Report No. 48653-PK Pakistan Federal Procurement Baseline Indicator Systems Assessment June 2009 Government of Pakistan and Development Partners UK's Department The European for International Government of Pakistan The World Bank Commission Development Asian Development Bank 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 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 i 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. ii 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 Maximum Achieved Pillars Rating Rating PILLAR I: Legislative and Regulatory Framework 3.00 1.99 3.00 1.92 PILLAR II: Institutional Framework and Management Capacity 3.00 1.67 PILLAR III: Procurement Operations and Market Practices 3.00 1.52 PILLAR IV: Integrity and Transparency of the Public Procurement System PILLAR I Legislative and Regulatory Framework 3.00 2.50 2.00 1.50 1.00 PILLAR IV Integrity and 0.50 PILLAR II Institutional Transparency of the 0.00 Framework and Public Procurement Management Capacity System PILLAR III Procurement Operations and Market Practices Maximum Federal iii 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. iv 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. v 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. 1 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 1 Public procurement legislative and regulatory framework 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 3 The public procurement system is mainstreamed and well and Management Capacity 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 6 The country's procurement operations and practices are and Market Practices 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. 2 Pillar Indicator 8 Existence of contract administration and dispute resolution provisions Sub-Indicators 3 IV Integrity and Transparency 9 The country has effective control and audit systems of the Public Procurement System 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. 3 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. 4 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 Maximu Achieved Pillars Rating m Rating PILLAR I: Legislative and Regulatory Framework 3.00 1.99 3.00 1.92 PILLAR II: Institutional Framework and Management Capacity 3.00 1.67 PILLAR III: Procurement Operations and Market Practices 3.00 1.52 PILLAR IV Integrity and Transparency of the Public Procurement System 18. Graphically, this is as follows: Figure 1: Pakistan CPS vs OECD-DAC BLIs PILLAR I Legislative and Regulatory Framework 3.00 2.50 2.00 1.50 1.00 PILLAR IV Integrity and 0.50 PILLAR II Institutional Transparency of the 0.00 Framework and Public Procurement Management Capacity System PILLAR III Procurement Operations and Market Practices Maximum Federal 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) 5 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 Current Status Rationale for Score condition Ranking 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. 6 Sub-indicator and ranking Current Status Rationale for Score condition Ranking of the legislative and regulatory framework consists of the PPRA issued on 15th May 2002 framework. Ordinance 2002 and the PPR lapsed after 90 days of 2004. The necessary supporting its issue, but the 17th The legislative and regulatory 3 sub-legislation exists partially as Amendment to the body of norms complies with all drafts which have yet to be Constitution validated the following conditions: approved. However, for the this on 31 December procurement of works, the rules 2003. (a) Is adequately recorded and forms issued by the PEC are and organised hierarchically generally used. This latter has (laws, decrees, regulations, the force of law through a The content of the PPR procedures,) and precedence decision of ECNEC notified by indicates that it is largely is clearly established. the Planning Commission under applicable to only the (b) All laws and regulations the authority of the PPRA. procurement of goods and works. There is no are published and easily explicit mention of accessible to the public at no services (including cost. The PPR 2004 is applicable to all consulting services). agencies and organisations of the (c) It covers goods, works, Federal Government. and services (including consulting services) for all The hierarchy of legislation is unclear as procurement using national the Draft Regulations budget funds. The Rules are applicable to all state that they supersede purchases made from public the Rules in a conflict The legislative and regulatory 2 funds. situation. body of norms complies with (a) plus one of the above conditions. The amended legislation and the The legislative and regulatory 1 regulatory framework is work in progress, but is nevertheless body of norms complies with accessible on the PPRA website. (a) of the above conditions. The system does not 0 substantially comply with any of the above conditions. . 1 (b) Procurement Methods While all conditions are The existing legislation specifies 2.0 met, they are not clearly various alternative methods for The legal framework meets all 3 spelled out and require procurement, but does not specify the following conditions: some the applicability of methods to rethinking to provide clarity and to specific levels of procurement. (a) Allowable procurement limit discretionary methods are established decision making to a unambiguously at an minimum acceptable appropriate hierarchical level The default procurement is a level, which need to be along with the associated competitive process. specified. conditions under which each method may be used, including a requirement for There is a restriction on approval by an official that is fragmenting procurements held accountable. planned for the year unless 7 Sub-indicator and ranking Current Status Rationale for Score condition Ranking (b) Competitive procurement specifically authorised by is the default method of public competent authority (Federal procurement. Government or PPRA the regulating body) Rule 9. (c) Fractioning of contracts to limit competition is prohibited. (d) Appropriate standards for Appropriate Standards are international competitive specified for ICB, in terms of bid tendering are specified and are response time etc., these are incompatible with international consistent with international standards. standards. The legal framework meets the 2 conditions of (a) and (b) plus Defined basis for the one of the remaining procurement method, if other conditions. than open competition is spelled out, but could be improved. The legal framework meets the 1 conditions of (a) and (b). Negotiated procedures and direct The legal framework fails to 0 purchasing is permitted only substantially comply with any under well-defined and justified three of the conditions a) circumstance, subject to controls. through d). 1 (c) Advertising Rules and Time Procurements worth more than The Rules do not require 3.0 Limits PKR 100,000 to be advertised on mandatory publication. PPRA webpage and may be Rule 437 clearly The legal framework meets the 3 placed in the print media. stipulates that on following conditions : completion of contract award, "shall make all (a) Requires that procurement documents related to opportunities other than sole Procurements worth more than evaluation of bids and source or price quotations be PKR 2,000,000 should be award of contract public. publicly advertised. advertised on PPRA webpage and placed in at least two (b) Publication of opportunities nationally circulated newspapers, provides sufficient time, one each in English and Urdu. If consistent with the method, the procuring agency has a nature and complexity of website then the advertisement procurement, for potential should also be placed there. bidders to obtain documents and respond to the advertisement. Such timeframes are extended when international competition Advertisements should contain is sought. all the necessary information and be available until the opening (c) Publication of open tenders is date for the bid. In situations mandated in at least a newspaper where publication of such of wide national circulation or in advertisements or notices has a unique Internet official site, occurred in both electronic and where all public procurement print media, the response time 8 Sub-indicator and ranking Current Status Rationale for Score condition Ranking opportunities are posted, that is shall be calculated from the day easily accessible. of its first publication in the newspapers. (d) Content of publication includes sufficient information to enable potential bidders to determine their ability and Under no circumstances the response time shall be less than interest in bidding. fifteen days for national competitive bidding and thirty The legal framework meets the 2 days for international competitive conditions of (a) and (b) plus bidding from the date of one of the remaining conditions. publication of advertisement or notice. The legal framework meets the 1 conditions of (a) plus one of the remaining conditions. The legal framework only meets 0 the conditions of (a) above. 1 (d) Rules of Participation Firms and individuals from all While the PPR 2004 does 1.0 countries not prohibited by law not distinguish between The legal framework meets the 3 and meeting defined criteria are firms of different following conditions: allowed to compete without any nationalities, there prejudice [Rule 24(1)]. appears to be an implicit (a) Establishes that participation understanding that this of any contractor or supplier or also extends to a lack of group of suppliers or contractors distinction between is based on qualification or in Preference to domestic bidders is domestic organisation. accordance with international allowed through This may not necessarily agreements; requires the use of S.R.O.827(I)/2001 of 3rd be true. What the pass/fail basis for determining December 2001. The amount of legislation should include qualifications to extent possible; domestic price preferential is left is a statement which limits domestic price flexible to the discretion of explicitly excludes any preferential, if allowed, to a procuring agency with ceilings distinction between reasonable amount (e.g.15% or (15 to 25 percent) established on public and private sector less); and requires justification the basis of value addition entities. for set asides that limit ranging from 15 percent to over competition. 