The time being taken by the Public Procurement Monitoring Office to decide whether to blacklist Omni Business Group, which was controversially awarded the contract to supply medical goods to fight Covid-19 pandemic, has raised suspicions that this indecision could be politically motivated.

Given Omni’s close connection with the coterie of Prime Minister KP Sharma Oli, some observers suspect that the procurement monitoring office has been deliberately withholding its decision on the company’s fate. 

Officials at the procurement monitoring office have, however, claimed that there is no political influence in play.

The delay has been caused due to the failure of the Department of Health Services to adopt due procedure while requesting to blacklist Omni after terminating contract with the controversial company, the officials said.

According to the procurement monitoring office, it had sought details from the department and Omni on why the latter should or should not be blacklisted, as the department had failed to follow due procedure while putting in its request to blacklist the company the first time around. 

After terminating the contract unilaterally on April 1, the department had written to the procurement monitoring office to blacklist the company without any supporting documents. 

The procurement monitoring office had then sought all documents concerning the procurement and later an explanation why the blacklist request was made.

The department, in response, cited Omni's failure to supply adequate medical goods in the first delivery batch as the ground behind contract termination and the reason why the company must be blacklisted.

The department said that Omni’s failure to deliver the said amount of goods raised questions on its ability to deliver all the goods in time.

On April 10, the procurement monitoring office had sought clarification from Omni as to why it should not be blacklisted. In its response, Omni complained about the department terminating the contract prematurely without following due procedure.

“Normally, in a public contract, the bidder is given the opportunity to clarify its position before terminating any contract. But the department scrapped the contract before the deadline, without seeking any clarification from Omni,” a senior official at the procurement monitoring office said on condition of anonymity. 

As per the contract signed between the department and Omni on March 26, the latter was supposed to deliver all specified medical goods—protective gear, reagents , rapid test kits and other medical supplies—by April 5. The department terminated the contract with Omni on April 1 after it was revealed that the company had secured the contract despite quoting much higher rates compared to other bidders. The department itself has said that the rates of medical equipment supplied by Omni was 20 percent higher than the estimated rates.

Reports have already exposed the close relationship of Omni representatives with the inner circle of Prime Minister Oli, which helped the company secure the contract. 

Despite questions raised about the quality of products supplied by Omni, the department had not mentioned inferior goods as the reason for contract termination. 

“The department could terminate the contract mid-way if the goods supplied are found to be of inferior quality. But the department has not raised the quality issue when it decided to terminate the contract,” the official at the procurement monitoring office said.

The government had supplied the medical goods delivered by Omni to various health institutes across the country. 

A report of the Nepal Health Research Council had concluded that the rapid test kits supplied by Omni were of inferior quality.

The 75,000 rapid diagnostic test kits procured by the government through Omni are only able to detect the presence of the coronavirus antibodies 50 percent of the time, the councils’ report had said. 

The official at the procurement monitoring office said that the department's failure to adopt due procedure in terminating the contract and making a blacklist request had prompted the office to seek clarification from the department for the second time.

“We have just received the clarification from the department,” said the official, without elaborating the details. “ Based on the department’s clarification, we have also sought further clarification from Omni as to why it should not be blacklisted.” 

The official said the procurement monitoring office will take its decision once Omni has furnished its explanation.

As per Public Procurement Act, the procurement monitoring office should decide whether to blacklist any firm within six months after receiving a blacklisting request from the government entity.

“Usually, our office blacklists the firm once the government entity makes a request,” said Rajesh Kumar Thapa, director at the procurement monitoring office. “The secretary (of office) has the authority to decide whether to blacklist the firm or not.” 

As per section 63 (c) of the Public Procurement Act, the public procurement monitoring office may blacklist a firm if it is proved that a firm has made substantial error in the implementation of the procurement contract or has not substantially fulfilled the obligation under the procurement contract or the work carried out under the procurement contract is not of the quality set by the contract.

Meanwhile, Omni representatives have claimed that the contract was terminated without following due procedure, which contributed to an unwarranted defamation of the company. 

Omni’s Director Suman Singh told the Post that her company had followed all rules and regulations while getting the contract and that the first consignment of goods were delivered as per the contract’s specifications.

“The contract was terminated unilaterally before the deadline of supplying all the goods was over,” she said. “We were not given the opportunity to clarify our position and we have been victims of defamation.”

Singh said that her company would take appropriate legal measures, hinting that the issue of contract termination will be contested in court. 

As per clause 141 (2) of the Public Procurement Regulation, the procurement monitoring office could also immediately bar Omni from taking part in any new public bids for at least six months, until the decision on the case is taken.

But the procurement monitoring office has not invoked the clause, which has paved the way for Omni to take part in new public bids.

Thapa, the director at the procurement monitoring office, said that the Department of Health Services had not recommended to ban Omni.

“The department has to make the request and we have to have a sufficient ground to bar a company from taking part in new government bids,” Thapa told the Post.

In November 2018, the procurement monitoring office had barred Pappu Construction from taking part in new bids as per the request of Sikta Irrigation Project in Banke. Pappu was eventually blacklisted.

Omni, a relatively new company, has succeeded in securing many government contracts, including the Rs 3 billion project to open IT labs in 930 community schools, printing of voter ID cards for the Election Commission three years ago, and supplying paper to the Janak Sikshya Samagri Kendra.

Many attribute Omni’s success to the closeness of its owners with the political elites.