“Corruption in USF”

ONE OF THE BIGGEST CHALLENGES I face is to convince some of those who matter that it is possible to deal in Billions WITHOUT ANY CORRUPTION. I don’t blame them. Corruption has become so pervasive that if and when it is absent, one tends to disbelieve!

So what does one do? It is said that transparency helps. Ostensibly, transparency ensures that the rationale of everything that you do becomes visible to everyone so that they are able to see that the decisions were arrived at on the basis of laid down rules and parameters – and not on any personal whims or favors. On top of that, making one’s work transparent by itself forces one to act clean. The mere thought that others are able to see, acts as a deterrent.

So at USF (Universal Service Fund) Company we try our utmost to keep things transparent and above board:

  • The set of rules used are the ones available in public domain – the Public Procurement Regulatory Authority (commonly known as PPRA) Rules.
  • Wherever these rules fall short (no set of rules can cover every eventuality), the bidding terms and conditions are elaborated, well in advance. It is considered important that bidders are not confronted with any surprises.
  • All bidding documents (standard terms/conditions, service specifications, any special conditions and even the templates of the contracts to be signed by the winning bidders) are posted on the website from where these are accessible to everyone. However the exact geographical co-ordinates are not posted on the website. These are provided to bidders who register themselves.
  • In almost all cases USF does not specify which technology the Service Provider should use to deliver the desired service (Technology Neutrality). In exceptional cases where some technical specifications must be given, then standards defined by International Telecom Union (ITU) are used.
  • All projects/procurements are advertised in at least 2 prominent national Newspapers – English and Urdu. Additionally the Ads are also placed on own and PPRA websites.
  • All questions received from the bidders – and their given answers – are shared with all registered bidders. Later these are also posted on the website so that everyone knows exactly what was asked and what were the replies given.
  • Bids are accepted, at the announced bid-submission date/time, in presence of all bidders and the major contents of the bids (especially bid-bonds) are checked. This ensures that each one of them knows exactly who is bidding and if any bid is incomplete.
  • Only LOWEST bidders are awarded contracts. Even the Board cannot change that. In case it is already declared that there would be more than one winner, all have to match the lowest bid otherwise they lose out.
  • At the conclusion of every bidding, the bid evaluation summary consisting of bidding process, it’s history and the bidding result is posted on the website for everyone to see.

It doesn’t stop with culmination of the bidding process:

  • After signing of the contract 20% mobilization advance is given to the successful bidder, but only after getting an irrevocable bank guarantee of double the value of the advance.
  • Project time-lines are divided into “milestones” and payments are released only on completion of milestones. To check completion of work at each milestone, Technical Audits are conducted by independent (third party) Technical Auditors, as well as by USF Co. experts.
  • Technical Auditors are appointed in the same transparent manner, through competitive bidding, among technically qualified firms. Records of these biddings are also posted on the website.
  • In case of completed projects, any penalties imposed on account of delays or other lapses, are also posted on the website.

There have been a couple of instances where the failed bidders – actually two – expressed their reservations. One of these was a telecom operator and the project was large. So the bidder was allowed to submit his reservations directly to the Board, who checked and ruled in management’s favor. Both bidders continue to participate and, as always, lose sometimes and win sometimes!

Not to take the credit away from a truly “dream team” of USF Co., the processes in place are such that if ever one of us tries to indulge in any corrupt practice, it would not be possible to hide it. And if one would still try, remember USF Co. is audited every 6 months – 9 Audits so far and not a single audit objection. In any case we would not be spared by the fund contributing telecom companies – keep in mind the cut-throat competition among themselves with billions at stake here. On the contrary, they all seem to have developed complete confidence in USF processes – that these are fair and free of any corruption.


“Corruption in USF”

21 thoughts on ““Corruption in USF””

  1. PPRA specifically prohibits price matching. Your article says bidders who do not match price lose out. Isn;t that a clear violation of PPRA.

  2. I wonder why such a simple model can’t be replicated or adapted by other public sector companies in Pakistan, and perhaps by the powers that be: Presidency, PM, Ministries, the all powerful Military and other government departments in Pakistan.

  3. Further more the head of PPRA said in an interview that there is sufficient evidence to suggest that Price Matching had in the past been used to accomodate contractors of choice in exchange for some personal gratifications by the management of some big corporations and that it was for that very reason that Price Matching is expressly prohibited. See this link:-

  4. apparently my comments and reservations about price matching have been deleted by the moderator. So much magnanimity from a fellow of Carnegie and Oxford. hah!

