New PPRA rules retain direct SOE contracting

It coincided with the fourth IMF programme review. The Public Procurement Rules 2026 have been formally notified through the Gazette of Pakistan and have come into force with immediate effect,. It added that the federal cabinet ratified the new rules on the recommendation of the Cabinet Committee for Disposal of Legislative Cases (CCLC), which repealed the Public Procurement Rules.

The government has not accepted one of the IMF's core demands of ending the unrestricted provision of awards of public contracts to the government-owned entities without competitive bidding.

The last IMF report on Pakistan read "the adoption of recently drafted legal amendments of the relevant provisions of the PPRA rules will eliminate preferences for SOEs in awarding public procurement contracts without competition, subject to limited and reasonable exceptions".

The language of the new rules showed that Rule 32-F, which deals with direct contract, was different from what the IMF had proposed.

The new rule says that the procuring agency may engage in direct contracting in case the procurement concerns the acquisition of spare parts or supplementary services from original manufacturer or supplier; for reasons connected with protection of exclusive rights or intellectual property, the supplies may be manufactured or delivered only by a particular supplier; where a change of supplier would oblige the procuring agency to acquire material having different technical specifications or characteristics and would result in 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 procurement contract on the same price, terms and conditions and when the price of goods, services or works is fixed by the government or any other Authority, agency or body duly authorised by the government, on its behalf.

Sources said that the IMF had a different position on the issue of direct contracting.

They added that the IMF had suggested that a procuring agency shall not engage in direct contracting with state-owned entities such as professional, autonomous or semi-autonomous organisations or bodies of the federal or provincial governments for the procurement of goods, works and services, including consultancy services, except for the procurement of works and services, including consultancy services, which are time-sensitive, scattered, remotely located and in the public interest.

The IMF had proposed some conditions for direct contracting.

Sources said that 's recommendations, the direct contracting shall only be carried out through e-PADS; the organisation or the body to be engaged in direct contracting shall be eligible to perform the works or render the services; the organisation or the body shall accomplish the work or the services including consultancy services, exclusively through its own resources without involving private sector as a partner or in the form of a joint venture or as a subcontractor; Provided that where specialised project components are required to be outsourced, the state-owned entity may assign the respective work to subcontractors, which shall in no case exceed 40% of the total quantum of the work assigned to the said entity., in case there is more than one organisation or body eligible to perform the work or render services, the procuring agency shall hold competition amongst them through limited tendering (notifications) without any s; however, giving reasonable time for submission of their applications or proposals.

The IMF had also suggested that the procuring agency shall devise a mechanism for determining price reasonableness to ensure that the prices offered by the state-owned entities are reasonable for award of the contract. Provided that, in case the entity engages in subcontracting beyond the permissible limit, it shall fall within the ambit of material deviation.

PPRA Managing Director Hasnat Ahmed Qureshi said that the new rules provide a modern regulatory framework designed to strengthen transparency, competition, accountability, efficiency and value for money in public procurement. Qureshi said the new rules introduce a range of measures to strengthen oversight throughout the procurement cycle, from procurement planning and bidding to contract management, performance evaluation and closure.