sindh.gov.pk Any violation by any department / authority officer in the matter would Any violation by any department / authority officer in the matter would result in invalidation/result in invalidation/ cancellation of such tender and responsible officer cancellation of such tender and responsible officer to be proceeded under relevant disciplinary laws of the Government of to be proceeded under relevant disciplinary laws of the Government of Sindh.Sindh.

c) The practice of enlisting and registration of contractors and suppliers by departments / district governments and government agencies I semi government agencies authorities is stopped with immediate effect and in future all intending participants may bid for the tenders and final decision may be made by procuring authorities after analysis, evaluation and vetting of the technical and financial proposals.

d) The budget of Government of Sindh d) The budget of Government of Sindh I I Annual Development Programs Annual Development Programs (ADP) including periodical releases and periodical utilization progress (ADP) including periodical releases and periodical utilization progress reports must be placed on website of Government of Sindh to reports must be placed on website of Government of Sindh to disseminate the information for general public and all stake holders: disseminate the information for general public and all stake holders:

FAZAL-U R-REH MAN FAZAL-U R-REH MAN CHIEF SECRETARY SINDHCHIEF SECRETARY SINDH

66

Integrity PactIntegrity Pact

Procurements exceeding the prescribed Procurements exceeding the prescribed limit shall be subject to an integrity limit shall be subject to an integrity pact, as specified by regulation with pact, as specified by regulation with approval of the Federal Government, approval of the Federal Government, between the procuring agency and between the procuring agency and the suppliers or contractors.the suppliers or contractors.

77

Integrity PactIntegrity PactDECLARATION OF FEES, COMMISSIONS AND BROKERAGE ETC.DECLARATION OF FEES, COMMISSIONS AND BROKERAGE ETC.

PAYABLE BY THE SUPPLIERS/CONTRACTORS OF GOODS, SERVICES & WORKSPAYABLE BY THE SUPPLIERS/CONTRACTORS OF GOODS, SERVICES & WORKS

[The Seller/Supplier/Contractor] hereby declares its intention not to obtain or induce the procurement [The Seller/Supplier/Contractor] hereby declares its intention not to obtain or induce the procurement of any contract, right, interest, privilege or other obligation or benefit from Government of Pakistan or of any contract, right, interest, privilege or other obligation or benefit from Government of Pakistan or any administrative subdivision or agency thereof or any other entity owned or controlled by it (GoP) any administrative subdivision or agency thereof or any other entity owned or controlled by it (GoP) through any corrupt business practice.through any corrupt business practice.

Without limiting the generality of the foregoing, [the Seller/Supplier/Contractor] represents and Without limiting the generality of the foregoing, [the Seller/Supplier/Contractor] represents and warrants that it has fully declared the brokerage, commission, fees etc. paid or payable to anyone and warrants that it has fully declared the brokerage, commission, fees etc. paid or payable to anyone and not given or agreed to give and shall not give or agree to give to anyone within or outside Pakistan not given or agreed to give and shall not give or agree to give to anyone within or outside Pakistan either directly or indirectly through any natural or juridical person, including its affiliate, agent, either directly or indirectly through any natural or juridical person, including its affiliate, agent, associate, broker, consultant, director, promoter, shareholder, sponsor or subsidiary, any associate, broker, consultant, director, promoter, shareholder, sponsor or subsidiary, any commission, gratification, bribe, finder’s fee or kickback, whether described as consultation fee or commission, gratification, bribe, finder’s fee or kickback, whether described as consultation fee or otherwise, with the object of obtaining or including the procurement of a contract, right, interest, otherwise, with the object of obtaining or including the procurement of a contract, right, interest, privilege or other obligation or benefit in whatsoever form from GoP, except that which has been privilege or other obligation or benefit in whatsoever form from GoP, except that which has been expressly declared pursuant hereto.expressly declared pursuant hereto.

[The Seller/Supplier/Contractor] certifies that it has made and will make full disclosure of all [The Seller/Supplier/Contractor] certifies that it has made and will make full disclosure of all

agreements and arrangements with all persons in respect of or related to the transaction with GoP agreements and arrangements with all persons in respect of or related to the transaction with GoP and has not taken any action or will not take any action to circumvent the above declaration, and has not taken any action or will not take any action to circumvent the above declaration, representation or warranty.representation or warranty.

