Shahid Karim, J:- This petition under Article 199 of the Constitution of Islamic Republic of Pakistan, 1973, lays a challenge to the procurement process undertaken by the respondent No.1, Pakistan International Airlines Corporation (PIA) and the consequent award of the contract to the respondent No.3, Pearl Continental Hotel, Lahore (PC Hotel)
2. The relevant facts are simple and are broadly admitted between the parties. As a backdrop it may be mentioned that the petitioner is a Company which offers flight catering services at various airports in Pakistan. It has been providing services since 2006. It has both ISO and Halal Certificates.
These are not in dispute. From the contents of the petition, it can be gleaned that the respondent No.1/ PIA issued a tender in January, 2014 for flight catering services for which the petitioner submitted its bid and according to the learned counsel, the petitioner was awarded the contract for providing flight catering services which continued till the contract was terminated on 01.03.2016.
3. The learned counsel for the respondent No.1 does not take issue with the fact that the contract was awarded to the petitioner in the year 2014, however, the period during which the contract remained in operation is disputed between the parties. This fact will not have any bearing on the ultimate decision of this petition. The learned counsel for the petitioner has not dwelt upon the contract which was awarded in 2014 and has narrowed down his attack to the tendering process which was put into motion in March, 2015.
4. The PIA invited bids for the provision of "In-Flight Catering Services" in March, 2015 (the procurement process). The invitation of bids is annexed at pages 34 to 52 of the petition. The tender schedule which formed part of the bid document is attached at page 39 of the petition in which the bidders were required to provide their rates at which they will charge food. The technical bids were opened in March, 2015. The petitioner and PC Hotel qualified on these technical bids and the other bidders were declared as disqualified. None of the disqualified bidders has chosen to challenge the bidding process. The financial bid was opened on 18.6.2015. The evaluation report was submitted on 20.08.2015 which declared the PC Hotel to be the lowest bidder.
5. The learned counsel for the petitioner submits that serious objections were raised to the evaluation report by filing objections by E-mail of August 26, 2015, which is at page 56 of the petition. No reply, according to the learned counsel, was given nor a decision was made by the grievance committee in terms of rule 48 of the Public Procurement Rules, 2004 (PPRA Rules).
However, the report/decision of the grievance committee has been belatedly delivered to the petitioner and is back-dated to 02.10.2015. On 01.03.2016, the petitioner was informed that the contract had been awarded to PC Hotel and that the contract of the petitioner had been terminated as also informing the petitioner of the rejection of its grievance raised against the evaluation report.
6. The learned counsel for the petitioner has raised a number of grounds which, according to the learned counsel, go to the heart of the matter and render the entire procurement process as ultra vires and liable to be set aside. These are dealt with in seriatim as follows: Illegal and Unlawful Termination:
7. This issue has lost its efficacy and need not be dilated upon in view of the fact that the learned counsel for the petitioner has chosen to drop the challenge to the purported unlawful termination of the contract awarded in the year 2014. The primary challenge of the learned counsel is now with regard to the procurement process as stated above.
Tender Process and Award of Illegal Contract Contrary to PPRA Rules.
8. As a prefatory, the general approach of the courts to procurement decisions may be set out in the first instance. The traditional approach of the courts is that contracting decisions fall within the sphere of private law and are therefore reviewable only in the private law courts. Judicial review proceedings can only be brought if it can be shown that the contracting decision in question has an additional public law element which justifies bringing the case within the sphere of public law. It is said that judicial review should be generally available at least in cases where the contract is made under statutory powers due to the importance to the rule of law of ensuring public bodies are held legally accountable in respect of abuses of power. (S. Bailey, "Judicial Review of Contracting Decisions" [2007] P.L. 444, 463). The cases establish that there are only two ways in which a procurement decision could be brought within the realm of public law; either the decision was conducted using statutory power and could therefore be reviewed for compliance with that stature or an alternative undefined public law element needed to be proved. Some of the English cases which break new ground in this area of law are "Mass Energy Ltd. v Birmingham City Council [1994] Env. L.R. 298 and "Cookson & Clegg Ltd v Ministry of Defence [2005] EWCA Civ 811". It was held in Cookson & Clegg that: "This analysis [in Mass Energy] makes a distinction between statutory fault in not following statutory rules on one hand; and actions of what might be called a normal commercial nature in awarding the contract itself. I would, however, immediately agree that that analysis does not and should not exclude public law entirely from the contract-awarding process, even if there were no statutory breaches involved".
