public disclosure authorized · ecnec economic committee of the national economic council ......

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Report No. 48653-PK

Pakistan Federal Procurement Baseline Indicator Systems Assessment

June 2009

UK's Department for International

Development The European Commission Asian Development Bank The World Bank Government of Pakistan

Government of Pakistan and Development Partners

GOVERNMENT FISCAL YEAR

July 1 – June 30

CURRENCY EQUIVALENTS

Currency Unit = Pakistan Rupee (PKR)

US$1 = PKR 80.56

ACRONYMS AND ABBREVIATIONS

ADR Alternative Dispute Resolution

BIS Baseline Indicator System

BLI Baseline Indicator

BOT Build, Operate and Transfer

CDA Capital Development Authority

CFAA Country Financial Accountability Assessment

CPAR Country Procurement Assessment Report

CPS Country Procurement Systems

DAC Development Advisory Committee

ECNEC Economic Committee of the National Economic Council

EOI Expression of Interest

ESTA Code Pakistan Civil Services Establishment Code

FIDIC Fédération Internationale des Ingénieurs-Conseils (International Federation of

Consulting Engineers)

GCC General Conditions of Contract

GFR General Financial Rules

ICB International Competitive Bidding

IESCO Islamabad Electricity Supply Company Limited

IFI International Financial Institution

MBDs Master Bidding Documents

MDB Multi-Lateral Development Bank

MTBF Medium Term Budgetary Framework

NAB National Accountability Bureau

NHA National Highway Authority

NHF National Health Facility Programmes of the Ministry of Health and Ministry of

Population Welfare

NESPAK National Engineering Services (Pakistan) Limited

OECD Organisation for Economic Development

PC-IV Planning Commission Form IV (Completion Report)

PEC Pakistan Engineering Council

PEFA Public Expenditure and Financial Accountability

PEPFM Public Expenditure Planning and Financial Management

PFMAA Public Financial Management and Accountability Assessment

PKR Pakistani Rupee

PPR Public Procurement Rules

PPRA Pakistan Public Procurement Regulatory Authority

PQA Port Qasim Authority

SBDs Standard Bidding Documents

SRO Statutory Rules and Orders

WAPDA Water and Power Development Authority

i

PAKISTAN

FEDERAL PROCUREMENT BASELINE INDICATOR SYSTEMS ASSESSMENT

TABLE OF CONTENTS

EXECUTIVE SUMMARY .................................................................................................................... III

I. BACKGROUND ................................................................................................................................... 1

II. THE OECD-DAC BASELINE INDICATOR FRAMEWORK ...................................................... 2

III. FEDERAL PROCUREMENT SYSTEMS – AN OVERVIEW ..................................................... 4

IV. ASSESSMENT OF BASELINE ........................................................................................................ 4

PILLAR I: LEGISLATIVE AND REGULATORY FRAMEWORK .................................................................... 5

Indicator 1: Public procurement legislative and regulatory framework complies with applicable

obligations with regard to national and international requirements. ................................ 6

Indicator 2: Existence of implementing regulations and documentation ............................................. 14

PILLAR II: INSTITUTIONAL FRAMEWORK AND MANAGEMENT CAPACITY ...................................... 19

Indicator 3: The public procurement system is mainstreamed and well integrated into the public

sector governance systems ............................................................................................... 19

Indicator 4: The country has a functional normative/regulatory body ................................................ 23

Indicator 5: Existence of Institutional Development Capacity ............................................................. 25

PILLAR III: PROCUREMENT OPERATIONS AND MARKET PRACTICES ............................................... 28

Indicator 6: The country’s procurement operations and practices are efficient .................................. 29

Indicator 7: Functionality of the public procurement market .............................................................. 32

Indicator 8: Existence of contract administration and dispute resolution ........................................... 34

PILLAR IV: INTEGRITY AND TRANSPARENCY OF THE PUBLIC PROCUREMENT SYSTEM ................ 37

Indicator 9: The country has effective control and audit systems ............................................................ 37

Indicator 10: Efficiency of appeals mechanism .................................................................................... 40

Indicator 11: Degree of Access to Information ..................................................................................... 43

Indicator 12: The country has ethics and anticorruption measures in place ........................................ 44

V. CONCLUSIONS AND REMEDIES ................................................................................................ 49

TABLES & FIGURES

TABLE 1: OECD-DAC MATRIX OF COUNTRY PROCUREMENT PERFORMANCE ..................... 2

TABLE 2: ASSESSMENT OF PROCUREMENT SYSTEMS ................................................................. 5

FIGURE 1: PAKISTAN CPS VS OECD-DAC BLIS ........................................................................................ 5

ii

ACKNOWLEDGEMENTS

1. The report has been prepared as part of the integrated public financial

management and procurement assessment conducted jointly under the auspices of the

development partners (The World Bank, Asian Development Bank, UK Department for

International Development, The European Commission) and in cooperation with the

Government of Pakistan. The United States Agency for International Development

participated in the finalization process during the stakeholders’ workshop. The

assessment was led by Asif Ali (World Bank Senior Procurement Specialist) with major

contributions from Zafar Hameed Ismail (Consultant) and Uzma Sadaf (World Bank

Senior Procurement Specialist). Other members of the PEFA PFM Assessment team

also contributed to the finalization of the assessment report.

2. Comments were received from Asian Development Bank and the European

Commission, as reviewers, and the Office of the Regional Procurement Manager, The

World Bank, also reviewed the draft report. The extensive collaboration of the Public

Procurement Regulatory Authority is gratefully acknowledged, and particular, the special

cooperation of Mr. Sarfaraz Ahmed Syed, Managing Director and Mr. Lodhi, Deputy

Director, PPRA, is acknowledged. The preparation of the report benefited from a

Stakeholders’ Workshop held in Islamabad (20-21 April 2009), and comments received

on the working draft have been incorporated into this final version of the report.

iii

EXECUTIVE SUMMARY

1. The Baseline Indicators (BLIs) assessment has been conducted by the

Development Partners and the Government of Pakistan as a precursor to carrying

forward the Government’s efforts to upgrade the Country Procurement Systems (CPS) to

international standards and to help it assess the level and type of technical assistance

required for achieving this objective. The assessment, being the first phase of a

comprehensive procurement performance assessment, covered the four pillars as well as

all the indicators and sub-indicators in each pillar based on a review of the existing

regulatory framework and the institutional and operational arrangements and as provided

for in the OECD DAC Guidelines. While the views expressed in the report were the

subject of discussions at the stakeholders’ workshop, they do not necessarily represent

the views of the Government of Pakistan.

2. The result indicates that compared to the standard required for a transparent,

efficient and effective procurement system, the existing system in Pakistan needs to be

improved substantially. The highest achieved rating is for Pillar I – the Legislative and

Regulatory Framework – which is an amalgam of specific legislation and sub-legislation

impacting the procurement activity of the government and the older legislative

instruments affecting the overall operations of the public and/or the private sectors. The

other Pillars’ achievements compared to the standard for international good practice are

much lower. This can be seen in both the following table and chart:

Assessment of Procurement Systems

Pillars Maximum

Rating

Achieved

Rating

PILLAR I: Legislative and Regulatory Framework 3.00 1.99

PILLAR II: Institutional Framework and Management Capacity 3.00 1.92

PILLAR III: Procurement Operations and Market Practices 3.00 1.67

PILLAR IV: Integrity and Transparency of the Public Procurement System 3.00 1.52

0.00

0.50

1.00

1.50

2.00

2.50

3.00

PILLAR I Legislative and Regulatory Framework

PILLAR II Institutional Framework and

Management Capacity

PILLAR III Procurement Operations and Market

Practices

PILLAR IV Integrity and Transparency of the Public Procurement

System

Maximum Federal

iv

3. As a first step towards improving the procurement systems, the Federal

Government created the Public Procurement Regulatory Authority (PPRA) in 2002

through a Presidential Ordinance1 for “regulating public procurement of goods, services

and works in the public sector” which expired 90 days after its promulgation2. This was

followed by the enunciation of the Public Procurement Rules 2004, and in December

2008 by the first set of regulations.

4. As part of the reforms, the PPRA commissioned and conducted the re-

engineering of the procurement systems, procedures and manuals of 14 public sector

undertakings to harmonise with the PPR 2004. Of these, seven3 studies have been

completed. The others are in the process of being completed. A Manual has also been

finalised for use by the National Health and Population Welfare Facility which could

well be used by both the Health and Population Welfare ministries/divisions and their

related organisations and with some modification by the other social sector ministries. A

draft Guidelines for the Public Procurement of Consultancy Services was issued in 2006

for soliciting stakeholder comments, and has yet to be finalised.

5. Most of the legislative framework requires to be brought at par with international

good practice4. This needs to be tackled as a first priority without which the likelihood

of donors accepting the CPS in preference to their own systems would not be possible.

6. The Public Procurement Regulatory Authority (PPRA) is the apex body of the

institutional framework (Pillar II) governing the public procurement arena. The Pakistan

Engineering Council (PEC) was involved as a member of the Kazi Committee to prepare

a standard bidding document and standard GCC for all engineering contracts. In 2008

the Executive Committee of the National Economic Council (ECNEC) notified that

public sector entities should use these SBDs and GCC for all public procurement of

works and engineering services.

7. This dichotomy has resulted in a conflict between the PEC and the PPRA on the

oversight of works in the country. The PEC was created for encouraging

professionalism in the engineering sector and not regulating procurement. It, however,

continues to do so as part of the oversight in ensuring professionalism and adherence to

standards which is its true mandate. The overlap between the PEC and the PPRA needs

to be clearly identified and resolved. The PPRA and PEC need to find ways to

accommodate their respective mandates, recognising problems that can arise out of

overlapping jurisdictions

1 XXII of 2002 issued on 15th May 2002.

2 The Ordinance lapsed after 90 days. As it was issued under the authority of the Provisional Constitutional Order it is

argued that this has the status of and Act of Parliament. Nevertheless, this was validated by the Seventeenth

Amendment (assented to by the President on 31 December 2003) to the Constitution through Article 270AA(i) which

states “all other laws made between the twelfth day of October, one thousand nine hundred and ninety-nine and the

date on which this Article comes into force (both days inclusive), having been duly made or accordingly affirmed,

adopted and declared to have been validly made by the competent authority and notwithstanding anything contained in

the Constitution shall not be called in question in any court or forum on any ground whatsoever”.

3 relating to Port Qasim Authority, Higher Education Commission, Capital Development Authority, Pakistan

International Airlines, Telephone Industries of Pakistan, Civil Aviation Authority and Pakistan Steel Mills.

Subsequently three more have been completed.

4 For instance the absence of a clear distinction between public and private sector entities, complaint redressal through

and adequate alternate dispute resolution mechanism.

v

8. Throughout the government there is a dearth of skill in procurement and contract

administration ranging from the development of policy to the management of the

function. This is largely due to the absence of dedicated cadre for professional

procurement officers, and the absence of a career path. Above all, dismal capacity in

procuring agencies, regulatory authorities, and accountability institutions further hamper

the efficiency, economy, and transparency of the procurement systems.

9. In effect, both the institutional framework and the management capacity are

weak and need to be improved substantively through Technical Assistance ranging from

drafting documents to on-the-job training at all levels from policy formulation to

procurement contract administration. As this is a long-term effort, Government should

accord this the second priority of reforms. This, however, should commence

simultaneously with revisions to the Legislative Framework.

10. Improvements in improving the procurement market and operations (Pillar III)

can only happen when substantial progress has been achieved in reforming Pillars I and

II of the procurement framework.

11. Integrity and efficiency in the public procurement system (Pillar IV) is the

ultimate goal of all procurement systems and is not easily achieved. It requires an

enabling environment, a friendly institutional framework, management capacity and

enlightened legislative framework. The OECD-DAC guideline for this, states: “A

cornerstone of a well-functioning public procurement system operating with integrity

(fair, transparent, and credible) is the availability of mechanisms and capacity for

independent control and audit of procurement operations to provide for accountability

and compliance. Similarly, there must be a system for participants to lodge complaints

and challenge decisions with administrative and judicial review bodies having both

appropriate levels of independence and the legal power to impose corrective measures

and remedies against contracting entities in breach of the legal and regulatory

framework. Fraud and corruption, including the issue of conflict of interest, should be

addressed in legislation as well as through special measures in order to create a sound

and fair environment for public procurement operations”. Another key factor ensuring

is a level playing field between the public and private sector suppliers, contractors and

consultants and easy access to market opportunities by all. It is only when all of these

conditions are met that a true transparent public procurement system can exist with the

framework of integrity.

12. This, therefore, requires changes not only within the specific procurement related

legislation, but also across a raft of other legislation to ensure an overall enabling

environment. Coupled to this is the need to motivate decision makers and civil society to

actively participate in ensuring the implementation of the revised legislation. This would

require several years, but the effort could be started at an early stage of the reform

process.

1

I. BACKGROUND

1. As part of the Paris Declaration Committee in March 2005, both developed and

developing countries signed off the commitment for taking far-reaching and monitorable

actions to reform the ways in which aid is delivered and managed. It was also recognised that

while the volumes of aid and other development resources must increase to achieve these

goals, aid effectiveness must increase significantly as well to support partner country efforts

to strengthen governance and improve development performance. At the same time, one of

the actions to be pursued aggressively includes reforming and simplifying donor policies and

procedures to encourage collaborative behaviour and progressive alignment with partner

countries’ priorities, systems and procedures5.

