Telecom association seeks end to government-to-government contracting under amended procurement rules

The Pakistan Telecommunication Access Providers Association, representing 26 telecommunications companies, has called for the end to government-to-government (G2G) contracting under the Public Procurement Rules. The association argues that this practice is hindering investment and innovation in the IT and telecom sector. In a letter addressed to the Finance Minister, Planning Minister, and IT and Telecom Minister, the association urged the government to eliminate G2G direct contracting from the rules.

According to the association, state-owned enterprises should compete with private firms for government-funded projects on equal terms. The amendment to the Public Procurement Rules 2004, inserted via SRO 834(I)/2021, allows government-owned organizations and state enterprises to contract directly with other state entities without competitive bidding.

This change has led to numerous IT and telecom projects being awarded to government-owned companies without fair competition, effectively crowding out the private sector. The association contends that this shift has significantly hampered local businesses' ability to sell their products and services to global customers. Moreover, the practice of G2G contracting creates unfair competition, as state-linked entities or preferred contractors often receive regulatory exemptions and preferential treatment.

This situation, according to the association, also stifles local innovation and suppresses the private sector's ability to enter the market. The association warns that without competition, state-backed or G2G contractors often underperform and become a burden on the economy, citing examples like Pakistan International Airlines, Steel Mills, and Discoms.

The association also points out that government agencies are utilizing sub-contracting and grey practices, bypassing transparency and accountability in public procurement.