The Public Procurement Monitoring Office blacklisted more than 100 contractors and suppliers in the last fiscal year 2020-21. The number is almost double what it was a year earlier.

The procurement monitoring office, which monitors the public-sector procurements, also blacklisting firms that are found to be violating the public procurement law and such firms are barred from participating in public procurement for a certain period.

According to its Annual Report 2020-21 released late last week, the monitoring office blacklisted 104 firms—contractors and suppliers to the public entities—for failing to work as per their contract agreements, failing to sign agreements after being awarded contracts, and for other breaches. In the fiscal year 2019-20, only 54 firms had been blacklisted.

This is the first time over 100 firms were blacklisted—and so many in a year—since the monitoring office started blacklisting firms in 2007, when only six had been blacklisted.

“One of the main reasons behind the surge in blacklisted firms is that about two dozen firms were associated with sick projects,” said Rajesh Kumar Thapa, director at the procurement monitoring office. “A number of contractors and suppliers also failed to complete their work owing to the pandemic but such firms also have been blacklisted.”

As per the Public Procurement Act-2007, a blacklisted firm can be barred from one year to three years from participating in public contracts.

Chakravarti Kanth, joint secretary at the procurement monitoring office, said the new public procurement regulations have set a limit on the number of times a contract can be extended so several firms were blacklisted because they could not complete their work within their last extended deadlines.

According to the 10th amendment to the public procurement regulations, the government offices were allowed to extend the contract deadline by a year in the case of the contracts signed before April 27, 2020, and such contractors and suppliers had sought deadline extensions.

But, contractors have been asking for further extension of the deadline citing the unforeseeable situation created by the Covid-19 pandemic.

In the last fiscal year, some of the contractors and suppliers who are known for their political connections were also blacklisted.

For example, Omni Business Corporate International, Pappu Construction and Shailung Enterprises are some of the enterprises whose promoters have direct political connections but still have been blacklisted.

But, as per the order of the Supreme Court, the procurement monitoring office removed Omni from its blacklist. “This was also the year when relatively more contractors and suppliers with political connections have been blacklisted,” said Thapa.

Omni was controversially awarded a contract for the delivery of medical goods from China despite quoting prices higher than the government’s own cost estimate and that of rival bidders.

Despite having no prior experience of supplying medical goods, Omni was chosen to supply the goods because of its alleged close relations with the then Prime Minister KP Sharma Oli.

The deal landed in controversy after it emerged that prices quoted by the company were much higher than what its rivals had proposed and on April 1 last year, the Department of Health Services terminated the contract.

The department and Omni had signed the contract on March 27 last year to deliver the medical goods worth $10.03 million in three phases even though the cost estimate of the department was $9.07 million.

After the termination of the contract, Omni moved the Patan High Court challenging the government decision and the case is sub judice. The company also moved the Supreme Court challenging the government decision to blacklist it and secured an interim order in its favour on September 23 last year.

After the company was blacklisted for just one year, questions were raised as to why it wasn’t blacklisted for three years. But officials at the procurement monitoring office said the company could have been blacklisted for three years only if the Department of Health Services said the goods supplied by Omni were of inferior quality.

But 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 council’s report had said. Questions were also raised about the quality of the polymerase chain reaction (PCR) machines supplied by the firm.

Likewise, two joint venture companies associated with Pappu Construction were blacklisted last fiscal year. Pappu-Nepal Pragati JV was blacklisted for failing to construct the bridges across the Khangsang and Sokhukhola streams along the Khurkot-Ghurmi road in July last year. Likewise, ZIEC-Pappu was blacklisted for failing to construct a bridge at Teku, Kathmandu across the Bishnumati River as per the original design.

Although the contractor completed the bridge, the Department of Roads has yet to take over the bridge over quality concerns.

Pappu is notorious for defaulting on construction deadlines and quality.

Its founder Hari Narayan Rauniyar was a lawmaker of the House of Representatives from the erstwhile Sanghiya Samajbadi Forum-Nepal and he was suspended from the lawmaker position after being charged with corruption by the Commission for Investigation of Abuse of Authority for a substandard construction of a bridge across the Babai river in Jabbighat, Bardiya.

Shailung Enterprises, which has been blacklisted by the procurement monitoring office, is owned by Sharada Prasad Adhikari, the landlord of CPN (Maoist Centre) Chairperson Pushpa Kamal Dahal.

Shailung was blacklisted on the recommendation of the government-owned Krishi Samagri Company.

The Krishi Samagri Company had awarded three contracts to Shailung on different dates last year to supply a total of 80,000 tonnes of urea fertiliser.

But, it failed to supply the fertiliser on time and this caused a shortage during the peak paddy planting season.

The Krishi Samagri Company had terminated the first contract with Shailung in early September, the second in late November last year and the third in early January this year.

On March 5, the company was blacklisted for a year for breaching one of the contracts and on July 5, it was blacklisted for one and two years separately for failing to supply fertilisers as per two other contracts.

Besides Shailung, Honiko Multiple Pvt. Ltd was blacklisted for a year on March 5 this year for failing to supply 25,000 tonnes of urea while Muktinath Krishi Company was blacklisted for two years on July 5 for failing to supply diammonium phosphate (DAP) and urea under two separate contracts. The company was supposed to supply 50,000 tonnes of fertilisers. Muktinath was awarded two separate contracts for supplying 25,000 tonnes of urea and 25,000 tonnes of DAP by December 3 and December 4 respectively last year.

“As all the companies failed to supply the fertilisers one after another, we initiated the process of penalizing them at the earliest,” said Bishnu Prasad Pokharel, spokesperson at the Krishi Samagri Company. “All three companies were new in the fertiliser supply field and this could be the reason for their failure to perform as per the contracts.”

After terminating the contracts, the company invited fresh tenders and brought 280,000 tonnes of fertilisers later last year.