The Federal Government initiated procurement reforms by establishing the Public Procurement Regulatory Authority (PPRA) in 2002 through a Presidential Ordinance. Later, it added the Public Procurement Rules in 2004, Public Procurement Regulations in 2008, and Consultancy Services Regulations in 2010. The efficient functioning of the PPRA, along with training for procuring agencies and effective rules and regulations related to planning, advertisements, and bidding, has significantly improved procurement effectiveness at the federal level over the past two decades. Accountability and transparency have also increased greatly since the establishment of the PPRA, as it obliges procuring agencies to advertise properly, conduct bids transparently, and be cautious of accountability provisions.
The provinces have been slow to implement procurement reforms, with Sindh being the most proactive. Sindh adopted the Federal Public Procurement Authority Ordinance in 2006 and established its own Public Procurement Rules in 2010. The Sindh Public Procurement Regulatory Authority has been particularly effective in implementing control systems and a grievance mechanism, thus improving transparency and accountability. In contrast, Punjab initially passed the Punjab Public Procurement Authority Ordinance in 2007, which was later replaced by a new law in 2009. Punjab simply adopted the Federal Public Procurement Rules, 2004, and renamed them Punjab Public Procurement Rules, 2009. Balochistan has been slow in implementing procurement reforms, passing the Balochistan PPRA Act in 2009 but not establishing a procurement authority until 2014. Khyber Pakhtunkhwa initiated reforms early with the NWFP Procurement Ordinance, 2002, and subsequently establishing procurement rules in 2003, but the absence of a specific institution hindered the process. However, the Federal PPRA played a crucial role in the establishment of provincial PPRAs and setting up the principles of public procurement.
The principles of efficient public procurement are of utmost importance. These principles include economy, efficiency, fairness/competition, transparency, and accountability. According to international financial institutions, economy is the outcome of a purchasing activity which achieves the ultimate purpose of maximum value for money whereas value may imply more than just price in case of complex procurements. Efficiency ensures that the procurement process is simple, swift, and produces desired results without protracted delays. Competition is ensured when the procurement process is impartial, consistent, and reliable, offering a level playing field to all players. Transparency is ensured when good procurement practice establishes and maintains accessible and unambiguous rules and procedures. Accountability holds procurement practitioners responsible for enforcing and obeying the rules, subjecting them to audit and sanction for neglecting or bending those rules. Accountability is a key inducement to individual and institutional probity, a deterrent to collusion and corruption, and a prerequisite for procurement credibility.
Public procurement makes up a substantial part of government spending and GDP in many countries. On average, it represents about 12-15% of GDP in OECD countries and approximately 29% of general government expenditure. The global public procurement market is estimated to be worth over $10 trillion annually, highlighting the importance of efficient and transparent procurement processes. In Pakistan, public procurement makes up around 10-12% of the GDP and about 25-30% of total government expenditure. It encompasses various sectors including infrastructure, healthcare, education, and defense, and often involves large-scale projects such as road construction, school building, and medical equipment supply. Public procurement significantly impacts economic growth, public service delivery, and governance. Thus, there is a pressing need in Pakistan, as in other countries, to continuously improve the efficiency, transparency, and integrity of procurement processes to ensure the effective use of public resources for the benefit of all citizens.
For such purpose, the federal government of Pakistan in collaboration with the World Bank initiated the e-Procurement program in 2017, through Federal PPRA, realizing the importance of the digitization process to digitalization to digital transformation to the e-governance.The Authority has named it “E-Pak Acquisition & Disposal System (EPADS)”. The implementation of e-procurement systems has a profound impact on the national economy, enhancing efficiency, transparency, and accountability in public procurement processes.Some of the key ways e-procurement shall affect the national economy are: Cost Savings; Increased Efficiency; Transparency and Accountability; Economic Growth and Development; Market Expansion and Innovation; Regulatory Compliance and Risk management.
The e-procurement system shall streamline the procurement processesand reduce administrative costs associated with paperwork, manual processing, and storage. This leads to significant savings for the government on the one hand; and provides a transparent platform for tendering, encouragement to more suppliers to participate, foster competition and lead to better pricing for goods and services, on the other hand.
The electronic system may automate many steps in procurement process, from requisition to payment, reducing time required to complete procurement cycles and accelerating project implementation. The centralized procurement data will allow for better management and coordination of procurement activities across different government departments, leading to more efficient use of resources.
The system shall also enhance transparency by providing a clear audit trail of all transactions. This may reduce opportunities for corrupt practices such as bid rigging and favoritism.In addition to that, by making procurement data publicly available, the e-procurement system shall allow citizens and civil society to monitor government spending, increasing accountability and trust in public institutions.
Moreover, e-procurement opens up opportunities for a wider range of suppliers, including small and medium-sized enterprises (SMEs), fostering a more competitive business environment and stimulating economic growth.Efficient and transparent procurement processes ensure that public funds are used effectively, leading to better infrastructure, healthcare, education, and other public services that are essential for economic development.
The e-procurement platforms can facilitate access to international suppliers, enabling governments to source high-quality goods and services at competitive prices and promoting global trade.By providing a transparent and competitive platform, e-procurement encourages suppliers to innovate and offer better products and services to win contracts, driving technological advancement and improving overall market quality and innovation.
Furthermore, the e-procurement system shall enforce compliance with procurement regulations and standards automatically, reducing the risk of legal and financial penalties associated with non-compliance.Automated systems can identify and mitigate risks in the procurement process, such as supplier defaults or fraud, ensuring more reliable and secure procurement operations in the country.
Hence, the e-procurement system has a transformative impact on the national economy by enhancing efficiency, reducing costs, increasing transparency, and fostering competition. These improvements lead to significant economic benefits, including cost savings, improved public services, and economic growth, contributing to the overall development and prosperity of the nation.