30 percent [Rule 24(2)]. (b) Ensures that registration if In practice, however, required does not constitute a public sector agencies, barrier to participation in tenders The law is silent on the status of more often than not, and does not require mandatory registration of firms before award contracts to public association with other firms. participation in the tendering sector entities either process. through sole sourcing or (c) Provides for exclusions for competitive bidding. criminal or corrupt activities, Examples are rife in the administrative debarment under construction industry the law subject to due process or where the bulk of large prohibition of commercial scale infrastructure relations. projects have been given 9 Sub-indicator and ranking Current Status Rationale for Score condition Ranking (d) Establishes rules for the to public sector participation of government contractors at a premium owned enterprises that promote price in the NHA, CDA, fair competition. PQA, etc. A similar situation exists in the consulting services sub- sector. Most design contracts are awarded to NESPAK at premia The law and regulations meet 2 ranging from 100 the conditions of (a) and (b) plus percent to 400 percent one of the remaining conditions. over the rates quoted by private consultants17. The law and regulations meet 1 Instances of cartelisation the conditions of (a) plus one of have been created by the remaining conditions. WAPDA and its entities The law and regulations do not 0 from among private meet the conditions of (a) sector suppliers. To through (d) above. 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. 10 Sub-indicator and ranking Current Status Rationale for Score condition Ranking those not registered with the PEC are debarred from overall participation. 1 (e) Tender documentation and For competitive bidding, whether Each of the conditions in 3.0 technical specifications. open or limited, the bidding the first conditionality is documents shall include the fulfilled. The legal framework meets the 3 following, namely:- following conditions: (a) invitation to bid; (a) Establishes the minimum content of the tender documents (b) instructions to bidders; and requires that content is relevant and sufficient for (c) form of bid; tenderers to be able to respond to (d) form of contract; the requirement. *Amended vide Cabinet Division No. 5/37/2005-M-III/Admin (b) Requires the use of neutral (PPRA), dated 13-12-2006; specifications citing (e) general or special conditions international standards when of contract; possible. (f) specifications and drawings or (c) Requires recognition of performance criteria (where standards which are equivalent applicable); when neutral specifications are not available. (g) list of goods or bill of quantities (where applicable); The legal framework 2 substantially meets the (h) delivery time or completion conditions of (a) plus one of the schedule; remaining conditions. (i) qualification criteria (where The legal framework meets the 1 applicable); conditions of (a). (j) bid evaluation criteria; The content of the bidding 0 (k) format of all securities documents is totally or largely required (where applicable); left at the discretion of the procuring entity. (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. 1 (f) Tender Evaluation and Award Procuring agencies are bound to It is only in the draft 2.0 Criteria. formulate an appropriate regulations for the public evaluation criterion listing all the procurement of relevant information against consulting services that 11 Sub-indicator and ranking Current Status Rationale for Score condition Ranking The legal framework mandates 3 which a bid is to be evaluated.adequate importance is that: given to quality. However, the issue of (a) The evaluation criteria are price appears to be a grey relevant to the decision, and Selection is made according to area and needs to be precisely specified in advance in the criteria and in the manner elucidated further. the tender documents so that the given in the bid documents by award decision is made solely on the procuring agency. the basis of the criteria stated in the tender documents. Oversight on inclusion of (b) Criteria not evaluated in evaluation criteria in the bidding monetary terms are evaluated on documents is considered as mis- a pass/fail basis to the extent procurement and is not allowed. 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; The legal framework covers the 2 conditions of (a) and (b) plus one of the remaining conditions. The legal frame work covers (a) 1 but does not fully cover the other conditions. The legal framework does not 0 adequately address any of the conditions (a) through (d) above. 1 (g) Submission, receipt and opening Bids are required to be opened at Meets all conditions 3.0 of tenders specified time and place In stated in criterion 1. specified form as given in the bid The legal framework provides 3 documents by each procuring for the following conditions: agency. (a) Public opening of tenders in Opening of tender documents a defined and regulated immediately after receipt or time proceeding immediately specified thereafter at specified following the closing date for place in front of all bidders and respondents or their authorised 12 Sub-indicator and ranking Current Status Rationale for Score condition Ranking bid submission. representatives is mandatory. (b) Records of proceedings for bid openings are retained and available for review. During the bid opening the name of the bidder and total amount of (c) Security and confidentiality each bid, and of any alternative of bids is maintained prior to bid bids if they have been requested opening and disclosure of or permitted, shall be read aloud specific sensitive information (and posted online when during debriefing is prohibited. electronic bidding is used) and recorded when opened and a (d) The modality of submitting copy of this record shall be tenders and receipt by the promptly sent to all bidders who government is well defined to submitted bids in time. avoid unnecessary rejection of tenders. The legal framework provides 2 At the end of the proceedings of for (a) and (b) plus one of the bid opening the report (record of remaining conditions. proceedings) to be signed by all bidders present. The legal framework provides 1 for (a) plus one of the remaining conditions. There is no requirement in the 0 legal framework for public opening of tenders. 1 (h) Complaints Where a bidder feels aggrieved by Only the first level 1.0 any act of procurement agency, criteria of the conditions The legal framework provides 3 the bidder may file a written is fulfilled. for the following: complaint within 15 days of publication of the bidding report. (a) The right to review for participants in a procurement process. The procuring agency is bound to (b) Provisions to respond to a constitute a committee to review request for review at the the complaint and give its procuring/agency level with decision within 15 days of the administrative review by another receipt of the complaint. body independent from the procuring agency that has the authority to grant remedies and includes the right for judicial However there is no second level review. of review other than filing a complaint in the court of law and (c) Establishes the matters that no mechanism has been notified are subject to review. for formation of an administrative review body. (d) Establishes timeframes for 13 Sub-indicator and ranking Current Status Rationale for Score condition Ranking issuance of decisions by the procuring agency and the administrative review body. The legal framework provides 2 for (a) and (b) plus one of the remaining conditions. The legal framework provides 1 for (a) plus one of the remaining conditions. The right for review of the 0 proper application of the procurement process is not provided in the legal framework. 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 Sub-indicator and ranking Current Status Rationale for Score condition Ranking 2 (a) Implementing regulation that The rules require improvement. The regulations exist. 1.0 provide defined processes and Supporting Guidelines and No system of regular procedures not included in higher-level Handbooks need to be review or updating exists. Responsibility legislation. developed. A system needs to for updating is unclear. be established which ensures - There are regulations that 3 that these are up-dated from time supplement and detail the to time to respond to changes in provisions of the procurement law the procurement market. The entire body of that meet the following legislation including requirements: rules, regulations, guidelines, handbooks, (a) They are clear, comprehensive The existing PEC regulations manuals, standard bidding documents and and consolidated as a set of need to be revised to reflect standardised contracts regulations available in a single changes in the FIDIC need either to be revised and accessible place regulations. or developed. (b) They are updated regularly; 14 Sub-indicator and ranking Current Status Rationale for Score condition Ranking (c) The responsibility for maintenance is defined. - The regulations meet the 2 conditions of (a) plus one of the remaining conditions. - The regulations exist but there 1 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. - There are no regulations or the 0 existing ones do not meet substantially any of the requirements listed above. 2 (b) Model Tender documents for Other than the documents Some model documents 1.5 goods works and services: developed by the PEC, standard exist. These require revisions to reflect latest bidding documents do not exist. changes in the These are limited to only works internationally accepted and engineering services. ones. (a) There are model invitation 3 and tender documents provided for use for a wide range of goods, works and services Existing documents (for instance As the current situation procured by government those specified in the superseded is between the second agencies; Purchase Manual and the and third criteria, the score allocation is the Buildings and Roads Code) can (b) There is a standard and average of the two. also be used where the Procuring mandatory set of clauses or Agency has not developed new templates that are reflective of ones. 