[The Seller/Supplier/Contractor] accepts full responsibility and strict liability for making any false [The Seller/Supplier/Contractor] accepts full responsibility and strict liability for making any false declaration, not making full disclosure, misrepresenting facts or taking any action likely to defeat the declaration, not making full disclosure, misrepresenting facts or taking any action likely to defeat the purpose of this declaration, representation and warranty. It agrees that any contract, right, interest, purpose of this declaration, representation and warranty. It agrees that any contract, right, interest, privilege or other obligation or benefit obtained or procured as aforesaid shall, without prejudice to privilege or other obligation or benefit obtained or procured as aforesaid shall, without prejudice to any other right and remedies available to GoP under any law, contract or other instrument, be any other right and remedies available to GoP under any law, contract or other instrument, be voidable at the option of GoP.voidable at the option of GoP.

Notwithstanding any rights and remedies exercised by GoP in this regard, [the Notwithstanding any rights and remedies exercised by GoP in this regard, [the Seller/Supplier/Contractor] agrees to indemnify GoP for any loss or damage incurred by it on account Seller/Supplier/Contractor] agrees to indemnify GoP for any loss or damage incurred by it on account of its corrupt business practices and further pay compensation to GoP in an amount equivalent to ten of its corrupt business practices and further pay compensation to GoP in an amount equivalent to ten time the sum of any commission, gratification, bribe, finder’s fee or kickback given by [the time the sum of any commission, gratification, bribe, finder’s fee or kickback given by [the Seller/Supplier/Contractor] as aforesaid for the purpose of obtaining or inducing the procurement of Seller/Supplier/Contractor] as aforesaid for the purpose of obtaining or inducing the procurement of any contract, right, interest, privilege or other obligation or benefit in whatsoever form from GoP.any contract, right, interest, privilege or other obligation or benefit in whatsoever form from GoP.

88

Public Procurement Rules, 2004 (PPR)

PPR 2004 has eliminated all discretions in procurement process,

The Vital Rules which have incorporated checks and balances in discretion free Procurement System are;

Standardization of Procurement Process and tender documents, advertise all prequalification or tenders over Rs 100,000 thousand on Procuring Agency website as well as on the website of Government of Sindh www.sindh.gov.pk, and in at least one English & one Urdu National Daily Newspaper, Min 15 days,

Provide Prequalification & Tender Documents to bidders which shall include all relevant information, including the detailed evaluation criteria, Bid award method, Signing of Integrity Pact, Rights of bidders for complain on evaluation report prior to award, Standard Conditions of Contract, Specifications which shall allow the widest possible competition and shall not favour any single contractor or supplier nor put others at a disadvantage, and elimination of culture of Gallop/Short Tender etc

Contd.

99

Announcement of 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, and bidders are allowed to submit their comments/objections within 15 days, and no negotiations with the bidder having submitted the lowest evaluated responsive bid or with any other bidder

Finalizing of the Evaluation Report after examining all complaints,

Award of all Contracts to Consultants, Contractors & Suppliers only to the Responsive Lowest Evaluated Bidder.

PEC Procedure to Award the Contract to Top Ranking Bidder eliminated

The Evaluation report and Contract to be made public after the Award

1010

LOWEST BIDDER MAY NOT BE “THE RESPONSIVE LOWEST EVALUATED BIDDER”

The general perception that when the tender is opened the Bid which is the lowest at the time of Tender Opening is the Lowest Bid and shall be awarded the Tender.

After Tender Opening preliminary checks are required to determine the responsiveness of all Bids.

A bid is non-responsive and not to be considered for evaluation, if the mandatory requirements are not fulfilled by the bidder.

After the responsiveness check, the evaluation of only the Responsive Bids are carried for determining the Cost of Bids, which in case of Equipment Supply also includes the lifecycle cost of the equipment.

The evaluated tender prices of all Bids thus arrived are the responsive evaluated prices, and the lowest amongst them is awarded the tender.

1111

1. It is received after the time and date fixed for its receipt, 2. Fails to Sign Integrity Pact, It is submitted through fax, telex, telegram or

e-mail.3. It is not accompanied with Bid Security, It is unsigned.4. Its validity is less than specified, It is submitted for incomplete Scope of

Work, It indicates completion date later than specified.5. It indicates that prices quoted are not firm during currency of the contract

except those prices where escalation/adjustments are permitted in the Conditions of Contracts.10. It indicates that material to be supplied does not meet the eligibility requirements.11. It indicates that Bid Prices do not include the amount of taxes & duties.12. If Bidder refuses to accept the arithmetic corrections.13. It is materially and substantially different from the Conditions/ Specifications of Bidding Documents.10. It provides Sub-contracting, contrary to conditions specified in the

Bidding Documents. 11. It fails to comply Mile-Stones/critical dates specified in Bidding

Documents.12.The bidder is not valid license holder of the PEC.

