As the number of contractors blacklisted for poor performance keeps rising, big and influential firms with strong political linkage have managed to stay clear.

The Public Procurement Monitoring Office, which keeps track of government contracts, blacklisted 52 contractors last fiscal year. But the firms having large contract portfolios are surprisingly not on the PPMO blacklist despite their poor track record.

According to the PPMO’s annual report, the number of contractors blacklisted has surged over the past three years. The monitoring office blacklisted 52 contractors on the recommendation of government agencies in the fiscal year 2017-18. The number of such contractors was 47 in the fiscal year 2016-17 and 18 in FY 2015-16.

A majority of the companies blacklisted have contracts with the Department of Roads, Nepal Police, Nepal Army, and the Lumbini Development Trust, among others.

The blacklist doesn’t have big names like Pappu Construction, Shailung Construction, Kalika Construction, Rasuwa Construction and Surya Construction, which won multiple contracts but failed to complete their tasks on schedule.

The performance of Shailung Construction, which has grabbed many road projects inside Kathmandu Valley, is far from satisfactory. The firm is yet to complete two of the major road projects—Nagdhunga-Kalanki-Tripureshwor and Kamalbinayak-Nagarkot. Shailung Construction Chairman Sharada Prasad Ahdikari is the landlord of Nepal Communist Party Co-chairman Pushpa Kamal Dahal.

Kalika Construction is recently in the news for the collapsed main canal of the multi-billion rupee Sikta Irrigation Project. The quality of construction of the project that aims to irrigate 80 percent of arable land in Banke district has been questioned after repeated collapses of the canal. Kalika Chairman Bikram Pandey is a leader of the Rastriya Prajatantra Party-Democratic.

The Pappu Construction owned by Hari Narayan Prasad Rauniyar, a lawmaker of the ruling Sanghiya Samajbadi Forum-Nepal, is notorious for taking as many contracts as possible, delaying them, and failing to maintain quality. Pappu has over 30 contracts related to bridge construction—most of them running behind schedule.

On June 29, the Eastern Section Mid-Hill Highway Project sought clarification from nine contractors including big names like Pappu, Rasuwa Construction owned by Nepali Congress Leader Mohan Acharya, Surya Construction, and Biruwa Construction, among others, for poor road and bridge works.

Although the project office said it was not satisfied with the contractors’ clarifications, it is yet to initiate the blacklisting process. Satyandra Shakya, project manager of the highway, said that Pappu and other contractors started some work on the bridges following the warning but the remedy was not convincing.

“But as long as a contractor wants to continue its work by paying fines as per the law, we encourage it instead of terminating the contract and blacklisting them,” he said.

Road Department officials say they want completion of a project from the same contractor as far as possible because calling fresh bids costs more time and money.

“Government agencies don’t usually blacklist big contractors because they may go to the court and get a stay order. This may halt a fresh tender process, leading to delays in implementing critical infrastructure projects,” said Mukti Gautam, spokesperson for the Road Department.

Officials said contractors often knock on the court’s door to avoid blacklist. Around March this year, the Bridge Division of the Road Department sought to blacklist Pappu Construction for the collapse of the bridge in Babai River at Jabbighat, Bardiya, on August 13, 2017.

“As we issued a warning to blacklist the contractor before recommending action, the contractor moved the Supreme Court and got an interim order against blacklisting,” said Arjun Jung Thapa, chief of the bridge division.

“Since the government has no mechanism for assessing the capacity of a company while awarding a contract, a single firm gets a lot of projects at a time. But such contractor fails to mobilise equipment and human resource for all the projects, causing project delays,” said Gautam.

According to the Public Procurement Act, one who fails to fulfil the responsibility stated in the contract, signs agreement by boasting wrong facts or one who doesn’t sign contract after being awarded it are blacklisted on the recommendation of a government agency.

Government agencies recommend blacklisting after terminating the contract. A blacklisted firm cannot participate in any new government contract for one to three years.

Number of blacklisted firms

Fiscal Year           Number

2017-18                         52

2016-17                         47

2015-16                         18

Source: Public Procurement Monitoring Office