' SHAHID ANWAR BAJWA, In the two suits out of which these High Court Appeals have arisen the plaintiffs had sought interim injunctive relief in the following circumstances:
2. The plaintiffs were carrying on work as construction contractors and are duly registered with Pakistan Engineering Council. On or about 25-11-2010 Pakistan Defense Housing Authority (Appellant in HCA No,39 of 2012 and Respondent No,1 in HCA No,82 of 2012, hereinafter referred to as the DHA) advertised for prequalification from amongst Pakistan Engineering Council registered contractors for various types of works stated in the advertisement. Nature of work was stated which is 10. Plaintiffs submitted applications and were duly prequalified in respect of different categories of works. Thereafter DHA floated tenders for specific works/projects. Bidding procedure adopted by DHA was "single stage-two envelope procedure". The plaintiffs were declared unsuccessful in respect of technical bid submitted by them and were eliminated from further participation in the bidding process. They were informed vide letter dated 21-10-2011 sent to them by DHA. Civil suits were filed challenging two envelopes bidding processes. Along with suits application for injunctive reliefs were filed.
3. When applications for prequalification were invited the following allocation of marks and break up for each category was provided: --- Qualification Criteria Category Max Points General Experience 350 Personnel Capabilities 150 Equipment Capabilities 200 Financial Soundness 300 Total 1000 BREAKUP FOR EACH CATEGORY:--- General Experience (Max 350 Points)
Sr. No. Description Maximum Points
(i) Specific Experience 100
(ii) Specific Experience 100
(iii) International Experience 50
(iv) Regional Experience(Kar/DHA) 50
(v) Valid Registration ISO-9001-2000 or better 50 Sub total 350 Personnel Capabilities (Max 150 Points)
Sr. No. Description Maximum Points
(i) Graduate Engineers Registered with PEC
(a) number of Engineers
(b) Experience of Engineers in number of years60 30
(ii) Number of Diploma Engineers in employment of Firm
(a) Number of Engineers
(b) Experience of Engineers in Number of years40 20 Sub total 150 ' Equipment Capabilities (Max. 200 Points)
' A Maximum of 200 points shall be awarded under this category on the basis of the various kinds of equipment available with the contractor which are relevant to the specific work. ' Financial Position (Max 300 Points)
Sr. No. Description Maximum Points
(i) Bank Credit Line 100
(ii) Average of annual turnover in last 5 years 100
(iii) Registration with Income Tax Department 50
(iv) Litigation History where decision went against the Firm (Full Points for no litigation and vice versa)50 Sub total 300 ' Evaluation Criteria ' Minimum requirement to secure at least 50% score in each category ' Minimum requirement to secure overall 700 points (out of 1000 points)
4. After two envelopes bidding process was floated for technical valuation, the following criteria was prescribed:--- ' NEW EVALUATION CRITERIA 1 Previous Experience Max Point 30
(a) List of overall experience of the firm with details of works in past fiveMax Point 7 years (one point for each project of Rs,100 Million or above).
(b) Experience of similar works in last 10 years for each project of Rs,100 million or above subject to a maximum of 2 projects in a specific field i,e, Roads, Drains, Water Supply and Sewerage)Max Point 3
(c) List of similar works i,e, integrated infrastructure Development, in hand (01 point for each project of Rs, 150 million or above subject to a maximum of 3 projects)Max Point 3
(d) Previous successful experience with DHA of similar works over Rs 100 Million (Five points for each such project)Max Point 15
2. Proposed Construction Schedule, Method Statement and Organization Chart.Max Point 60
(a) Proposed Detailed Construction Schedule (inter-relating all the sub- heads of the works)Max Point 15
(b) Detailed Method Statement (Iner- relating all the sub-heads of the works)Max Point 15
(c) Organization Chart Max Point 5
(d) CV of the proposed Project Manager with 15 years overall experience land 10 years experience in related works with proof.Max Point 3
(e) List of Engineers and other key personnel As per Organization ChartMax Point 2
(f) List of machinery and equipment intended To be used on the project duly co- related with proposed Construction ScheduleMax Point 5
(g) Proof of Ownership of machinery and equipment as mentioned aboveMax Point 5
3. Documentary evidence of Financial SoundnessMax Point 20
(a) Financial soundness Certificate from the bank issued in last one yearMax Point 6
(b) Audited Reports of the firm for last 03 yearsMax Point 15
(c) Bank Statements for the last 12 monthsMax Point 1
(d) Average Annual Turnover of at least Rs. 150 Million per year in last 03 years as determined by audited Reports only.10 Total of Max Point 100
5. In the civil suits it was primarily challenged on the ground that once having prequalified in accordance with the criteria set down, it was no longer available to DHA to resort to fresh technical evaluation. Learned Single Judge who passed order on 30-12-2012 (challenged in HCA 39/2012) observed as under:- "Taking up the first objection, of course there cannot be two opinions about the proposition that mere prequalification of a prospective bidder does not create any vested right in him to be A directly selected for any prospective bid but at the same time once a prospective bidder who has meted out the prequalification criteria laid down for execution of a particular work cannot be ousted from participating in financial bid by knocking him down while changing prequalifying criteria and that too without any lawful justification."