2. This has been expressed at the joint World Bank and OECD Development Assistance

Committee (DAC) Procurement Round Table initiative. These two multi-lateral agencies

have worked together to develop a set of tools and standards that provide guidance for

improvements in procurement systems and the results they produce. Among these tools are

included:

i. Benchmarking for the assessment of the structure of the public procurement

systems; and

ii. Monitoring and Evaluation of the public procurement systems.

3. Under the Paris Declaration, partner countries are required to (a) improve the country

systems so that at least one third move up a scale on 4 point-scale used to assess performance

in procurement systems, and (b) requires the donors to use country procurement systems

where they are robust to meet the requirements of internationally accepted standards. To

attain this, the first task for partner countries is to undertake a Procurement Assessment vis-a-

vis the DAC-OECD Base Line Indicators.

4. It is expected that the exercise of benchmarking the status of the Government of

Pakistan procurement systems, in accordance with the baseline indicator system, would

contribute in improving procurement activities in the following ways:

a. an awareness of the level of achievement in making the public procurement

effective, efficient and transparent;

b. identify needed changes;

c. contribute to the development and implementation of a prioritised capacity

development strategy and plan;

d. move towards acceptability of national procurement systems by the donors; and

e. harmonisation of public procurement rules and procedures around recognized

standards.

5. The OECD-DAC BIS procurement based assessment efforts rest on:

strong Government ownership of and participation in the process;

joint participation of donors and development partners and congruent

coordination of implementation intervention;

participation of all relevant stakeholders in the public sector; and

5 Paris Declaration on Aid Effectiveness.

2

building on the existing body of knowledge where reviews have already been

undertaken by the Government, private sector, Bank and other donors, including

the CPAR 2000, CFAA 2003 and draft PEPFM 2008.

6. Three provincial government procurement systems’ assessments of the governments

of NWFP, Balochistan, Punjab, and Sindh have been undertaken in Pakistan, which give a

snapshot against 12 OECD DAC Baseline indicators. The Punjab report is currently being

finalized while the reports of the other provinces have since been published. The Federal

Government is the subject of this report.

7. The methodology adopted in conducting this assessment is given in Appendix-I.

II. THE OECD-DAC BASELINE INDICATOR FRAMEWORK

8. The 12 indicators each have a number of sub-indicators as shown in Table 1.

9. The OECD-DAC benchmarking tool provides guidance on how to score each sub-

indicator, as well as an approach to produce a single rating for indicator 2(b).

Table 1: OECD-DAC Matrix of Country Procurement Performance

Pillar Indicator

I Legislative and Regulatory

Framework

1 Public procurement legislative and regulatory framework

achieves the agreed standards and complies with applicable

obligations

Sub-indicators 8

2 Existence of Implementing Regulations and Documentation

Sub-Indicators 6

II Institutional Framework

and Management Capacity

3 The public procurement system is mainstreamed and well

integrated into the public sector governance systems

Sub-Indicators 4

4 The country6 has a functional normative/regulatory body

Sub-Indicators 4

5 Existence of institutional development capacity

Sub-Indicators 4

III Procurement Operations

and Market Practices

6 The country’s procurement operations and practices are

efficient

Sub-Indicators 5

7 Functionality of the public procurement market

Sub-Indicators 4

6 Consultant’s note: in the context of Pakistan this would also refer to the federating units, that is, refer also to each of the provinces.

3

Pillar Indicator

8 Existence of contract administration and dispute resolution

provisions

Sub-Indicators 3

IV Integrity and Transparency

of the Public Procurement

System

9 The country has effective control and audit systems

Sub-Indicators 5

10 Efficiency of appeals mechanisms

Sub-Indicators 5

11 Degree of access to information

Sub-Indicators 1

12 The country has ethics and anticorruption measures in place

Sub-Indicators 7

Source: The World Bank; 2008; Use of Country Systems in Bank Supported Procurement Operations – Proposed Piloting

Program; Annex B; The World Bank; Washington DC.

10. The Bank methodology relies on a different approach to rating. No aggregate rating

is computed at the level of the 12 indicators, the four pillars, or the whole system. The fifty-

four (54)7 sub-indicators are evaluated and rated individually.

11. Rating is based on a 0-3 scale, according to the criteria defined by the OECD/DAC

paper. A score of 3 indicates full achievement of the stated generally-accepted international

practice for each sub-indicator. A score of 2 is given when the system exhibits less than full

achievement and needs more improvements in the area being assessed, but still reflects

substantive compliance with the standard.

12. The World Bank classifies the 54 sub-indicators in four categories which reflect the

relative importance of the sub-indicators and the indicators under which they fall:

a. seventeen core sub-indicators which should be assessed to meet the criteria of

the corresponding benchmarks indicated for a “3” rating;

b. ten sub-indicators which could be assessed to only meet the criteria of the

corresponding benchmarks indicated for a “2” rating, provided the country

agrees to put in place an action plan of corrective measures to bring those sub-

indicators to a “3” benchmark rating during implementation;

c. twenty five sub-indicators which should be assessed to meet the criteria of the

corresponding benchmarks indicated for a “2” rating; and

d. two sub-indicators (4-d and 10-e regarding respectively the regulatory body and

the complaints review body, for which only a “3” or a “0” rating can be

allocated).

13. Pakistan accepted the Paris Declaration when it co-signed this on the 2nd

of March

2005 at a meeting in Paris which resolved to “take far-reaching and monitorable actions to

reform the ways we deliver and manage aid……we recognise that while the volumes of aid

and other development resources must increase to achieve these goals, aid effectiveness must

7 Instead of 56 used for the OECD-DAC BLIs.

4

increase significantly as well to support partner country efforts to strengthen governance and

improve development performance. This will be all the more important if existing and new

bilateral and multilateral initiatives lead to significant further increases in aid”8. One of the

actions to be pursued aggressively was “reforming and simplifying donor policies and

procedures to encourage collaborative behaviour and progressive alignment with partner

countries’ priorities, systems and procedures”9.

III. FEDERAL PROCUREMENT SYSTEMS – AN OVERVIEW

14. The “modern” practice of Public Procurement throughout Pakistan was, up until a

few years back, governed by the General Financial Rules of the Central Government and

following two Manuals each dating from the days of the Raj: namely,

a. the Purchase Manual, which covered the purchase of mostly all commodities

barring nine categories of goods10

and those purchased through foreign aided

projects or programmes, and

b. the West Pakistan Building & Roads Department Code which governs the

construction of buildings and roads and the hiring of consultants for this purpose.

15. As Pakistan’s infrastructure development efforts became more dependent on

assistance from international funding agencies, both multi- and bi-lateral, the reliance on

public procurement systems and procedures of these funding organisations became the

standard operating procedure for all funded projects. As the basket of projects and of donors

increased, Governments across Pakistan were unable to achieve the targets set in project

documents and procurement began to suffer due to three principal reasons:

a. The plethora of different systems and procedures operating simultaneously,

b. The lack of institutional capacity to handle the complex set of parameters

governing the wide spectrum of procurement systems and procedures, and

c. The lack of human resources adequately trained to implement the systems and

procedures.

16. Realising this both the Government and the donors initiated a move to reform the

process. In 1999 the modification of the Purchase Manual and of the Code, while keeping the

principle of the acceptance of the lowest bid intact were the first steps towards modifying

local public procurement procedures. In 1999/2000, the World Bank spearheaded the first

assessment of the country’s procurement systems. This11

recommended a number of actions

which needed to be undertaken to upgrade existing systems and procedures to internationally

acceptable standards. One of these was the establishment of a Regulatory Authority.

IV. ASSESSMENT OF BASELINE

17. The analysis for each indicator is presented as a matrix defining the indicator and its

8 Paris Declaration on Aid Effectiveness.

9 op cit.

10 i) Food Stuff; ii) Indigenous Coals, Charcoal and Firewood; iii) Bricks, Stones, Marble, Lime, Sand, Chalk, Cement and

other building material.; iv) School and college furniture; v) P.O.L. items; vi) Jute Mats; vii) Books, Maps, Charts; viii)

Woods and Timber; ix) Raw wool and Woollen yarn.

11 World Bank; Pakistan: Country Procurement Assessment Report; Report No. 22000.

5

sub-categories, the existing situation, the rationale for scoring and the score attained. The

average rating for the four Pillars is 1.78 which is made up as follows:

Table 2: Assessment of Procurement Systems

Assessment of Procurement Systems

Pillars Maximu

m Rating

Achieved

Rating

PILLAR I: Legislative and Regulatory Framework 3.00 1.99

PILLAR II: Institutional Framework and Management Capacity 3.00 1.92

PILLAR III: Procurement Operations and Market Practices 3.00 1.67

PILLAR IV Integrity and Transparency of the Public Procurement System 3.00 1.52

18. Graphically, this is as follows:

Figure 1: Pakistan CPS vs OECD-DAC BLIs

Pillar I: Legislative and Regulatory Framework Rating 1.99

19. The legislative framework in a country is often perceived to be the vehicle which

establishes a system of good governance. In the context of any specific activity, such as

procurement, it sets parameters of the activity and, within this the rules of the process,

provides the legal basis for ensuring the rights of participants, and establishes their authorities

and responsibilities. It is a fundamental element that links the procurement process both to

the overall governance structures within the country and defines obligations of the

government to comply with internal and external requirements. The regulatory framework

either identifies or establishes the agency that would regulate the activity; defines or modifies

its mandate; establishes or changes its structure; and sets or re-defines its authority, role(s)

0.00

0.50

1.00

1.50

2.00

2.50

3.00


PILLAR II Institutional Framework and

Management Capacity

PILLAR III Procurement Operations and Market

Practices

PILLAR IV Integrity and Transparency of the Public Procurement

System

Maximum Federal

6

and responsibilities; empowers it to establish regulations, issue guidelines, set standards and

produce handbooks; and limits its scope to either the activity itself or extends it to cover

ancillary and peripheral activities and/or actions.

20. As a first step towards improving the procurement systems, the Federal Government

created the Public Procurement Regulatory Authority (PPRA) in 2002 through a Presidential

Ordinance12 for “regulating public procurement of goods, services and works in the public

sector” which expired 90 days after its promulgation13. This was followed by the

enunciation of the Public Procurement Rules 200414.

21. As part of the reforms the PPRA was a catalyst in initiating the re-engineering of the

procurement systems, procedures and manuals of 14 public sector undertakings. Of these

seven15 studies (and counting as time passes) have been completed. The others are in the

process of being completed. A Manual16 has also been finalised, with the help of DFID. for

use by the National Health and Population Welfare Facility which could well be used by both

the Health and Population Welfare ministries/divisions and their related organisations and

with some modification by the other social sector ministries.

22. A draft Guidelines for the Public Procurement of Consultancy Services was issued in

2006 for soliciting stakeholder comments. Comments from only some of the Ministries and

other Procurement Agencies have been received. Others are yet to respond.

23. The two indicators in this area are discussed and scored below:

Indicator 1: Public procurement legislative and regulatory framework complies with

applicable obligations with regard to national and international requirements.

24. The indicator covers the legal and regulatory instruments from the highest level

(national law, act, regulation, decree, etc.) down to detailed regulation, procedures and

bidding documents formally in use. This indicator is broken down into eight sub-indicators.

25. This is a critical indicator for which most requirements should meet the conditions

for a “3” rating.

Rating 2.29

Sub-indicator and ranking

condition

Current Status Rationale for

Ranking

Score

1 (a) Scope of application and coverage The existing legislative The PPRA Ordinance 2.0

12 XXII of 2002 issued on 15th May 2002.

13 The Ordinance lapsed after 90 days. As it was issued under the authority of the Provisional Constitutional Order, it is

argued that this has the status of and Act of Parliament. Nevertheless, this was validated by the Seventeenth Amendment

(assented to by the President on 31 December 2003) to the Constitution through Article 270AA(i). This validates “all other

laws made between the twelfth day of October, one thousand nine hundred and ninety-nine and the date on which this

Article comes into force (both days inclusive), having been duly made or accordingly affirmed, adopted and declared to have

been validly made by the competent authority and notwithstanding anything contained in the Constitution shall not be called

in question in any court or forum on any ground whatsoever”.

14 Cabinet Division, Government of Pakistan; SRO 432(I)-2004 Islamabad, 19 June 2004.

15 Relating to Port Qasim Authority, Higher Education Commission, Capital Development Authority, Pakistan International

Airlines, Telephone Industries of Pakistan, Civil Aviation Authority and Pakistan Steel Mills.

16 Manual of Procurement Policies and Standard operating procedures for the NHF Programmes of the Ministry of Health

and the Ministry of Population Welfare, Government of Pakistan.

7


condition


Ranking

Score

of the legislative and regulatory

framework.

The legislative and regulatory

body of norms complies with all

the following conditions:

(a) Is adequately recorded

and organised hierarchically

(laws, decrees, regulations,

procedures,) and precedence

is clearly established.

(b) All laws and regulations

are published and easily

accessible to the public at no

cost.

(c) It covers goods, works,

and services (including

consulting services) for all

procurement using national

budget funds.

3


body of norms complies with

(a) plus one of the above

conditions.

2


body of norms complies with

(a) of the above conditions.

1

The system does not

substantially comply with any

of the above conditions. .