1212

TI Pakistan Time Based Procedure of Routing the Tenders & Contract Award

Evaluation - Opening & Evaluation of tenders 07 Days - Public Declaration of Evaluation Report 10 Days

- Finalization of ER 06 Days- Approval of ER by Project Award Committee. 02 Days - Approval of Award of Contract by competent authority 02 Days Letter of Award

Issue of Letter of Award by Department 02 Days-Total Time 29 DaysSigning of Contract Agreement 04-28 Days

1313

DefinitionsDefinitions

(g) “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;

(h)(h) (j) “repeat orders” means procurement (j) “repeat orders” means procurement of the same commodity from the same of the same commodity from the same source without competition and includes source without competition and includes enhancement of contracts;enhancement of contracts;

1414

42. Alternative Methods of Procurements42. Alternative Methods of Procurements

(a) Petty Purchases(a) Petty Purchases Procuring agencies may provide for petty Procuring agencies may provide for petty

purchases where the object of the procurement is purchases where the object of the procurement is below the financial limit of below the financial limit of twenty five thousand rupeestwenty five thousand rupees. . Such procurement shall be exempt from the Such procurement shall be exempt from the requirements of bidding or quotation of prices:requirements of bidding or quotation of prices:

Provided that the procuring agencies shall ensure that Provided that the procuring agencies shall ensure that procurement of petty purchases is in conformity with the procurement of petty purchases is in conformity with the principles of procurement prescribed in rule 4:principles of procurement prescribed in rule 4:

1515

(b) Request for Quotations(b) Request for Quotations

A procuring agency shall engage in this method of A procuring agency shall engage in this method of procurement only if the following conditions exist, namely:-procurement only if the following conditions exist, namely:-

(i) The cost of object of procurement is below the (i) The cost of object of procurement is below the prescribed limit of prescribed limit of one hundred thousand rupeesone hundred thousand rupees:: Provided that the respective Boards of Autonomous bodies are Provided that the respective Boards of Autonomous bodies are

authorized to fix an appropriate limit for request for quotations authorized to fix an appropriate limit for request for quotations method of procurement subject to a maximum of method of procurement subject to a maximum of rupees five rupees five hundred thousandhundred thousand which will become financial limit under this sub- which will become financial limit under this sub-rule:rule:

(ii) The object of the procurement has standard specifications;(ii) The object of the procurement has standard specifications;(iii) Minimum of three quotations have been obtained; and(iii) Minimum of three quotations have been obtained; and(iv) The object of the procurement is purchased from the (iv) The object of the procurement is purchased from the

supplier offering the lowest price:supplier offering the lowest price:

1616

(c) Direct Contracting(c) Direct Contracting

A procuring agency shall only engage in direct contracting if the A procuring agency shall only engage in direct contracting if the following conditions exist, namely:-following conditions exist, namely:-

(i) The procurement concerns the acquisition of spare parts or (i) The procurement concerns the acquisition of spare parts or supplementary services from original manufacturer or supplier:supplementary services from original manufacturer or supplier:

Provided that the same are not available from alternative sources;Provided that the same are not available from alternative sources;

(ii) Only one manufacturer or supplier exists for the required procurement:(ii) Only one manufacturer or supplier exists for the required procurement:

Provided that the procuring agencies shall specify the appropriate Provided that the procuring agencies shall specify the appropriate fora, which may authorize procurement of proprietary object after due fora, which may authorize procurement of proprietary object after due diligence; anddiligence; and

contdcontd

1717

(c) Direct Contracting(c) Direct Contracting

(iii) Where a change of supplier would oblige the procuring agency to (iii) Where a change of supplier would oblige the procuring agency to acquire material having different technical specifications or acquire material having different technical specifications or characteristics and would result in incompatibility or characteristics and would result in incompatibility or disproportionate technical difficulties in operation and maintenance:disproportionate technical difficulties in operation and maintenance:

Provided that the contract or contracts do not exceed three years in Provided that the contract or contracts do not exceed three years in duration;duration;

(iv) repeat orders not exceeding fifteen per cent of the original (iv) repeat orders not exceeding fifteen per cent of the original procurementprocurement;;

(v) in case of an emergency(v) in case of an emergency**:: Provided that the procuring agencies shall specify appropriate fora Provided that the procuring agencies shall specify appropriate fora

vested with necessary authority to declare an emergency;vested with necessary authority to declare an emergency;(vi) (vi) when the price of goods, services or works is fixed by the when the price of goods, services or works is fixed by the

government or any other authority, agency or body duly authorized government or any other authority, agency or body duly authorized by the Government, on its behalf, andby the Government, on its behalf, and

(vii) for purchase of motor cars from local original (vii) for purchase of motor cars from local original manufacturers or their authorized agents at manufacturer’s price.manufacturers or their authorized agents at manufacturer’s price.