' Thereafter the learned Single Judge observed as under: ' In the instant case procuring agency for a specified civil work had engaged contractors and even those who were enlisted in "A" Category in prequalification process and further against the spirit of Rule 16 of 2004 instead of charging cost of printing of prequalification documents have charged hefty amounts under the garb of such prequalification engagement, therefore, could not by adopting ,Procedure "B" without lawful justification oust the prequalified contractor by providing different qualification criteria. I am of the firm view that such prequalified contractor had vested right unless disqualified or blacklisted in terms of Rules 18 and 19 of Rule 2004 to directly compete in financial bidding and for this reason Procedure-A after the words. Technical Proposal provides "if any"."
' Consequently the learned Single Judge allowed the application under Order. XXXIX, Rules 1 and 2, C.P.C. However the learned Single Judge declared that the DHA shall be at liberty to initiate the procurement process in accordance with the observations made in the order.
6. On the other hand, the other learned Single Judge who passed the order out of which HCA No,82/2012 has arisen referred to Regulation 15 of the Public Procurement Regulations, 2008 and held that use of words 'may engage' in Rule 15 indicated that prequalification is discretionary with the procuring agency and observed as under:--- "However, the intent behind Rule 15 is simply to make the actual bidding exercise more manageable by eliminating any person who could not have any reasonable or realistic prospect of success if allowed to participate in the actual tendering exercise, thus saving the valuable and otherwise limited resources and time of the procuring agency. From this it inevitably follows, in my view, that the prequalification of contractors cannot preclude the procuring agency from asking for and obtaining a technical proposal at the stage of the actual bidding exercise. As noted, this distinction is evident from the opening words of sub-rule (1) itself: one exercise is to take place "prior" to the floating of tenders and invitation of bids, while the, other take place as part of tendering or bidding exercise itself"
7. Thereafter the learned Judge referred to rules 36 and 37 and observed as under:--- "It must however also be recognized that the procuring agency does have an element of discretion in this regard and some leeway must be given to it, otherwise it will be the Court that will be substituting its decision for that of the procuring agency and that of course is neither realistic nor permissible. The differences in the weight factors in the present case (e.g., in relation to previous work experience with DHA) does not, in the end, add up to a case of discrimination or favouritism. In my view the two exercises, namely the prequalification exercise and the further evaluation exercise pursuant to the technical proposal moved and were carried out within essentially the same framework and hence the plaintiff has filed to substantiate its allegations."
' Consequently learned Single Judge dismissed the application for interim relief. Hence these two appeals.
8. Mr. Muhammad Mushaffy learned counsel for appellant in HCA 82/2012 made the following submissions:---
(1) Once having prescribed the criteria it was not available to the DHA to change the goal post 'and start technical evaluation on the basis of another set of criteria. Learned counsel relied upon SUO MOTU CASE NO.5 OF 2010, PLD 2010 SC 731.
(2) Learned counsel submitted that the learned Single Judge, has practically decided the whole controversy at the interim stage and there is nothing left to be finally decided.. Learned counsel extensively referred to the two sets of criteria to which we shall revert to later.