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. - Model documents and a 2 minimum set of clauses or templates are available, but the use of such documents is not mandatory or regulated. The 15 Sub-indicator and ranking Current Status Rationale for Score condition Ranking documents are not updated regularly. - Model documents are not 1 available, but a set of mandatory clauses is established for inclusion in tender documents. - There are no model documents 0 and the procuring entities develop their own documents for with little or no guidance. 2 (c) Procedures for pre-qualification: The PPR 2004 provide detailed Criterion 1 is fully 3.0 procedures for pre-qualification complied with. of bidders, as well as guidance on when to apply these - Procedures exist that define pre- 3 procedures. 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. - Procedures exist that cover (a) 2 plus one of the remaining conditions. - Procedures exist that cover (a). 1 - Procedures for the application of 0 pre-qualification procedures do not exist. 2 (d) Procedures suitable for contracting PPR 2004 meet all conditions The rules meet the 1.5 services or other requirements in which for goods and works, are weak requirements of criteria 1 (a) partially, but are technical capacity is a key criterion: in the context of services and better than criteria 3. non-existent for consulting services. 16 Sub-indicator and ranking Current Status Rationale for Score condition Ranking - The legal framework and its 3 A rating averaging the implementing regulations provide 2nd and 3rd criteria for the following: However these are not lucidly suggesting rating has set out as no guidelines have been given. (a) Conditions under which been issued for establishing selection based exclusively on criteria. 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. - Implementing regulations meet 2 (a) above but leave (b) to the discretion of the procuring entity. - Implementing regulations leave 1 the possibility of use of technical capacity in selection but neither the law nor the regulations elaborate on the procedure. - Neither the law nor 0 implementing regulations cover this procedure 2 (e) User's guide or manual for A Manual on Standard Criterion 3 is fully 1.5 contracting entities. Operating Procedures is satisfied. Criterion 2 is satisfied partially. available on the website of PPRA, however it is only applicable to Ministry of Health (a) There is a unique procurement 3 and Population Welfare. With manual detailing all procedures only minor modifications to for the correct administration of meet specific needs this could be procurement regulations and used as the template laws. government-wide. (b) The manual is updated regularly; Each entity of the government is (c) The responsibility for preparing its own set of maintenance of the manual is guidelines and manuals therefore clearly established. creating a raft of documents There is no unique manual but 2 which will need to be there is an obligation for the harmonised subsequently. . The PPRA has assisted over 17 17 Sub-indicator and ranking Current Status Rationale for Score condition Ranking procuring agencies to have one major public sector corporations that meets conditions (b) and (c.) in developing their internal procurement procedures. Some There is no manual and no 1 of these are ready others are still obligation to have one but many in the process of finalisation. procurement agencies have an internal manual for administration of procurement. There is no manual or 0 requirement to have one. 2 (f) General Conditions of Contracts PEC documents used as standard Criterion 1 satisfied only 2.0 (GCC) for public sector contracts bidding documents do contain for works contracts. The use of the covering goods, works and services GCC which were acceptable, but documents is mandatory consistent with national requirements need revisions to bring them at through SRO and, when applicable, international par with FIDIC. 8(60)/WR/PC/2006 requirements dated the 12th February 2008 from the Planning Commission and No similar documents exist for subsequently notified as Both of the following apply: 3 the procurement of goods, Regulation 3 in August services and consulting services. 2008. a) There are GCC for the most common types of contracts and their use is mandatory. Other standard However, the PPRA website documents are referred b) The content of the GCC is hosts the SBDs from the World to, but there is no generally consistent with Bank which are used sometimes mandatory requirement internationally accepted practice. in the interim. for using these. There are GCC for the most 2 common types of contracts, consistent with international practice, but their use is not mandatory. There are GCC for the most 1 common types of contracts but they do not conform to internationally accepted practice and their use is not mandatory. There are no GCC and individual 0 agencies use the form of contract of their choice. 18 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. 19 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 Sub-indicator and ranking Current Status Rationale for Score condition Ranking 3 (a) Procurement planning integrated The PPR Rules and the The annual 2.0 into budget formulation process and Government's Budget Rules procurement plans require planning at the start of reflect the budget plans contribute to multi-year planning. ex-post facto, that is, the year, and reflection of the are modified to be planning exercise is in the synchronous with the annual budgets. Further even budget once the latter There is a regular planning 3 though multi-year planning has been presented to exercise instituted by law or exists, and a rolling Medium- and accepted by regulation that: Term Development Framework Parliament. is planned, the Annual Budgets, ˇ starts with the preparation of by and large, are prepared multiyear plans for the independently of these plans. government agencies, from However, the procurement plans which annual operating plans are are recast to be consistent with derived. budgets once the latter have been announced. ˇ followed by annual procurement plans and estimation of the associated expenditures ˇ And culminates in the annual budget formulation. ˇ Procurement plans are prepared in support of the budget planning and formulation process. The majority of procurement 2 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. Procurement plans are normally 1 prepared based on the annual and multiyear operating plans. Links with budget planning are weak and plans are not required to 20 Sub-indicator and ranking Current Status Rationale for Score condition Ranking match the budgetary allocation available before expenses are committed. There is no integrated 0 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. 3 (b) Budget law and financial Budget funds are not committed The procedures do not 1.0 procedures support timely procurement, in full at the start of the project. meet requirements in a contract execution, and payment: material way. They Finance Rules and Regulations however, fulfil Budget and financial procedures 3 permit the processing of bills in criterion 3. in place meet the requirements of time, but payments are not the following: necessarily within time owing to a multiplicity of approvals (a) Budget funds are committed required. 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. Budget and financial procedures 2 in place meet the requirements of (a) but there are no published business standards. Authorisation of payments is generally timely. Procedures in place take longer 1 than stated in (a) and conditions (b) and (c) are not generally met. 21 Sub-indicator and ranking Current Status Rationale for Score condition Ranking The procedures in place do not 0 meet the requirements in a material way. 3 (c) No initiation of Procurement In most cases requirement (a) is Criterion 2 is fulfilled. 2.0 without budget appropriation fulfilled. The system meets the following 3 requirements: However, in some cases this can (a) The law requires certification be waived by the competent of availability of funds before authority and a post-facto solicitation of tenders takes place. approval is given at the end of (b) There is a system in place the fiscal year. (e.g. paper or electronic interface between the financial Moreover, in some cases, management and the procurement without the funds in hand, the systems) that ensures procuring agencies initiate enforcement of the law. procurement process justifying tight timelines to meet, in The system meets requirement 2 particular in the last two quarters (a) but requirement (b) is not of a financial year. fully enforced due to weaknesses in the system. The system meets requirement 1 (a) only. There system does not meet 0 requirements (a) and (b). 3 (d) Systematic completion reports are PC-IVs (Completion Reports) The system meets 1.0 prepared for certification of budget are supposed to be prepared for criterion 3. execution and for reconciliation of every contract. However, these delivery with budget programming: are seldom developed, and where prepared are substantially The procurement system is 3 delayed. However, for foreign sufficiently integrated with the funded projects, the completion financial management and reports and reconciliation reports budgetary systems to provide are prepared, to a great extent. information on the completion of all major contracts. Information on completion of the 2 majority of large contracts is submitted as described above. Information on the completion of 1 contracts is erratic or is normally submitted with considerable delay after the fiscal budgetary 22 Sub-indicator and ranking Current Status Rationale for Score condition Ranking period. . The procurement system does not 0 generally provide this information. 