0

framework consists of the PPRA

Ordinance 2002 and the PPR

2004. The necessary supporting

sub-legislation exists partially as

drafts which have yet to be

approved. However, for the

procurement of works, the rules

and forms issued by the PEC are

generally used. This latter has

the force of law through a

decision of ECNEC notified by

the Planning Commission under

the authority of the PPRA.

The PPR 2004 is applicable to all

agencies and organisations of the

Federal Government.

The Rules are applicable to all

purchases made from public

funds.

The amended legislation and the

regulatory framework is work in

progress, but is nevertheless

accessible on the PPRA website.

issued on 15th

May 2002

lapsed after 90 days of

its issue, but the 17th

Amendment to the

Constitution validated

this on 31 December

2003.

The content of the PPR

indicates that it is largely

applicable to only the

procurement of goods

and works. There is no

explicit mention of

services (including

consulting services).

The hierarchy of

legislation is unclear as

the Draft Regulations

state that they supersede

the Rules in a conflict

situation.

1 (b) Procurement Methods

The legal framework meets all

the following conditions:

(a) Allowable procurement

methods are established

unambiguously at an

appropriate hierarchical level

along with the associated

conditions under which each

method may be used,

including a requirement for

approval by an official that is

held accountable.

3

The existing legislation specifies

various alternative methods for

procurement, but does not specify

the applicability of methods to

specific levels of procurement.

The default procurement is a

competitive process.

There is a restriction on

fragmenting procurements

planned for the year unless

While all conditions are

met, they are not clearly

spelled out and require

some rethinking to

provide clarity and to

limit discretionary

decision making to a

minimum acceptable

level, which need to be

specified.

2.0

8


condition


Ranking

Score

(b) Competitive procurement

is the default method of public

procurement.

(c) Fractioning of contracts to

limit competition is prohibited.

(d) Appropriate standards for

international competitive

tendering are specified and are

consistent with international

standards.

The legal framework meets the

conditions of (a) and (b) plus

one of the remaining

conditions.

2


conditions of (a) and (b).

1

The legal framework fails to

substantially comply with any

three of the conditions a)

through d).

0

specifically authorised by

competent authority (Federal

Government or PPRA the

regulating body) Rule 9.

Appropriate Standards are

specified for ICB, in terms of bid

response time etc., these are

incompatible with international

standards.

Defined basis for the

procurement method, if other

than open competition is spelled

out, but could be improved.

Negotiated procedures and direct

purchasing is permitted only

under well-defined and justified

circumstance, subject to controls.

1 (c) Advertising Rules and Time

Limits


following conditions :

(a) Requires that procurement

opportunities other than sole

source or price quotations be

publicly advertised.

(b) Publication of opportunities

provides sufficient time,

consistent with the method,

nature and complexity of

procurement, for potential

bidders to obtain documents and

respond to the advertisement.

Such timeframes are extended

when international competition

is sought.

(c) Publication of open tenders is

mandated in at least a newspaper

of wide national circulation or in

a unique Internet official site,

where all public procurement

3

Procurements worth more than

PKR 100,000 to be advertised on

PPRA webpage and may be

placed in the print media.

Procurements worth more than

PKR 2,000,000 should be

advertised on PPRA webpage

and placed in at least two

nationally circulated newspapers,

one each in English and Urdu. If

the procuring agency has a

website then the advertisement

should also be placed there.

Advertisements should contain

all the necessary information and

be available until the opening

date for the bid. In situations

where publication of such

advertisements or notices has

occurred in both electronic and

print media, the response time

The Rules do not require

mandatory publication.

Rule 437 clearly

stipulates that on

completion of contract

award, “shall make all

documents related to

evaluation of bids and

award of contract public.

3.0

9


condition


Ranking

Score

opportunities are posted, that is

easily accessible.

(d) Content of publication

includes sufficient information

to enable potential bidders to

determine their ability and

interest in bidding.



one of the remaining conditions.

2


conditions of (a) plus one of the

remaining conditions.

1

The legal framework only meets

the conditions of (a) above.

0

shall be calculated from the day

of its first publication in the

newspapers.

Under no circumstances the

response time shall be less than

fifteen days for national

competitive bidding and thirty

days for international competitive

bidding from the date of

publication of advertisement or

notice.

1 (d) Rules of Participation


following conditions:

(a) Establishes that participation

of any contractor or supplier or

group of suppliers or contractors

is based on qualification or in

accordance with international

agreements; requires the use of

pass/fail basis for determining

qualifications to extent possible;

limits domestic price

preferential, if allowed, to a

reasonable amount (e.g.15% or

less); and requires justification

for set asides that limit

competition.

(b) Ensures that registration if

required does not constitute a

barrier to participation in tenders

and does not require mandatory

association with other firms.

(c) Provides for exclusions for

criminal or corrupt activities,

administrative debarment under

the law subject to due process or

prohibition of commercial

relations.

3

Firms and individuals from all

countries not prohibited by law

and meeting defined criteria are

allowed to compete without any

prejudice [Rule 24(1)].

Preference to domestic bidders is

allowed through

S.R.O.827(I)/2001 of 3rd

December 2001. The amount of

domestic price preferential is left

flexible to the discretion of

procuring agency with ceilings

(15 to 25 percent) established on

the basis of value addition

ranging from 15 percent to over

30 percent [Rule 24(2)].

The law is silent on the status of

registration of firms before

participation in the tendering

process.

While the PPR 2004 does

not distinguish between

firms of different

nationalities, there

appears to be an implicit

understanding that this

also extends to a lack of

distinction between

domestic organisation.

This may not necessarily

be true. What the

legislation should include

is a statement which

explicitly excludes any

distinction between

public and private sector

entities.

In practice, however,

public sector agencies,

more often than not,

award contracts to public

sector entities either

through sole sourcing or

competitive bidding.

Examples are rife in the

construction industry

where the bulk of large

scale infrastructure

projects have been given

1.0

10


condition


Ranking

Score

(d) Establishes rules for the

participation of government

owned enterprises that promote

fair competition.

The law and regulations meet

the conditions of (a) and (b) plus


2

The law and regulations meet

the conditions of (a) plus one of

the remaining conditions.

1

The law and regulations do not

meet the conditions of (a)

through (d) above.

0

to public sector

contractors at a premium

price in the NHA, CDA,

PQA, etc. A similar

situation exists in the

consulting services sub-

sector. Most design

contracts are awarded to

NESPAK at premia

ranging from 100

percent to 400 percent

over the rates quoted by

private consultants17

.

Instances of cartelisation

have been created by

WAPDA and its entities

from among private

sector suppliers. To

illustrate are the recent

supply of transformers

and electricity meters to

IESCO and other

transmission and

distribution companies.

Specific rules ensuring

fair competition between

public and private sector

entities do not exist.

Debarment is allowed

and the basis is defined.

However, the Rules are

silent on allowing for

due process and appeal.

In a large quantity of

tenders restrictions are

placed on the

participated of

unregistered firms.

Specifically in the

context of engineering,

17 Mir, Aized H and .Z. Durrani; 2007; Pakistan Infrastructure Implementation Capacity Assessment; The World Bank in

Pakistan: “ unfair competition from parastatal public sector companies” .... “dominated by just over a dozen construction

and consulting firms each”.. p15.

11


condition


Ranking

Score

those not registered with

the PEC are debarred

from overall

participation.

1 (e) Tender documentation and

technical specifications.


following conditions:

(a) Establishes the minimum

content of the tender documents

and requires that content is

relevant and sufficient for

tenderers to be able to respond to

the requirement.

(b) Requires the use of neutral

specifications citing

international standards when

possible.

(c) Requires recognition of

standards which are equivalent

when neutral specifications are

not available.

3

The legal framework

substantially meets the



2


conditions of (a).

1

The content of the bidding

documents is totally or largely

left at the discretion of the

procuring entity.

0

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;

*Amended vide Cabinet Division

No. 5/37/2005-M-III/Admin

(PPRA), dated 13-12-2006;

(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.

Each of the conditions in

the first conditionality is

fulfilled.

3.0

1 (f) Tender Evaluation and Award

Criteria.

Procuring agencies are bound to

formulate an appropriate

evaluation criterion listing all the

relevant information against

It is only in the draft

regulations for the public

procurement of

consulting services that

2.0

12


condition


Ranking

Score

The legal framework mandates

that:

(a) The evaluation criteria are

relevant to the decision, and

precisely specified in advance in

the tender documents so that the

award decision is made solely on

the basis of the criteria stated in

the tender documents.

(b) Criteria not evaluated in

monetary terms are evaluated on

a pass/fail basis to the extent

possible.

(c) The evaluation of proposals

for consulting services gives

adequate importance to the

quality and regulates how price

and quality are considered.

(d) During the evaluation period,

information relating to the

examination, clarification and

evaluation of tenders is not

disclosed to the participants or to

others not involved officially in

the evaluation process;

3

The legal framework covers the



2

The legal frame work covers (a)

but does not fully cover the other

conditions.

1

The legal framework does not

adequately address any of the

conditions (a) through (d) above.

0

which a bid is to be evaluated.

Selection is made according to

the criteria and in the manner

given in the bid documents by

the procuring agency.

Oversight on inclusion of

evaluation criteria in the bidding

documents is considered as mis-

procurement and is not allowed.

adequate importance is

given to quality.

However, the issue of

price appears to be a grey

area and needs to be

elucidated further.

1 (g) Submission, receipt and opening

of tenders

The legal framework provides

for the following conditions:

(a) Public opening of tenders in

a defined and regulated

proceeding immediately

following the closing date for

3

Bids are required to be opened at

specified time and place In

specified form as given in the bid

documents by each procuring

agency.

Opening of tender documents

immediately after receipt or time

specified thereafter at specified

place in front of all bidders and

respondents or their authorised

Meets all conditions

stated in criterion 1.

3.0

13


condition


Ranking

Score

bid submission.

(b) Records of proceedings for

bid openings are retained and

available for review.

(c) Security and confidentiality

of bids is maintained prior to bid

opening and disclosure of

specific sensitive information

during debriefing is prohibited.

(d) The modality of submitting

tenders and receipt by the

government is well defined to

avoid unnecessary rejection of

tenders.


for (a) and (b) plus one of the


2


for (a) plus one of the remaining

conditions.

1

There is no requirement in the

legal framework for public

opening of tenders.

0

representatives is mandatory.

During the bid opening the name

of the bidder and total amount of

each bid, and of any alternative

bids if they have been requested

or permitted, shall be read aloud

(and posted online when

electronic bidding is used) and

recorded when opened and a

copy of this record shall be

promptly sent to all bidders who

submitted bids in time.

At the end of the proceedings of

bid opening the report (record of

proceedings) to be signed by all

bidders present.

1 (h) Complaints


for the following:

(a) The right to review for

participants in a procurement

process.

(b) Provisions to respond to a

request for review at the

procuring/agency level with

administrative review by another

body independent from the

procuring agency that has the

authority to grant remedies and

includes the right for judicial

review.

(c) Establishes the matters that

are subject to review.

(d) Establishes timeframes for

3

Where a bidder feels aggrieved by

any act of procurement agency,

the bidder may file a written

complaint within 15 days of

publication of the bidding report.

The procuring agency is bound to

constitute a committee to review

the complaint and give its

decision within 15 days of the

receipt of the complaint.

However there is no second level

of review other than filing a

complaint in the court of law and

no mechanism has been notified

for formation of an

administrative review body.

Only the first level

criteria of the conditions

is fulfilled.

1.0

14


condition


Ranking

Score

issuance of decisions by the

procuring agency and the

administrative review body.


for (a) and (b) plus one of the


2


for (a) plus one of the remaining

conditions.

1

The right for review of the

proper application of the

procurement process is not

provided in the legal framework.

0

Indicator 2: Existence of implementing regulations and documentation

26. This indicator verifies the existence, availability and quality of implementing

regulations, operational procedures, handbooks, model tender documentation, and standard

conditions of contract. Ideally the higher level legislation provides the framework of

principles and policies that govern public procurement. Lower level regulations and more

detailed instruments supplement the law, make it operational, and indicate how to apply the

law to specific circumstances. This indicator consists of six sub-indicators.

27. Many countries, including the most developed, do not have regulations at the central

government level.

Rating 1.68


condition


Ranking

Score

2 (a) Implementing regulation that

provide defined processes and

procedures not included in higher-level

legislation.

- There are regulations that

supplement and detail the

provisions of the procurement law

that meet the following

requirements:

(a) They are clear, comprehensive

and consolidated as a set of

regulations available in a single

and accessible place

(b) They are updated regularly;

3

The rules require improvement.

Supporting Guidelines and

Handbooks need to be

developed. A system needs to

be established which ensures

that these are up-dated from time

to time to respond to changes in

the procurement market.

The existing PEC regulations

need to be revised to reflect

changes in the FIDIC

regulations.

The regulations exist.

No system of regular

review or updating

exists. Responsibility

for updating is unclear.

The entire body of

legislation including

rules, regulations,

guidelines, handbooks,

manuals, standard

bidding documents and

standardised contracts

need either to be revised

or developed.

1.0

15


condition


Ranking

Score

(c) The responsibility for

maintenance is defined.

- The regulations meet the



2

- The regulations exist but there

is no regular updating, the

responsibility for updating is not

clearly defined or there are many

important omissions in the

regulations or inconsistencies

with the law.