9. It has also been noted in the cases decided by the courts that public bodies are given their powers on the basis that they are to be exercised in the public interest and consequently, the public had an interest in ensuring that they were not abused. The case law shows that the courts are now willing to review procurement decisions on all the normal judicial review grounds so long as use of statutory powers can be shown. With regard to contract making power by the public bodies, it has generally been accepted that the simple fact that a local authority was exercising a statutory function should be sufficient to justify judicial review where it was alleged that there is an abuse of power. One of the key cases is R. (on the application of Molinaro) v Kensington and Chelsea RLBC [2001] EWHC Admin 896.
10. In our jurisdiction, the watershed case is Messrs Airport Support Services v. The Airport Manager, Quaid-e-Azam International Airport, Karachi and others (1998 SCM R 2268) where the following observations were made: "...Further a contract carrying elements of public interest, concluded by functionaries of the State, has to be just, fair, transparent, reasonable and free of any taint of mala fides, all such aspects remaining open for judicial review. The rule is founded on the premises that public functionaries, deriving authority from or under law, are obligated to act justly, fairly equitably, reasonably, without any element of discrimination and squarely within the parameters of law, as applicable in a given situation. Deviations, if of substance, can be corrected through appropriate orders under Article 199 of the Constitution. In such behalf even where a contract, pure and simple, is involved, provided always that public element presents itself and the dispute does not entail evidentiary facts of a disputed nature, redress may be provided... "
11. In Alleged Corruption In Rental Power Plants etc.: In the matter of Human Rights (2012 SCM R 773), the following observations may pertinently be quoted: "18. Internationally, the following factors have been considered key features in procurement of public contracts:-- 1) Upholding competition among firms; 2) Promoting best value for money; 3) Encouraging more firms to bid on work; 4) Maintaining openness and transparency in the bidding process; 5) Executing contracts quickly; 6) Ensuring quality of goods and services; and 7) Meeting other obligations required for federal procurement.
19. In this regard, it is to be noted that in section 5 of the Public Procurement Regulatory Authority Ordinance, 2002, the functions and the powers of the Authority have been defined, according to which the Authority may take such measures and exercise such powers as may be necessary for improving governance, management, transparency, accountability and quality of public procurement of goods, services and works in the public sector. The words transparency? and accountability are of high importance and cast a duty upon the Authority who had invited the bids to ensure openness of the transaction without withholding any information..."
12. There is a cluster of cases in which the Supreme Court of Pakistan has consistently applied the PPRA Rules as mandatory application of its terms and any non compliance has been visited with severity and has been frowned upon by the superior courts. We may begin the discussion with the general observation that the PPRA Rules are to be taken as mandatory and requiring strict compliance in order to ensure transparency and the implementation of the underlying objective of these Rules. Suffice to refer to the observations of Supreme Court of Pakistan made in Suo Motu Case No.5 (PLD 2010 SC 73) where it was held that: "Here we may observe that it is the duty of the Court to ensure that the Public Procurement Regulatory Authority Ordinance, 2002 read with Public Procurement Rules, 2004, are adhered to strictly to exhibit transparency."
13. The first challenge with regard to the non compliance of the PPRA Rules is on the basis of the tender schedule which forms part of the bidding documents and which according to the learned counsel for the petitioner ought to have been filled in properly so as to enable the evaluation of the bid submitted by PC Hotel and the consequent compiling of the evaluation report. The learned counsel for PIA has drawn the attention of this Court to paragraph 15 of the reply filed on behalf of PIA which is reproduced as under: "It may be submitted that total 27 Group Menus have been prescribed. M/S PC is lowest in 21 Menus.
RFP required parties to quote Handling Charges of B-777, A310 and A-320. It may be mentioned that M/S KC quoted the handling charges for B-747 and B-737 aircraft which were not asked by PIAC. M/S KC did not quote handling charges for A-310, A-320 and B777 aircraft which were required by PIAC in RFP. Therefore, M/S KC failed to comply with the tender requirement.
