The Public Procurement Monitoring Office has initiated the process to amend the Procurement Act. The 100 agenda for governance reforms approved by the Cabinet meeting led by Balendra Shah on Chaitra 13 has mentioned that the Public Procurement Act will be amended within 30 days.

The Procurement Monitoring Office has placed the initial draft on the office's website on Chaitra 25 to collect suggestions on the initial draft of the bill to amend the Public Procurement Act, 2063. Seven days have been given for this. The draft proposes to reduce the amount of the mobilization amount received upon signing the contract agreement to remove the consumer committee.

In Section 8 of Sub-section (1), Clause (a), Sub-section (5) of the Procurement Act, it has been proposed to remove the word "involving the consumer committee or beneficiary community in the procurement of goods, construction work or other services" from the act. In Sub-section (2) of Section 13 of the original Act, instead of submitting the documents proving technical capacity and the financial proposal (bid score) in a single envelope, a new provision has been proposed.

If the documents proving technical capacity are to be submitted in a single envelope, the documents proving technical capacity and the financial proposal will have to be submitted in a single envelope. If the documents are to be submitted in two envelopes, a proposal has been added to submit the documents proving technical capacity (technical proposal) and the financial proposal in separate envelopes and seal them and then place those separate envelopes inside another single envelope and seal them.

The 100 agendas on governance reforms approved by the Council of Ministers led by Balendra Shah on 13 Chaitra mention that the Public Procurement Act will be amended within 30 days. In Section 14 of the Act, in the context of invitation to bid (contract), it is mentioned in Sub-section (1) that the notice of invitation to bid or pre-qualification proposal should be published in a national daily newspaper and in the case of international bids, it can also be published in international media. After the said Sub-section, a restrictive clause has been added to the draft that in the case of invitation to bid or pre-qualification proposal through electronic procurement system, such notice should not be published through any means other than electronic system.

In Section 14 of Sub-section (4) of the same Act, it is mentioned that while publishing the notice of invitation to bid, a period of at least 30 days should be given in the case of national bid or pre-qualification notification and at least 45 days should be given in the case of international bid. The proposed draft, however, states that the period of notice to be published will be as prescribed instead of the said Section.

A new amendment has been proposed to Section 52 of the original Act. Currently, this Act states that a public body may issue a mobilization payment not exceeding 20 percent of the purchase agreement amount by taking an advance bank guarantee from the supplier, construction entrepreneur or service provider after the purchase agreement. However, the proposed draft states that a public body may issue a mobilization payment not exceeding 20 percent of the purchase agreement amount by taking an advance bank guarantee for the construction site preparation, temporary camps, worker arrangement and worker housing, machinery and equipment management required to start work after the purchase agreement, and for the supply of goods and consulting services, it states that a mobilization payment may be issued not exceeding 20 percent of the purchase agreement amount by taking an advance bank guarantee after the purchase agreement.

‘While issuing a mobilization payment, the payment may be issued not exceeding half of the first approved payment amount after taking the work schedule,’ the proposed Act adds, ‘The work must be started within 30 days from the date of receiving the payment for the first time.’

It has been proposed that if the payment amount is not received and the work is not started within the specified time, the bank guarantee taken by the concerned public body should be confiscated. It has been proposed that additional funds can be given only after confirming that the work has started. A draft has been proposed that the mobilization amount will be paid only through a bank account opened separately for the work for which the agreement was signed. If the work schedule submitted with the payment amount is not done as per the agreement made with the public body and the payment amount received is not used for the related work, the advance bank guarantee will have to be forfeited and the agreement will be cancelled.

The proposed draft states that such a supplier, construction entrepreneur or service provider will be taken action according to the prevailing law by canceling the agreement. As per Sub-section (7) of Section 59 (8), if a person who enters into a procurement agreement with a public body does not start the work as per the agreement, leaves it midway or does not progress the work as per the agreement, the public body may terminate such agreement at any time.

If the agreement is terminated according to Sub-section (7), the entire guarantee kept for that work will be forfeited. It is mentioned that the amount required to complete the remaining work as per the agreement due to the termination of the agreement will be recovered from the bidder who does not perform the work as per the agreement as a government due. According to the proposed draft, a new provision has been proposed instead of the current sub-section (8).

