Utility Stores Violated Tender Rules for ERP Software

The Competition Commission of Pakistan (CCP) has passed an order, declaring a tender issued by the Utility Stores Corporation of Pakistan (USC) for the procurement of Enterprise Resource Planning (ERP), in violation of the Competition Act 2010.

The commission directed the USC to hold fresh bidding after addressing the competition concerns.

M/s Digital Research Labs (Pvt.) Ltd. sent a complaint to CCP about USC’s tender of 19th May 2016, inviting bids for the purchase of an ERP Software and related hardware implementation services.

According to the complaint, unfair terms and conditions had been imposed through certain clauses in the Request for Proposal (RFP) to exclude, discriminate and restrict fair participation of local vendors in the bidding process. Furthermore, the RFP was tailor-made to select only specific international vendors.

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 compared to the international ones.

It further stated that the mandatory pre-qualification criteria designed by USC focused on experience in managing cloud services, which was only a small part of the project. Similarly, two clauses of the Solution/Product Evaluation Criteria placed local vendors at a competitive disadvantage.

On the recommendations of the inquiry report, a show cause notice was issued and hearings were held on the matter. In its final order, the CCP’s bench observed that USC was the dominant player in the market for procurement of customized ERP solutions for large scale retail outlets in Pakistan, by virtue of operating the largest retail chain of stores providing household commodities.

Declaring the USC’s RFP null and void for being in violation of Section 3 of the Competition Act, the order stated that the USC may re-advertise the RFP and start the bidding process afresh, ensuring a fair opportunity for prospective bidders. In view of the compliance by USC with the CCP’s interim order of January 2017 into the matter, no penalties have been imposed.

Referring to the procurement laws of Pakistan and international standards, the order stated that the technical specifications by procuring agencies must allow widest possible competition in the bidding process.