Islamabad Airport outsourcing: PPRA board to consider aviation ministry’s proposal today

ISLAMABAD: The Public Procurement Regulatory Authority (PPRA) has convened a special meeting of its board on Wednesday (June 26) to consider a proposal of Ministry of Aviation in which the latter has sought exemption from Rules 36 and 40 of PPRA Ordinance, 2002 for second round of financial bidding to outsource Islamabad Airport as PPP project, well-informed sources Finance Ministry told Business Recorder.

The Ministry of Aviation in a letter of June 21, 2024, requested PPRA to place the matter before its Board to recommend an exemption from the applicability of Rule 36 of Public Procurement (PP) Rules, 2004, allowing second round of financial bidding of the PPP project in terms of Section 21 of the PPRA Ordinance, 2002, or advise any other lawful course of action in the matter.

In accordance with the details provided by the Ministry of Aviation, a meeting was held in December, 2022 chaired by the Prime Minister, wherein, it was decided to outsource operations and management of airports of Pakistan under the Public Private Partnership Act 2017 (P3A Act). In this regard Islamabad, Karachi and Lahore airports were identified for outsourcing in the first phase. Subsequently, International Finance Corporation (IFC) was appointed as Transaction Advisor under the P3A Act. In order to guide and steer this process a Steering Committee was constituted by the Prime Minister on June 14, 2023.

IFC informs body: ‘Outsourcing of Islamabad Airport: healthy competition likely on 15 July’

The Steering Committee held ten meetings in which, inter alia, project scope and state support required for attracting investment wherein it was also decided that Islamabad airport project shall be taken as the first project to be outsourced while Karachi and Lahore airports would also be taken-up subsequently. After required due diligence and obtaining approval from ECNEC, Islamabad Airport outsourcing project was advertised for international competitive bidding specifying July 15, 2024 as the last date for the submission of bids as well as opening of technical bids.

The Ministry had adopted Single Stage Two Envelope procedure in terms of rule 36 of Public Procurement Rules, 2004. The technical proposals shall be opened on July 15, 2024.

During Steering Committee meeting held on June 13, 2024, it was suggested that a second round of bidding may be proposed to obtain full value for this concession and minimize the chances of rebidding. The proposed second round of financial bidding is not expressly provided under the Public Procurement Rules, but it does not run contrary to transparency and competitive principles of procurement. The Steering Committee as a result of detailed deliberations and discussions gave the following decision: “Steering Committee approved Second Round of Financial Bidding as proposed with the modification that in the second round only top two highest bidders of the first round will be asked to participate and submit their revised financial bids. Pakistan CAA (PCAA) will announce the reference price before the start of the second round; and if none of the two parties participates in the second round, their bids in the first round shall be considered as final offers from their side,”.

According to PPRA, the provision for second round financial bidding does not exist in Public Procurement Rules, 2004, however, if the procuring agency chooses to adopt second round of financial bidding, it will ultimately change the substance of the bid, submitted by the bidders in their original financial proposal(s), which is contrary to Rule 40 of the Public Procurement Rules, 2004.

Relevant rules are as follows: 40.limitation on negotiations. - (1) Without clanging the cost and scope of work or services, the procuring agency may negotiate with the successful bidder (with a view to streamlining the work or task execution, at the time of contract finalization) on methodology, work plan, staffing and special conditions of the contract; and (2) Authority may determine the extent and types of negotiations on procurement by regulations.

Foregoing in view, PPRA has placed the request of Ministry of Aviation for grant of exemption under Section 21 of the PPRA Ordinance, 2002 for the consideration of the PRPA Board, from the applicability of Rule 36 & 40 of public Procurement Rules, 2004 allowing second round of financial bidding of the PPP project for outsourcing Islamabad Airport.

Copyright Business Recorder, 2024