Amendment to Public Procurement Rules 2007

Contractors oppose law barring graft-accused to bid govt projects

Published On: May 19, 2019 08:36 AM NPT By: Republica  | @RepublicaNepal

KATHMANDU, May 19: Civil contractors have blamed the government for introducing regressive policies to not only discourage the construction sector but to damage the entire construction industry through the amendment in Public Procurement Rules 2007.

They have strongly opposed the provision of barring any construction company, one of whose shareholders is charge-sheeted of corruption at the court, from participating in public procurements.
Experts who framed the Public Procurement Act 2007 are also unhappy over the provision inserted by the government. They said it was an ‘attempt of killing the construction industry’.

“This provision is against the public interest and this is not in the spirit of the law that we framed,” said Dinkar Sharma, who framed the act in 2007. Sharma is also a former director general of the Department of Roads.

The amended law was published in Nepal Gazette on Monday. 

General Secretary of the Federation of Contractors’ Association Nepal, Roshan Dahal, said that civil contractors may face such charges any time, and the provision may make several companies ineligible to participate in the contracts of the public entities. 

Issuing a press statement on Friday, FCAN said: “It has breached our fundamental right, and we have asked the government to correct it.” 

“Anyone may file a complaint at the Commission for the Investigation of Abuse of Authority and make us vulnerable of being charge-sheeted at the court. This makes us feel extremely insecure to do our work,” argued Dahal. 

Before this amendment, there was no such provision of barring of civil contractors in public procurement.

Limiting the time extension to 50 percent from the validity of the contract period (which means one year of contract can be extended only by maximum 6 months) is another issue the civil contractors are not happy about.

The project manager can extend up to 15 percent time of the contract term, while department head enjoys the power of giving additional 10 percent time to the contract period. Likewise, concerned government secretary has the authority of extending time by 25 percentage points. 

The government has argued that this provision is introduced to control unlimited time extensions and delays in projects. 

Previously, project manager had the sole authority of extending contract period multiple times. “This will lead termination of many contracts and also result in blacklisting of almost all civil contractor firms because almost majority of them suffer time delays due to one or the other reason,” argued Dahal.

Commenting on this provision, Sharma said that although the intention behind this provision was good, dividing and transferring of the power to higher authorities was completely meaningless and unnecessary. 

“The secretaries have no idea of project management and estimated costs. Therefore allowing them to extend contracts gives them an authority that they do not know how to use,” added Sharma.

Likewise, the contractors are also not happy with the new provision of bidding capacity in applying for a public bid. The counting system of average annual turnover of a contractor has been changed. In the new system, their average annual turnover will be calculated from the last five years’ figures, whereas previously it was taken from the best three turnovers of the past ten years. 

Dahal said: “Now we have to have higher annual turnover to bid for the same value of contract. This may push several contractors out of business.” 

Sharma however welcomed the provision and said that it gave priority to the active contractors having good recent records. 

Civil contractors have, however, welcomed a provision that prohibits the packaging of different construction works into one. They have also welcomed another provision that bars government officials from publishing tender notice without needful budget allocation.

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