Furthermore, KC attempted to quote rates after opening of financial bids which was a post tender modification and cannot be allowed. In the entire process KC looked non-serious and made several violations of tender requirement. PPRA Rules 2004- Rule31."
14. He has referred to the second report filed by PIA and the document which is annexed at page 2 of the second report in order to demonstrate that the tender schedule was in fact not properly filled in by the petitioner. In the same vein, the learned counsel has also referred to page 16 of the second report filed by PIA for rebutting the arguments of the learned counsel for the petitioner on this account. According to this document the tender schedule had been properly filled in by PC Hotel and there is an attachment with the tender schedule which elaborately specifies the different meal types as also other information which was sought to be entered and submitted by the bidders in respect of tender schedule. This should effectively take care of the objection of the learned counsel for the petitioner with regard to the non fulfillment of the requirements of properly filling in the tender schedule.
15. The next objection of the learned counsel for the petitioner was with regard to the evaluation report submitted in terms of rule 35 of PPRA Rules. Rule 35 reads as under: "Announcement of evaluation reports.- Procuring agencies shall announce the results of bid evaluation in the form of a report giving justification for acceptance or rejection of bids at least ten days prior to the award of procurement contract."
16. The precise submission of the learned counsel for the petitioner on the basis of rule 35 was that that the announcement of the result of bid evaluation must be in the form of a report giving justification for acceptance or rejection of bids at least ten days prior to the award of procurement contract. This, according to the learned counsel, has gone abegging. However, a reading of the evaluation report makes it evident that by the evaluation report, the bids of the petitioner as also the PC Hotel were accepted as the first and second lowest bids respectively. When confronted with this, the learned counsel for the petitioner did not seriously challenge the evaluation report on the touchstone of rule 35 as, in fact, by the evaluation report itself the petitioner was also accepted as the lowest bidder and was held qualified to be considered as financial evaluated bidder.
17. The learned counsel for the petitioner, however, has raised polycentric challenges to the entire procurement process by which In-Flight Catering Services were contracted out to PC Hotel.
According to the learned counsel, the petitioner may not benefit out of the tender process and does not insist that it be declared as the successful bidder, however, the facts and circumstances of the case do require a re-visitation of the procurement procedure as serious violation of rules has crept in the entire process. In this regard, the learned counsel has relied upon rule 26(3), (4) as also rule 38 of the rules. These rules so far as relevant are reproduced as under: "26 (3) The procuring agency shall ordinarily be under an obligation to process and evaluate the bid within the stipulated bid validity period. However under exceptional circumstances and for reason to be recorded in writing, if an extension is considered necessary, all those who have submitted their bids shall be asked to extend their respective bid validity period. Such extension shall be for not more than the period equal to the period of the original bid validity.
(4) Bidders who,- a) agree to extension of their bid validity period shall also extend the validity of the bid bond or security for the extended period of the bid validity; b) agree to the procuring agency?s request for extension of bid validity period shall not be permitted to change the substance of their bids; and c) do not agree to an extension of the bid validity period shall be allowed to withdraw their bids without forfeiture of their bid bond or securities.
18. The contexture and setting of rule 26 may be stated thus. A reading of rule 26 above makes it clear that a procuring agency shall evaluate the bid to a bid validity period. It is admitted on all hands that the validity period in the instant case was ninety days. By virtue of sub-rule (3) of rule 26, the procuring agency shall ordinarily be under an obligation to process and evaluate the bid within the stipulated bid validity period that is ninety days in the instant case. However, under exceptional circumstances and for reasons to be recorded in writing, if an extension is considered necessary, all those who have submitted their bids shall be asked to extend their respective bid validity period. Such extension shall not be for more than the period equal to the period of the original bid validity. From the tenor and the context of sub-rule (3) of rule 26, the terms of the said rule seems to be obligatory and mandatory in nature and must be complied with. This is the very essence of the procurement procedure and the good faith which must permeate the entire procedure. In this regard, it may be stated that the bids were submitted on 26.3.2015 and the evaluation report was made on August 20, 2015 i.e after more than five months. The contract was admittedly awarded on 01.03.2016 i.e. after almost one year of the tender for the bids. Clearly, the mandate of rule 26 has not been complied with and has been contravened. The learned counsel for PIA does not deny the fact that bid validity period was not extended by a speaking order and the bidders were thus not asked to extend their respective bid validity period. The non compliance of rule 26(3), in my opinion, renders the subsequent acts of submission of the evaluation report as also the award of contract as ultra vires and void.