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 Sub-indicator and ranking Current Status Rationale for Score condition Ranking 4 (a) The status and basis for the The PPRA established through There is full 3.0 regulatory authority is covered in the the PPRA Ordinance 2002 compliance with exists and performs all the criterion 1. legislative and regulatory framework: functions of a legal and There is a normative or regulatory 3 regulatory body in unambiguous body or the functions are clearly way without gaps and is assigned to various units within supported by budget allocations. the government which is specified in the legal and regulatory There is a prima facie framework in unambiguous way perception that an overlap exists without gaps or overlaps. between the PPRA and the PEC. However, a deeper There is a regulatory body or 2 analysis indicates that is largely functional designation to various due to a misunderstanding about units within government, but it is the roles of the organisation not established as part of the legal rather than an endemic fault in and regulatory framework and legislation or the institutional there are gaps or overlaps of framework. regulatory responsibilities. Only part of the functional 1 responsibilities of a regulatory body are assigned throughout the government leaving significant parts of the work unassigned. Separate functional 0 responsibilities to regulate the procurement system are not recognised as part of the legal and 23 Sub-indicator and ranking Current Status Rationale for Score condition Ranking regulatory framework and are not effectively performed. 4 (b) The body has a defined set of The PPRA Ordinance 2002 Totally compliant with 3.0 responsibilities. provides for all these functions criterion 1. as part of the mandate of the All the eight functions listed are 3 PPRA. 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. At least five functions are 2 assigned to an appropriate agency or agencies and there is no overlap or conflict in responsibilities. Four or less functions are 1 assigned to appropriate entities and there are overlaps and conflicts in responsibilities. Functions are not clearly assigned 0 and/or assignments are often in conflict with other agency responsibilities. 4 (c) The body's organisation, funding, PPRA is an autonomous body More than adequately 3.0 24 Sub-indicator and ranking Current Status Rationale for Score condition Ranking staffing and level of independence and of the Cabinet Division thus meets criterion 1. authority to exercise its duties should be ensuring that it is at an adequate sufficient and consistent with the level of Government. responsibilities. Its financing is secured by legal The regulatory body (or the 3 / regulatory framework. assignment of responsibilities for the regulatory function if there is not a body) is at an adequate level Given the mandate the level of in Government and financing is financing may not be sufficient. secured by the legal/regulatory framework. The body is at an adequate level 2 but financing is subject to administrative decisions and can be changed easily. The level of the body is too low 1 or financing is inadequate for proper discharge of its responsibilities. The level of the body is low, 0 financing is inadequate and the body has no or little independence to perform its obligations. 4 (d) Separation and clarity of PPRA is not responsible for Meets criterion 1 3.0 responsibilities to avoid conflict of direct procurement and is free completely. interest: from any possible conflicts of interest. The body is not responsible for 3 direct procurement operations and is free from other possible conflicts (e.g. by being member of evaluation committees, etc.). The body does not meet the 0 requirement as stated above. 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. 25 38. This is an important aspect, and it is expected that donor support will be provided for participating countries. Rating 1.25 Sub-indicator and ranking Current Status Rationale for Score condition Ranking 5 (a) The country has a system for While no integrated system The information system 2.0 collecting and disseminating exists the PPRA has developed a is partially developed procurement information, including website where procurement but is reaching towards business opportunity maturity rapidly. tender invitations, requests for proposals, contract award information. information across the span of the federal government and its 3 parastatal organisations. There is an integrated information system that provides as a minimum, up-to-date information as described above This is, however, yet nascent and is easily accessible to all and needs to be developed to interested parties at no or include results of awards and minimum cost. more to ensure transparency in procurement activities. Responsibility for its management and operation is clearly defined. At present contracts worth more There is an integrated system of 2 than PKR 100,000 are required the characteristics described that mandatorily to be advertised on provides up-to-date information this website. for the majority of contracts at the central government level but access is limited. There is a system but it only 1 provides information on some of the contracts and the system accessibility is limited. There is no procurement 0 information system except for some individual agency systems. Entities keep information on contract awards and some statistics. 5 (b The country has systems and No system fulfilling any of the Evident from analysis. 0.0 procedures for collecting and conditions set forth for such an monitoring national procurement information system in this statistics. indicator exists at the federal level. The country has a system that 3 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 26 Sub-indicator and ranking Current Status Rationale for Score condition Ranking 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. The country has a system that 2 meets (a) plus two of the remaining conditions. The system is in place to meet 1 (a) plus one of the remaining conditions. There is no statistical data 0 collection system in place. 5 (c) A sustainable strategy and training Training programmes for Dedicated procurement 3.0 capacity exists to provide training, improving or providing de novo training capacity exists advice and assistance to develop the skills exist. These include in- at the PPRA which capacity of government and private house and on-the-job training to uses both an in-house sector participants to understand the access to Capacity Development training programme rules and regulations and how they under Technical Assistance and An outreach should be implemented. programmes from donors. programme providing in situ training. There is a training and capacity 3 building strategy that provides for: The PPRA is undertaking these for public sector entities only. Advisory services are (a) Substantive permanent available for both training programs of suitable public and private quality and content for the needs Plans have been initiated to sector entities. of the system. create a dedicated National (b) Evaluation and periodic Institute of Procurement adjustment based on feedback Management. and need. (c) Advisory service or help desk to absolve questions by procuring entities, suppliers, contractors and the public. There is a training and capacity 2 building strategy that provides for a) above. 27 Sub-indicator and ranking Current Status Rationale for Score condition Ranking The existing program is of poor quality and insufficient to meet the needs of the system and there 1 is no procurement help desk or advisory service. No formal training or help desk 0 programs exist. 5 (d) Quality control standards are A system of annual staff As Procurement is not 1.0 disseminated and used to evaluate staff performance evaluations exists. considered to be a performance and address capacity Evaluations are subjectively specialist cadre, there development issues. measured against work done vis- are no quality ŕ-vis the employee's job assurance standards The procurement system 3 description. These are, however, and therefore address complies with the following: not related to procurement issues in skill specifically. The Ministry of development. a) Provide quality assurance Finance is ISO certified and is standards and a monitoring therefore audited annually for system for procurement performance and each activity, processes and product. task and person comes within the purview of the ISO b) Provide for a staff certificate renewal process. This performance evaluation is an isolated instance of process based on outcomes performance measurement and professional behaviours. within the Government and does not therefore qualify as a c) Ensure that operational audits system-wide SOP. are carried out regularly to monitor compliance with quality assurance standards. The procurement system 2 complies with (a) and (b) above but there is no regular auditing to monitor compliance. The procurement system has 1 quality standards but does not monitor nor use the standards for staff performance evaluation. The system does not have 0 quality assurance or staff performance evaluation systems 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- 28 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 Sub-indicator and ranking Current Status Rationale for Score condition Ranking 6 (a) Level of procurement competence No defined skills or knowledge Lack of skills is 0.0 in government officials in the entity is profiles are in place for conspicuous largely commensurate with their procurement procurement jobs, hence there is because of dearth. However, there are responsibilities. no matching of skills against instances of a high requirements for competitive level of knowledge and The system meets the 3 recruitment. skill in cases where requirements: procurement officials have received and put a) There are defined skill and to use the specifying knowledge profiles for training provided to specialised procurement jobs. them either in situation b) There is systematic matching of of off-site; other skills against requirements for instances can also be competitive recruitment. found, scattered within various agencies, c) Staff required to undertake where the skill has procurement activities on an ad been absorbed through hoc basis have the knowledge on-the-=job exposure they need to undertake the over a long stretch in- activity or have access to post. The PPRA has professional staff that can trained 2,435 provide this knowledge. procurement personnel The system meets (a) plus one of 2 from various the remaining conditions. organisations through a 2-3 day The system only meets (a) above. 