1

- There are no regulations or the

existing ones do not meet

substantially any of the

requirements listed above.

0

2 (b) Model Tender documents for

goods works and services:

(a) There are model invitation

and tender documents provided

for use for a wide range of

goods, works and services

procured by government

agencies;

(b) There is a standard and

mandatory set of clauses or

templates that are reflective of

the legal framework, for use in

documents prepared for

competitive tendering.

(c) The documents are kept up to

date with responsibility for

preparation and updating clearly

assigned.

3

- Model documents and a

minimum set of clauses or

templates are available, but the

use of such documents is not

mandatory or regulated. The

2

Other than the documents

developed by the PEC, standard

bidding documents do not exist.

These are limited to only works

and engineering services.

Existing documents (for instance

those specified in the superseded

Purchase Manual and the

Buildings and Roads Code) can

also be used where the Procuring

Agency has not developed new

ones.

Some model documents

exist. These require

revisions to reflect latest

changes in the

internationally accepted

ones.

As the current situation

is between the second

and third criteria, the

score allocation is the

average of the two.

1.5

16


condition


Ranking

Score

documents are not updated

regularly.

- Model documents are not

available, but a set of mandatory

clauses is established for

inclusion in tender documents.

1

- There are no model documents

and the procuring entities

develop their own documents for

with little or no guidance.

0

2 (c) Procedures for pre-qualification:

- Procedures exist that define pre-

qualification which:

(a) Provide for limitations on the

content of pre-qualification

criteria that are based on the

needs of the specific procurement

(b) Specify the use of pass/fail for

application of qualification

criteria.

(c) Provide guidance on when to

apply a pre-qualification

procedure.

3

- Procedures exist that cover (a)

plus one of the remaining

conditions.

2

- Procedures exist that cover (a). 1

- Procedures for the application of

pre-qualification procedures do

not exist.

0

The PPR 2004 provide detailed

procedures for pre-qualification

of bidders, as well as guidance

on when to apply these

procedures.

Criterion 1 is fully

complied with.

3.0

2 (d) Procedures suitable for contracting

services or other requirements in which

technical capacity is a key criterion:

PPR 2004 meet all conditions

for goods and works, are weak

in the context of services and

non-existent for consulting

services.

The rules meet the

requirements of criteria

1 (a) partially, but are

better than criteria 3.

1.5

17


condition


Ranking

Score

- The legal framework and its

implementing regulations provide

for the following:

(a) Conditions under which

selection based exclusively on

technical capacity is appropriate

and when price and quality

considerations are appropriate.

(b) Clear procedures and

methodologies for assessment of

technical capacity and for

combining price and technical

capacity under different

circumstances.

3

- Implementing regulations meet

(a) above but leave (b) to the

discretion of the procuring entity.

2

- Implementing regulations leave

the possibility of use of technical

capacity in selection but neither

the law nor the regulations

elaborate on the procedure.

1

- Neither the law nor

implementing regulations cover

this procedure

0

However these are not lucidly

set out as no guidelines have

been issued for establishing

criteria.

A rating averaging the

2nd

and 3rd

criteria

suggesting rating has

been given.

2 (e) User’s guide or manual for

contracting entities.

(a) There is a unique procurement

manual detailing all procedures

for the correct administration of

procurement regulations and

laws.

(b) The manual is updated

regularly;

(c) The responsibility for

maintenance of the manual is

clearly established.

3

There is no unique manual but

there is an obligation for the

2

A Manual on Standard

Operating Procedures is

available on the website of

PPRA, however it is only

applicable to Ministry of Health

and Population Welfare. With

only minor modifications to

meet specific needs this could be

used as the template

government-wide.

Each entity of the government is

preparing its own set of

guidelines and manuals therefore

creating a raft of documents

which will need to be

harmonised subsequently. . The

PPRA has assisted over 17

Criterion 3 is fully

satisfied. Criterion 2 is

satisfied partially.

1.5

18


condition


Ranking

Score

procuring agencies to have one

that meets conditions (b) and (c.)

There is no manual and no

obligation to have one but many

procurement agencies have an

internal manual for administration

of procurement.

1

There is no manual or

requirement to have one.

0

major public sector corporations

in developing their internal

procurement procedures. Some

of these are ready others are still

in the process of finalisation.

2 (f) General Conditions of Contracts

(GCC) for public sector contracts

covering goods, works and services

consistent with national requirements

and, when applicable, international

requirements

Both of the following apply:

a) There are GCC for the most

common types of contracts and

their use is mandatory.

b) The content of the GCC is

generally consistent with

internationally accepted practice.

3

There are GCC for the most

common types of contracts,

consistent with international

practice, but their use is not

mandatory.

2

There are GCC for the most

common types of contracts but

they do not conform to

internationally accepted practice

and their use is not mandatory.

1

There are no GCC and individual

agencies use the form of contract

of their choice.

0

PEC documents used as standard

bidding documents do contain

GCC which were acceptable, but

need revisions to bring them at

par with FIDIC.

No similar documents exist for

the procurement of goods,

services and consulting services.

However, the PPRA website

hosts the SBDs from the World

Bank which are used sometimes

in the interim.

Criterion 1 satisfied only

for works contracts.

The use of the

documents is mandatory

through SRO

8(60)/WR/PC/2006

dated the 12th

February

2008 from the Planning

Commission and

subsequently notified as

Regulation 3 in August

2008.

Other standard

documents are referred

to, but there is no

mandatory requirement

for using these.

2.0

19

PILLAR II: Institutional Framework and Management Capacity

Rating 1.92

28. Pillar II is designed to examine the central government institutional framework and

its capacity to oversee, manage and support efficient implementation as well as to provide

leadership in modernising and maintaining the public procurement system.

29. The PPRA is the apex body created for “improving governance, management,

transparency, accountability and quality of public procurement of goods, services and works

in the public sector”, and is part of the Cabinet Division. The PEC was involved as a member

of the Kazi Committee to prepare a standard bidding document and standard GCC for all

engineering contracts. The output was finally notified by Government (Planning

Commission) as a decision18 of the Executive Committee of the National Economic Council

which was subsequently modified19 in 2008 requiring all public sector entities to use the

SBDs and GCC developed by the PEC for all tenders/contracts governing works and

engineering services. Subsequently issued as PPRA Regulation 3 in December 2008.

30. This dichotomy has resulted in a conflict between the PEC and the PPRA on the

oversight of works in the country. The overlap between the PEC and the PPRA needs to be

clearly identified and resolved. There is a need to clearly stipulate that the PPRA’s mandate

is limited to regulation, providing advice and technical assistance in building capacity. The

PEC’s role in authoring and gaining government approval is explicitly acknowledged by the

PPRA as it cites them as SBDs and standard GCCs in its regulations. Further, the PPRA

Ordinance superseded all other preceding acts, rules, etc. dealing with procurement and gave

it the sole responsibility for the development of sub-legislation, guidelines, handbooks,

manuals, SBDs and GCCs. This included the work done by the PEC in preparing and

obtaining approval of its version of the SBDs and GCCs. The PPRA and PEC need to find

ways to accommodate their respective mandates, recognising problems that can arise out of

overlapping jurisdictions.

31. Throughout the government there is a dearth of skill in procurement ranging from the

development of policy to the management of the function. This is largely due to the absence

of dedicated posts for professional procurement officers, and the absence of a career path.

Above all, dismal capacity in procuring agencies, regulatory authorities, and accountability

institutions further hamper the efficiency, economy, and transparency of the procurement

systems.

32. In effect, both the institutional framework and the management capacity are weak

and need to be improved substantively through Technical Assistance ranging from drafting

documents to on-the-job training at all levels from policy formulation to procurement

contract administration. The three indicators in this area are discussed and scored below.

Indicator 3: The public procurement system is mainstreamed and well integrated into

the public sector governance systems

33. This indicator looks at the procurement system to: a) determine its suitability to

discharge the obligations prescribed in the law without gaps or overlaps; b) whether the

necessary links with other sectors of government affecting procurement exist; c) whether

18 SRO No. 8(60)WR/PC/2002 dated 21 August 2002. 19 SRO No. 8(60)WR/PC/2008 dated 12 February 2008.

20

procurement operations are constrained by other external institutional factors; and d) whether

the managerial and technical capacity of the system are adequate to do procurement without

unnecessary cost or delay.

34. PFM systems would have already been reviewed by the Bank, and deemed

acceptable.

Rating 1.50


condition


Ranking

Score

3 (a) Procurement planning integrated

into budget formulation process and

contribute to multi-year planning.

There is a regular planning

exercise instituted by law or

regulation that:

• starts with the preparation of

multiyear plans for the

government agencies, from

which annual operating plans are

derived.

• followed by annual

procurement plans and estimation

of the associated expenditures

• And culminates in the annual

budget formulation.

• Procurement plans are prepared

in support of the budget planning

and formulation process.

3

The majority of procurement

plans are prepared based on the

annual and multiyear operating

plans independently from budget

allocation but they are revised to

meet the forward budget

estimates for the sector or agency

allocations before expenses are

committed.

2

Procurement plans are normally

prepared based on the annual and

multiyear operating plans. Links

with budget planning are weak

and plans are not required to

1

The PPR Rules and the

Government’s Budget Rules

require planning at the start of

the year, and reflection of the

planning exercise is in the

annual budgets. Further even

though multi-year planning

exists, and a rolling Medium-

Term Development Framework

is planned, the Annual Budgets,

by and large, are prepared

independently of these plans.

However, the procurement plans

are recast to be consistent with

budgets once the latter have

been announced.

The annual

procurement plans

reflect the budget plans

ex-post facto, that is,

are modified to be

synchronous with the

budget once the latter

has been presented to

and accepted by

Parliament.

2.0

21


condition


Ranking

Score

match the budgetary allocation

available before expenses are

committed.

There is no integrated

procurement and budget planning

of the nature described.

Procurement plans are drawn

without obvious and direct

connection with the budget

planning exercise and there is no

requirement to match

procurement plans with

availability of funds before

expenses are committed.

0

3 (b) Budget law and financial

procedures support timely procurement,

contract execution, and payment:

Budget and financial procedures

in place meet the requirements of

the following:

(a) Budget funds are committed

or appropriated within a week

from the award of the contract to

cover the full amount of the

contract (or amount to cover the

portion of the contract to be

performed within the budget

period).

(b) There are published business

standards for processing of

invoices by the government

agencies that meet obligations for

timely payment stated in the

contract.

(c) Payments are authorised

within four weeks following

approval of invoices or monthly

certifications for progress

payments.

3

Budget and financial procedures

in place meet the requirements of

(a) but there are no published

business standards. Authorisation

of payments is generally timely.

2

Procedures in place take longer

than stated in (a) and conditions

(b) and (c) are not generally met.

1

Budget funds are not committed

in full at the start of the project.

Finance Rules and Regulations

permit the processing of bills in

time, but payments are not

necessarily within time owing to

a multiplicity of approvals

required.

The procedures do not

meet requirements in a

material way. They

however, fulfil

criterion 3.

1.0

22


condition


Ranking

Score

The procedures in place do not

meet the requirements in a

material way.

0

3 (c) No initiation of Procurement

without budget appropriation

The system meets the following

requirements:

(a) The law requires certification

of availability of funds before

solicitation of tenders takes place.

(b) There is a system in place

(e.g. paper or electronic interface

between the financial

management and the procurement

systems) that ensures

enforcement of the law.

3

The system meets requirement

(a) but requirement (b) is not

fully enforced due to weaknesses

in the system.

2

The system meets requirement

(a) only.

1

There system does not meet

requirements (a) and (b).

0

In most cases requirement (a) is

fulfilled.

However, in some cases this can

be waived by the competent

authority and a post-facto

approval is given at the end of

the fiscal year.

Moreover, in some cases,

without the funds in hand, the

procuring agencies initiate

procurement process justifying

tight timelines to meet, in

particular in the last two quarters

of a financial year.

Criterion 2 is fulfilled. 2.0

3 (d) Systematic completion reports are

prepared for certification of budget

execution and for reconciliation of

delivery with budget programming:

The procurement system is

sufficiently integrated with the

financial management and

budgetary systems to provide

information on the completion of

all major contracts.

3

Information on completion of the

majority of large contracts is

submitted as described above.

2

Information on the completion of

contracts is erratic or is normally

submitted with considerable

delay after the fiscal budgetary

1

PC-IVs (Completion Reports)

are supposed to be prepared for

every contract. However, these

are seldom developed, and

where prepared are substantially

delayed. However, for foreign

funded projects, the completion

reports and reconciliation reports

are prepared, to a great extent.

The system meets

criterion 3.

1.0

23


condition


Ranking

Score

period. .

The procurement system does not

generally provide this

information.

0

Indicator 4: The country has a functional normative/regulatory body

35. The assessment of the indicator will focus on the existence of the functions, the

independence of the regulatory function, the effectiveness of performance and the degree of

coordination between responsible organizations. There are four sub-indicators.

36. Many countries, including the most advanced, do not have such a body at the central

level.

Rating 3.00


condition


Ranking

Score

4 (a) The status and basis for the

regulatory authority is covered in the

legislative and regulatory framework:

There is a normative or regulatory

body or the functions are clearly

assigned to various units within

the government which is specified

in the legal and regulatory

framework in unambiguous way

without gaps or overlaps.

3

There is a regulatory body or

functional designation to various

units within government, but it is

not established as part of the legal

and regulatory framework and

there are gaps or overlaps of

regulatory responsibilities.

