New Procurement Act to end hassles for PEsThe government has been working on a new Public Procurement Act in a bid to cut the red tape hindering public enterprises from competing with private companies
Public enterprises like Nepal Telecom, National Trading and Nepal Food Corporation have been complaining that the complicated procedures of the existing Public Procurement Act have prevented them from making timely purchases while private companies surge ahead as they are unfettered by such rules.
In order to allow timely purchases, the proposed act has provisioned that public corporations competing with the private sector can buy whatever they need under their own Purchase Working Procedure after getting the go-ahead from the Public Procurement Monitoring Office (PPMO) that keeps a watch on public procurement.
The proposed law has inserted this provision under the heading of Special Type Purchase Provision. The PPMO has prepared a draft act which is being examined by different ministries.
According to Guna Raj Shrestha, legal officer at the PPMO, the proposed act has also allowed government hospitals to make purchases through their purchase working procedure after receiving the PPMO’s okay. Similarly, the new act has opened the door for Nepali missions abroad to make their own purchase working procedures as per local needs and laws where they are located. They will be allowed to make purchases by preparing a guideline after obtaining the approval of the PPMO.
“The current act has not considered that Nepal has offices abroad, and this has made it difficult for Nepali missions abroad to make purchases and sell goods owned by them,” said Anup Kumar Upadhyaya, secretary at the PPMO.
“The present laws seem to have been designed for purchasing things needed by road, irrigation and drinking water projects, and their stipulations are impractical for other sectors,” said Upadhyaya.
The proposed act will also pave the way for purchasing goods through negotiation if there is a single seller. Such a situation exists, for example, when buying electricity as India is the only seller around. The current act has not envisioned purchasing goods and services through negotiation.
Since the current provision of awarding contracts to the lowest bidder has led to anomalies, and complaints have been raised about the misuse of the 20 percent mobilization fund given to contractors before they start work, Upadhyaya said that the new act and regulation would resolve these issues.
As per clause 27 of the present act, public entities have to select the lowest bidder. This has created problems like non-completion of development projects on time as contractors facing low profit margins and losses flee and delay work giving various reasons.
Upadhyaya said that under the planned new act, public entities could award the contract to a higher bidder if the lowest bidder does not meet the technical requirement.
“Bureaucrats making professional decisions and not awarding the contract to the lowest bidder have faced charges, and since then they have stopped taking risks and have been awarding contracts to the lowest bidder even if they were less competent. “No concrete decision has been taken in this regard, but it will be resolved through the act and regulation,” said Upadhyaya.
Likewise, the current Public Procurement Regulation allows public entities to provide up to 20 percent mobilization fund while Finance Minister Ram Sharan Mahat and Chief Secretary Lilamani Poudel have been saying that such money is being misused by contractors.
Upadhyaya said that the necessary measures would be taken through an amendment to the regulation to solve this problem.