The newly amended Public Procurement Act (PPA) has untied the hands of public enterprises (PEs) and allowed them to buy specific goods and services without following lengthy procedures in a bid to enable them to compete with fast-moving private companies.

State-owned corporations have been complaining that they have not been able to compete with the private sector because they have to stick to lengthy public procurement procedures to buy even urgently required goods which leaves them far behind.

The new law has permitted them to create a working procedure to make purchases after getting the go-ahead from the Public Procurement Monitoring Office and developing a business plan, life cycle and net present value.

President Bidya Devi Bhandari signed the bill into law a few days ago after it was endorsed by Parliament.

Particular PEs which have to compete with the private sector will be allowed to purchase certain goods and services for business operations through the working procedure on procurement.

This is expected to benefit government corporations such as Nepal Telecom, Salt Trading, National Trading, Dairy Development Corpor-ation, Rastriya Banijya Bank, Rastriya Beema Sansthan and Nepal Airline Corporation, among others.

The Act has allowed the government to specify the PEs and the goods and services they can buy by taking a short-cut. PEs can purchase goods for taking them to foreign exhibitions and trade fairs under the working procedure.  This rule also applies to Nepali diplomatic missions abroad. Nepal Airlines Corporation has also been exempted from following the procurement procedure of the Act to buy equipment related to aviation and aircraft. 

Many PEs have also complained that their procurement process has been halted midway due to the intervention of the Commission for the Investigation of Abuse of Authority and other government watchdogs, preventing them from buying even emergency equipment. The new Act says the authorities probing the actions of PEs should seek documents related to their purchase plans without obstructing the procurement process as far as possible.

Besides making it easier for government agencies to buy things they need, it has also strengthened them against those who have signed procurement agreements with the government.

It says that any party which signs a procurement agreement with the government cannot terminate the contract without informing the government agencies.

However, government agencies can terminate the contract if the contractor or seller does not perform as per the contract, abandons work midway or does not exhibit satisfactory progress as per the agreement.

The contractor will also have to bear the additional cost of completing the task while going for a fresh procurement process.