2

Only part of the functional

responsibilities of a regulatory

body are assigned throughout the

government leaving significant

parts of the work unassigned.

1

Separate functional

responsibilities to regulate the

procurement system are not

recognised as part of the legal and

0

The PPRA established through

the PPRA Ordinance 2002

exists and performs all the

functions of a legal and

regulatory body in unambiguous

way without gaps and is

supported by budget allocations.

There is a prima facie

perception that an overlap exists

between the PPRA and the

PEC. However, a deeper

analysis indicates that is largely

due to a misunderstanding about

the roles of the organisation

rather than an endemic fault in

legislation or the institutional

framework.

There is full

compliance with

criterion 1.

3.0

24


condition


Ranking

Score

regulatory framework and are not

effectively performed.

4 (b) The body has a defined set of

responsibilities.

All the eight functions listed are

clearly assigned to one or several

agencies without creating gaps or

overlaps in responsibility.

providing advice to contracting

entities;

drafting amendments to the

legislative and regulatory

framework and implementing

regulations;

monitoring public procurement;

providing procurement

information;

managing statistical databases;

reporting on procurement to

other parts of government;

developing and supporting

implementation of initiatives

for improvements of the public

procurement system; and

providing implementation tools

and documents to support

training and capacity

development of implementing

staff.

3

At least five functions are

assigned to an appropriate agency

or agencies and there is no

overlap or conflict in

responsibilities.

2

Four or less functions are

assigned to appropriate entities

and there are overlaps and

conflicts in responsibilities.

1

Functions are not clearly assigned

and/or assignments are often in

conflict with other agency

responsibilities.

0

The PPRA Ordinance 2002

provides for all these functions

as part of the mandate of the

PPRA.

Totally compliant with

criterion 1.

3.0

4 (c) The body’s organisation, funding, PPRA is an autonomous body More than adequately 3.0

25


condition


Ranking

Score

staffing and level of independence and

authority to exercise its duties should be

sufficient and consistent with the

responsibilities.

The regulatory body (or the

assignment of responsibilities for

the regulatory function if there is

not a body) is at an adequate level

in Government and financing is

secured by the legal/regulatory

framework.

3

The body is at an adequate level

but financing is subject to

administrative decisions and can

be changed easily.

2

The level of the body is too low

or financing is inadequate for

proper discharge of its

responsibilities.

1

The level of the body is low,

financing is inadequate and the

body has no or little

independence to perform its

obligations.

0

of the Cabinet Division thus

ensuring that it is at an adequate

level of Government.

Its financing is secured by legal

/ regulatory framework.

Given the mandate the level of

financing may not be sufficient.

meets criterion 1.

4 (d) Separation and clarity of

responsibilities to avoid conflict of

interest:

The body is not responsible for

direct procurement operations and

is free from other possible

conflicts (e.g. by being member

of evaluation committees, etc.).

3

The body does not meet the

requirement as stated above.

0

PPRA is not responsible for

direct procurement and is free

from any possible conflicts of

interest.

Meets criterion 1

completely.

3.0

Indicator 5: Existence of Institutional Development Capacity

37. The objective of this indicator is to assess the extent to which the country or agency

has systems to support and monitor the performance of the entire system, and to formulate

and implement improvement plans. This indicator has four sub-indicators.

26

38. This is an important aspect, and it is expected that donor support will be provided for

participating countries.

Rating 1.25


condition


Ranking

Score

5 (a) The country has a system for

collecting and disseminating

procurement information, including

tender invitations, requests for

proposals, contract award information.

There is an integrated

information system that provides

as a minimum, up-to-date

information as described above

and is easily accessible to all

interested parties at no or

minimum cost.

Responsibility for its

management and operation is

clearly defined.

3

There is an integrated system of

the characteristics described that

provides up-to-date information

for the majority of contracts at

the central government level but

access is limited.

2

There is a system but it only

provides information on some of

the contracts and the system

accessibility is limited.

1

There is no procurement

information system except for

some individual agency systems.

Entities keep information on

contract awards and some

statistics.

0

While no integrated system

exists the PPRA has developed a

website where procurement

business opportunity

information across the span of

the federal government and its

parastatal organisations.

This is, however, yet nascent

and needs to be developed to

include results of awards and

more to ensure transparency in

procurement activities.

At present contracts worth more

than PKR 100,000 are required

mandatorily to be advertised on

this website.

The information system

is partially developed

but is reaching towards

maturity rapidly.

2.0

5 (b The country has systems and

procedures for collecting and

monitoring national procurement

statistics.

The country has a system that

meets the following

requirements:

a) There is a system in operation

to collect data.

b) The system collects data on

procurement by method,

duration of different stages of

the procurement cycle, awards

3

No system fulfilling any of the

conditions set forth for such an

information system in this

indicator exists at the federal

level.

Evident from analysis. 0.0

27


condition


Ranking

Score

of contracts, unit prices for

most common types of goods

and services and other

information that allows

analysis of trends, levels of

participation, efficiency and

economy of the purchases and

compliance with requirements.

c) Reliability of the information

is high (verified by audits).

d) Analysis of information is

routinely carried out,

published and fed back into

the system.


meets (a) plus two of the


2

The system is in place to meet

(a) plus one of the remaining

conditions.

1

There is no statistical data

collection system in place.

0

5 (c) A sustainable strategy and training

capacity exists to provide training,

advice and assistance to develop the

capacity of government and private

sector participants to understand the

rules and regulations and how they

should be implemented.

There is a training and capacity

building strategy that provides

for:

(a) Substantive permanent

training programs of suitable

quality and content for the needs

of the system.

(b) Evaluation and periodic

adjustment based on feedback

and need.

(c) Advisory service or help

desk to absolve questions by

procuring entities, suppliers,

contractors and the public.

3

There is a training and capacity

building strategy that provides

for a) above.

2

Training programmes for

improving or providing de novo

skills exist. These include in-

house and on-the-job training to

access to Capacity Development

under Technical Assistance

programmes from donors.

The PPRA is undertaking these

for public sector entities only.

Plans have been initiated to

create a dedicated National

Institute of Procurement

Management.

Dedicated procurement

training capacity exists

at the PPRA which

uses both an in-house

training programme

and An outreach

programme providing

in situ training.

Advisory services are

available for both

public and private

sector entities.

3.0

28


condition


Ranking

Score

The existing program is of poor

quality and insufficient to meet

the needs of the system and there

is no procurement help desk or

advisory service.

1

No formal training or help desk

programs exist.

0

5 (d) Quality control standards are

disseminated and used to evaluate staff

performance and address capacity

development issues.

The procurement system

complies with the following:

a) Provide quality assurance

standards and a monitoring

system for procurement

processes and product.

b) Provide for a staff

performance evaluation

process based on outcomes

and professional behaviours.

c) Ensure that operational audits

are carried out regularly to

monitor compliance with

quality assurance standards.

3


complies with (a) and (b) above

but there is no regular auditing

to monitor compliance.

2

The procurement system has

quality standards but does not

monitor nor use the standards for

staff performance evaluation.

1

The system does not have

quality assurance or staff

performance evaluation systems

0

A system of annual staff

performance evaluations exists.

Evaluations are subjectively

measured against work done vis-

à-vis the employee’s job

description. These are, however,

not related to procurement

specifically. The Ministry of

Finance is ISO certified and is

therefore audited annually for

performance and each activity,

task and person comes within

the purview of the ISO

certificate renewal process. This

is an isolated instance of

performance measurement

within the Government and does

not therefore qualify as a

system-wide SOP.

As Procurement is not

considered to be a

specialist cadre, there

are no quality

assurance standards

and therefore address

issues in skill

development.

1.0

PILLAR III: Procurement Operations and Market Practices

Rating 1.67

39. Public procurement requires participation by both the public sector and private sector

entities. Performance is based on the integrity and professionalism at both ends of the

spectrum – the procuring agency and the supplier/consultant/contractor. Where markets have

participation by the public sector on both sides of the curtain, this creates unfair non-

29

competitive markets leading to unfair trade practices. In such instances the private sector

entities tend to collude with each other creating situations of monopolistic and /or

oligopolistic behaviour leading to clubbing and rationing. For instance, it is not uncommon

in Pakistan for highway and other infrastructure construction contracts being awarded to

public sector organisations without inviting bids or for granting design and supervision

consultancy contracts at much higher rates than to the private sector. This is clearly unfair

trade practice, but a laissez faire attitude generally continues to exist.

40. A functioning, robust and competitive private sector market is, therefore, a key

partner to the public procurement system in a well-functioning system. To be effective, the

market must have confidence in the competence of the contracting authorities at all levels

within the system. The indicators in this area are discussed and scored below.

Indicator 6: The country’s procurement operations and practices are efficient

41. This indicator looks at the efficiency of the operations and operational practices as

implemented by the procuring agencies. There are four sub-indicators

Rating 1.63


condition


Ranking

Score

6 (a) Level of procurement competence

in government officials in the entity is

commensurate with their procurement

responsibilities.

The system meets the

requirements:

a) There are defined skill and

knowledge profiles for

specialised procurement jobs.

b) There is systematic matching of

skills against requirements for

competitive recruitment.

c) Staff required to undertake

procurement activities on an ad

hoc basis have the knowledge

they need to undertake the

activity or have access to

professional staff that can

provide this knowledge.

3

The system meets (a) plus one of

the remaining conditions.

2

The system only meets (a) above. 1

The system does not meet any of

the requirements.

0

No defined skills or knowledge

profiles are in place for

procurement jobs, hence there is

no matching of skills against

requirements for competitive

recruitment.

Lack of skills is

conspicuous largely

because of dearth.

However, there are

instances of a high

level of knowledge and

skill in cases where

procurement officials

have received and put

to use the specifying

training provided to

them either in situation

of off-site; other

instances can also be

found, scattered within

various agencies,

where the skill has

been absorbed through

on-the-=job exposure

over a long stretch in-

post. The PPRA has

trained 2,435

procurement personnel

from various

organisations through

a 2-3 day

training/exposure

programme both at its

headquarters and in-

situ at the offices of

the Pas.

0.0

6 (b) The procurement training and

information programs for government

PPRA is operating a capacity

building plan largely through its

A formal training

curriculum and

1.5

30


condition


Ranking

Score

officials and for private sector

participants are consistent with demand

The training and information

programs available meet the

following requirements:

a) Training programs’ design is

based on a skills gap inventory

to match the needs of the

system.

b) Information and training

programs on public

procurement for private sector

are offered regularly either by

the government or by private

institutions.

c) The waiting time to get into a

course (for public or private

sector participants) is

reasonable, say one or two

terms.

3

The training programs are

sufficient in terms of content and

frequency (waiting time) for

government participants but there

are few information programs for

private sector.

2

There are training programs but

they are deficient in terms of

content and supply.

1

There is no systematic training or

information program for public or

private sector participants.

0

own resources for public sector

officials.

These are limited to 2-3 days of

exposure to the rules.

This is not consistent with

demand as PPRA’s own

capacity is limited. To enhance

this PPRA has developed a

proposal for establishing the

National Institute for

Procurement Management.

programme does not

exist. PPRA is

undertaking capacity

development through a

series of continual

short-term courses in

response to identified

demand, but the

approach is not holistic

nor designed to offer

growth along a career

path.

A similar facility for

private sector entities

does not exist.

6 (c) There are established norms for the

safekeeping of records and documents

related to transactions and contract

management.


complies with the following

requirements.

a) The legal/regulatory

framework establishes a list of

the procurement records that

must be kept at the operational

level and what is available for

public inspection, including

conditions for access.

b) The records should include:

3

The complete list of bidding

documents are required to be

maintained safely and produced

for audit requirements and or a

period specified by the

Evidence Act, the NAB

Ordinance and the Audit Rules.

The Standard Operation

Procedures governing document

maintenance and retrieval are

contained in the Manuals issued

by the Management Services

Division.

However since all systems are

manual and no secure storage is

Absence of secure

storage is an issue, but

is not considered to be

critical for the

maintenance of

records.

3.0

31


condition


Ranking

Score

Public notices of bidding

opportunities.

Bidding documents and

addenda.

Bid opening records

Bid evaluation reports

Formal appeals by bidders and

outcomes.

Final signed contract

documents and addenda and

amendments.

Claims and dispute resolutions

Final payments

Disbursement data (as required

by the country’s financial

management system).

c) There is a document retention

policy that is compatible with

the statute of limitations in the

country for investigating and

prosecuting cases of fraud and

corruption and with the audit

cycles.

d) There are established security

protocols to protect records

either physical or electronic.


complies with requirements (a),

plus two of the remaining

conditions.

2


complies with (a) but not with the

rest.

1

There is no mandatory list of

documents or retention policy

leaving it to the discretion of the

procuring entity.

0

provided, the veracity and

completeness of records cannot

be guaranteed.

6 (d) There are provisions for delegating

authority to others who have the capacity

to exercise responsibilities.

The system meets the following

requirements:

a) Delegation of decision making

authority is decentralised to

the lowest competent levels

consistent with the risks

associated and the monetary

sums involved.

3

Authority is delegated

according to rules specified in

the ESTA Code and the

Financial Powers Regulations

for Drawing and Disbursing

Officers and are not necessarily

devolved according to

capability and accountability is

defined precisely.

However decisions are made at

the higher level.

