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Principles of public procurement.

Byline: Engr. Shehzad Memon

Considering diversity and multiplicity of living situations, norms for each and every legal situation cannot be established; therefore principles are established. A principle is a concept or value that is a guide for behavior or evaluation. In law, it is a rule governance that has to be followed, the absence of which, being "unprincipled", is considered a character defect. In the area of public procurement as well, it is considered that, in addition to public procurement rules, principles having become common value criteria of civilization and covering the whole legal system are to be taken into consideration.

Therefore it is necessary to understand procurement regulations through certain principles guiding the procuring agency in its decision-making, and the bidder in the assessment of its rights in public procurement procedures.

Pakistan decided to establish Public Procurement Regulatory Authority (PPRA) at the federal level, under the Public Procurement Regulatory Authority Ordinance 2002 followed by the promulgation of Public Procurement Rules in 2004. Subsequently, the Provincial Governments drafted independent Acts and Rules of Public Procurement for provincially owned entities.

The Principle of Procurement has been addressed in public procurement rules of Pakistan i-e federal and provincial except Khyber Pakhtunkhwa (KPK). The text of the role has been repeated by all Public Procurement Authority with minor changes. This rule is a benchmark against which all procurements are to be evaluated.

The following are five principles which form the essence of the procurement regime: -

* Fair

* Transparent

* Value for money

* Efficient

* Economical

Fair

Fair in public procurement means to create a level playing field for all businesses across, treating all bidders equally, decision-making actions must be unbiased, and no preferential treatment should be extended to individuals or organizations. All bids must be considered on the basis of their compliance with the bidding documents, and bids should not be rejected for reasons other than those specifically stated in the bidding documents and the procurement rules. Fairness is also emphasized with a separate rule in public procurement rules of Pakistan (federal as well as provincial) under the title of "Discriminatory and difficult conditions".

The rule stipulates that award criteria and performance conditions must not be worded in a way that directly or indirectly encourages discrimination. It is squarely underlined that award criteria and performance conditions must be drafted keeping in view the ordinary practices of the trade, manufacturing, construction business or services to which particular procurement is related.

Transparent

It can be defined as timely, easily understood access to. Transparency generally refers to openness and a free flow of information. In public procurement, it implies that information should be generally accessible and available at all stages of the procurement process to all public procurement stakeholders: contractors, suppliers, service providers, and the public at large unless there are valid and legal reasons for keeping certain information confidential.

The information should include the detail of procurement opportunities, the criteria to be applied to the tender, the applicable rules and practices, and decisions and the reasons, therefore, and should be accessible and available to all interested parties. The requirement of access to information forms a core element of transparency as this requirement is so integral to transparency.

Value for money (VFM)

A measure of quality that assesses the monetary cost of the goods, works or service against the quality and/or benefits of that goods, works or service, taking into account subjective factors such as fitness for purpose, along with whole-of-life costs such as construction, installation, training, maintenance and disposal, and wastage.

Value for money is based not only on the minimum bid price (economy) but also on the maximum efficiency and effectiveness of the purchase. The definition of value for money under the public procurement rules of federal and provincial government is same. VFM means best returns for each rupee spent in terms of following:

i. Quality,

ii. Timeliness,

iii. Reliability,

iv. After sales service,

v. Upgradeability,

vi. Price,

vii. Source, and

viii. The combination of whole-life cost and quality to meet the procuring agency's requirements.

It is significant to note that the term value for money is also defined in KPPPR, however, the rule regarding the principle of procurement appears to be missing. Generally speaking, the primary objective of public procurement is to obtain a value for money. It must be kept in mind that other factors are relevant when public procurement is compared with private procurement, which necessitates special consideration.

Some of these are the need for accountability by the state, fair treatment of suppliers, avoidance of corrupt practices, and the need to avoid secondary motives like political gain or national preference. The effect hereof is that although the main objective of procurement may be to obtain a value for money, this is not as simple in the case of public procurement as in the case of private procurement, as other considerations are also of importance.

Efficient

Efficiency is the (often measurable) ability to avoid wasting materials, energy, efforts, money, and time in doing something or in producing the desired result. In a more general sense, it is the ability to do things well, successfully, and without waste. In public procurement, the process must be conducted in a manner which can produce desired results in stipulated time.

Economical

Public procurements are made to meet the necessity NOT for Luxury, therefore, the economy will always form a core element thereof. In the developed countries, luxury at public funds is the least tolerated thing. Those found spending recklessly from the public kitty are often shown the door. However, the situation is quite different in many third world countries, including Pakistan.

Everyone associated with the public procurement process or directly responsible for public funds should avoid waste and abuse of public resources which can result in over specifications to the extent that necessity becomes luxury. Public procurement principles are the foundation of public procurement, therefore, must be understood by its users as the essential characteristics of the public procurement.

They govern the management of public procurement, and also set the framework for a code of conduct for public procurement practitioners and all other officials directly or indirectly associated with the public procurement process. The fundamental principle which governs the application of the Public Procurement Rules, 2004, is that the Procuring Agency should obtain "value for money" and that the procurement process is economical and efficient consistently with the requirement that the agency acts in fair and transparent manner.

The general rule is and must remain that a Procuring Agency abides by the Rules, but those Rules must be viewed and applied consistently with their spirit and not be allowed to become a straitjacket by focusing only on the letter. (2012 CLC 1434)
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Publication:Pakistan Engineering Review
Date:Jul 15, 2018
Words:1220
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