1 training/exposure programme both at its headquarters and in- situ at the offices of The system does not meet any of 0 the Pas. the requirements. 6 (b) The procurement training and PPRA is operating a capacity A formal training 1.5 information programs for government building plan largely through its curriculum and 29 Sub-indicator and ranking Current Status Rationale for Score condition Ranking officials and for private sector own resources for public sector programme does not participants are consistent with demand officials. exist. PPRA is undertaking capacity The training and information 3 development through a programs available meet the series of continual These are limited to 2-3 days of short-term courses in following requirements: exposure to the rules. response to identified a) Training programs' design is demand, but the based on a skills gap inventory approach is not holistic to match the needs of the nor designed to offer This is not consistent with system. growth along a career demand as PPRA's own b) Information and training path. capacity is limited. To enhance programs on public this PPRA has developed a procurement for private sector proposal for establishing the are offered regularly either by National Institute for A similar facility for the government or by private Procurement Management. private sector entities institutions. does not exist. c) The waiting time to get into a course (for public or private sector participants) is reasonable, say one or two terms. The training programs are 2 sufficient in terms of content and frequency (waiting time) for government participants but there are few information programs for private sector. There are training programs but 1 they are deficient in terms of content and supply. There is no systematic training or 0 information program for public or private sector participants. 6 (c) There are established norms for the The complete list of bidding Absence of secure 3.0 safekeeping of records and documents documents are required to be storage is an issue, but related to transactions and contract maintained safely and produced is not considered to be for audit requirements and or a critical for the management. period specified by the maintenance of Evidence Act, the NAB records. The procurement system 3 Ordinance and the Audit Rules. complies with the following requirements. The Standard Operation Procedures governing document a) The legal/regulatory maintenance and retrieval are framework establishes a list of contained in the Manuals issued the procurement records that by the Management Services must be kept at the operational Division. level and what is available for public inspection, including conditions for access. b) The records should include: However since all systems are manual and no secure storage is 30 Sub-indicator and ranking Current Status Rationale for Score condition Ranking Public notices of bidding provided, the veracity and opportunities. completeness of records cannot be guaranteed. 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. The procurement system 2 complies with requirements (a), plus two of the remaining conditions. The procurement system 1 complies with (a) but not with the rest. There is no mandatory list of 0 documents or retention policy leaving it to the discretion of the procuring entity. 6 (d) There are provisions for delegating Authority is delegated Compliant with 2.0 authority to others who have the capacity according to rules specified in criterion 2. to exercise responsibilities. the ESTA Code and the Financial Powers Regulations The system meets the following 3 for Drawing and Disbursing requirements: Officers and are not necessarily devolved according to a) Delegation of decision making capability and accountability is authority is decentralised to defined precisely. the lowest competent levels consistent with the risks associated and the monetary sums involved. However decisions are made at the higher level. 31 Sub-indicator and ranking Current Status Rationale for Score condition Ranking b) Delegation is regulated by law. c) Accountability for decisions is precisely defined. The law establishes delegation 2 and accountabilities but the system concentrates decisions at a high level creating congestions and delays. Delegation is regulated in very 1 general terms creating a need to clarify accountability for decision making. Delegation is not regulated by law 0 and left at the discretion of the procuring entity. There is lack of clarity on accountability. 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 Sub-indicator and ranking Current Status Rationale for Score condition Ranking 7 (a) There are effective mechanisms for There is no stated PPP policy. Condition (a) of 1.0 partnerships between the public and However, instances of such criterion 1 are met. private sector. formal relationships involving large scale procurement are to Each of the following conditions 3 be found in the Infrastructure is met. Project Development Facility, the use of BOT for the a) Government encourages open development of infrastructure dialogue with the private sector and has several established and by the Port Qasim Authority formal mechanisms for open and the National Highway dialogue through associations Authority. or other means. b) The government has programs An open dialogue with private to help build capacity among sector is evidenced by the private companies, including inclusion of private sector for small businesses and professional in various fora training to help new entries into the public procurement such as Commissions, marketplace. Committees and Task Forces. c) The government encourages public/private partnerships and the mechanisms are well established in the legal 32 Sub-indicator and ranking Current Status Rationale for Score condition Ranking framework to make possible such arrangements. The system meets (a) plus one 2 other condition above. The system only provides for (a) 1 above. There are no obvious 0 mechanisms for dialogue or partnership between the public and private sector. 7 (b) Private sector institutions are well The larger institutions in the The large scale private 2.0 organised and able to facilitate access to private sector are limited in sector firms are well the market. number, but are highly organised and can offer fair competition. competitive within the The private sector is competitive, 3 Because of the constraints of an oligopolistic shortage of capacity well organised and able to framework largely created by they are unable to meet participate in the competition for the intrusion of the public sector the demand placed on public procurement contracts. entities which are favoured, them20. The private sector is therefore There is a reasonably well 2 able to access the market in a functioning private sector but limited manner. This is, however, set competition for large contracts is aside when vested concentrated in a relatively small interest intervene when number of firms. cartelisation or However, the smaller rationing takes place. The private sector is relatively 1 organisations, even though Such instances can be weak and/or competition is somewhat competitive, tend to found across the board limited owing to monopolistic or form cartels and have limited the latest such instance oligopolistic features in important access to the markets. in the construction segments of the market. sector is the near- award for the Kashmir Highway by the CDA. The private sector is not well 0 In the power sector is organised and lacks capacity and The rest of the private sector is the award of contracts access to information for disorganised and lacks capacity. for transformers has participation in the public been traditionally procurement market. spread over five suppliers each receives a fixed quota to be supplied at pre- determined prices. 7 (c) There are no major systemic There are systemic constraints Criterion 3 holds true 1.0 constraints (e.g. inadequate access to which inhibit large scale private for the bulk of the 20 Mir, Aized H., and Durrani, Amer Zafar; 2007; Pakistan Infrastructure Implementation Capacity Assessment; World Bank in Pakistan. 33 Sub-indicator and ranking Current Status Rationale for Score condition Ranking credit, contracting practices, etc.) sector participation. The main private sector entities. inhibiting the private sector's capacity to constraint is the non-level access the procurement market. playing field because of the presence of public sector There are no major constraints 3 organisations that are given inhibiting private sector access to preference to the extent of sole the public procurement market. sourcing in the higher valued contracts. There are some constraints 2 inhibiting private sector access to the public procurement market, but competition is sufficient. There are multiple constraints 1 inhibiting private sector access to the public procurement market which often affect competition levels. There are major constraints that 0 discourage competition and the private sector firms are generally reluctant to participate in public procurement. 