Compliant with

criterion 2.

2.0

32


condition


Ranking

Score

b) Delegation is regulated by law.

c) Accountability for decisions is

precisely defined.

The law establishes delegation

and accountabilities but the

system concentrates decisions at a

high level creating congestions

and delays.

2

Delegation is regulated in very

general terms creating a need to

clarify accountability for decision

making.

1

Delegation is not regulated by law

and left at the discretion of the

procuring entity. There is lack of

clarity on accountability.

0

Indicator 7: Functionality of the public procurement market

42. The objective of this indicator is primarily to assess the market response to public

procurement solicitations. There are three sub indicators.

Rating 1.33


condition


Ranking

Score

7 (a) There are effective mechanisms for

partnerships between the public and

private sector.

Each of the following conditions

is met.

a) Government encourages open

dialogue with the private sector

and has several established and

formal mechanisms for open

dialogue through associations

or other means.

b) The government has programs

to help build capacity among

private companies, including

for small businesses and

training to help new entries into

the public procurement

marketplace.

c) The government encourages

public/private partnerships and

the mechanisms are well

established in the legal

3

There is no stated PPP policy.

However, instances of such

formal relationships involving

large scale procurement are to

be found in the Infrastructure

Project Development Facility,

the use of BOT for the

development of infrastructure

by the Port Qasim Authority

and the National Highway

Authority.

An open dialogue with private

sector is evidenced by the

inclusion of private sector

professional in various fora

such as Commissions,

Committees and Task Forces.

Condition (a) of

criterion 1 are met. 1.0

33


condition


Ranking

Score

framework to make possible

such arrangements.

The system meets (a) plus one

other condition above.

2

The system only provides for (a)

above.

1

There are no obvious

mechanisms for dialogue or

partnership between the public

and private sector.

0

7 (b) Private sector institutions are well

organised and able to facilitate access to

the market.

The private sector is competitive,

well organised and able to

participate in the competition for

public procurement contracts.

3

There is a reasonably well

functioning private sector but

competition for large contracts is

concentrated in a relatively small

number of firms.

2

The private sector is relatively

weak and/or competition is

limited owing to monopolistic or

oligopolistic features in important

segments of the market.

1

The private sector is not well

organised and lacks capacity and

access to information for

participation in the public

procurement market.

0

The larger institutions in the

private sector are limited in

number, but are highly

competitive within the

constraints of an oligopolistic

framework largely created by

the intrusion of the public sector

entities which are favoured,

The private sector is therefore

able to access the market in a

limited manner.

However, the smaller

organisations, even though

somewhat competitive, tend to

form cartels and have limited

access to the markets.

The rest of the private sector is

disorganised and lacks capacity.

The large scale private

sector firms are well

organised and can

offer fair competition.

Because of the

shortage of capacity

they are unable to meet

the demand placed on

them20

.

This is, however, set

aside when vested

interest intervene when

cartelisation or

rationing takes place.

Such instances can be

found across the board

the latest such instance

in the construction

sector is the near-

award for the Kashmir

Highway by the CDA.

In the power sector is

the award of contracts

for transformers has

been traditionally

spread over five

suppliers each receives

a fixed quota to be

supplied at pre-

determined prices.

2.0

7 (c) There are no major systemic

constraints (e.g. inadequate access to

There are systemic constraints

which inhibit large scale private

Criterion 3 holds true

for the bulk of the 1.0

20 Mir, Aized H., and Durrani, Amer Zafar; 2007; Pakistan Infrastructure Implementation Capacity Assessment; World Bank

in Pakistan.

34


condition


Ranking

Score

credit, contracting practices, etc.)

inhibiting the private sector’s capacity to

access the procurement market.

There are no major constraints

inhibiting private sector access to

the public procurement market.

3

There are some constraints


the public procurement market,

but competition is sufficient.

2

There are multiple constraints


the public procurement market

which often affect competition

levels.

1

There are major constraints that

discourage competition and the

private sector firms are generally

reluctant to participate in public

procurement.

0

sector participation. The main

constraint is the non-level

playing field because of the

presence of public sector

organisations that are given

preference to the extent of sole

sourcing in the higher valued

contracts.

private sector entities.

Indicator 8: Existence of contract administration and dispute resolution

43. This indicator’s objective is to assess the quality of contract administration practices

which begin after contract award and continue to acceptance and final payments. This

indicator covers three sub- indicators.

44. Critical indicator for open competition and transparency of the country systems.

Rating 2.00


condition


Ranking

Score

8(a) Procedures are clearly defined for

undertaking contract administration

responsibilities that include inspection and

acceptance procedures, quality control

procedures, and methods to review and

issue amendments in a timely manner

Contract administration

procedures provide for:

a) Procedures for acceptance of

final products and for issuance

of contract amendments are

part of the legal/regulatory

3

PEC documents and regulations

ensure compliance with the first

four requirements.

The payment procedures

although well-defined in the

PPR 2004 are not followed

completely, which leads to delay

in payments

Four of five conditions

of criterion 1 are

satisfied

2.0

35


condition


Ranking

Score

framework or are incorporated

as standard clauses in

contracts.

b) Clauses are generally

consistent with internationally

accepted practices (see IFI

standard contracts for good

practice examples).

c) Quality control (QC)

procedures for goods are well

defined in the model

contracts/documents or in the

regulations. QC is carried out

by competent officers,

inspection firms or specialised

testing facilities.

d) Supervision of civil works is

carried out by independent

engineering firms or qualified

government supervisors and

inspectors.

e) Final payments are processed

promptly as stipulated in the

contract.


procedures provide for (a) plus

three of the remaining

requirements.

2


procedures provide for (a) plus

two of the remaining

requirements.

1


procedures do not meet the

requirements of (a) to (e) above.

0

8 (b) Contracts include dispute resolution

mechanisms that provide for an efficient

and fair process to resolve disputes arising

during the performance of the contract.

The system meets all the good

practice standards below.

a. There is an Arbitration law in

the country.

b. The law is consistent with

generally accepted practices for

neutrality of arbitrators, due

process, expediency and

3

The Arbitration Act includes

provision of neutral arbitrators,

due process and expediency but

decision is difficult to enforce.

ICB contracts allow for

international arbitration.

No ADR exists.

Four of the five

conditions of criterion

1 are met.

2.0

36


condition


Ranking

Score

enforceability.

c. The country accepts as a matter

of course international

arbitration for international

competitive bidding.

d. Provisions for Alternative

Dispute Resolution (ADR) are

standard in contracts.

e. ADR provisions conform to the

international standard wording

(may refer to IFI standard

bidding documents for sample of

good international practice).

The system meets (a) plus three of

the remaining good practice

standards.

2

The system meets (a) plus two of

the remaining good practice

standards.

1

The system does not use ADR as a

normal dispute resolution

mechanism in public contracts.

0

8 (c) Procedures exist to enforce the

outcome of the dispute resolution process

The procurement system in the

country meets following the

requirements:

The country is a member of the

New York Convention on

enforcement of international

arbitration awards.

The country has procedures to

enable the winner in a dispute to

seek enforcement of the outcome

by going to the courts.

The country has a process to

monitor this area of contract

administration and to address

performance issues.

3

The country meets two of the three

conditions above.

2

The country meets condition a). 1

The country does not meet any of 0

Only the first two requirements

are met.

evident from analysis. 2.0

37


condition


Ranking

Score

the requirements.

PILLAR IV: Integrity and Transparency of the Public Procurement System

Rating 1.52

45. This is the ultimate goal of all procurement systems and is not easily achieved. It

requires an enabling environment a friendly institutional framework, management capacity

and enlightened legislative framework.

46. The OECD-DAC guideline for assessment states “A cornerstone of a well-

functioning public procurement system operating with integrity (fair, transparent, and

credible) is the availability of mechanisms and capacity for independent control and audit of

procurement operations to provide for accountability and compliance. Similarly, there must

be a system for participants to lodge complaints and challenge decisions with administrative

and judicial review bodies having both appropriate levels of independence and the legal

power to impose corrective measures and remedies against contracting entities in breach of

the legal and regulatory framework. Fraud and corruption, including the issue of conflict of

interest, should be addressed in legislation as well as through special measures in order to

create a sound and fair environment for public procurement operations”.

47. Another key factor is ensuring that there is a level-playing field between the public

and private sector suppliers, contractors and consultants and easy access to market

opportunities by all. It is only when all of these conditions are met that a true transparent

public procurement system can exist with the framework of integrity. The scores and ratings

of the indicators in this Pillar is discussed below.

Indicator 9: The country has effective control and audit systems

48. The objective of this indicator is to determine the quality, reliability and timeliness of

the internal and external controls preferably based on risk assessment and mitigation. The

indicator has five sub-indicators.

49. Further improvements would be part of the action plan of corrective measures to be

implemented during the implementation of the pilot projects.

Rating 1.8


condition


Ranking

Score

9 (a) A legal framework, organisation,

policy and procedures for an internal and

external control and audit of public

procurement operations are in place to

provide a functioning control framework.

Audit, both internal and

external, is largely limited to

financial transactions only.

Mechanisms for performance

audit by external auditors have

been developed, but are rarely

Only condition (a) of

criterion 1 are met. 1.0

38


condition


Ranking

Score

The system in the country

provides for:

a) Adequate independent control

and audit mechanisms and

institutions to oversee the

procurement function.

b) Implementation of internal

control mechanisms in

individual agencies with clearly

defined procedures.

c) Proper balance between timely

and efficient decision making

and adequate risk mitigation.

d) Specific periodic risk

assessment and controls

tailored to risk management.

3

The system in the country meets

(a) plus two of the above. 2

The system meets (a) but controls

are unduly burdensome and time-

consuming hindering efficient

decision making.

1

Controls are imprecise or lax and

inadequate to the point that there

is weak enforcement of the laws

and regulations and ample risk

for fraud and corruption.

0

undertaken largely due to

capacity constraints.

Mechanisms for procurement

audit do exist but findings are

not specifically highlighted.

The time lag between decision

making and risk mitigation is

very large, an average of 2-3

years.

9 (b) Existence of follow-up on findings

and recommendations provide an

environment that fosters compliance.

Internal or external audits are

carried at least annually and

recommendations are responded

to or implemented within six

months of the submission of the

auditors’ report.

3

Audits are carried out annually

but response to or

implementation of the auditors’

recommendations takes up to a

year.

2

Audits are performed annually

but recommendations are rarely

responded to or implemented.

1

Internal audit is concurrent with

transaction.

An Annual audit is conducted,

observations discussed and

settled generally within 6

months wherever feasible.

Criterion 1 complied

with. 3.0

39


condition


Ranking

Score

Audits are performed erratically

and recommendations are not

normally implemented.

0

9 (c) The internal control systems

provides timely information for

management action.

All of the following requirements

are met.:

a) There are written standards for

the internal control unit to

convey issues to management

depending on the urgency of

the matter.

b) There is established regular

periodic reporting to

management throughout the

year.

c) The established periodicity and

written standards are complied

with.

3

Requirement (a) plus one of the

above are met.

2

Only requirement (a) is met. 1

There is no functioning internal

control system.

0

Internal written controls are

available.

Only the first condition

of criteria 1 is

complied with.

1.0

9 (d) The internal control systems are

sufficiently defined to allow performance

audits to be conducted.

There are internal control

procedures including a manual

that state the requirements for

this activity which is widely

available to all staff.

3

There are internal control

procedures but there are

omissions or practices that need

some improvement.

2

There are procedures but

adherence to them is uneven.

1

The internal control system is

poorly defined or non-existent.

0

Performance audit has been

introduced but is used in a

limited manner.

The Manual is being developed.

Adherence to set

procedure is uneven. 1.0

40


condition


Ranking

Score

9 (e) Auditors are sufficiently informed

about procurement requirements and

control systems to conduct quality audits

that contribute to compliance.

There is an established program

to train internal and external

auditors to ensure that they are

well versed in procurement

principles, operations, laws, and

regulations and the selection of

auditors requires that they have

adequate knowledge of the

subject as a condition for

carrying out procurement audits.

3

If auditors lack procurement

knowledge, they are routinely

supported by procurement

specialists or consultants.

2

There is a requirement that the

auditors have general knowledge

of procurement principles,

operations, laws, and regulations

but they are not supported

generally by specialists in

procurement.

1

There is no requirement for the

auditors to have knowledge of

procurement and there is no

formal training program and no

technical support is provided to

the auditors.

0

A programme of training has

been instituted by the Auditor

General’s Office and covers

both procurement and

performance audit.

Complies with

criterion 1. 3.0

Indicator 10: Efficiency of appeals mechanism

50. The appeals mechanism here assesses a range of specific issues regarding efficiency

in contributing to the compliance environment in the country and the integrity of the public

procurement system. There are five sub indicators.

51. This is a critical indicator requiring a “3”rating for all its components.

Rating 0.80


condition


Ranking

Score

10 (a) Decisions are deliberated on the

basis of available information, and the

An appeal must be filed within Criterion 2 is met. 2.0

41


condition


Ranking

Score

final decision can be reviewed and ruled

upon by a body (or authority) with

enforcement capacity under the law.


meets the following

requirements.

a) Decisions are rendered on the

basis of available evidence

submitted by the parties to a

specified body that has the

authority to issue a final

decision that is binding unless

referred to an appeals body.

b) An appeals body exists which

has the authority to review

decisions of the specified

complaints body and issue

final enforceable decisions.

c) There are times specified for

the submission and review of

complaints and issuing of

decisions that do not unduly

delay the procurement

process.

