The association, which has 26 members including Cybernet, Nayatel, PTCL, Wateen and Multinet, has urged the government to end direct government-to-government (G2G) contracting, arguing that the practice is adversely affecting private-sector businesses.
In a letter to Finance Minister Muhammad Aurangzeb, Planning Minister Ahsan Iqbal and IT and Telecom Minister Shaza Fatima Khawaja, the association called for the removal of G2G direct contracting provisions from procurement rules. It urged the government to require state-owned enterprises (SOEs) to compete with private firms for government-funded projects on an equal footing.
The association said the federal government had introduced clause 42(f) into the Public Procurement Rules 2004 through SRO 834(I)/2021, allowing government-owned organisations and SOEs to directly contract with other state entities.
It claimed that following the amendment, federal and provincial governments had strengthened existing SOEs and established dozens of new entities, which had secured numerous IT and telecom projects through direct G2G arrangements over the past five years without competitive bidding.
“This has severely crowded out the private sector, which has invested heavily in infrastructure and services over the last two decades,” the association said.
It pointed out that the government was a major purchaser of IT, telecom and digital services. While a significant portion of procurement spending went to international suppliers for hardware and software, the share previously available to local firms had increasingly shifted towards government-owned companies.
The association warned that the reduced market share was limiting local businesses’ ability to expand and compete internationally.
It also alleged that G2G arrangements created an uneven playing field, with state-linked entities and preferred contractors sometimes benefiting from regulatory exemptions, preferential licensing and implicit government guarantees unavailable to private companies.
The association further argued that increased state dominance was discouraging innovation, saying the regulator’s dual role as market operator and overseer created higher barriers for private businesses and weakened incentives for commercial research and entrepreneurship.
It also criticised the performance of state-backed entities, arguing that the absence of competition could reduce incentives to improve efficiency and services.
“In the long term, the majority of them fail — like PIA, Steel Mills, Discos, etc. — and become a burden on the economy,” it warned.
The association further alleged that some government agencies were using subcontracting arrangements to bypass competitive procurement. It claimed that after receiving G2G contracts, several SOEs subcontracted projects to preferred private companies without open bidding.
“The government is effectively dismantling the private sector that contributes to the national economy through taxes, job creation and innovation,” the letter said.
