Prime Minister Imran Khan on Saturday praised the Federal Board of Revenue (FBR) for “procuring” track and trace system to curb tax evasion amid a serious dispute over the bidding process that has delayed the award of the Rs25 billion worth contract.

The FBR has not yet issued the contract award letter or the license to the successful bidder due to the pending dispute but the premier took to twitter to congratulate the FBR team. The prime minister “commend(ed) FBR head office team for developing the IT-enabled transformation plan and procuring cutting-edge track and trace system”.

The premier further stated that once fully operational in July 2021, it would add hundreds of billions of rupees in additional revenue, curb counterfeiting, and help establish rule of law. Imran Khan also congratulated the FBR for achieving its seven-month tax collection target. However, the International Monetary Fund (IMF) has agreed to downward revise the annual FBR target by over Rs250 billion in anticipation of huge shortfall in coming months.

The Pakistan Tehreek-e-Insaf government has twice attempted to curb tax evasion in sectors of tobacco, cement, fertiliser and sugar. In its latest attempt, it opened the bids on February 1 that showed AJCL Private Limited as the leading contender. AJCL appeared the most advantageous bidder on the back of highest technical score, as its financial bid was 52% expensive than the lowest bid.

The price difference between the lowest financial bid of Rs499 per thousand stamps and the second highest bid offered by the consortium of AJCL Private Limited was Rs259 per thousand stamps. This translates into an additional Rs8.5 billion payment to the bidder over the five-year contract period.

The five-year contract can be extended by another three years, taking total additional financial impact to Rs13.5 billion.

The price that the top-scoring bidder quoted brings the contract value at roughly Rs25 billion over a period of five years and Rs39 billion for an eight-year period. The contract will be awarded by the FBR but the price will be paid by the manufacturers, presumably by recovering from the consumers of cigarettes, cement, fertilisers and sugar.

At least three parties have challenged the bidding process before a Grievance Redressal Committee, which is currently in process of hearing out the parties. The premier’s tweet could undermine the dispute resolution process, as the committee has not heard out all the parties.

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“The dispute resolution committee has fixed the hearing in your case on February 23, 2021,” showed a hearing notice that the FBR served on one of the bidders, SICPA and Arwentec, on Wednesday.

An FBR spokesman confirmed that the contract award process was still ongoing.

“Letter has been issued for negotiations after which the contract will be signed,” said Syed Nadeem Rizwi to a question whether the FBR has awarded the contract to the AJCL Private Limited.

Rizvi further said that the first round was held this Friday and may continue through next week. “After signing the contract license will be issued,” said the FBR spokesman.

Another bidder, Reliance IT Solutions Limited, has also raised serious objections over the bidding process. The Evaluation Report of the Licensing Committee that has been uploaded on the Public Procurement Regulatory Authority’s (PPRA) website intentionally conceals the financial cost of each bidder, according to Reliance IT Solutions’ complaint to the dispute resolution committee.

Reliance claimed that there was a vast gap between the financial proposal of AJCL and the lowest financial bidder. “In order to bridge the said financial gap and award the license to its favoured bidder, the licensing committee has adjusted the technical marks accordingly so as to ensure that AJCL was awarded the highest overall marks,” according to the allegation.

It said that the concealment of the financial costs of the bids and the decision to declare AJCL’s substantially more expensive proposal as the most advantageous, constitutes a clear and grave violation of Rule 4 of the PPRA Rules, 2004.

Reliance further alleged that on July 26, 2020 the FBR placed an advertisement in the national dailies for hiring a consultancy services firm to prepare the IFL. However, the World Bank refused to fund and support services of the said consultancy firm as the tendering process of the FBR did not meet the World Bank’s standard terms of reference for such tenders.

As a result, in October 2020, the FBR cancelled the process of hiring the consultancy firm through a corrigendum issued in the national dailies. Following the issuance of the corrigendum a hand-picked consultant by the name of “Hany Albert Ras” from IDECO Biometrics was hired for this purpose, according to Reliance. It added that the credentials of the consultant clearly showed that the individual did not have prior experience in drafting such complicated Request for Proposals/IFLs and was handpicked by the FBR’s preferred bidder.

“AJCL (Private) Limited, which has been declared as the successful bidder by the licensing committee, suffers from an obvious conflict of interest which is expressly forbidden by the IFL,” according to Reliance Solutions.

Published in The Express Tribune, February 21st, 2021.

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