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 Sub-indicator and ranking Current Status Rationale for Score condition Ranking 8(a) Procedures are clearly defined for PEC documents and regulations Four of five conditions 2.0 undertaking contract administration ensure compliance with the first of criterion 1 are responsibilities that include inspection and four requirements. satisfied acceptance procedures, quality control procedures, and methods to review and The payment procedures issue amendments in a timely manner although well-defined in the PPR 2004 are not followed Contract administration 3 completely, which leads to delay procedures provide for: in payments a) Procedures for acceptance of final products and for issuance of contract amendments are part of the legal/regulatory 34 Sub-indicator and ranking Current Status Rationale for Score condition Ranking 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. Contract administration 2 procedures provide for (a) plus three of the remaining requirements. Contract administration 1 procedures provide for (a) plus two of the remaining requirements. Contract administration 0 procedures do not meet the requirements of (a) to (e) above. 8 (b) Contracts include dispute resolution The Arbitration Act includes Four of the five 2.0 mechanisms that provide for an efficient provision of neutral arbitrators, conditions of criterion and fair process to resolve disputes arising due process and expediency but 1 are met. during the performance of the contract. decision is difficult to enforce. The system meets all the good 3 practice standards below. ICB contracts allow for a. There is an Arbitration law in international arbitration. the country. b. The law is consistent with generally accepted practices for No ADR exists. neutrality of arbitrators, due process, expediency and 35 Sub-indicator and ranking Current Status Rationale for Score condition Ranking 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 2 the remaining good practice standards. The system meets (a) plus two of 1 the remaining good practice standards. The system does not use ADR as a 0 normal dispute resolution mechanism in public contracts. 8 (c) Procedures exist to enforce the Only the first two requirements evident from analysis. 2.0 outcome of the dispute resolution process are met. The procurement system in the 3 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. The country meets two of the three 2 conditions above. The country meets condition a). 1 The country does not meet any of 0 36 Sub-indicator and ranking Current Status Rationale for Score condition Ranking 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 Sub-indicator and ranking Current Status Rationale for Score condition Ranking 9 (a) A legal framework, organisation, Audit, both internal and Only condition (a) of 1.0 policy and procedures for an internal and external, is largely limited to criterion 1 are met. external control and audit of public financial transactions only. procurement operations are in place to provide a functioning control framework. Mechanisms for performance audit by external auditors have been developed, but are rarely 37 Sub-indicator and ranking Current Status Rationale for Score condition Ranking The system in the country 3 undertaken largely due to provides for: capacity constraints. a) Adequate independent control Mechanisms for procurement and audit mechanisms and audit do exist but findings are institutions to oversee the not specifically highlighted. procurement function. b) Implementation of internal The time lag between decision control mechanisms in making and risk mitigation is individual agencies with clearly very large, an average of 2-3 defined procedures. years. c) Proper balance between timely and efficient decision making and adequate risk mitigation. d) Specific periodic risk assessment and controls tailored to risk management. The system in the country meets 2 (a) plus two of the above. The system meets (a) but controls 1 are unduly burdensome and time- consuming hindering efficient decision making. Controls are imprecise or lax and 0 inadequate to the point that there is weak enforcement of the laws and regulations and ample risk for fraud and corruption. 9 (b) Existence of follow-up on findings Internal audit is concurrent with Criterion 1 complied 3.0 and recommendations provide an transaction. with. environment that fosters compliance. Internal or external audits are 3 carried at least annually and An Annual audit is conducted, recommendations are responded observations discussed and to or implemented within six settled generally within 6 months of the submission of the months wherever feasible. auditors' report. Audits are carried out annually 2 but response to or implementation of the auditors' recommendations takes up to a year. Audits are performed annually 1 but recommendations are rarely responded to or implemented. 38 Sub-indicator and ranking Current Status Rationale for Score condition Ranking Audits are performed erratically 0 and recommendations are not normally implemented. 9 (c) The internal control systems Internal written controls are Only the first condition 1.0 provides timely information for available. of criteria 1 is management action. complied with. All of the following requirements 3 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. Requirement (a) plus one of the 2 above are met. Only requirement (a) is met. 1 There is no functioning internal 0 control system. 9 (d) The internal control systems are Performance audit has been Adherence to set 1.0 sufficiently defined to allow performance introduced but is used in a procedure is uneven. audits to be conducted. limited manner. There are internal control 3 The Manual is being developed. procedures including a manual that state the requirements for this activity which is widely available to all staff. There are internal control 2 procedures but there are omissions or practices that need some improvement. There are procedures but 1 adherence to them is uneven. The internal control system is 0 poorly defined or non-existent. 39 Sub-indicator and ranking Current Status Rationale for Score condition Ranking 9 (e) Auditors are sufficiently informed A programme of training has Complies with 3.0 about procurement requirements and been instituted by the Auditor criterion 1. control systems to conduct quality audits General's Office and covers that contribute to compliance. both procurement and performance audit. There is an established program 3 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. If auditors lack procurement 2 knowledge, they are routinely supported by procurement specialists or consultants. There is a requirement that the 1 auditors have general knowledge of procurement principles, operations, laws, and regulations but they are not supported generally by specialists in procurement. There is no requirement for the 0 auditors to have knowledge of procurement and there is no formal training program and no technical support is provided to the auditors. 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 Sub-indicator and ranking Current Status Rationale for Score condition Ranking 10 (a) Decisions are deliberated on the An appeal must be filed within Criterion 2 is met. 2.0 basis of available information, and the 40 Sub-indicator and ranking Current Status Rationale for Score condition Ranking final decision can be reviewed and ruled fifteen days of occurrence. upon by a body (or authority) with enforcement capacity under the law. The country has a system that 3 The existing appeals meets the following mechanism consists of a requirements. Committee to be appointed on a case-by-case basis leading to a) Decisions are rendered on the inconsistent decisions on basis of available evidence similar issues. submitted by the parties to a specified body that has the authority to issue a final decision that is binding unless The appeal to the courts and the referred to an appeals body. Ombudsman Office is b) An appeals body exists which permitted. 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. The country has a system that 2 meets (a) and (b) above, but the process is not controlled with regard to (c). The system only provides for (a) 1 above with any appeals having to go through the judicial system requiring a lengthy process. The system does not meet the 0 conditions of (a) ­ (c) above, leaving only the courts. 10 (b) The complaint review system has While existing systems can Criterion 3 is satisfied. 1.0 the capacity to handle complaints handle complaints, decision and efficiently and a means to enforce the enforcement for remedy takes remedy imposed. years. The complaint review system has 3 precise and reasonable conditions and timeframes for decision by the complaint review system and clear enforcement authority and mechanisms. There are terms and timeframes 2 established for resolution of complaints but mechanisms and 41 Sub-indicator and ranking Current Status Rationale for Score condition Ranking authority for enforcement are unclear or cumbersome. Terms and timeframes for 1 resolution of complaints or enforcement mechanisms and responsibilities are vague. There are no stipulated terms and 0 timeframes for resolution of complaints and responsibility for enforcement is not clear. 10 (c) The system operates in a fair The system complies with only Decisions are based on 1.0 manner, with outcomes of decisions the first condition of criterion 1. relevant information. balanced and justified on the basis of However, in implementation the available information. process can be influenced to favour the complainant. Procedures governing the 3 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. Procedures comply with (a) plus 2 two of the remaining conditions above. Procedures comply with (a) 1 above. - The system does not comply 0 with any of the above. 10 (d) Decisions are published and made Decisions of administrative Complies with the last 0.0 available to all interested parties and to reviews are not published or criterion. the public. made available. Copies of court decisions are available on All decisions are publicly posted 3 payment. in a government web site or another easily accessible place. All decisions are posted in a 2 somewhat restricted access media 42 Sub-indicator and ranking Current Status Rationale for Score condition Ranking (e.g. the official gazette of limited circulation). Publication is not mandatory and 1 publication is left to the discretion of the review bodies making access difficult. Decisions are not published and 0 access is restricted. 10 (e) The system ensures that the Review bodies are ad-hoc and Evident from analysis. 