Sheikh Afzaal Raza

Public Procurement Regularity Authorities (PPRAs) were established during the last decade at federal and provincial levels to improve governance, management, and quality of Public Procurement in Pakistan.

These authorities introduced a new set of public procurement rules based on ‘UNCITRAL Model Law on Public Procurement’ and standardized procurement practices across departments at government level in a bid to enhance fairness, transparency, accountability, efficiency, economy, and value for money.

Under the provisions of new public procurement rules, ‘Grievance redressal Committees’ are established at the level of each procuring entity to address the complaints of bidders which may arise ‘before’ coming into force of the procurement contract; appellant bodies are also designated to hear appeals against the decisions of Grievance Redressal Committees. By and large, this mechanism is working well.

However, in order to settle the disputes which may arise ‘after’ coming into force of the procurement contract, the new public procurement rules, or the Standard Bidding Documents notified by these authorities, provide for arbitration. The costs of arbitration include fee of the arbitral tribunal, travel and other expenses of the arbitrators, costs of expert advice and of other assistance required by the arbitral tribunal, travel and other expenses of witnesses, costs for legal representation and assistance of the ‘successful party’, any fees and expenses of the appointing authority as well as administrative expenses of arbitration institute. As a rule of thumb, these costs are borne by the ‘unsuccessful party’ unless the arbitral tribunal apportion these costs between the parties to a dispute. Additionally, each party to a dispute has to deposit an equal amount as an advance for the costs referred above.

During the course of arbitral proceedings, the arbitration institute may request supplementary deposits from the parties to meet additional expenses. All this makes arbitration a pretty expensive method of dispute settlement.

Leaving aside the mega contracts, it is apparent that arbitration is not a viable option for contractors or the procuring entities because the costs involved in arbitration are likely to outweigh the benefits of any resultant relief. The cost of arbitration is, thus, a major deterrence to resort to this method of dispute settlement.

Owing to already overburdened judiciary, litigation is a slow and, again, not a less expensive option to settle the procurement contract related disputes. The parties to a procurement contract are thus left with no much viable legal remedy in case of disputes.

All this is contributing to shrinking pool of contractors for public procurement, creation of cartels, and other collusive practices in procurement. Further, it has made public procurement a ‘high risk - high return’ venture for contactors in Pakistan because each bid includes a risk premium for such an eventuality.

Keeping in view the phenomenal performance of and popular confidencein already functioning Ombudsmen in Pakistan, it will not be out of the box to plead for the establishment of ‘Public Procurement Ombudsman’ both at federal and provincial levels to provide inexpensive and speedy justice in contract related disputes in public procurement. It will be particularly useful in case of small contracts, which constitute a vast majority of public procurement operations, where it is not feasible for the contractor or the procuring entity to challenge each other through arbitration or litigation due to relatively small monetary value of contracts. It can alsoenhance the confidence of economic operators in public procurement system and can surely help in expanding marketsand thereby increasing competition of bidders for public procurement.The point to be stressed here is that public procurement is all about spending public money for public good and no amount from public exchequer, however small, should be spent delinquently.

And finally, one must not ignore the fact that no initiative for good governance or agenda for reforms is complete unless it explicitly includes measures for improving the spending of governments and maximizingvalue for taxpayers’ money.

The writer is a civil servant and currently working as Procurement Advisor in Punjab Agriculture Department.