If the contract agreement is terminated, the entire performance security kept for the work will be forfeited. The additional amount to be borne by the public body will have to be determined based on the updated cost estimate made by the public body to complete the remaining work and the amount to be paid by the concerned supplier, construction entrepreneur, consultant or service provider when the work is completed.

‘The additional amount will be recovered from the supplier, construction contractor, consultant or service provider who does not complete the work as per the agreement,’ the proposed draft states, ‘In the event that the agreement is terminated, the public body will be prevented from inviting bids to complete the remaining work as per the updated cost estimate.’

A new proposal has been made by removing the provisions in Sub-section (1) of the original Act 61A. Accordingly, if the procurement-related action is not initiated within the stipulated time or if the official concerned with the public procurement work does not take the necessary decision in this regard, the authorized official will take action against such official in accordance with the prevailing law.

‘If a construction site is not arranged, compensation or compensation is distributed without ensuring the removal of trees and plants, structures to be removed, without allocating a budget for it, and without approving the environmental study report required in accordance with the prevailing law,’ the draft to be amended states, ‘If the necessary decisions are not made in time in the implementation phase of the procurement agreement, such as providing site and design drawings, issuing variation orders, extending the period, paying the submitted bill, etc., and if the written notice to put them on the blacklist is not sent, the authorized officer will take action against the contracting officer in accordance with the prevailing law.’

It has been proposed to add a section to the Act to encourage employees who complete the procurement process on time. For that, Section 61 B has been added, where it is proposed to provide incentives as prescribed to employees involved in the procurement process on the basis that the Government of Nepal or a public body has completed the procurement-related work within the stipulated time in a quality manner and achieved excellent results.

It has been proposed that construction entrepreneurs will also be honored and rewarded if they complete their work in a quality manner ahead of schedule. For this, it has been proposed to add Section 62A of the main act. In that section, it has been proposed that the Government of Nepal or the highest executive body of a public body may give a specified amount and a certificate of appreciation as a reward to construction entrepreneurs who complete construction-related work in a quality manner within the prescribed period.

According to the Legislation Act, 2081, a draft of any law is prepared and placed on the office's website for the purpose of collecting suggestions to inform everyone publicly, said Ram Prasad Acharya, Joint Secretary and Spokesperson of the Public Procurement Monitoring Office. ‘Before preparing the draft, we called almost everyone involved in the procurement process to the office for discussion,’ he said. ‘After putting the draft on the website, suggestions are coming in via email and social media. The draft that is currently in the initial stage.’

After receiving suggestions for improvements and additions, he said that he will sit with procurement law experts, adjust the language, prepare the draft, and send it to the Prime Minister and Council of Ministers. ‘After sending it to the Prime Minister’s Office, there will be further discussions on the revised act, and then it will go to the Council of Ministers and then to the Parliament,’ he said. ‘Therefore, we can finalize it and send it within the given time of 30 days.’

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This is the current arrangement and the new proposal.

1. Arrangements related to consumer committees

Now: Amendment proposal that consumer committees/beneficiary communities can be involved in procurement:

Removing such arrangements 2. Publication of tender notice

Now:

National tender → Mandatory in national daily International → International media also

Amendment proposal:

If called through electronic system, publication in other media is not required 3. Notice publication period

Now:

National → At least 30 days International → At least 45 days

Amendment proposal:

The period will be ‘as specified’ (fixed day removed) 4. Mobilization (Payski) amount

Now:

A maximum of 20 percent can be paid as a payski Amendment proposal:

Only on the basis of need and justification The first installment will not be more than half of the approved amount

Work must start within 30 days

If work does not start, bank guarantee will be forfeited

Expenditure only from a separate bank account

5. Action against misuse of funds

Now:

Limited to clear and strict provisions Amendment proposal:

If work is not done/misused, bank guarantee will be forfeited, contract will be cancelled and legal action will be taken 6. Termination of contract

Now:

Confiscation of guarantee, remaining amount will be recovered as government dues Amendment proposal:

Calculate actual additional burden by estimating updated cost, recover amount from contractor on that basis and invite bids again 7. Action against responsible officials