Daily Times

KARACHI: The Competition of Commission of Pakistan (CCP) annulled the Request for Proposal (RFP) for multi-billion-rupee automation project of Utility Stores Corporation (USC) declaring it illegal.

The CCP has passed an order declaring a tender issued by the USC for the procurement of Enterprise Resource Planning (ERP) in violation of the Competition Act, 2010 and directed the USC to hold fresh bidding after addressing the competition concerns.

USC is a state owned corporation established in 1971 by taking over 20 retail outlets from the Staff Welfare Organization. USC is engaged in the business of operating the retail chain stores providing basic commodities to the general public at lower rates then the open market and other vendors. Currently, the USC is operating around 6000 stores throughout Pakistan and is prima-facie the largest retail chain operator in Pakistan. The USC floated an advertisement issuing RFP for the purchase/procurement of ERP software and related hardware implementation services.

The Digital Research Labs (DRL) challenged the RFP before the High Court, Islamabad and filed complaint against USC with the CCP alleging that unfair terms and conditions had been imposed through certain clauses in the RFP to exclude, discriminate and restrict fair participation of local vendors in the bidding process. The complainant further alleged that the RF P is tailor-made so as to select only a specific international vendor, which, directly or indirectly, excludes local vendors from the market. The DRL also highlighted its concerns in the pre-bid meeting held by the USC and also before the Ministry of Industries and Production, where-alter the USC did make certain changes in the RF P, but the same remains inconsequential.

The CCP initiated an enquiry by appointing the Enquiry Committee to investigate the matter for possible violations of the Act, and to submit a report to the Commission. The CCP’s enquiry report into the matter saw prima facie violation of Section 3 of the Competition Act in the USC’s tender and identified certain anti-competitive clauses in the RFP to the disadvantage of local vendors as against the international ones.

The CCP said financial penalties up to Rs 75 million or 10 % of the annual turnover of undertakings concerned might have been imposed on USC. However, in view of the compliance oriented approach of the USC and the fact that the contract has not been awarded, the CCP is of the considered view not to impose any financial penalty on the USC in this instance. “If the USC fails to comply with the directions given in order, the CCP may impose financial penalties that may extend to Rs 25 million and an additional penalty of Rs 5, 00,000 per day on USC, it added.

Published in Daily Times, December 22^nd 2017.