    1. Dear Ali, no, I have not deleted anything. On the contrary, I welcome criticism and debate, as it does only good! It’s just that I couldn’t “moderate” the blog-comments as I had not seen them. On busy days in office I check my personal mails, fb updates, blog comments, etc in the evening and you posted your comments late last night. I saw all three of them just now! As for price-matching, I will give a detailed response to it tomorrow Inshallah – as it needs a bit of explaining and so a bit more time. Thanks for the comments!

  5. Ok. The comments are visible now. So I take back my words. I’ll see these pages to read & understand the rationale behind Price Matching. Another afterthought, food for thought if you may; Shouldn’t public sector organisations abide by the law in toto. I mean whatever the logic might be (in which I’m deeply interested nonetheless) if the law of the country prohibits price matching then it should stay prohibited, no matter what might the benefits be of deviating from that law. To quote another example from your blog above, you award contracts to only the lowest bidder, which is in accordance with the law. But I see benefits like better quality and quantity in deviating from the principal of lowest bidder getting the projects. If you don’t deviate from the “lowest bidder getting the contract” principal then why do you deviate from “Price Matching is prohibited” principal. Alternatively if you can deviate from the price matching principal and find viable logics for it, then why don’t you deviate from the lowest bidder principal.

  6. I ask this becuase from the USF website I gather that most of the contracts (almost half in terms of volume and more than half in terms on numbers) are won by PTCL. Now PTCL is most probably providing only very basic voice and data services in the areas they have won. Wireless telephony and x1 data both are pathetic in terms of service quality. These supposedly backward areas should experience a blast in terms of voice and data services quality, a revolution if you may. But that revolution will not be experienced at the current quality of PTCL services in backwards areas. Peoples’ enthusiasm will die before getting nourished. Waiting for clock minutes for a page to load up is sheer torture. Listening to someone on the other end of the phone would be like trying to have a conversation in a disco bar and that too right under the nose of the drummer. Why not pay up a relatively higher bidder for relatively higher quality services.

    1. Ali, I notice that now I have even more things to respond to! But again today there’s something that is making me rush. I’ll definitely do it tomorrow. Dont worry, I wont leave it unanswered!

      1. It’s true PPRA forbids ‘Price Matching’. But this is something different. To explain: USF is ‘Technology Neutral’ but Broadband is delivered using various technologies (DSL, HFC, FTTx, WiMax, EVO, etc.). So while preparing Broadband bidding model, it was feared that if, for instance, a DSL operator won the bid, he would deploy Broadband in only those areas where copper cables exist.
        After extensive consultations it was decided that technologies other than the lowest bidder’s, should also be permitted to play their role in this nation building task. This led to Multiple Winners concept – to cover areas which the lowest bidder alone would not be able to.
        Four issues were specifically addressed while going for Multiple Winners:
        1. Bidders must know in advance that there would be multiple winners. So even maximum number of winners was fixed (Five or 2/3rd of total, whichever is less, Para 48.4 RFA Broadband FTR-1/2008). In fact the whole scheme was explained well in advance in the RFA.
        2. There must be absolutely no negotiations except voluntary matching of winning bid, while ensuring that the lowest gets it’s share.
        3. USFCo or CEO must not have any discretion to grant or refuse any favor to anyone. In fact USF should not even be able to decide whom to allow price matching. Only the lower 2/3rd bidders may!
        4. Since bidders would be able to win without being lowest, there must be strong incentive to quote low. So if a bidder is among the higher 1/3rd he gets thrown out.
        This type of price matching is the most transparent way of finding multiple winners. Remember when two Mobile Cellular licenses were auctioned, the second bidder was required to match winning bidder. Even in WLL auction, PTCL was offered to match the winning price (this model was supported by World Bank). The rationale of PPRA Rule 40 is to ensure that there are no corrupt practices in procurement. Every care was taken that USF’s broadband model does not go against that rationale.

        1. One correction Parvez,

          PPRA Rule 40 prohibits “negotiations” with bidders, not price matching per se. Price matching may or may not qualify to be a “negotiation”. I agree with you that the process you are mentioning does not qualify to be “negotiation” as there is no give and take and USFco does not have any discretion in the process.

          Just thought to correct the misconception.

  7. In the present day scenario of political intrigues, rampant corruption, public sector incompetence and an overall lack of professionalism, it is refreshing to see an organization doing what it was meant to do, and that too in an sufficient manner.

