AJCL Private Limited has emerged as the leading contender for a government contract for electronic monitoring of production of four tax evasion-prone sectors on the back of highest technical score, as its financial bid was 52% expensive than the lowest bid.

The price that the top-scoring bidder quoted brings the contract value at roughly Rs25 billion over a period of five years and Rs39 billion for an eight-year period. The contract will be awarded by the Federal Board of Revenue (FBR) but the price will be paid by the manufacturers, presumably by recovering from the consumers of cigarettes, cement, fertilisers and sugar.

“FBR has successfully completed the evaluation process for the grant of five-year licence for an IT-based solution for electronic monitoring (Track and Trace System) of specified goods ie tobacco, cement, sugar and fertiliser,” stated a late announcement by the FBR.

“AJCL/Authentix/MITAS was declared as ‘the most advantageous bid’ on the basis of the combined highest score in accordance with the Licensing Rules 2019 and PPRA Rules 2004,” the statement added.

The FBR on Monday opened financial bids of eight technically qualified bidders for electronic monitoring of production of these sectors, according to a top official of the FBR. The contract will be awarded for a period of five years, which is extendable to eight years. The cumulative score obtained by the consortium of AJCL Private Limited and Authentix was 183 – making it the top scorer among the eight bidders. However, its financial bid was the second highest – at Rs758 per thousand stamps.

The price difference between the lowest financial bid of Rs499 per thousand stamps and the second highest bid offered by the consortium of AJCL Private Limited was Rs259 per thousand stamps. This translates into an additional Rs8.5 billion payment to the bidder over the five-year contract period.

The five-year contract can be extended by another three years, taking total additional financial impact to Rs13.5 billion.

The lowest financial bid of Rs499 per thousand stamps was quoted by the consortium of Steuermarken Solutions Limited, which was 52% cheaper than the financial bid quoted by the top scorer. But Steuermarken Solutions that got the second highest technical score last time obtained the lowest technical score this time.

The FBR has not yet awarded the contract and would now secure approval of its Board-in-Council – the highest decision-making forum of the tax machinery being headed by the FBR chairman, said a member of the FBR. It was the second time that the FBR was trying to award the contract. Its last attempt had ended in court due to mishandling of the issue and two conflicting legal opinions given by the Ministry of Law and Justice the same day.

There are apprehensions that the matter may again end up in court as Reliance IT Solutions Private Limited, which had got the highest technical score in the last attempt, has decided to challenge the FBR’s scoring.

Reliance Solutions was at number four in the overall score and at fifth in the technical score. A representative of Reliance Solutions left the bid venue before the opening of financial bids, threatening to take the FBR to court over alleged wrongdoing in technical scores.

Pakistan has long been trying to install electronic monitoring systems to check tax evasion in the tobacco sector. The estimated tax evasion in this sector alone is Rs20 billion per annum, according to the FBR court filing.

A recent sugar inquiry report has also raised serious questions over supply chain of the sugar sector.

As per the FBR’s working, the consortium of NIFT was the second lowest bidder as it offered a price of Rs689 per thousand stamps. SICPA was at third place with the price of Rs699 per thousand stamps and Reliance at fourth position with the offer of Rs529 per thousand stamps.

NRTC, which was the winner last time, was at the fifth slot with Rs768 per thousand stamp offer, the AYS Group at sixth position with Rs559 rate, LMK Resource at seventh with Rs680.8 bid price and Steumermarken was at the last position on the table. Reliance Solutions approached the licensing committee and the special assistant to prime minister on revenue against what it called unjust treatment meted out to it.

Prior to the opening of financial bids, the technical marks given to the bidders were shown on a screen to all the bidders and these were not provided in writing to the bidders, according to Reliance Solutions.

Reliance Solutions has decided to challenge the technical marks given to it before the Grievance Redressal Committee (GRC) and sought a detailed breakdown of the marks allocated to it for each category of the evaluation criteria.

“The transparency of the entire process being conducted by the licensing committee is severely compromised by such secrecy,” said Reliance Solutions. It alleged that there was another aspect of the financial opening that was most alarming and of serious concern. In the tender document, it added, the bidders were required to submit an identical sealed copy of their financial proposals.

“At the time of opening of financial bids, the original financial proposals of the qualified bidders were opened. Several of the bidders requested that the unopened copies of their financial proposals be returned to them, however, the licensing committee refused to return the same,” according to Reliance Solutions.

Published in The Express Tribune, February 2nd, 2021.

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