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20th Anniversary Souvenir 2024
There are lots of problems in the procurement The main challenges in Nepal’s procurement
system of Nepal. Inadequate capacity for efficient processes can be characterized as follows:
procurement and drawbacks in the prevailing legal
Procurement law focuses on low bidding
provisions are the two major problems being faced
(cost concern) rather than on quality. As a
by public entities in Nepal. There is a practice of
result, there have been instances of bidders
procurement without an approved multi-year and
going up to 30% below the estimated cost in
annual procurement plan. Only need-based and
order to win contracts, which then
timely public procurement can contribute to
compromises on the delivery and quality of
development and nation-building by utilizing public
the goods/services.
expenditure properly. Weak implementation of
procurement contracts is a serious matter appearing Lack of development friendly laws. There
in the procurement process. There is a lack of are various laws which needs to be complied
continued monitoring of the public procurement during the procurement but they are outdated
proceedings. Corruption has been increasing due and not relevant today. Due to provision of
to the lack of an effective penal system. Thus, the these laws, acquisition of land and cutting
culture of reward and penal system should be trees for the construction/expansion of
developed. Human resource development is a key infrastructure is very difficult.
aspect of proper functioning of the public The procurement law has provisions for
procurement system. Currently, officials involved
penalties for non-compliance but these
in procurement are not well trained. A lack of
provisions are very weak and rarely
professionalism in officials involved in procurement
enforced. As a result, contractors may not
remains one of the major weaknesses. There is lack
be incentivized to deliver with high quality,
of adequate procurement related guidelines, manuals
low cost, and short amount of time.
and materials. There is also no guideline and format
for the cost estimate of goods. Lack of coordination between public entities.
Public entities have to take approval from
Challenges
various authorities for the execution of
The main problems seem to be an insufficient project. These authorities are process oriented
capacity to undertake procurement efficiently and rather than result oriented. They are taking
an outdated system of procurement rules. They are long time for giving approval/site clearance.
creating hurdles for efficient, transparent and
Lack of adequate technological adoption in
competitive procurement. The Public Procurement
the procurement process. Public entities are
rules has been amended twelve times since its
using e-bidding for the procurement but they
enactment. However, it still has effectively failed to
are not using adequate technologies for
increase the scale and efficiency of even budgeted
contract administration.
capital expenditure and equally failed to ensure
fairness and transparency in the bidding process. Public procurement is a specialized
The public procurement laws are process-oriented profession requiring effective integration of
rather than result-oriented. Due to this capital technical, financial, and legal requirements
expenditure has remained chronically low. in its process of planning, contractor
Confusion in the construction modality, the selection, and execution. There is lack of
involvement of multiple-stakeholders in monitoring adequate procurement professional and
and evaluation, low bidding, hurdles in land capacity in public entities.
acquisition/site clearance and the shortage of skilled
Private sector is more focus on wining the
technical human resources as the major problems
tender rather than timely completion of
in the execution of public procurement in Nepal.
project specially in construction sector.
Professionalism is lacking in the bidders which has
Capacity of the bidder is assessed based on
affected procurement adversely.
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20th Anniversary Souvenir 2024
their capital only. There is a lack of adequate bidder whose bid is closest to the average bids
capacity and professionalism in the private among all the participating bidder wins.
sector.
It is necessary to make the procurement system
Due to anti-competitive practices most of the easy, smart, technology-friendly, and development-
project are secured by few contractors. They oriented. Currently, 30 days and 45 days’ time is
have not adequate capacity to complete the given for bid submission for national bidding and
project on time. Due to this most of the international bidding respectively. We have already
projects are not completed in stipulated time started e-bidding. Bidder can submit their bids from
and cost. anywhere without physically coming to public
entity. Therefore, bid submission time can be
Poor monitoring of procurement and contract
reduced to 15 days for national bidding and 21 days
management. There is lack of accountability
for international bidding.
in project manager/office. No one is taking
responsibility for delay completion or low We should adapt good practices from around
quality of the project. the world to promote comprehensive procurement
reform, including legal, judicial, and institutional
reforms, that would enable public procurement
processes to contribute effectively to achieving its
development goals.
The executing and implementing agencies need
to boost their capacity on technical and
administrative matters related to efficient
procurement, including clarity about the scope and
nature of work, contract management methodology,
and the associated financial aspects of procurement
design and processing. Competent human resources
are required for its efficient execution of
procurement. To develop the capacity of public
entities, PPMO should develop required Standard
Bid Documents (SBD), Guidelines, Manuals etc. and
arrange training, seminar, interaction programs for
public officials involved in procurement. It is better
There is need to review existing procurement to conduct procurement-related training through the
related laws and institutions and develop strategies establishment of an online training portal. Human
to reform existing systems. There is a trend of resources can be developed by including the content
selecting a bid having the lowest price but the quality relating to public procurement in the curriculum of
aspect is neglected by public entities. With these universities as specialization. The experts relating
provisions we have seen the winning bid being to procurement management should be acquired as
significantly below the estimated cost of the project. permanent staff to develop professionalism.
When winning bid are considerably below the cost A careful procurement planning and effective
estimates, the quality of the project is compromised. performance monitoring is critical subject for
Additionally, it directly hinders project completion efficient execution of projects. Project manager/
resulting into defaults and delays. The procurement office should be made accountable for the
laws should clearly be attracted to focusing on the completion of project within the stipulated timeline
costs as well as quality of services. We can make by conducting regular supervision, monitoring, and
provision of Average Price bidding, wherein the quality control measures. Latest technology/
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20th Anniversary Souvenir 2024
software should be used for the assessment of the Strong incentive and penalties system for
performance of procurement processes based on behavioral change of private sector should be
various indicators and factors. We should identify embedded in the procurement processes with a
specific problems and their potential solutions of strong legal and regulatory reinforcement
selected projects based on the assessment. Further mechanism of these provisions.
procurement audit should be carried out to measure
The local and provincial governments within
the effectiveness of public procurement.
their legislative rights should be given authority to
Public Procurement Management Information formulate their procurement laws or guidelines as
System (PPMIS) per their geographical and resource mobilization
We should introduce participatory approach for needs. Federal government should only support
monitoring, reporting and social accountability of these laws to be nationally synchronized. An
infrastructure projects. Further, we should develop accountability mechanism, locally developed and
mechanism to report infrastructure flaws and faults owned, needs to be put in place to stop the leakages
via mobile app or another platform in real-time by from the national treasury.
general public to concerned authority.
We need to enhance the capacity of the private References:
sector specially in construction sector. Capacity to
perform of the bidder should be kept in mind during 1. Issues in Public Procurement in Nepal, my República
formulation of qualification criteria of bidders. 2. Public Procurement Act, 2063
Capacity of the domestic bidder should be increased 3. Public Procurement Rules, 2064
by encouraging domestic bidder to participate in joint
4. Status and Issues on Public Procurement Processes-
venture with foreign bidder. Integrity and ethics of
Outcomes of Some Infrastructure Projects from
contractor is the most important factor for smooth
Sudurpaschim Province, Nepal, Kings College.
execution of procurement. Hence, we should
promote integrity and ethics of contractor. 5. [Link]
"Your employees are your company's real competitive advantage.
They're the ones making the magic happen—
so long as their needs are being met."
- Richard Branson
"The function of HR is not just to implement policies
and procedures, but to build the culture,
give it a face, and nurture it over time."
- Jack Welch, former CEO of General Electric
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