Public Procurement Law in Nepal

I. Introduction to Public Procurement Law in Nepal

Public procurement in Nepal is governed by a comprehensive legal framework that aims to ensure transparency, fairness, and efficiency in the acquisition of goods, services, and works by government entities. The primary legislation governing public procurement in Nepal is the Public Procurement Act, 2063 (2007) and its associated Public Procurement Regulations, 2064 (2007). These laws establish the fundamental principles, procedures, and institutional arrangements for public procurement in the country.

The Public Procurement Act, 2063 (2007) was enacted with the objective of making the procedures, processes, and decisions relating to public procurement much more open, transparent, objective, and reliable. It also aims to promote competition, fairness, honesty, accountability, and reliability in public procurement processes, and obtain the maximum returns of public expenditures in an economical and rational manner by promoting competition, fairness, honesty, accountability, and reliability in public procurement processes.

II. Principles of Public Procurement in Nepal

The public procurement system in Nepal is built upon several key principles that are enshrined in the Public Procurement Act and Regulations. These principles serve as the foundation for all procurement activities and guide the actions of procurement officials and participating bidders. The main principles include:

1. Transparency: All procurement processes must be conducted in an open and transparent manner, with clear procedures and criteria for decision-making.
2. Fairness and Non-discrimination: All potential bidders must be treated equally and without discrimination based on nationality, ownership, or other factors.
3. Competition: Procurement should promote healthy competition among bidders to ensure the best value for money.
4. Accountability: Procurement officials and entities are accountable for their decisions and actions throughout the procurement process.
5. Integrity: The procurement process should be free from corruption, fraud, and unethical practices.
6. Value for Money: Procurement decisions should aim to achieve the best possible outcome in terms of quality, cost, and timeliness.
7. Efficiency: Procurement processes should be conducted in a timely and cost-effective manner.

These principles are reflected in various provisions of the Public Procurement Act and Regulations, and they guide the implementation of procurement procedures at all levels of government in Nepal.

III. Procurement Procedure in Nepal

The public procurement procedure in Nepal typically follows a structured process that includes several key steps. These steps are designed to ensure compliance with the principles of public procurement and to achieve the best possible outcomes for the procuring entity. The main steps in the procurement procedure are:

A. Step 1: Procurement planning

Procurement planning is a crucial first step in the public procurement process in Nepal. According to Section 6 of the Public Procurement Act, 2063 (2007), every public entity must prepare an annual procurement plan. This plan should include:

• Description of goods, services, or works to be procured
• Estimated cost of procurement
• Proposed procurement method
• Time schedule for procurement activities

The procurement plan serves as a roadmap for the entity’s procurement activities throughout the year and helps ensure proper budgeting and resource allocation.

B. Step 2: Preparation of bidding documents

Once the procurement plan is in place, the next step is to prepare the bidding documents. The Public Procurement Regulations, 2064 (2007) provide detailed guidelines on the content and structure of bidding documents. These documents typically include:

• Instructions to bidders
• Bid data sheet
• Evaluation and qualification criteria
• Bidding forms
• Schedule of requirements
• General and special conditions of contract
• Contract forms

The bidding documents must be prepared in a manner that ensures clarity, completeness, and fairness to all potential bidders.

C. Step 3: Publication of tender notice

After the bidding documents are prepared, the procuring entity must publish a tender notice to invite bids. Section 14 of the Public Procurement Act requires that the notice be published in a national daily newspaper and, if necessary, in international media for high-value procurements. The notice must include:

• Name and address of the procuring entity
• Nature, quantity, and place of delivery of goods or services
• Place, date, and time for purchasing bidding documents
• Place, date, and time for submission and opening of bids
• Bid security amount and validity period
• Other necessary information

The publication of the tender notice marks the official start of the bidding process and allows potential bidders to prepare and submit their bids.

D. Step 4: Bid evaluation and selection

Once the bids are received, the procuring entity must evaluate them according to the criteria specified in the bidding documents. The Public Procurement Act and Regulations provide detailed guidelines for bid evaluation, including:

• Examination of bids for completeness and responsiveness
• Evaluation of technical and financial aspects of bids
• Application of domestic preference (if applicable)
• Determination of the lowest evaluated substantially responsive bid

The evaluation process must be conducted by a bid evaluation committee, as specified in Section 71 of the Public Procurement Act. The committee’s recommendations are then submitted to the appropriate authority for approval.