0.0 complaint review body has full authority appointed by the Head of and independence for resolution of department of the Procuring complaints. Agency. The complaint review body is 3 They are therefore not independent and autonomous independent. with regard to resolving complaints. The complaint review body is not 0 independent and autonomous with regard to resolving complaints. 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 Sub-indicator and ranking Current Status Rationale for Score condition Ranking 11 Information (on public procurement)21 There is a rudimentary public Criterion 2 is satisfied. 2.0 is published and distributed through information system which available media with support from IT provides information only for when feasible. the initial opportunities for submission of expressions of interest, bids and proposals for all procurement government wide. 21 Inserted from the introductory narrative 43 Sub-indicator and ranking Current Status Rationale for Score condition Ranking Information on procurement is 3 However no information is easily accessible in media of provided regarding processes, wide circulation and availability. outcomes, results and The information provided is performance. centralised at a common place. Information is relevant and complete. Information is helpful The PPRA is preparing and to interested parties to understand issuing monthly reports on the procurement processes and performance in the form of requirements and to monitor proportion of uploads compliant outcomes, results and with PPR, but this only for performance. circulation within government Information is posted in media 2 and is not available publicly. 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. Information is difficult to get and 1 very limited in content and availability. There is no public information 0 system as such and it is generally up the procuring entity to publish information. 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 Sub-indicator and ranking Current Status Rationale for Score condition Ranking 12 (a) The legal and regulatory The legal framework contains a Criterion 1 satisfied. 3.0 framework for procurement includes number of legislations and sub- provisions addressing corruption, fraud, legislations dealing with these conflict of interest, and unethical issues, including the PPR. They behaviour and sets out the actions that are, however, ambiguous in can be taken with regard to such their definitions and provide for behaviour. a number of loopholes. Action is however, clearly specified. 44 Sub-indicator and ranking Current Status Rationale for Score condition Ranking The procurement law or the 3 Specific bodies to deal with regulations specify this these issues exist and consist of mandatory requirement and give the National Accountability precise instructions on how to Bureau (NAB), the Prime incorporate the matter in Minister's Inspection tendering documents. Tender Committees and the Anti- documents include adequate Corruption Establishment. provisions on fraud and corruption. The procurement law or the 2 SBDs and GCCs prepared by regulations specify this PEC and World Bank address mandatory requirement but these issues completely. leaves no precise instruction on how to incorporate the matter in tendering documents leaving this The NAB requires ex-ante up to the procuring agencies. approval for all contracts Tender documents generally beyond a threshold value. cover this but without consistency. The legal/regulatory framework 1 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. The legal framework does not 0 directly address fraud, corruption or unethical behaviour and its consequences. Tender documents generally do not cover the matter. 12 (b) The legal system defines The overall legal framework in Criterion 1 is fulfilled. 3.0 responsibilities, accountabilities, and the country includes specific penalties for those found to have engaged and general legislation which in fraudulent or corrupt practices. define responsibility, accountability and penalty for The legal/regulatory framework 3 fraud and corruption. The latest explicitly deals with the matter. It specific legislation are the defines fraud and corruption in National Accountability Bureau procurement and spells out the and the Electronic Crimes individual responsibilities and Ordinances which were issued consequences for government specifically to fight white collar employees and private firms or crime. However, the individuals found guilty of fraud procedures specified are or corruption in procurement, cumbersome and inordinately 45 Sub-indicator and ranking Current Status Rationale for Score condition Ranking without prejudice of other protracted. provisions in the criminal law. The legal/regulatory framework 2 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. The legal/regulatory framework 1 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. The legal/regulatory framework 0 does not deal with the matter. 12 (c) Evidence of enforcement of rulings While the laws are fairly well Evidence of 1.0 exists. stated, however, the emphasis enforcement in the of implementation is on the major cases of There is ample evidence that the 3 corruption is sparse. weaker segments of officialdom laws on corrupt practices are against whom evidence of being enforced in the country by enforcement exists. application of stated penalties. There is evidence available on a 2 few cases where laws on corrupt practices have been enforced. Laws exist, but evidence of 1 enforcement is weak. There is no evidence of 0 enforcement. 12 (d) Special measures exist to prevent Government's efforts against While systems exist, 2.0 and detect fraud and corruption in public corruption are weak and half- there appears to be no procurement. hearted even though special evidence of punishment or measures exist. The government has in place a 3 redressed except in isolated cases. comprehensive anticorruption program to prevent, detect and penalise corruption in There is an existing published government that involves the Anti-Corruption Strategy and Policy. 46 Sub-indicator and ranking Current Status Rationale for Score condition Ranking appropriate agencies of government with a level of responsibility and capacity to Specialist organisations to fight enable its responsibilities to be corruption exist in the form of carried out. Special measures are the Anti-Corruption in place for detection and Establishment, The Prime prevention of corruption Minister's Inspection Team, the associated with procurement. National Accountability Bureau and the white collar crime unit The government has in place an 2 of the Federal Investigation anticorruption program but it Agency. requires better coordination or authority at a higher level to be effective. No special measures Oversight by the electronic and exist for public procurement. print media and civil society The government has isolated 1 organisations act as the anticorruption activities not whistleblowers. properly coordinated to be an effective integrated program. The government does not have an 0 anticorruption program. 12 (e) Stakeholders (private sector, civil The relationship between the There are only a few 1.0 society, and ultimate beneficiaries of government and stakeholders organisations operating procurement / end-users) support the can at best be described as wary as watchdogs in civil society. creation of a procurement market known and mistrustful. Moreover, for its integrity and ethical behaviours. there are many vested interests against the creation of a The creation of a procurement 3 responsive and transparent market is supported by the procurement market. Thus the following: possibility for the creation of a procurement market known for a) There are strong and credible its integrity and ethical civil society organisations that exercise social audit and behaviour is asymptotic to zero control. in the short- to medium-term. 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. There are several civil society 2 organisations working on the matter and the dialogue with the government is frequent but it has limited impact on improving the 47 Sub-indicator and ranking Current Status Rationale for Score condition Ranking system. There are only a few 1 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. There is no evidence of public 0 involvement in the system OR the government does not want to engage the public organisations in the matter. 12 (f) The country should have in place a Other than the annual external The access is limited 2.0 secure mechanism for reporting audit of all PAs, there is a partly because of a lack of a fraudulent, corrupt, or unethical secure mechanism for reporting supporting system of rewards. behaviour. these activities, but follow-up is erratic and more often than not, There is a secure, accessible and 3 targeted. confidential system for the public The reliability of the reporting of cases of fraud, system is questionable unethical behaviour and because of apparent corruption. vested interest interference. There is a mechanism in place but 2 accessibility and reliability of the system undermine and limits its use by the public. There is a mechanism in place but 1 security or confidentiality cannot be guaranteed. There is no secure mechanism for 0 reporting fraud, unethical behaviour and corruption cases. 12 (g) Existence of Codes of The PEC regulation contains The Services 2.0 Conduct/Codes of Ethics for participants both a code of conduct and a Efficiency and that are involved in aspects of the public code of ethics. This is however Disciplinary Rules ensure compliance financial management systems that also restricted to engineering only. with all three criteria, provide for disclosure for those in but enforcement is decision making positions. The Services Efficiency and weak. These need to Discipline Rules contains such be strengthened and The existence of these code 3 a code implicitly. implementation should ensures the following: be based on objective criteria. a) There is a code of conduct or ethics for government officials with particular provisions for 48 Sub-indicator and ranking Current Status Rationale for Score condition Ranking 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 2 (a) and (b) but is only a recommended good practice code with no consequences for violations unless covered by criminal codes. There is a code of conduct but 1 determination of accountabilities is unclear. 