9. Mr. Shahenshah Hussain, learned counsel for respondent in HCA 39/2012 adopted arguments of Mr. Muhammad Mushaffy. He submitted that the prequalification was not general prequalification but job specific prequalification. Learned counsel submitted that the - appellant obtained 900 marks and prequalification was valid for three years. He submitted that for certain works only financial bids were invited and for the work he competed two envelopes bids were invited. Learned counsel referred to word 'prequalification' as defined in Words and Phrases (in the following words):--- "PREQUALIFICATION OF BIDDER ' The practice adopted by city board of education, and known as "prequalification of bidders," is defined as determination of contractor's competency and responsibility to satisfactorily complete given construction project before he submits a bid. Education Law, 875, subd. 8, as added by Laws 1917, c. 786 1, requires contract for construction, alteration, or remodeling of any building involving expenditure of over $1,000 to be duly advertised and the contract in each case awarded to the lowest responsible bidder furnishing security required by such board. J.. Weinstein Bldg. Corp. v.
Scoville, 254 N.Y.S. 384, 387, 141 Misc.
902."
' Learned counsel referred to para 3.4 of Standard Procedure for Evaluation of Bids for Procurement of Works, issued by the Pakistan Engineering Council and submitted that after this stage is crossed, it is mandatorily prescribed in para 3.6 1(b) as under:- "(b) Qualification.--- If prequalification was conducted, the bidder whose bid is the lowest evaluated should receive the award unless the bidder's qualifications have since materially deteriorated or the bidder has since received additional work that over-stresses its capacity. The executing agency should satisfy itself fully on both accounts. The rejection of a bid for reasons of qualification requires substantial justification, which should be clearly documented in attachments to the report."
' Contention of the learned counsel was that in view of such provision only option available to the procuring agency was to open financial bids and then award the contract to the lowest bidder.
Learned counsel relied upon Mst. Maqbool Begum and others v. Gullan and others PLD 1982 SC 46.
10. Mr. Masood Khan, learned counsel for the respondent No,4 in HCA No,82/2012 and for respondent No,3 in HCA No,39/2012 submitted that he is one of the successful bidders. He submitted that there is no rule that once prequalification exercise has been undertaken and completed there cannot be technical evaluation of bids. Learned counsel submitted that Rule 37 of the Public Procurement Rules, 2004 prescribed that in which situation what process is to be followed and this aspect has not at all been considered to in the judgment of learned Single Judge which is subject-matter of HCA No,39/2012.
11. Mr. Khalid Javed Khan, learned counsel for DHA made the following submissions:---
(1) Prequalification is different from, technical evaluation. He submitted that at interlocutory stage, detailed evaluation cannot be carried. Learned counsel supported and adopted reasons given by the learned Single Judge whose order has been challenged in HCA No,82/2012. Learned counsel referred to Rule 36 of Public Procurement Rules, 2004.
12. We have considered the submissions made by learned counsel and have gone through the record.
13. Rule 15 of Public Procurement Rules, 2004 provides as under:-- "(15) Prequalification of supplier and contractors.--- (1) A procuring-agency, prior to the floating of tenders, invitation to proposals or offers in procurement pr9ceedings, may engage in prequalification of bidders in case of services, civil works, turnkey projects and in case of procurement of expensive and technically complex equipment to ensure that only technically and financially capable firms having adequate managerial capability are invited to submit bids. Such prequalification shall solely be based upon the ability of the interested parties to perform that particular work satisfactorily.
(2) A procuring agency while engaging in prequalification may take into consideration the following factors, namely:--
(a) relevant experience and past performance;
(b) capabilities with respect to personnel; equipment, and plant;
(c) financial position;
(d) appropriate managerial capability; and
(e) any other factors that a procuring agency may deem relevant, not inconsistent with these rules."
14. We fully agree with the conclusion arrived at by the learned Single. Judge (quoted in para above) that it is discretionary for the procuring agency to decide whether it wants to adopt steps of prequalification or not. However, in the present case procuring agency itself decided to go for prequalification and now the question is that once having been resorted to prequalification can it again undertake technical evaluation; Before we answer this question it may be relevant at this stage to refer to two sets of criteria. One set of the criteria is at the stage of prequalification reproduced in para 3 above and the other criteria is the one adopted when the two envelopes procedure was followed (reproduced in -para 4 above). The new criterion allots 30 marks to previous experience. Previous experience was also subject-matter at the stage of prequalification.