    Finding the truth amongst self serving corporate press releases, media reports or governmental statements is a confusing task. However a simple search on the net regarding USF activities in Pakistan in very revealing. World Telecom organizations speak highly of USF and frequently present it as a role model for telecom activities to emerging projects in many developing countries.

    Congratulations USF, for proving that professionalism, integrity, innovation and competence can overcome all obstacles, and for providing an example for other corporate entities to follow.

  8. “Corruption” where ever and when ever is happening is because of high ups have vested interests and they support it in ways which are at times subtle.
    If people at the top make a point of dealing with it and make sure that there is going to be no “corruption” then there is no “corruption” and rest of the people follow it too.
    Its good to see that USF despite being a government organization is different. I really hope all of the government departments follow suite and make Pakistan the best in the world, amen.

  9. As a neutral observer, if there is any area where Pakistan has made a mark internationally, is Telecommunication. In my personal opinion, USF has done a monumental job in provisioning connectivity to some of the remotest places in Pakistan, which had remained completely devoid of some of the basics.
    The fact that the model being emulated by some others, is a proof in itself.
    In short, USF has been doing a great job and we as a patriotic Pakistanis, should feel proud.

  10. I am really proud of the way USF has operated from the start. Over the last four decades I have attended numerous meetings internationally with people bemoaning the lack of any success of the USO anywhere in the world. For a change we got the formula right and the USF is quoted as the benchmark for implementation of the USO internationally. There is something I am still proud of when I go abroad and meet my peers in telecoms worldwide.

    While it has some defects like permitting PTCL to get a share of these funds (in addition to the APCL) for their use, which has been misused in not actually growing the Local Loop and rural area development but actually shrinking it and applying these funds to create a cross subsidy which is illegal.

    One of the best programs are those of the Broadband projects. Despite the lapse of 8 years, the Government has not come out with a new and fresh vision, thought and policy for Telecoms. We are still caught in the Voice, Data and Video paradigm. The future is simple Broadband services with a wireless last mile delivery, totally agnostic to the services being offered. This is the era of rapid Cloud adoption, even in Pakistan, where the client and server side will reside in the cloud and the 60-70 M cell phone users will use multiple services but only if Broadband is available to cross link them.
    3G, 4g, LTE …all a mirage at least at this time.

    Parvez and his team have done a tremendous job against all odds. If the silly government servants and idiotic politicians could get their heads together for something more than point scoring and casting aspersions against something that is really genuine, we may be able to really empower the most vulnerable parts of the disenfranchised population.

    If they had not interfered, I am sure the USF could have gone very far ahead and would have been able to exploit technology for communications for development, disaster relief and general economic growth. I know the process very well and have not seen anything related to the government, remotely approaching the level of transparency and clarity as the way the USF has functioned. And trust me I have been around for verrry long!

    My message to him and his team is: do not let petty distractions get in your way. Go ahead and do what is needed. Like my dad used to tell us: ‘Agar niyat saaf hai, tou sirf Allah sey daro. Tumhara koi nahin begaar sakta. Himmat sey kaam karo aur logougn ko bata dou key: sometimes the good guys also win”

    1. Thank you very much for the encouraging words Salman. You may have a point regarding PTCL. But trust me with the level of hesitant participation by operators in bidding in USF areas, without PTCL it would’ve been even more difficult.

  11. It is refreshing to see the CEO of a public sector company in Pakistan voluntarily offer transparency to their procuremnt processes and allow a debate at a public forum.

    Such a step is 64 years past due for a country with the dubious honor of being amongst the most corrupt countries in the world. Even if one other government entity follows in the steps of USF this year, it will be a giant step in reversing the perpetual decline that we have witnessed over the past 3 generations.

  12. There are couple of other comments to respond to.

    We abide by the law in toto. Contracts only to the lowest bidders. Broadband bidding is handled somewhat differently but keeping it fully transparent, giving the lowest bidder his full rights and not letting anyone have any discretion to decide who is good and who is not.

    Finally PTCL: Well, unlike others, PTCL is 3-in-1 operator. No other operator provides Telephony, Optic Fiber, Broadband AND Telecenters with that reach in remote areas! On top of that they bid every time – again unlike others, who like to be choosey. That’s why they win more contracts – but always at lowest prices. Yes, their customer service could be better, but technically they are not bad!

    1. I am extremely sorry for the inconvenience. But it took me a long time and even then one could not dig out why does it happen at all (same mail 4 times)? Anyway, I hope it will not happen again.

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