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 Recommendations for Harmonisation of Public Procurement Performance Area BIS PPR with International Good Practice PILLAR I Legislative and Regulatory Framework Indicator 1 - Public procurement legislative and regulatory framework achieves the agreed standards and complies with applicable obligations 49 Matrix of Recommendations OECD ­ DAC Recommendations for Harmonisation of Public Procurement Performance Area BIS PPR with International Good Practice 1(a) Scope of application and coverage of the To ensure greater legitimacy to the existence of a legislative and regulatory framework. 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. 50 Matrix of Recommendations OECD ­ DAC Recommendations for Harmonisation of Public Procurement Performance Area BIS PPR with International Good Practice 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 Adopt the MBDs or develop similar. specifications 1 (f) To be aligned with international good practice. A Evaluation Criteria and Method standard set of criterion needs to be developed To be aligned with MDBs processes and Award Criteria 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 This results automatically once 1(a) has been processes and procedures not included in completed. higher-level legislation 2(b) MBDs developed by the MDBs should be used. Model Tender or submission of proposal Where these are not yet available, the existing documents SBDs used by the DBs should be used in the interim. 51 Matrix of Recommendations OECD ­ DAC Recommendations for Harmonisation of Public Procurement Performance Area BIS PPR with International Good Practice 2 (d) Procedures suitable for contracting services or Templates and criterion for evaluation should be other requirements in which technical capacity prepared for works, goods, services and is a key criterion 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 Should be prepared as part of a standardised set public sector contracts covering goods, works of contracts similar to those by the MDBs and and services consistent with national IFIs. The PPRA should have templates prepared requirements and, when applicable, for this purpose. There should be a clear international requirements 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 There is a disconnect between the formulation process and contribute to multi-year implementation schedule contained in the PC- planning I, Three-Year Rolling Budgets (MTBF) and the Annual Budget. Procedures for budget Budget law and financial procedures support timely preparation need to be redesigned to reflect procurement, contract execution, and payment and the schedule of work stated in the approved allows no initiation of Procurement without budget PC-Is. appropriation 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 This needs to be expedited. covered in the legislative and regulatory framework 4 (c) The body's organisation, funding, staffing and level A detailed study should be undertaken to of independence and authority to exercise its duties determine the need for resources (human and should be sufficient and consistent with the financial) to fulfil the responsibilities specified responsibilities by the Ordinance for the PPRA. This should also include the need for capacity development both internally and for all procuring agencies. 52 Matrix of Recommendations OECD ­ DAC Recommendations for Harmonisation of Public Procurement Performance Area BIS PPR with International Good Practice 4 (d) Separation and clarity of responsibilities to avoid The overlap between the PPRA and the PEC conflict of interest 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 The existing system should be expanded disseminating procurement information, including initially to capture the totality of information tender invitations, requests for proposals, contract from advertising for EOI or Pre-Qualification award information and for to the award of contracts and then monitoring national procurement statistics subsequently to collect information for monitoring procurement performance. 5 (c) (d) A sustainable strategy and training capacity exists A phased needs assessment should be to provide training, advice and assistance to develop conducted and a training plan developed. The the capacity of government and private sector proposed establishment of the Pakistan participants to understand the rules and regulations Institute for Procurement Management should and how they should be implemented be expanded to also include provision for the development of private sector capacity in Quality control standards are disseminated and used procurement. In the event of resource to evaluate staff performance and address capacity constraint then capacity should be created development issues 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 A capacity assessment of all persons engaged in government officials in the entity is procurement should be undertaken. Based on this commensurate with their procurement a plan for career development should be prepared responsibilities, and there are provisions for which (i) creates a specialist cadre for delegating authority to others who have the procurement specialists, (ii) provides a planned capacity to exercise responsibilities training programme for providing skill for different levels of procurement staff, and (iii) , provides detailed job descriptions, quality assurance standards and market-based salaries. 53 Matrix of Recommendations OECD ­ DAC Recommendations for Harmonisation of Public Procurement Performance Area BIS PPR with International Good Practice 6 (b) The procurement training and information The existing training programme of the PPRA is programs for government officials and for based on the perceived demands in a state of private sector participants are consistent with vacuum. What is required is a training demand 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 The existing system should be evaluated with safekeeping of records and documents related respect to security and access and, if needed, to transactions and contract management modified. Indicator 7 ­ Functionality of the public procurement market 7 (a) to (d) There are effective mechanisms for Develop a stated policy and put into place partnerships between the public and private mechanisms which facilitate private sector sector, they are well organised, can access the participation. market with impediment and there are clear rules of engagement both in domestic and international market 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 As part of the development of Institutional contract administration responsibilities that capacity detailed job descriptions and process and include inspection and acceptance procedures, procedures manuals should be developed for each quality control procedures, and methods to agency considering its specific needs review and issue amendments in a timely manner 8 (b) Contracts include dispute resolution A wider mechanism needs to be resolved which mechanisms that provide for an efficient and fast-tracks this. This should be developed and fair process to resolve disputes arising during specified in the contracts, guidelines, manuals the performance of the contract 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 These should be developed such that they are dispute resolution process 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 54 Matrix of Recommendations OECD ­ DAC Recommendations for Harmonisation of Public Procurement Performance Area BIS PPR with International Good Practice 9 (a) A legal framework, organisation, policy and Internal audit is one of the weakest linkages in procedures for an internal and external control the public sector governance arena. A specialist and audit of public procurement operations are cadre of internal auditors needs to be developed in place to provide a functioning control within the Finance Division staff separate from framework 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 A Management Information System needs to be recommendations provide an environment that developed and internal redressal mechanisms fosters compliance developed. 9 (c) to (e) Internal control systems provides timely A Management Information System needs to be information for management action, allow developed. performance audits to be conducted and auditors are sufficiently informed to conduct Specialist Auditors should be appointed and quality audits that contribute to compliance 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 Mechanisms for these should be designed and available information, and the final decision made operational. can be reviewed and ruled upon by a body (or authority) with enforcement capacity under the law 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 This should be developed to ensure that through available media with support from IT information is carried on the website of both the when feasible 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 55 Matrix of Recommendations OECD ­ DAC Recommendations for Harmonisation of Public Procurement Performance Area BIS PPR with International Good Practice procurement includes provisions addressing amendments integrated into the PPRA, the rules, corruption, fraud, conflict of interest, and Guidelines, Handbooks and Manuals. This unethical behaviour and sets out the actions should be contracted out to consultants with that can be taken with regard to such demonstrated experience of drafting procurement behaviour ; defines responsibilities, legislation which should then be peer reviewed accountabilities, and penalties for those found by international agencies. 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 56 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 57 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. 58 59