At the stage of prequalification not only overall experience, specific experience, international experience and regional experience were also included. Learned counsel failed to point out as to which aspect of the experience was not considered at the prequalification which is now sought to be considered through, two envelopes procedure. Second element of the new prequalification criteria is financial soundness. Financial soundness including bank credit line, registration with income-tax department, turnover etc., was already considered at the stage of prequalification.
Again the learned counsel appearing for DHA has failed to point out as to which aspect was not included at the stage of prequalification which was now sought to be included at the stage after prequalification, The third set of fresh criteria is regarding proposed construction. The first item of it is construction schedule. Construction schedule would obviously be part of the contract and is always specified in tender documents, so it is not a prequalification item which could be at the stage when after prequalification bids are invited. Other items like Organization Chart, CV of the proposed project manager, proof of ownership of machinery and equipment are again the items which had been considered when the personnel capabilities were assessed at prequalification stage. Learned counsel for DHA has not been able to point out as to what new thing was being sought or what aspect was not considered at prequalification stage which was now sought to be considered at the stage when bids were invited.
15. Contention of Mr. Shahenshah Hussain and Mr. Muhammad Mushaffy was that after prequalification has been affected the procuring agency has no discretion to undertake fresh technical evaluation. In this regard reference was made to Rule 37 of the Public Procurement Rules, 2004. The said rule provides as under:--- "37. Conditions for use of single stage two envelops, two stage and two stage two envelopes bidding procedures.--- Single stage one envelope bidding procedure shall ordinarily be the main open competitive bidding procedure used for most of the procurements. Other appropriate procedures of open competitive bidding shall be selected in the following circumstances, namely:-
(a) Single stage two envelopes bidding procedure shall be used where the bids are be evaluated on technical and financial grounds and prince is taken into account after technical evaluation;
(b) two stage bidding procedure shall be adopted in large and complex contract where technically unequal proposal are likely to be encountered or where the procuring agency is aware of its options in the market but, for a given set of performance requirements, there are two or more equally acceptable technical solutions available to the procuring agency; and
(c) two stage envelope bidding method shall be used for procurement where alternative technical proposal are possible, such as certain type of machinery or equipment or manufacturing plant."
16. Mr. Justice Munib Akhtar has observed that (as quoted above) the procuring agency must have same element of discretion, even after prequalification has taken place. We cannot find fault with the observation made by Mr. Justice Munib Akhtar. In order to elaborate our point. Let us take an example: a procuring agency wants to procure a ship. At the prequalification stage it will consider whether shipyard has technical capability, financial strength, equipment availability and personnel depth to build the ship. This would be prequalification stage. Let us say a number of shipyards are prequalified and they are then asked to submit two bid envelopes. These bids would be technical and financial, technical bids will be evaluated no longer from the point of financial soundness, personnel depth, equipment availability etc., of the bidder but from the point of view design of the ship submitted by the bidder. Therefore at this stage technical evaluation would be different in scope from technical evaluation conducted at the pre-bidding stage. Therefore in such like situations it would be available for the procuring agency to, even after prequalification, invite separate technical and financial bids. Therefore contention of Mr. Shahenshah Hussain that in no case after prequalification has taken place can the technical bids be invited. Same holds true of let us, say multiple storey building being constructed. If at the stage of prequalification technical capability, equipment availability, personnel depth and financial soundness has already been evaluated and design of the building is provided by the consultant, then obviously there would be no scope for inviting separate technical and separate financial bids. Having considered the parameters adopted at the time of prequalification of contractors and the parameters which are now sought to be included in technical evaluations to us a comparison of the two indicates that they are exactly the same and identical to each other and in the facts and circumstances of the case no ground for fresh technical evaluation was made out.
17. In .Suo Motu Case No,5/2010 (Supra) in respect of alleged massive corruption in awarding contract for supply of LNG, the Supreme Court observed that such types of transactions must be made in a transparent manner. Maqbool Begum's case (Supra) is regarding nonimpleadment of a party. In A.R. Khan & Sons (Pvt.) Ltd. Through Authorized Officer and 3 others v. Federation of Pakistan through Secretary Ministry of Commerce, Islamabad and 3 others, 2010 CLC 1810, it was observed that procumbent must be by means of a competitive and open process and in a transparent manner.
18. Result of the above discussion is that HCA No,39/2012 is dismissed and HCA No,82/2012 is allowed. DHA would be at liberty to initiate procurement process afresh strictly in accordance with the rules and the observations made hereinabove.