Advised by World Bank, foreign consultant: Govt all set to overhaul PPRA Rules

ISLAMABAD: The federal government is set to overhaul PPRA Rules in the light of recommendations of an international consultant and World Bank alluding to current rules as complex, ambiguous and lacking transparency, well-informed sources told Business Recorder.

These proposals came under hectic debate at the 81st special meeting of the PPRA Board on September 26, 2024, under the chairmanship of the Finance Secretary, ie, Chairman PPRA Board which was also attended by the World Bank procurement team and international consultant Peter Trepte.

The MD (PPRA) briefed the participants, stating that the purpose of the meeting was to hold a stakeholder consultation with the international procurement consultant, who is currently reviewing PPRA’s procurement regulatory framework.

Govt asks PPRA to ‘overhaul’ its rules

Further that the consultant also intended to have feedback from the Board members and heads of procuring agencies.

Peter, International Consultant (Procurement Lawyer), briefed the Board on his preliminary review of the procurement regulatory framework.

He acknowledged that PPRA rules are generally sound, since those are developed in line with UN Commission on International Trade Law (UNCITRAL) model law, however they lack sufficient details, which creates ambiguity. He informed the Board that the review exercise is being conducted on the basis of Methodology for Assessment Procurement System (MAPS) framework, an internationally recognized approach.

Peter Trepte highlighted another significant issue related to lack of responsibility and an inefficient check and balance system within procurement regulatory framework.

He said that the existing framework does not clearly specify who is responsible for procurement planning, development of specifications, bid preparation, bid evaluation, contract management and there is no specific procurement cell in any procuring agency. This lack of defined responsibility hampers accountability. Functions of the Authority are also required to be extended further.

Regarding Third Party Validation (TPV), the consultant opined that adding more layers may not address the underlying issues. Instead, the focus should be on ensuring transparency and accountability by proposing the most optimal solution.

According to the UNCITRAL model law, there is a two-tiered grievance redressal mechanism. At the first level, the procuring agency is responsible for addressing grievances, while at the second level, the Authority reviews the decision of the Grievance Redressal Committee (GRC).

The consultant noted that since the Authority is responsible for writing policies and guidelines, bidders lack confidence in the Authority’s grievance review process, as it is not perceived as fully independent. He recommended that the Authority should include individuals from outside the Authority for grievance reviews to ensure impartiality. However, he suggested that the administrative process should still be supported by the PPRA.

The consultant further stated that a delicate balance is required in the procurement processes between ensuring oversight and avoiding unnecessary complexity. Introducing third-party evaluations can risk diffusing responsibility, as additional layers may blur accountability.

Therefore, it is essential to focus on assigning clear responsibility and enhancing the capabilities of procuring agencies. The Australian model, featuring both a Probity Advisor and a Probity Auditor, provides a framework for maintaining accountability without direct interference.

The Probity Advisor takes on a consultative role, offering guidance when requested, while the Probity Auditor serves as an independent observer, reviewing the process and reporting on its fairness without offering advice. While effective for high-value projects, this model may require significant resources and might not be practical for smaller-scale procurement.

A challenge with third-party evaluations is the potential for conflict between the external evaluator and the procuring agency, especially if the final product doesn’t meet the agency’s expectations. This underscores the importance of having highly skilled evaluators with expertise relevant to the project, ensuring that assessments are accurate and aligned with the agency’s goals.

The idea that third-party evaluations should be conducted by experts is particularly crucial, as it ensures that necessary expertise are applied without undermining the agency’s core responsibilities. This approach is especially valuable in high-stakes projects where mistakes can have significant consequences.

The Consultant further highlighted that blacklisting/debarment under existing provisions is conducted by the procuring agency, whereas, consultant proposed that it should be conducted centrally by the Authority.

Centralizing blacklisting and debarment would help minimize the risk of inconsistent interpretations, abuse of authority, and discrepancies in decision-making across different agencies. However, the consultant also acknowledged the value of having arbitration provisions in place for cases of contract failure, providing a fair opportunity to the parties for resolving disputes.

Chairman PPRA Board reinforced the consultant’s remarks on the need for third-party validation when there are performance issues or evidence of discrepancies. He emphasized that such checks and balances could enhance transparency, ensure value for money, and improve fairness in contract management. He also proposed simplifying the grievance redressal mechanism by moving from a two-tiered system to a single-tiered one, ideally managed by an entity outside the ministry, to reduce delays.

Another Board member highlighted concerns raised by the honorable Prime Minister about the impartiality of the Grievance Redressal Committee, citing potential conflicts of interest. They agreed that the GRC should operate independently of the procuring agency.

The member also pointed out a gap in the procurement process within ministries, where civil servants rather than procurement specialists are tasked with managing procurement, which could affect the efficiency and integrity of the process.

Additionally, the issue was raised regarding firms that have been blacklisted or debarred by federal procuring agencies but are still eligible to secure contracts at the provincial level, highlighting inconsistencies in enforcement across different government levels.

In response to the suggestion of a single-tiered Grievance Redressal Committee, the consultant recommended maintaining the two-tiered approach, provided that specific timelines are prescribed to prevent delays. Regarding third-party validation (TPV), the consultant emphasized that it should focus on creating checks and balances, primarily for high-value projects or in cases where discrepancies are evident.

The consultant also pointed out a critical gap in the procurement process including lack of specific tools and data for effective monitoring. This shortfall needs to be addressed to improve oversight and ensure better procurement outcomes.

One of the members suggested that third-party evaluation (TPE) could be applied in cases of complex procurements, particularly when the procuring agency lacks the necessary expertise. In such cases, TPE would be used to review the procurement process in line with established standards.

Additionally, a representative from the World Bank emphasized the importance of stakeholder consultation, noting that this aspect should also be factored in when determining timelines to develop procurement framework.

The Board decided that instead of making piecemeal changes to the existing framework, a completely new set of rules should be developed, with only minimal amendments to the original Ordinance. The World Bank will engage a local lawyer to assist in the development of draft procurement regulatory framework.

Copyright Business Recorder, 2024