On February 15, Prime Minister KP Sharma Oli told Parliament that awarding contracts to companies without examining their capacity had resulted in low capital expenditure.

According to the Oli, a handful of builders and contractors were holding the lion's share of the government contracts.

Contracts worth 44.4 percent of the total contracts related to urban developments were in the hands of just 18 companies. Similarly, contracts worth 47.6 percent of total contracts related to roads were also in the name of 18 companies and contracts worth 66.7 percent of total contracts related to water supply were also held by 18 companies.

“The government is correcting these anomalies by amending the public procurement regulation,” the prime minister had said in his Parliament address.

The government had made provision of awarding contracts based on the capacity of the bidding companies through the eighth amendment to the Public Procurement Regulation last year.

But the government is yet to develop a proper system that helps examine the bid capacity of companies, according to the government officials and contractors.

Although the Public Procurement Monitoring Office has the office has a software where some details of contracts can be uploaded, it is not comprehensive enough to calculate the bidding capacity of the companies involved in project development.

"The software does not show details about which contract is running, which company has completed the work and how much work a company has accumulated,” a senior official at the procurement monitoring office told the Post.

As per the eighth amendment to the regulation, a bidder can get a contract up to seven times its average turnover of three years. The amount equivalent to the seven times the size of average turnover of three best years of the bidder should be calculated by deducting the annual liability of the existing contracts. The provision regarding bid capacity is also expected to create opportunities for more contractors.

But so far these bidding criteria have not been put to the test, as the procurement monitoring office lacks the system and updated information to track the activities of builders and contractors.

“Recently, there has been discussion regarding this issue at the Prime Minister’s Office and efforts are being made to accommodate all necessary information regarding the bid capacity of companies,” the official at the procurement monitoring office said.

In the absence of an advanced integrated software system, the Department of Roads, has been relying on documents submitted by the bidders to evaluate their capacity.

“We have no option but to depend on the documents submitted by bidders, as there is no proper system in place that can automatically give a clear picture about the bid capacity of the companies,” said Shivahari Sapkota, spokesperson for the department.

Many contractors have been uploading their details in the software of the procurement monitoring office but there is still a need for an integrated software system, contractors say.

Rabi Singh, president of Federation of Contractors’ Association of Nepal, said there should be a system that automatically shows the latest bidding capacity of a contractor.

The federation has long been demanding for standard bidding capacity criteria so that more contractors could vie for government contracts. 

There are around 15,000 contractors across the country, according to the federation.

“With a single company occupying a large number of contracts, many other companies are struggling to survive,” Singh told the Post.

Despite the procurement monitoring office starting to take details from the contractors, there has been little coordination between the office and the government agencies that awards contracts.

For example, the Department of Roads issues by far the largest number construction related tenders and awards contracts every year. However, there is little coordination between the procurement monitoring office and the department regarding the enforcement of regulation on bidding capacity.

“We only check whether the bidding companies have been blacklisted or whether they have any court case from the procurement monitoring office at the moment,” said Sapkota, the spokesperson of the department.

The department maintains its own software ‘Contract Monitoring System’ where it keeps details of contracts— when the contract was awarded, who the contractor is, deadline of contract and whether any deadline of contract has been extended.

“But, it only gives us information about road and bridge contracts. It does not have any records on contracts involving other projects such as building houses, irrigation facilities and drinking water,” Sapkota said.