Reform public procurement

The latest government decision to slash by half the advance payments made to contractors who secure state-funded projects through tender bids is a step toward minimizing the risk of misappropriation of taxpayer money by private sector operators. But we feel that this should be just a prelude to introducing more stringent measures and to ultimately scrapping the provision for releasing advance money to contractors, who have a track record of playing truant and ending up misusing the funds.



The current law - Public Procurement Act 2007 - allows state agencies to issue to contractors up to 20 percent of the total cost of a project soon after they secure the contract through public bidding. This provision was introduced to make life easier for local contractors, who have a history of working with low capital. But instead of making proper use of such money, many have been found diverting it to other commercial undertakings and even into real estate speculation. As a result, the public continues to bear the brunt of delays in the construction of roads, bridges, hydropower projects and other such infrastructure.



To arrest this malpractice, state-owned Kathmandu Valley Road Improvement Project recently introduced a new provision under which only half the amount provided for in the law would be released as advance payment. It also provides that installment payments to contractors would be released only after they submit progress reports and financial documents on the projects they are handling.



We are persuaded that these measures will put pressure on contractors to make proper use of resources and complete projects on time. A practice of working with scarce resources and under pressure to meet deadlines would enhance their efficiency levels and professionalism, which are prerequisite if they are to compete with foreign contractors that have started penetrating the construction market here.



We, therefore, urge the government to introduce this measure in all the projects that it hands out to the private sector as there is evidence that the money it funnels as advance payment has neither accelerated the pace of project implementation nor affected the output. The government should also realize that contractors these days are not as cash-strapped as in the past and have all the resources needed to hire or purchase the requisite equipment.



We know that the government has been making efforts to better regulate the public procurement sector through the introduction of facilities such as e-bidding, which has discouraged the hiring of thugs to land contracts and also helped cut project costs. We now wish to see the government take another bold step so that taxpayer money is never squandered away.

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