3


meets (a) and (b) above, but the

process is not controlled with

regard to (c).

2

The system only provides for (a)

above with any appeals having to

go through the judicial system

requiring a lengthy process.

1

The system does not meet the

conditions of (a) – (c) above,

leaving only the courts.

0

fifteen days of occurrence.

The existing appeals

mechanism consists of a

Committee to be appointed on a

case-by-case basis leading to

inconsistent decisions on

similar issues.

The appeal to the courts and the

Ombudsman Office is

permitted.

10 (b) The complaint review system has

the capacity to handle complaints

efficiently and a means to enforce the

remedy imposed.

The complaint review system has

precise and reasonable conditions

and timeframes for decision by

the complaint review system and

clear enforcement authority and

mechanisms.

3

There are terms and timeframes

established for resolution of

complaints but mechanisms and

2

While existing systems can

handle complaints, decision and

enforcement for remedy takes

years.

Criterion 3 is satisfied. 1.0

42


condition


Ranking

Score

authority for enforcement are

unclear or cumbersome.

Terms and timeframes for

resolution of complaints or

enforcement mechanisms and

responsibilities are vague.

1

There are no stipulated terms and

timeframes for resolution of

complaints and responsibility for

enforcement is not clear.

0

10 (c) The system operates in a fair

manner, with outcomes of decisions

balanced and justified on the basis of

available information.

Procedures governing the

decision making process of the

review body provide that

decisions are:

a) based on information relevant

to the case.

b) balanced and unbiased in

consideration of the relevant

information.

c) can be subject to higher level

review.

d) result in remedies that are

relevant to correcting the

implementation of the process

or procedures.

3

Procedures comply with (a) plus

two of the remaining conditions

above.

2

Procedures comply with (a)

above.

1

- The system does not comply

with any of the above.

0

The system complies with only

the first condition of criterion 1.

However, in implementation the

process can be influenced to

favour the complainant.

Decisions are based on

relevant information. 1.0

10 (d) Decisions are published and made

available to all interested parties and to

the public.

All decisions are publicly posted

in a government web site or

another easily accessible place.

3

All decisions are posted in a

somewhat restricted access media

2

Decisions of administrative

reviews are not published or

made available. Copies of court

decisions are available on

payment.

Complies with the last

criterion. 0.0

43


condition


Ranking

Score

(e.g. the official gazette of

limited circulation).

Publication is not mandatory and

publication is left to the

discretion of the review bodies

making access difficult.

1

Decisions are not published and

access is restricted.

0

10 (e) The system ensures that the

complaint review body has full authority

and independence for resolution of

complaints.

The complaint review body is

independent and autonomous

with regard to resolving

complaints.

3

The complaint review body is not

independent and autonomous

with regard to resolving

complaints.

0

Review bodies are ad-hoc and

appointed by the Head of

department of the Procuring

Agency.

They are therefore not

independent.

Evident from analysis. 0.0

Indicator 11: Degree of Access to Information

52. This indicator deals with the quality, relevance, ease of access and

comprehensiveness of information on the public procurement system.

53. The Bank will support the development of E-gp and E-procurement systems and

platforms in general.

Rating 2.0


condition


Ranking

Score

11 Information (on public procurement)21

is published and distributed through

available media with support from IT

when feasible.

There is a rudimentary public

information system which

provides information only for

the initial opportunities for

submission of expressions of

interest, bids and proposals for

all procurement government

wide.

Criterion 2 is satisfied. 2.0

21 Inserted from the introductory narrative

44


condition


Ranking

Score

Information on procurement is

easily accessible in media of

wide circulation and availability.

The information provided is

centralised at a common place.

Information is relevant and

complete. Information is helpful

to interested parties to understand

the procurement processes and

requirements and to monitor

outcomes, results and

performance.

3

Information is posted in media

not readily and widely accessible

or not user friendly for the public

at large OR is difficult to

understand to the average user

OR essential information is

lacking.

2

Information is difficult to get and

very limited in content and

availability.

1

There is no public information

system as such and it is generally

up the procuring entity to publish

information.

0

However no information is

provided regarding processes,

outcomes, results and

performance.

The PPRA is preparing and

issuing monthly reports on

performance in the form of

proportion of uploads compliant

with PPR, but this only for

circulation within government

and is not available publicly.

Indicator 12: The country has ethics and anticorruption measures in place

54. This indicator assesses the nature and scope of the anticorruption provisions in the

procurement system. There are seven sub indicators.

55. Critical indicator requiring a top rating for most of its aspects.

Rating 2.0


condition


Ranking

Score

12 (a) The legal and regulatory

framework for procurement includes

provisions addressing corruption, fraud,

conflict of interest, and unethical

behaviour and sets out the actions that

can be taken with regard to such

behaviour.

The legal framework contains a

number of legislations and sub-

legislations dealing with these

issues, including the PPR. They

are, however, ambiguous in

their definitions and provide for

a number of loopholes. Action

is however, clearly specified.

Criterion 1 satisfied. 3.0

45


condition


Ranking

Score

The procurement law or the

regulations specify this

mandatory requirement and give

precise instructions on how to

incorporate the matter in

tendering documents. Tender

documents include adequate

provisions on fraud and

corruption.

3

The procurement law or the

regulations specify this

mandatory requirement but

leaves no precise instruction on

how to incorporate the matter in

tendering documents leaving this

up to the procuring agencies.

Tender documents generally

cover this but without

consistency.

2

The legal/regulatory framework

does not establish a clear

requirement to include language

in documents but makes fraud

and corruption punishable acts

under the law.

Few tendering documents include

appropriate language dealing

with fraud and corruption.

1

The legal framework does not

directly address fraud, corruption

or unethical behaviour and its

consequences. Tender documents

generally do not cover the matter.

0

Specific bodies to deal with

these issues exist and consist of

the National Accountability

Bureau (NAB), the Prime

Minister’s Inspection

Committees and the Anti-

Corruption Establishment.

SBDs and GCCs prepared by

PEC and World Bank address

these issues completely.

The NAB requires ex-ante

approval for all contracts

beyond a threshold value.

12 (b) The legal system defines

responsibilities, accountabilities, and

penalties for those found to have engaged

in fraudulent or corrupt practices.


explicitly deals with the matter. It

defines fraud and corruption in

procurement and spells out the

individual responsibilities and

consequences for government

employees and private firms or

individuals found guilty of fraud

or corruption in procurement,

3

The overall legal framework in

the country includes specific

and general legislation which

define responsibility,

accountability and penalty for

fraud and corruption. The latest

specific legislation are the

National Accountability Bureau

and the Electronic Crimes

Ordinances which were issued

specifically to fight white collar

crime. However, the

procedures specified are

cumbersome and inordinately

Criterion 1 is fulfilled. 3.0

46


condition


Ranking

Score

without prejudice of other

provisions in the criminal law.


includes reference to other laws

that specifically deal with the

matter (e.g. anti corruption

legislation in general). The same

treatment is given to the

consequences.

2


has general anti corruption and

fraud provisions but does not

detail the individual

responsibilities and consequences

which are left to the general

relevant legislation of the

country.

1


does not deal with the matter.

0

protracted.

12 (c) Evidence of enforcement of rulings

exists.

There is ample evidence that the

laws on corrupt practices are

being enforced in the country by

application of stated penalties.

3

There is evidence available on a

few cases where laws on corrupt

practices have been enforced.

2

Laws exist, but evidence of

enforcement is weak.

1

There is no evidence of

enforcement.

0

While the laws are fairly well

stated, however, the emphasis

of implementation is on the

weaker segments of officialdom

against whom evidence of

enforcement exists.

Evidence of

enforcement in the

major cases of

corruption is sparse.

1.0

12 (d) Special measures exist to prevent

and detect fraud and corruption in public

procurement.

The government has in place a

comprehensive anticorruption

program to prevent, detect and

penalise corruption in

government that involves the

3

Government’s efforts against

corruption are weak and half-

hearted even though special

measures exist.

There is an existing published

Anti-Corruption Strategy and

Policy.

While systems exist,

there appears to be no

evidence of

punishment or

redressed except in

isolated cases.

2.0

47


condition


Ranking

Score

appropriate agencies of

government with a level of

responsibility and capacity to

enable its responsibilities to be

carried out. Special measures are

in place for detection and

prevention of corruption

associated with procurement.

The government has in place an

anticorruption program but it

requires better coordination or

authority at a higher level to be

effective. No special measures

exist for public procurement.

2

The government has isolated

anticorruption activities not

properly coordinated to be an

effective integrated program.

1

The government does not have an

anticorruption program.

0

Specialist organisations to fight

corruption exist in the form of

the Anti-Corruption

Establishment, The Prime

Minister’s Inspection Team, the

National Accountability Bureau

and the white collar crime unit

of the Federal Investigation

Agency.

Oversight by the electronic and

print media and civil society

organisations act as the

whistleblowers.

12 (e) Stakeholders (private sector, civil

society, and ultimate beneficiaries of

procurement / end-users) support the

creation of a procurement market known

for its integrity and ethical behaviours.

The creation of a procurement

market is supported by the

following:

a) There are strong and credible

civil society organisations that

exercise social audit and

control.

b) Organisations have

government guarantees to

function and cooperation for

their operation and are

generally promoted and

respected by the public.

c) There is evidence that civil

society contributes to shape

and improve integrity of

public procurement.

3

There are several civil society

organisations working on the

matter and the dialogue with the

government is frequent but it has

limited impact on improving the

2

The relationship between the

government and stakeholders

can at best be described as wary

and mistrustful. Moreover,

there are many vested interests

against the creation of a

responsive and transparent

procurement market. Thus the

possibility for the creation of a

procurement market known for

its integrity and ethical

behaviour is asymptotic to zero

in the short- to medium-term.

There are only a few

organisations operating

as watchdogs in civil

society.

1.0

48


condition


Ranking

Score

system.

There are only a few

organisations involved in the

matter, the dialogue with the

government is difficult and the

contributions from the public to

promote improvements are taken

in an insignificant way.

1

There is no evidence of public

involvement in the system OR

the government does not want to

engage the public organisations

in the matter.

0

12 (f) The country should have in place a

secure mechanism for reporting

fraudulent, corrupt, or unethical

behaviour.

There is a secure, accessible and

confidential system for the public

reporting of cases of fraud,

unethical behaviour and

corruption.

3

There is a mechanism in place but

accessibility and reliability of the

system undermine and limits its

use by the public.

2

There is a mechanism in place but

security or confidentiality cannot

be guaranteed.

1

There is no secure mechanism for

reporting fraud, unethical

behaviour and corruption cases.

0

Other than the annual external

audit of all PAs, there is a partly

secure mechanism for reporting

these activities, but follow-up is

erratic and more often than not,

targeted.

The access is limited

because of a lack of a

supporting system of

rewards.

The reliability of the

system is questionable

because of apparent

vested interest

interference.

2.0

12 (g) Existence of Codes of

Conduct/Codes of Ethics for participants

that are involved in aspects of the public

financial management systems that also

provide for disclosure for those in

decision making positions.

The existence of these code

ensures the following:

a) There is a code of conduct or

ethics for government officials

with particular provisions for

3

The PEC regulation contains

both a code of conduct and a

code of ethics. This is however

restricted to engineering only.

The Services Efficiency and

Discipline Rules contains such

a code implicitly.

The Services

Efficiency and

Disciplinary Rules

ensure compliance

with all three criteria,

but enforcement is

weak. These need to

be strengthened and

implementation should

be based on objective

criteria.

2.0

49


condition


Ranking

Score

those involved in public

financial management,

including procurement.

b) The code defines

accountabilities for decision

making and subjects decision

makers to specific financial

disclosure requirements.

c) The code is of obligatory

compliance and consequences

are administrative or criminal.

The system meets requirements

(a) and (b) but is only a

recommended good practice code

with no consequences for

violations unless covered by

criminal codes.

2

There is a code of conduct but

determination of accountabilities

is unclear.

1

There is no code of conduct. 0

V. CONCLUSIONS AND REMEDIES

56. The legal framework is weak and needs to be developed. This should be undertaken

in stages. On completion of the targets for Pillar I, the donors should agree to adopt the CPS.

57. The proposed action is as follows:

Matrix of Recommendations

OECD – DAC

BIS Public Procurement Performance Area

Recommendations for Harmonisation of

PPR with International Good Practice


Indicator 1 - Public procurement legislative and regulatory framework achieves the agreed standards and

complies with applicable obligations

50


OECD – DAC




1(a) Scope of application and coverage of the

legislative and regulatory framework.

To ensure greater legitimacy to the existence of a

more empowered PPRA, the Ordinance, ideally,

should be reissued as an Act of Parliament

amending the Ordinance to reflect the Public

Procurement Strategy and some elements of the

Rules should be incorporated It should also

specify the roles, responsibility and authority of

the PPRA more explicitly rather than in a broad

based manner.

The Act should also clearly establish the

hierarchy of sub-legislation

The PPR 2004 should extend the scope and

coverage to include explicitly services and

consulting services.

Regulations, Guidelines and Handbooks need to

be developed. The NHF guidelines should be

used to develop a standardised template.

If necessary amendments to the Contract Act,

Arbitration Act, Sale of Goods Act, the GFR and

the Audit Regulations should be issued to reflect

international good practice in procurement.

