Pakistan notifies procurement rules, retaining direct SOE contracting
Pakistan has notified new public procurement rules that meet an International Monetary Fund deadline while leaving in place one of the conditions the Fund has pressed hardest: an end to the award of public contracts to state-owned entities without competitive bidding. The Public Procurement Regulatory Authority Rules 2026 were notified through the Gazette of Pakistan, annulling the 2004 rules with immediate effect, according to the authority. The notification came two days before the IMF deadline expired and coincided with the Fund's fourth review of Pakistan's programme. The federal cabinet approved the rules last week on the recommendation of the Cabinet Committee for Disposal of Legislative Cases, the authority said.
Rule 32-F, which governs direct contracting, allows a procuring agency to engage a supplier without competition in a defined set of circumstances: the acquisition of spare parts or supplementary services from an original manufacturer or supplier; where exclusive rights or intellectual property mean only one supplier can deliver; where a change of supplier would require materials with different technical specifications or characteristics and cause incompatibility or disproportionate technical difficulties in operation and maintenance; repeat orders not exceeding fifteen per cent of the original contract amount after expiry of the original contract, on the same price, terms and conditions; and where the price of goods, services or works is fixed by the government or a body authorised on its behalf.
That language differs from what the IMF proposed, according to sources. The Fund suggested that a procuring agency should not engage in direct contracting with state-owned entities — professional, autonomous or semi-autonomous bodies of the federal or provincial governments — for goods, works and services, including consultancy services, except where work is time-sensitive, scattered, remotely located and in the public interest. Its proposed conditions included channelling direct contracting through e-PADS; requiring the entity to be eligible and to perform the work exclusively through its own resources, without a private-sector partner, joint venture or subcontractor; capping specialised subcontracting at 40 per cent of the total work assigned to that entity; holding limited tendering among eligible bodies without advertisements; and devising a mechanism to determine price reasonableness. The last IMF report on Pakistan said the adoption of drafted amendments to the relevant PPRA provisions "will eliminate preferences for SOEs in awarding public procurement contracts without competition, subject to limited and reasonable exceptions".
Hasnat Ahmed Qureshi, managing director of the Public Procurement Regulatory Authority, said the new rules provide a modern regulatory framework designed to strengthen transparency, competition, accountability, efficiency and value for money in public procurement. He said they introduce measures to strengthen oversight across the procurement cycle, from procurement planning and bidding to contract management, performance evaluation and closure.