19. The grand norm of the PPRA Rules is section 4 of the Rules. It says:
4. Principles of procurements.- Procuring agencies, while engaging in procurements, shall ensure that the procurements are conducted in a fair and transparent manner, the object of procurement brings value for money to the agency and the procurement process is efficient and economical.
20. Fairness, transparency, value for money, and the process being efficient and economical lie at the heart of the procurement process. None of these factors can be nullified or brushed under the carpet to the detriment of the process and those who offer their tenders for the procurements.
Since the promulgation of PPRA Rules, superior courts have proactively and vigorously sought their enforcement so that they are not reduced to a painting, to be looked at only. A cluster of case-law signifies the overreaching policy of the courts in such matters and that policy is driven by the concept of public trust and that it be preserved inviolate. Thus it is immutable rule now that all public bodies making contracting or procurement decisions must adhere to the statutory scheme of things and chime with the intent and the purpose of the law, so that these are not tainted with invidious discrimination.
21. It will be noticed from the entire reading of PPRA Rules that the word shall? has been used to denote and accentuate the mandatory nature of the duty as against permissive words which grant distinction. This runs through the length and breadth of the Rules.
22. There is a purpose to prescribing a bid validity period. Surely it was not lost on the legislature that any procurement is subject to vagaries of time and economic constraints. The price quoted in a tender or bid may be subject to many and differing variables and may be subject to entirely different price etc. after a certain period. Duties and taxes may change, the freight charges may fluctuate and the goods to be supplied or civil works to be performed may get impacted by unforeseen factors. Thus it is just and fair to have a bid validity period. The concept lends fairness, transparency and certainty to the procurement process. Lord Mansfield (regarded as father of English commercial law) said: "The successful conduct of trade, investment and business generally is promoted by a body of accessible legal rules governing commercial rights and obligations. In all mercantile transactions, the great object should be certainty, and therefore it is of more consequence that rule should be certain." (The Rule of Law--Tom Bingham).
23. Sub-rule (2) of rule 26 drives home the imposition of duty in this regard by stating that bids shall be valid for the period of time specified in the bidding document. Read with rule 38, the scheme that emerges is that the award of the procurement contract, too, has to be made within the original or extended period of bid validity. There is thus no room for doubt that the bid validity period is of fundamental importance and all acts must adhere to that period.
24. Rule 38 also has significance in the entire determination of the instant petition. Rule 38 is as follows: ""38. Acceptance of bids.- The bidder with the lowest evaluated bid, if not in conflict with any other law, rules, regulations or policy of the Federal Government, shall be awarded the procurement contract, within the original or extended period of bid validity."
25. By the terms of rule 38, the bidder with the lowest evaluated bid shall be awarded the procurement contract within the original or extended period of bid validity. Since the contract was awarded on 01.03.2016, it is clear that the contract was not awarded within the original period of bid validity. It has already been brought forth that no extension in the period of bid validity was ever granted and thus it follows ineluctably that any grant of contract in the period beyond the original period must be held to be unlawful and contrary to the PPRA Rules.
26. Another fact which exercises a gravitational pull on the entire procedure is the failure on the part of the grievance committee to properly adjudicate the redressal of the grievance made by the petitioner. Under rule 48, the committee shall investigate and decide upon the complaint within fifteen days of the receipt of the complaint. The complaint was properly lodged with the grievance committee but till the filing of this petition, the petitioner was not apprised of the decision of the grievance committee. As stated above, a decision was apparently made by the grievance committee which is annexed at page 18 with the reply filed by PIA. It is clear from a reading of the grievance committee report that the petitioner was not engaged in the hearing held by the grievance committee which offends the principles of fairness and due process. Any redressal by the grievance committee ought have been made by hearing the petitioner and by a proper notice so that the petitioner could have put forth its objections to the evaluation report.
27. In view of the above, the instant petition is accepted and the procurement process is held without lawful authority and ultra vires. Consequently that award of contract dated 01.03.2016 is declared null and void. It is made clear, however, that PIA may undertake the procurement process afresh after complying with PPRA Rules.