KATHMANDU, April 13: The government has initiated steps to amend the Public Procurement Act, 2007, aiming to introduce stricter accountability measures for project officials and contractors alike.
The Public Procurement Monitoring Office has prepared a preliminary draft of the amendment bill on April 8. In line with Section 6(2) of the Legislation Act, 2021, which requires draft bills to be made public for feedback, the office has sought public opinions and suggestions until April 14.
Officials said the proposed amendment includes changes to 38 different provisions of the existing 19-year-old law, which has often been blamed by entrepreneurs for hindering development projects. Similarly, the Ministry of Finance has frequently pointed to defects in the current act to explain slow capital expenditure.
While the government has amended public procurement regulations multiple times over the years, it has faced criticism that those revisions were designed to benefit a handful of contractors.
SC makes publication of public procurement tender notices in ne...
As part of its ‘100-Point Governance Reform Action Plan,’ the Balen Shah-led government had announced plans to amend the Public Procurement Act within 30 days. The proposed revision aims to introduce broad reforms in the procurement system and project management by minimizing legal hurdles.
Key Proposed Changes
The draft proposes a ‘structural change’ by introducing a ‘reverse auction’ method, under which bidders can competitively lower their prices while viewing each other’s quotes through an online system. The contract will be awarded to the bidder submitting the lowest price within the specified time.
Any bid that is 50 percent lower or 30 percent higher than the cost estimate will be considered ‘abnormal.’ In such cases, the bidder must provide technical and financial justification. If the explanation is unsatisfactory, the evaluation committee will have full authority to cancel the bid.
To address the problem of contractors taking advances without performing work, the draft includes strict provisions. If the advance is misused or work does not begin within 30 days of receiving it, the bank guarantee will be directly forfeited, and the contract terminated.
The proposed bill also aims to make government procurement completely paperless. It introduces the concept of a ‘Government E-Marketplace,’ allowing public entities to directly purchase daily consumable goods or services from designated online markets.
In support of the ‘Make in Nepal’ campaign, the draft broadens the definition of domestic goods and mandates the purchase of goods that use domestic raw materials or have a certain percentage of local value addition.
Accountability for Officials
Crucially, the draft establishes accountability for government officials involved in the procurement process. It proposes departmental action against employees who call for bids without proper site preparation—such as compensation, tree cutting, or environmental studies—or who fail to make timely payments after work completion or provide incorrect designs.
For complex and large infrastructure projects—including tunnels, bridges, and hydropower plants—the bill proposes special provisions for ‘Engineering, Procurement, and Construction’ (EPC) and turn-key methods. Under this framework, a single company will be responsible for the project from design to construction, facilitating better risk and cost management.
Following the public feedback period, necessary revisions will be made before the draft is forwarded to the concerned ministry and then to the Cabinet for approval. Once endorsed by the Cabinet, the bill will be tabled in Parliament, and after passage, it will be sent to the President for authentication before becoming law.
