After scrapping the procurement rules of 2004, the government has notified the new Public Procurement Regulatory Authority (PPRA) Rules 2026 in a bid to satisfy the International Monetary Fund (IMF). However, the government has allowed direct contracting with State-Owned Entities (SOEs) through newly notified rules. These new PPRA Rules are going to deal with 20 to 25 per cent of Gross Domestic Product (GDP) of the public sector procurement, ranging into trillions of rupees on an annual basis.
The IMF review mission is currently in Islamabad for holding parleys for completion of the fourth review under the $7 billion Extended Fund Facility (EFF). The IMF prepared a Governance and Corruption Diagnostic Assessment (GCD) Report, and Pakistan tabled a plan to ensure compliance, committing to overhaul procurement rules and fulfilling other conditions. Under the IMF program, the PPRA has agreed to publish beneficial ownership information of awarded contracts larger than Rs50 million.
For a level playing field, the government has agreed to amend the relevant provisions of the PPRA rules to eliminate SOE preferences in awarding public procurement contracts without competition, subject to limited and reasonable exceptions under structural benchmarks agreed with the IMF. With approval of the federal cabinet, the new PPRA Rules 2026 were notified on Monday. The direct contracting with the SOEs permitted as newly placed rules elaborates that a procuring agency may engage through E-Pak Acquisition and Disposal System (EPADS) in direct contracting with state owned entities such as professional, autonomous or semi-autonomous organizations or bodies of the federal or provincial governments for procurement of such works and services, including consultancy services, which are time sensitive, scattered, remotely located and in the public interest, subject to the following conditions, namely: - (i) the organisation or the body to be engaged in direct contracting shall be eligible to perform the works or render the services; (ii) the organization 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 sub-contractor: Provided that where specialised project components are required to be outsourced, the State-Owned Entity may assign the respective work to sub-contractor(s), which shall in no case exceed 40pc of the total quantum of the work assigned to the said entity.
(iii) in case there are more than one organizations or bodies eligible to perform the works or render the services, the procuring agency shall hold competition amongst them through limited tendering (notifications) without any advertisements, however, giving reasonable time for submission of their applications or proposals; (iv) the procuring agency shall devise a mechanism for determining price reasonability 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 permissible limit, under this rule, it shall fall within the ambit of material deviation as provided in sub-rule (4) of rule 67.
Provided further that the Head of the Procuring Agency shall submit an undertaking on EPADS that the conditions prescribed in this rule are being satisfactorily met. (2) All financial thresholds enumerated in this rule may be modified by the Authority from time to time. Under Rule 35 related to reservations and preference, the procuring agencies shall allow all prospective and eligible bidders to participate in procurement proceedings, except in cases where a procuring agency decides to limit such participation only to national bidders or certain categories of national bidders or prohibit participation of bidders of some nationalities, in accordance with the policy of the Federal Government.
(2) The procuring agency shall evaluate and compare bids, allow for preference to domestic bidders, while competing with the international bidders in accordance with the policies of the Federal Government for - (a) works projects; and (b) certain goods manufactured, mined, extracted and grown in the Islamic Republic of Pakistan. (3) The per centage of preference, to be accorded, shall be clearly mentioned in the bidding documents under the bid evaluation criteria.
To comply with international and Inter-Governmental Commitments of the Federal Government, whenever these Rules conflict with an obligation or commitment of the Federal Government arising out of an international treaty or an agreement with a State or States, or any international financial institution, the provisions of such international treaty or agreement shall prevail to the extent of such conflict. All communications and documentation related to the Federal Government's procurements shall be in Urdu, English, or both.
Except where a procuring agency is situated outside the territories of Pakistan and procurements are to be made locally, the procuring agency may use the local language in addition to Urdu or English. (2) Where the use of local language is found essential, the original documentation shall be in Urdu or English, which shall be retained on record and for all other purposes, translation in local language shall be used.
Public procurements, exceeding the prescribed limits, shall be subject to an integrity pact, as specified in the standard bidding documents, between the procuring agency and the suppliers or contractors. The Principal Accounting Officer or the Head of Procuring Agency, as the case may be, shall have overall control and supervision over the conduct of all public procurements by the procuring agency. The Principal Accounting Officer or Head of the Procuring Agency shall establish a Procurement Cell, comprising officers, duly accredited by the Authority, having relevant qualifications or experience.