1 (c) Advertising Rules The specification of print media should be

limited to nationally circulated newspapers and

have the top category ranking accorded by the

Audit Bureau of Circulation.

The current practise of advertising in low-

circulation regional papers should be forbidden

mandatorily for all procurements below the

advertising threshold on the PPRA website (PKR

100,000).

The Press Information Department’s discretion in

selecting the media should be abandoned and the

choice be left to the Procuring Agency as they

can good identify their clientele or possible

suppliers.

Time Limits This is extremely restricting, more particularly so

in the case of ICB. These should be restated in

line with international good practice of a

minimum of 42 days and a maximum of 90 days.

51


OECD – DAC




1 (d) Rules of Participation Should include a statement on public and private

sector being treated equitably and current

methods of sole-sourcing for large contracts

should be prohibited mandatorily.

If the objective is to develop integrity based

efficient public procurement systems, then these

public sector entities should be phased out of

supply and tasked with monitoring and

evaluation.

The benefits of this would be that private sector

entities would then be able to achieve ISO 9001

etc certifications for output quality assurance.

1 (e) Tender documentation and technical

specifications

Adopt the MBDs or develop similar.

1 (f) Evaluation Criteria and Method

To be aligned with international good practice. A

standard set of criterion needs to be developed

Award Criteria To be aligned with MDBs processes and

procedures

1 (h) Complaints To be brought at par with MDBs. The existing

method of an internal enquiry should include

provisions for external participation to ensure

integrity and transparency.

A second tier for redressal should be integrated.

-- Domestic preference given Should be restricted to a maximum accepted

worldwide, namely 15 percent for a 30 percent

value addition.

Indicator 2 - Existence of implementing regulations and documentation

2 (a) Implementing regulation that provide defined

processes and procedures not included in

higher-level legislation

This results automatically once 1(a) has been

completed.

2(b) Model Tender or submission of proposal

documents

MBDs developed by the MDBs should be used.

Where these are not yet available, the existing

SBDs used by the DBs should be used in the

interim.

52


OECD – DAC




2 (d) Procedures suitable for contracting services or

other requirements in which technical capacity

is a key criterion

Templates and criterion for evaluation should be

prepared for works, goods, services and

consulting services should be prepared.

Guidelines should be developed to encourage the

participation of newly established forms such that

the criteria for qualification should be experience

of professional partners and not of the entity in its

own name.

2 (e) User’s guide or manual for contracting entities These should be prepared by each procuring

entity based on a template to be prepared by

PPRA.

2 (f) General Conditions of Contracts (GCC) for

public sector contracts covering goods, works

and services consistent with national

requirements and, when applicable,

international requirements

Should be prepared as part of a standardised set

of contracts similar to those by the MDBs and

IFIs. The PPRA should have templates prepared

for this purpose. There should be a clear

distinction between lump-sum and fee plus

contracts.

PILLAR II Institutional Framework and Management Capacity

Indicator 3 - The public procurement system is mainstreamed and well integrated into the public sector

governance systems

PFM systems would have already been reviewed by the Bank, and deemed acceptable

3 (a) to (c) Procurement planning integrated into budget

formulation process and contribute to multi-year

planning

Budget law and financial procedures support timely

procurement, contract execution, and payment and

allows no initiation of Procurement without budget

appropriation

There is a disconnect between the

implementation schedule contained in the PC-

I, Three-Year Rolling Budgets (MTBF) and

the Annual Budget. Procedures for budget

preparation need to be redesigned to reflect

the schedule of work stated in the approved

PC-Is.

Technical assistance should be obtained to

hone systems and procedures and develop

institutional capacity and staff capability.

Indicator 4 - The country has a functional normative/regulatory body

Many countries, including the most advanced, do not have such a body at the central level

4 (a) The status and basis for the regulatory authority is

covered in the legislative and regulatory framework

This needs to be expedited.

4 (c) The body’s organisation, funding, staffing and level

of independence and authority to exercise its duties

should be sufficient and consistent with the

responsibilities

A detailed study should be undertaken to

determine the need for resources (human and

financial) to fulfil the responsibilities specified

by the Ordinance for the PPRA. This should

also include the need for capacity development

both internally and for all procuring agencies.

53


OECD – DAC




4 (d) Separation and clarity of responsibilities to avoid

conflict of interest

The overlap between the PPRA and the PEC

should be clarified through appropriate

amendment of the PEC regulations.

Indicator 5 - Existence of Institutional Development Capacity

This is an important aspect, and it is expected that donor support will be provided for participating

countries

5 (a) (b) The country has a system for collecting and

disseminating procurement information, including

tender invitations, requests for proposals, contract

award information and for

monitoring national procurement statistics

The existing system should be expanded

initially to capture the totality of information

from advertising for EOI or Pre-Qualification

to the award of contracts and then

subsequently to collect information for

monitoring procurement performance.

5 (c) (d) A sustainable strategy and training capacity exists

to provide training, advice and assistance to develop

the capacity of government and private sector

participants to understand the rules and regulations

and how they should be implemented

Quality control standards are disseminated and used

to evaluate staff performance and address capacity

development issues

A phased needs assessment should be

conducted and a training plan developed. The

proposed establishment of the Pakistan

Institute for Procurement Management should

be expanded to also include provision for the

development of private sector capacity in

procurement. In the event of resource

constraint then capacity should be created

within existing public sector institutions.

The existing performance systems and reports

should be evaluated, and, if required modified

and linked to a staff development programme

which also needs to be developed.

Quality control standards need to be

developed to ensure measurement of

performance in the procurement arena.

PILLAR III Procurement Operations and Market Practices

Indicator 6 - The country’s procurement operations and practices are efficient

The Bank will also rely on its assessment of the capacity of the executing agencies of the pilot projects

6 (a) (d) Level of procurement competence in

government officials in the entity is

commensurate with their procurement

responsibilities, and there are provisions for

delegating authority to others who have the

capacity to exercise responsibilities

A capacity assessment of all persons engaged in

procurement should be undertaken. Based on this

a plan for career development should be prepared

which (i) creates a specialist cadre for

procurement specialists, (ii) provides a planned

training programme for providing skill for

different levels of procurement staff, and (iii) ,

provides detailed job descriptions, quality

assurance standards and market-based salaries.

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6 (b) The procurement training and information

programs for government officials and for

private sector participants are consistent with

demand

The existing training programme of the PPRA is

based on the perceived demands in a state of

vacuum. What is required is a training

programme developed on the bases of a needs

awareness programme linked to a career path.

This should be undertaken at the earliest to

consolidate on the progress which has been made

to date.

6 (c) There are established norms for the

safekeeping of records and documents related

to transactions and contract management

The existing system should be evaluated with

respect to security and access and, if needed,

modified.

Indicator 7 – Functionality of the public procurement market

7 (a) to (d) There are effective mechanisms for

partnerships between the public and private

sector, they are well organised, can access the

market with impediment and there are clear

rules of engagement both in domestic and

international market

Develop a stated policy and put into place

mechanisms which facilitate private sector

participation.

Indicator 8 – Existence of contract administration and dispute resolution

Critical indicator for open competition and transparency of the country systems

8 (a) Procedures are clearly defined for undertaking

contract administration responsibilities that

include inspection and acceptance procedures,

quality control procedures, and methods to

review and issue amendments in a timely

manner

As part of the development of Institutional

capacity detailed job descriptions and process and

procedures manuals should be developed for each

agency considering its specific needs

8 (b) Contracts include dispute resolution

mechanisms that provide for an efficient and

fair process to resolve disputes arising during

the performance of the contract

A wider mechanism needs to be resolved which

fast-tracks this. This should be developed and

specified in the contracts, guidelines, manuals

and handbooks. The system should contain a

two-tier system at the administrative level

followed by recourse to arbitration and litigation,

if necessary.

8 (c) Procedures exist to enforce the outcome of the

dispute resolution process

These should be developed such that they are

equitable to both parties to the dispute.

PILLAR IV Integrity and Transparency of the Public Procurement System

Indicator 9 – The country has effective control and audit systems

Further improvements would be part of the action plan of corrective measures to be implemented during the

implementation of the pilot projects

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9 (a) A legal framework, organisation, policy and

procedures for an internal and external control

and audit of public procurement operations are

in place to provide a functioning control

framework

Internal audit is one of the weakest linkages in

the public sector governance arena. A specialist

cadre of internal auditors needs to be developed

within the Finance Division staff separate from

the Auditor General’s Office who should be

trained specifically in procurement audit and

performance measurement techniques.

9 (b) Existence of follow-up on findings and

recommendations provide an environment that

fosters compliance

A Management Information System needs to be

developed and internal redressal mechanisms

developed.

9 (c) to (e) Internal control systems provides timely

information for management action, allow

performance audits to be conducted and

auditors are sufficiently informed to conduct

quality audits that contribute to compliance

A Management Information System needs to be

developed.

Specialist Auditors should be appointed and

trained in Procurement Audits and Performance

Measurement.

Indicator 10 – Efficiency of appeals mechanism

This is a critical indicator requiring a “3”rating for all its components

10 (a) Decisions are deliberated on the basis of

available information, and the final decision

can be reviewed and ruled upon by a body (or

authority) with enforcement capacity under

the law

Mechanisms for these should be designed and

made operational.

10 (b) The complaint review system has the capacity

to handle complaints efficiently and a means

to enforce the remedy imposed

10 (c) The system operates in a fair manner, with

outcomes of decisions balanced and justified

on the basis of available information

10 (d) Decisions are published and made available to

all interested parties and to the public

10 (e) Decisions are published and made available to

all interested parties and to the public

10 (f) The system ensures that the complaint review

body has full authority and independence for

resolution of complaints

Indicator 11 – Degree of Access to Information

The Bank will support the development of E-gp and E-procurement systems and platforms in general

11 (a) Information is published and distributed

through available media with support from IT

when feasible

This should be developed to ensure that

information is carried on the website of both the

procuring agency and PPRA.

Indicator 12 – The country has ethics and anticorruption measures in place

Critical indicator requiring a top rating for most of its aspects

12 (a) to (g) The legal and regulatory framework for Existing laws should be amended or effective

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procurement includes provisions addressing

corruption, fraud, conflict of interest, and

unethical behaviour and sets out the actions

that can be taken with regard to such

behaviour ; defines responsibilities,

accountabilities, and penalties for those found

to have engaged in fraudulent or corrupt

practices; enforcement of rulings is evidenced;

embedded detection of fraud and corruption in

procurement; ensures stakeholder support for

creation of efficient procurement based on

ethics and integrity; embeds secure reporting

methods for fraud, corruption and unethical

behaviour; and has Codes of Conduct/Codes

of Ethics for participants that are involved in

aspects of the public financial management

systems that also provide for disclosure for

those in decision making positions

amendments integrated into the PPRA, the rules,

Guidelines, Handbooks and Manuals. This

should be contracted out to consultants with

demonstrated experience of drafting procurement

legislation which should then be peer reviewed

by international agencies.

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APPENDIX- I

METHODOLOGY

1. The OECD-DAC Baseline Procurement Assessment Report provides an assessment

of the existing public procurement procedures against the following four key areas (pillars)

that have been identified as a way of organising the basic elements of a national/sub-national

public procurement system. Under the pillars, 12 indicators have been defined.

Pillar I. Legislative and Regulatory Framework

Procurement legislative and regulatory framework complies with applicable

obligations deriving from national and international requirements.

Availability of implementing regulations, documentation and tools to support

implementation.

Pillar II. Institutional Framework and Management Capacity

Degree of mainstreaming and integration into Public Financial Management

Systems.

Existence of a Functional Management/Regulatory Body.

Existence of Institutional Development Capacity.

Pillar III. Procurement Operations and Market Practices

Efficiency of Procurement Operations and Practices.

Functionality of the Public Procurement Market.

Existence of Contract Administration and Dispute Resolution Provisions.

Pillar IV. The Integrity of the Public Procurement System

Existence of Effective Control and Audit Systems.

Existence and Efficiency of the Appeals Mechanism.

Degree of Access to Information.

Existence of Ethics and Anti-corruption Measures.

2. The study is based on interviews and desk reviews of government legislation and

documents, and comprises, but is not be limited to, the following tasks:

a. Studying the existing reports on Public Procurement Systems of the Government

of Pakistan.

b. Examining the body of laws, rules, regulations, codes, manuals and guidelines

used by the public sector entities at the Federal level, with particular emphasis on

the overlapping Jurisdictions of the PPRA and the Pakistan Engineering Council

(PEC).

c. Conducting interviews with key stakeholders, not limited to:

i. Managing Director and staff of the Public Procurement Regulatory

Authority

ii. Concerned officials of the Cabinet, Finance and Planning Divisions

responsible for policy making

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iii. Concerned officials of the Finance Division and of the Auditor General's

Office responsible for oversight and audit (financial and performance) of the

procurement function

iv. Concerned officials of a sample (not more than two from each type) of the

line Ministries or Divisions, autonomous bodies and public sector

corporations of the Federal Government responsible for regulating or

developing internal procedures and systems.

d. Undertaking an analysis of the existing framework, legislations, systems and

procedures to determine the current status of procurement vis-a-vis the BUs

essentially using the OECDDAC methodology and also responding to the issues

highlighted in the World Bank's methodology.

e. Suggesting remedies.