Client Query 028:- Greetings! Wanted to ask that, according to Public procurement Rules, 2004 allow direct contracting for procurement of certain items/stores under alternate methods of procurement as specified in Rule 42. As per Rule 42(c) (vii), purchase of motor vehicles from local original manufacturers or their authorized agents at manufacture’s price is covered under Direct Contracting Method. Pakistan Navy frequently purchases motor vehicles from such sources i-e M/s Indus Motors, M/s Honda Atlas and M/s Suzuki Motors. From the contents of the said rule, it is understood that written exemption for advertising through PPRA/Newspaper and declaration of proprietary is not required in this case. Clarification in this regard is solicited to offset any audit objection.
Imran Mohsin, UK
Answer:- Thankyou for writing to us. As per your query we would like to let you know that, in terms of Rule 42(c)(vii) of Public Procurement Rules, 2004 a procuring agency shall engage in direct contracting only if purchase of motor vehicle is made from local original manufacturers or their authorized agents at manufacturers price. The matter of definition of local original manufacturer has been discussed with the Ministry of Industries and Production. It has been clarified by the Ministry that those cars whose Complete Knock Down (CKD) kits have been imported and assembled in Pakistan and are also utilizing local content, either in-house or vendorized, irrespective of level of localization and also pay all value added local taxes and availing concessionary SROs should be considered as locally manufactured cars. In all such processes assembling is the final process of production. However, those cars, which have been imported in a Completely Built Unit (CBU) condition, cannot be considered as locally manufactured cars. Hope this helps your question! Thankyou!
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