1818

d) Negotiated Tenderingd) Negotiated Tendering

A procuring agency may engage in negotiated tendering with one or A procuring agency may engage in negotiated tendering with one or more suppliers or contractors with or without prior publication of a more suppliers or contractors with or without prior publication of a procurement notification. This procedure shall only be used when,-procurement notification. This procedure shall only be used when,-

(i) the supplies involved are manufactured purely for the purpose of (i) the supplies involved are manufactured purely for the purpose of supporting a specific piece of research or an experiment, a study or a supporting a specific piece of research or an experiment, a study or a particular development;particular development;

(ii) (ii) for technical or artistic reasons, or for reasons connected with protection for technical or artistic reasons, or for reasons connected with protection of exclusive rights or intellectual property, the supplies may be of exclusive rights or intellectual property, the supplies may be manufactured or delivered only by a particular supplier;manufactured or delivered only by a particular supplier;

(iii) (iii) for reasons of extreme urgency brought about by events unforeseeable for reasons of extreme urgency brought about by events unforeseeable by the procuring agency, the time limits laid down for open and limited by the procuring agency, the time limits laid down for open and limited bidding methods cannot be met. The circumstances invoked to justify bidding methods cannot be met. The circumstances invoked to justify extreme urgency must not be attributable to the procuring agency:extreme urgency must not be attributable to the procuring agency:

Provided that any procuring agency desirous of using negotiated tendering Provided that any procuring agency desirous of using negotiated tendering as a method of procurement shall record its reasons and justifications in as a method of procurement shall record its reasons and justifications in writing for resorting to negotiated tendering and shall place the same on writing for resorting to negotiated tendering and shall place the same on record.record.

1919

43. On Account Payments43. On Account Payments

All procuring agencies shall make All procuring agencies shall make prompt payments to suppliers and prompt payments to suppliers and contractors against their invoices or contractors against their invoices or running bills within the time given in the running bills within the time given in the conditions of the contract, which shall not conditions of the contract, which shall not exceed thirty days.exceed thirty days.

2020

48. Redressal of grievances by the procuring 48. Redressal of grievances by the procuring AgencyAgency

(1) The procuring agency shall constitute a committee comprising of (1) The procuring agency shall constitute a committee comprising of odd number of persons, with proper powers and authorizations, to odd number of persons, with proper powers and authorizations, to address the complaints of bidders that may occur prior to the entry address the complaints of bidders that may occur prior to the entry into force of the procurement contract.into force of the procurement contract.

(2) Any bidder feeling aggrieved by any act of the procuring agency after (2) Any bidder feeling aggrieved by any act of the procuring agency after the submission of his bid may lodge a written complaint concerning his the submission of his bid may lodge a written complaint concerning his grievances not later than fifteen days after the announcement of the bid grievances not later than fifteen days after the announcement of the bid evaluation report under rule 35.evaluation report under rule 35.

(3) The committee shall investigate and decide upon the complaint within (3) The committee shall investigate and decide upon the complaint within fifteen days of the receipt of the complaint.fifteen days of the receipt of the complaint.

(4) (4) Mere fact of lodging of a complaint shall not warrant suspension of the Mere fact of lodging of a complaint shall not warrant suspension of the procurement process.procurement process.

(5) Any bidder not satisfied with the decision of the committee of the (5) Any bidder not satisfied with the decision of the committee of the procuring agency may lodge an appeal in the relevant court of jurisdiction.procuring agency may lodge an appeal in the relevant court of jurisdiction.

2121

50. Mis-procurement50. Mis-procurement

Any unauthorized breach of these rules Any unauthorized breach of these rules shall amount to mis-procurement.shall amount to mis-procurement.

2222

Blacklisting of suppliers and Blacklisting of suppliers and contractorscontractors

The procuring agencies shall specify a The procuring agencies shall specify a mechanism and manner to permanently or mechanism and manner to permanently or temporarily bar, from participating in their temporarily bar, from participating in their respective procurement proceedings, suppliers respective procurement proceedings, suppliers and contractors who either consistently fail to and contractors who either consistently fail to provide satisfactory performances or are found provide satisfactory performances or are found to be indulging in corrupt or fraudulent to be indulging in corrupt or fraudulent practices. Such barring action shall be practices. Such barring action shall be duly publicized and communicated to the duly publicized and communicated to the Authority:Authority:

2323