No deviation from framework: SOEs can frame own procurement rules: PPRA Board

ISLAMABAD: The Public Procurement Regulatory Authority (PPRA) Board has affirmed that State-Owned Entities (SOEs) are autonomous in formulating their own procurement rules and their policies can only be questioned in cases of deviation from the overarching PPRA framework, well-informed sources told Business Recorder.

According to sources, during a recent meeting of the PPRA Board, the Managing Director (MD) of PPRA presented the agenda and briefed the Board that, in line with Section 17(2) of the SOEs Act, 2023, various SOEs had submitted independent procurement policies for review, requesting feedback.

The matter was brought before the PPRA Board during its 92nd meeting on February 20, 2025. The Board decided to seek legal guidance from the Ministry of Law and Justice to determine whether Section 17(2) of the SOEs Act, 2023, holds precedence over the PPRA Ordinance, 2002, which is a specialized law on public procurement.

ATIR Islamabad orders transfer of tax appeals involving SOEs to ADRC

Following the Board’s decision, PPRA referred the matter to the Ministry of Law and Justice on March 11, 2025. In its response, dated March 21, 2025, the Ministry clarified that SOEs are authorized to create their own procurement policies, subject to the approval of the Federal Government. Furthermore, SOEs are only required to adhere to the PPRA Ordinance, 2002, to the extent specified by the Federal Government—effectively limiting the Ordinance’s applicability in such cases.

The Ministry further elaborated that while the PPRA Ordinance, 2002, governs public procurement as a special law, the SOEs Act, 2023, is also a special law but specifically tailored to SOEs. According to established legal principles upheld by the Supreme Court in 2017 SCMR 1218, when two special laws conflict, the later-enacted statute prevails. Therefore, Section 17(2) of the SOEs Act, 2023, overrides the PPRA Ordinance, 2002.

In light of this clarification, the MD of PPRA stated that while SOEs are permitted to maintain independent procurement policies, the PPRA—as a regulatory authority—should still monitor these policies to ensure compliance with their respective frameworks. He proposed that before reviewing such policies, the PPRA should require SOEs to clearly indicate which provisions of the PPRA framework they will follow, and where they intend to introduce deviations or new clauses, accompanied by appropriate justification.

The MD suggested that the PPRA review SOE procurement policies based on the following parameters: (i) compliance with Core Principles; (ii) extent of deviation; (iii) new policy provisions; (iv) official declaration as SOE; (v) scope of procurement policy; (vi) maintenance and regulatory mechanism; (vii) third-party evaluation and grievance redressal; and) (viii) CIPS certification.

According to sources, one of the Board members opined that since the Ministry of Law and Justice has rendered its interpretation after examining the legal provisions of SOE Act and PPRA Ordinance that an SOE may develop its own procurement policies with approval of the Federal government, PPRA only need to point out the deviations from PPRA framework and offer comments where necessary. Moreover, there is no justification for PPRA to act as regulator of such SOEs whose procurements are not made in conformity with PPRA framework.

Copyright Business Recorder, 2025