FBR allegedly causes Rs13.5 billion losses to exchequer

KARACHI: Transparency International Pakistan has found the Federal Board of Revenue (FBR) involved in prima facia violating procurement rules for IT-based solutions and causing Rs13.5 billion losses to exchequer, it was learnt on Monday.

Transparency International Pakistan, part of the global anti-corruption organisation, said it received allegations of violation of Public Procurement Regulatory Authority (PPRA) rules by the FBR in tender for IT-based solution for electronic monitoring (track and trace system) for tobacco products, sugar, fertilisers and cement causing loss of Rs13.5 billion in contract of Rs39.4 billion.

“Chairman FBR may examine the allegations and refer to documents quoted by the complainant. If the allegations are found to be correct, kindly ensure saving the exchequer from that alleged loss of Rs13.5 billion, make accountable all those found responsible, discharge the tender and re-invite in accordance with RFP [request for proposal] of FBR,” Nasira Iqbal, vice chairperson of Transparency International Pakistan said in a letter to the FBR chairman.

The FBR had invited tenders and at least five RFPs were issued by FBR T&T system to increase tobacco excise revenue since 2013, according to the complainant. The 2013 proposal comprised of the evaluation criteria and the tendering process was unfortunately abandoned by FBR.

In August 2019, the FBR issued RFP for the installation of track and trace system of tobacco products. In the following month, the tobacco lobby met with the FBR chairman and managed to convince him to change the evaluation methodology to favour the lowest cost solution provider as was provided in 2013 RFP rather than a combination of technical and financial performance.

Eight bidders were evaluated as clearing technical evaluation criteria and their financial bids were opened. A bidder NTRC offered price of Re0.731 with the unit of 1,000 stamps, but subsequent to tender opening, NTRC informed the FBR that this price quoted is per one stamp and not per quoted 1,000 stamps.

“FBR accepted NTRC change of submitted cost, in violation of PPRA rules,” said the complainant. “Other bidders invoked Rule 48, but the FBR grievance committee rejected the complaint that NTRC bid cost of Re0.731 with the unit of 1,000 stamps was not correct and justified NTRC revised cost of Rs731 with the unit 1,000 stamps.”

Financial bids of the eight technically qualified companies were opened by licencing committee on February 1, 2021. Technical scores of the applicants were also announced at the same time. AJCL, whose financial bid was 52 percent expensive than the lowest bid, along with Authentix were declared winner.

“Just by manipulating and implanting discretionary the technical evaluation criteria the exchequer will end up paying 52 percent more than the offer bid of Steuermaaken Solution.”