The government has amended the Public Procurement Act, 2063 (Second) by including provisions ranging from reducing the time for the call for tenders to criminal action for misuse of the tender funds. The issue of price adjustment, which has been repeatedly raised by construction entrepreneurs, has also been included in the act. 

Section 58 (a) 3 of the amended Act states that if it is found that the funds provided by the public body, including the tender funds, have been spent for purposes other than those intended, criminal action will be taken against the construction entrepreneur, supplier and consultant under fraud and forgery. 

Action will be taken against the contractor if it is found that the funds provided for the implementation of the procurement agreement have been used for purposes other than those intended, such as the tender funds, despite being in a position to act in accordance with the procurement agreement, are used for purposes other than those intended. "If it is found through investigation or investigation that payment has been received by submitting false details or documents, or that work has been abandoned without being done after receiving payment, or that damage has been caused to a public body or the state, the directors, representatives, and responsible officials involved in the act will be considered to have committed an offense under the prevailing criminal law, including fraud or forgery," the Procurement Act states. 

This provision has been included for the first time in the Procurement Act. Earlier, construction entrepreneurs used to receive up to 20 percent of the total contract amount in two installments. Initially, when construction entrepreneurs received the advance payment in this way, the construction work was stalled, which led to the contract becoming invalid. 

According to Section 55 of the Act, regardless of anything written in the procurement agreement, if there is an unnatural increase in the price of construction materials, labor, fuel, equipment or transportation costs due to international reasons, war, disruption in the supply chain, epidemic, blockade or other special circumstances, the public body can adjust the price in accordance with the procedure approved by the Council of Ministers. Construction entrepreneurs have welcomed the inclusion of this demand, which has been raised for a long time, in the Procurement Act.

The practice of awarding contracts based on the lowest price (low bidding) has been abolished and contracts have been awarded using the average evaluation method, which will help in quality competition and effective work performance in the construction sector, said a statement issued by the Federation's General Secretary Shivahari Ghimire on Tuesday.

The government has also decided to reduce the time taken to call for contracts through the Procurement Act. The time for national and international contracts has been reduced to speed up the procurement process. Earlier, 30 days were initially set for national contracts and 15 days were set for re-calls. The revised act stipulates 21 days for national-level bidding and 7 days for re-invitation. The time limit for international-level bidding is 30 days and 15 days for re-invitation. Earlier, it was 45 days and 21 days for re-invitation.

The previous act had a provision that the lowest bidder would be awarded the contract. According to the revised act, the average score of the bids received by the bidders will be determined and the bidder closest to that average score and not exceeding the cost estimate will be selected. The revised act stipulates that bidders who accept a reduction of more than 30 percent should be removed from the evaluation process. Earlier, there was a provision that the bidder submitting the lowest financial proposal will be selected.

The act includes a provision that a variation order of up to 5 percent can be approved by a gazetted third-class chief. A gazetted second-class or equivalent chief will be allowed to issue a variation order of up to 10 percent. A variation order of up to 15 percent will be made by a gazetted first-class or equivalent head of the public body concerned. The Act states that a variation order can be issued by the department head for more than 15 percent. Earlier, the authority to decide on this was from the Deputy Secretary to the Council of Ministers. 

The amended Act states that the relevant bodies must provide the necessary workplace for the implementation of public construction. The Act stipulates that the federal, provincial, local levels and relevant bodies are responsible for facilitating the supply of construction materials, allowing the use of forest areas, transferring infrastructure including electricity, drinking water, sewage, telecommunications, and making access roads easier. The Public Procurement Monitoring Office has stated that there was no such provision before. 

If decisions, approvals, consents, recommendations or facilitations within their jurisdiction are not made on time, departmental action will be taken against such officials or bodies and the government will stop the grants provided to such bodies. 

In the event that the purchase agreement is canceled due to the construction contractor, the revised act states that the performance security will be forfeited, the contract amount will be deducted from the updated cost estimate of the remaining work, and the remaining amount will be recovered as government dues. Earlier, it was mentioned that all the costs incurred to complete the remaining work will be recovered from the construction contractor. This provision was opposed by the construction contractors.

Bonuses will be provided to construction contractors and employees who complete the work before the specified start time. It is mentioned that bonuses, certificates of appreciation and awards can be given as incentives to construction contractors and employees who perform quality work during the initial contract period of national pride, transformational projects or as specified by the government.

The act also includes the issuance of technical guidance on EPC, design and build and turnkey contracts. The act has made provision for a government procurement service in the Prime Minister's Office to provide technical support to government agencies in supplier selection and procurement of goods.

Joint Secretary and Spokesperson of the Public Procurement Monitoring Office, Ram Prasad Acharya, said that the Procurement Act has been introduced with many new provisions. “The Act has come into effect as soon as it was published in the Gazette,” he said. “Now, we will formulate regulations, procedures, and standards based on the Act.”