Staggering cost of inefficient procurement

LAHORE: Public procurement is the process through which governments buy goods, services and works. It is one of the largest channels of public spending. In Pakistan, it accounts for an estimated 15-20 per cent of GDP. 

When conducted transparently and efficiently, it ensures that taxpayers get value for money and public projects are delivered on time. When it is opaque or politicised, the losses run into trillions of rupees annually.

Procurement efficiency, in simple terms, means purchasing the right goods at the right price, at the right time, and in the right quantity -- without waste, delay or corruption. The financial implications of this inefficiency are staggering. Studies and civil-society estimates suggest that corruption, kickbacks and poor contract management inflate procurement costs in Pakistan by 10-30 per cent on average. Given that Pakistan’s GDP now exceeds Rs114 trillion, and public procurement constitutes roughly Rs17-18 trillion of that, even a conservative 10 per cent leakage translates into annual losses exceeding Rs1.7 trillion. At 30 per cent, the figure climbs to over Rs5 trillion -- a sum that could fund the entire national education budget several times over.

Pakistan has taken partial steps in that direction. The Public Procurement Regulatory Authority (PPRA) at the federal level, and its provincial counterparts, were created to enforce open and competitive procurement. The PPRA Rules require public sector agencies to advertise tenders, evaluate bids transparently, and publish results. In principle, any procurement that bypasses these rules without a valid exemption is illegal and may expose the responsible officials to disciplinary or criminal proceedings.

However, in practice, the system’s efficiency remains patchy. Many agencies continue to invoke emergency exemptions, award contracts to preferred suppliers, or fragment procurement to avoid competition. The real test of any regulatory framework lies in enforcement -- and that is where Pakistan struggles.

Procurement oversight in Pakistan is shared among multiple institutions. The PPRA issues rules and guidelines; the Auditor General audits completed projects; the Ombudsman investigates complaints of maladministration; and anti-corruption agencies such as NAB and FIA are expected to prosecute fraud. In addition, civil-society organisations such as Transparency International Pakistan regularly flag irregularities and lodge complaints before courts or regulators.

Yet, despite this extensive web of oversight, accountability remains weak. Most audit objections end up in files; prosecutions drag on for years; and administrative penalties are rare. Political interference in appointments, lack of technical capacity, and frequent transfers of trained procurement officers have all contributed to institutional paralysis. While watchdogs are legally accountable for their lapses, in reality, very few are held responsible for inaction.

Some progress has been made. Punjab and Khyber Pakhtunkhwa (KP) have launched e-procurement platforms, and federal agencies are required to publish all tenders on the PPRA portal. Still many projects are awarded on the basis of lowest cost rather than overall value for money, resulting in poor quality and costly repairs later.

Experts argue that the solution lies not only in punishing corruption but also in professionalising procurement. Contracts above a certain value require multi-tier approval, external audit clearance, and post-award disclosure of performance metrics. Pakistan’s laws provide for much of this, but political will to implement them remains lacking.

Transparency and competition are the most effective antidotes to waste. Every public contract -- whether for a road, a hospital or an IT system -- should be published online with full details of bidders, evaluation scores, and final payments. Exemptions should be rare, justified, and subject to independent review. Watchdogs must publish quarterly reports showing how many violations were detected, what penalties were imposed, and how much money was recovered.

A transparent procurement process is not just about saving money; it is about rebuilding trust between citizens and the state. If the government truly wants to curb fiscal waste, it must make procurement efficiency a national priority -- because every rupee lost to inefficiency or corruption is a rupee denied to schools, hospitals and clean water.