FBR overlooking serious flaws in track & trace award process

ISLAMABAD: The Federal Board of Revenue (FBR) has allegedly committed several irregularities while evaluating applicants’ profiles for installation of the Track and Trace system, it was learnt on Wednesday.

Sources alleged the FBR’s technical committee had not counter-checked the information provided by applicants, such as instances of ‘conflict of interest’ and ‘historical information about the company through available data’, thereby overlooking its own bylaws pertaining to the award of contract.

According to details, FBR declared M/s AJCL/Authentix/MITAS 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 bid was declared most advantageous despite the fact that the tax department mentioned in the invitation for the licence (IFL) for track and trace system that the applicant should have a yearly turnover of above $50 million in any of the last three years.

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According to available information, Authentix has around $20 million annual revenue, while Mitas and AJLC have substantially less revenue.

It had earlier emerged in the Islamabad High Court (IHC) judgement dated December 19, 2020, that there is no Pakistani entity providing IT solutions with the annual turnover of $50 million financial work required by the Rule 150ZL of the Licencing Rules, 2019.

Moreover, according to IFL conditions to qualify as a successful bidder, the applicant should not have been involved in any proved fiscal fraud or corruption or other illegal activities linked to the award, implementation and operation of the past or current government or other contracts.

Similarly, the applicant should have no material conflict of interest with the industry of the goods such as, but not limited to, direct or indirect involvement in the manufacturing, import, export, distribution, wholesale and retail of the goods in the industry in which the track and trace system is going to be used.

However, the data available with this scribe depicted that one of the directors of AJCL was Abdul Kader Jaffer, whose name had also surfaced in the Panama leaks. In the historical context, FBR itself issued notices to persons whose names appeared in Panama Leaks.

Furthermore, in clear violation of IFL rules of the FBR for awarding of the license, Kader is also the director of Claiser Trading Ltd which is registered in the UK; the company exported 29MT of Ethanol from January 2018 to December 2020.

Ethanol is a byproduct of sugar manufacturing and sugar is one commodity for which track and trace would be used. According to AJCL website, the company is currently involved in the indenting, import and export of several commodities such as ethanol, cement, sugar, fertilizer, rice and wheat.

In addition, Abdul Kader Jaffar is also a shareholder in Shah Murad Sugar Mill Ltd, with 4,284 unclaimed dividends, and serves as a director of the company.

The FBR remained quiet on serious deficiencies in meeting qualification criteria as well as the violation of conflict of interest clauses set in the FBR IFL bidding documents. On the other hand, an official from the AJCL told Profit that Abdul Kader Jaffar had declared all his assets in his tax returns and is, therefore, in the clear with regards to the Panama case.

Furthermore, sources say that some of the major applicants from Europe for the same license requested FBR to extend the time for bid submission from December 31, 2020, to January 15, 2021, as almost all the solutions providers are US and EU based that were on Christmas holidays.

“The FBR, however, rejected the request apparently to discourage the potential applicants from participating in the tender process,” sources added.

The PPRA rule 32 states that no procuring agency shall introduce any condition, which discriminates between bidders or that is considered to be met with difficulty. In ascertaining the discriminatory or difficult nature of any condition reference shall be made to the ordinary practices of that trade, manufacturing, construction business or service to which that particular procurement is related.

When reached out, FBR officials only commented that the entire process had been merit-based.

Pakistan is bound to implement the Track and Trace System under the International Monetary Fund (IMF) programme. The system is used to scan authentic products and to curb smuggled goods in the market. Initially, the license was sought only for the tobacco industry but a ruling by the Islamabad High Court ordered the implementation of Track and Trace System in three other sectors; fertilizer, sugar, cement, besides tobacco.

Earlier, the department stated that the installation of the Track and Trace System in the identified sectors would be a game-changer for improving revenue and curbing counterfeit products in the market. Prime Minister Imran Khan also commended the FBR head office team for developing the IT-enabled transformation plan and producing a cutting edge system.

The FBR is expecting to collect Rs100 billion in additional revenue after installing the system, which is expected to go live in July 2021.

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  1. Project Director Tariq Sheikh has been overseeing the bidding process and has successfully managed to de rail all RFPs issued.

    He should be removed and a transparent fair bidding must done with a balanced approach rather than just to favor a single bidder.


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