Impact of Collusion on Public Procurement Contracts in Pakistan : Boundaries between Legal and Illegal Collusion

Abstract

Public Procurement in Pakistan has always been controversial and academia as well as industry avoid conducting research and/or give input to improve transparency and efficiency in public procurement management. Whether it is about supplies, services or projects, generally the large scale public procurement (of supplies, services and projects) end up in Supreme Court of Pakistan. The reasons behind irregularities in Public Procurement is absence of legislation of PPRA Rules, half-hearted implementation of PPRA rules, lack of procurement audit skills of procurement professionals, political influence, biased PPRA board, absence of execution powers to PPRA, lack of human resource and financial autonomy. In addition Competition Commission of Pakistan has many deficiencies including human resource, absence of financial autonomy, decisions of CCP challenged in higher courts and the delays in higher courts etc. One of the major factors is limited capacity of private sector that is technically and financially unable to execute mega projects. Public procuring agencies take advantage and settle deals abroad resulting in untracked heavy kickbacks. Irregularities in public procurement get shield by using delaying tactics in higher courts. In addition record of corruption are wasted by putting government buildings on fire and influencing the investigation as federal investigation agencies like FIA, NAB etc. report to Prime Minister directly. In politically unstable environment the PM has to protect benefits of the parliamentarians and cabinet ministers. From the study it is revealed that tacit collusion is the biggest factor impacting public procurement in the form of bid rigging and government in power is the main stakeholder in such irregularities resulting in collusion.