Transparency International Pakistan) has accused Pakistan State Oil (PSO) of illegally awarding security contract to M/s FIST Security bypassing Public Procurement Rules.
In a letter written by Transparency International Pakistan Chairman Adil Gilani to Chairman Public Accounts Committee, Registrar Supreme Court, Auditor General, Managing Director, PPRA and Managing Director PSO, Transparency International Pakistan received a complaint alleging that PSO without public tendering, has awarded contract for security of PSO installations, by terminating ongoing contracts with 5-6 firms, to a single firm, M/s FIST Security at Rs 121 million.
According to the letter, the complainant has also revealed that the procurement was steered by the new General Manager, Colonel Fazal Abbas (Retd) who was reported earlier by Transparency International Pakistan through its letter of December 14, 2009, as violating the rules as he was appointed at the age of 57 years whereas the rule of PSO is max age limit of 55 years.
It is also reported that Colonel Fazal Abbas (Retd) was managing his family owned security company in the name of Hifazat Security, while he was in employment of DHA, and BP. It has been reported that the running contracts of 5-6 security companies were for Rs 73 million per year, whereas the new contract awarded without tender to M/s FIST Security is for Rs 121 million, Rs 48 million more than the previous contracts. The pleas taken by the new GM was that 600 ex armed forces personnel shall be hired by PSO due to deteriorating law and order situation.
The GM's proposal was reportedly objected to by the Executive Director supply and chain on April 13, 2010 on the grounds that the change in the security company happened overnight. He also correctly pointed out that the process in awarding the new contract was non-transparent, and placed an extra burden of Rs 48 million on PSO.
"This complaint in short was also sent to you as one of many complaints in the Transparency International Pakistan letter dated August 16, 2010, which has not been responded by PSO," said Gilani. If the complaint is found to be correct, the contractor has to be dealt as per Rule 2 (f), "corrupt and fraudulent practices" and rule 7 integrity pact, where a recovery for collusive practice of 10 times the loss, ie Rs 480 million can be made from contractor.
Transparency International Pakistan also quoted a judgement announced by the Supreme Court on April 28, 2010, in a case relating to award of multibillion dollar LNG contract to GDF-Suez, in which the court declared that it is the duty of the court to ensure the application of Public Procurement Rules 2004:
"Here we may observe that it is duty of the court to ensure that the Public Procurement Regulatory Authority Ordinance 2002 read with the Public Procurement Rules 2004 are adhered strictly to exhibit transparency. It is universally recognised principle that such type of transactions must be made in transparent manner for the satisfaction of the people, who are the virtual owners of the national exchequer, which is being invested in these projects." Following rules are violated if the contract is awarded without public tendering.
4. Principles of procurements.- Procuring agencies, while engaging in procurements, shall ensure that the procurements are conducted in a fair and transparent manner, the object of procurement brings value for money to the agency and the procurement process is efficient and economical.
8. Procurement planning Within one year of commencement of these rules, all procuring agencies shall devise a mechanism, for planning in detail for all proposed procurements with the object of realistically determining the requirements of the procuring agency, within its available resources, delivery time or completion date and benefits that are likely to accrue to the procuring agency in future.
12. Methods of advertisement (2) All procurement opportunities over two million rupees should be advertised on the Authority's website as well as in other print media or newspapers having wide circulation. The advertisement in the newspapers shall principally appear in at least two national dailies, one in English and the other in Urdu.
20. Principal method of procurement Save as otherwise provided hereinafter, the procuring agencies shall use open competitive bidding as the principal method of procurement for the procurement of goods, services and works.
21. Open competitive bidding Subject to the provisions of rules 22 to 37 the procuring agencies shall engage in open competitive bidding if the cost of the object to be procured is more than the prescribed financial limit which is applicable under sub-clause (i) of clause (b) of rule 42.
All procurements are to be made in accordance with these rules since June 2004, and violation of any of these 50 rules may render such procurement as mis-procurement. Public Procurement Rules, 2004 has eliminated all discretion's in procurement process and avenues of corrupt practices defined in rule No 2.
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