E. Step 5: Contract award and management

After the successful bidder is selected, the procuring entity must issue a notification of award and enter into a contract with the winning bidder. The contract must be signed within the time specified in the bidding documents, typically within 15 days of the notification of award.

Contract management is an essential part of the procurement process and involves monitoring the contractor’s performance, ensuring timely delivery of goods or services, and managing any disputes that may arise during the contract period.

IV. Documents Required for Public Procurement

The public procurement process in Nepal requires various documents at different stages. Some of the key documents include:

1. Annual Procurement Plan
2. Cost Estimate and Technical Specifications
3. Bidding Documents
4. Tender Notice
5. Bid Submission Forms
6. Bid Evaluation Report
7. Contract Agreement
8. Performance Security
9. Advance Payment Guarantee (if applicable)
10. Goods Received Notes or Work Completion Certificates

These documents serve as official records of the procurement process and are crucial for ensuring transparency, accountability, and proper documentation of procurement activities.

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V. Procurement Advisory Services

To support public entities in conducting procurement activities effectively, the Public Procurement Monitoring Office (PPMO) provides procurement advisory services. These services include:

• Guidance on interpretation and application of procurement laws and regulations
• Assistance in preparing bidding documents and evaluation criteria
• Advice on handling complex procurement cases
• Training and capacity building for procurement officials

Public entities can seek advice from the PPMO on various aspects of procurement to ensure compliance with legal requirements and best practices.

VI. Typical Timeframe for Procurement Process

The timeframe for the procurement process in Nepal can vary depending on the complexity and value of the procurement. However, a typical timeline for a national competitive bidding process might be:

• Preparation of bidding documents: 2-4 weeks
• Publication of tender notice: Minimum 30 days for national bidding, 45 days for international bidding
• Bid submission period: 30-45 days
• Bid evaluation: 2-4 weeks
• Contract award and signing: 2-3 weeks

The entire process from planning to contract award can take anywhere from 3 to 6 months or longer for complex procurements.

VII. Thresholds and Methods of Procurement

The Public Procurement Act and Regulations specify different procurement methods based on the estimated value of the procurement. The main procurement methods and their thresholds (as of 2021) are:

1. Direct Purchase: Up to NPR 500,000
2. Sealed Quotation: Up to NPR 2,000,000 for goods and services, NPR 5,000,000 for construction works
3. National Competitive Bidding: Up to NPR 20,000,000 for goods and services, NPR 200,000,000 for construction works
4. International Competitive Bidding: Above NPR 20,000,000 for goods and services, above NPR 200,000,000 for construction works

These thresholds are subject to periodic revision by the government.

VIII. Relevant Laws and Authorities

The main laws and authorities governing public procurement in Nepal are:

1. Public Procurement Act, 2063 (2007)
2. Public Procurement Regulations, 2064 (2007)
3. Public Procurement Monitoring Office (PPMO)
4. Financial Comptroller General Office (FCGO)
5. Commission for the Investigation of Abuse of Authority (CIAA)
6. Office of the Auditor General (OAG)

These laws and institutions work together to ensure the proper implementation of public procurement practices in Nepal.

IX. Public Procurement Practices in Nepal

Public procurement practices in Nepal have evolved significantly since the enactment of the Public Procurement Act in 2007. Some key features of current procurement practices include:

1. Increased use of e-procurement systems to enhance transparency and efficiency
2. Greater emphasis on value for money and life-cycle costing in procurement decisions
3. Implementation of sustainable procurement practices
4. Enhanced monitoring and oversight mechanisms to prevent corruption and malpractice
5. Capacity building initiatives for procurement officials and bidders

Despite these improvements, challenges remain in areas such as contract management, dispute resolution, and ensuring fair competition among bidders.

X. Conclusion

Public procurement law in Nepal provides a comprehensive framework for ensuring transparent, fair, and efficient procurement of goods, services, and works by government entities. The Public Procurement Act and Regulations, along with various institutional mechanisms, aim to promote competition, value for money, and accountability in public spending.

While significant progress has been made in improving procurement practices, ongoing efforts are needed to address challenges and further enhance the effectiveness of the public procurement system in Nepal. Continued focus on capacity building, technological advancements, and strengthening of oversight mechanisms will be crucial in achieving these goals.

FAQs:

1. What is the main law governing public procurement? The main law governing public procurement in Nepal is the Public Procurement Act, 2063 (2007), supplemented by the Public Procurement Regulations, 2064 (2007).
2. Who oversees public procurement in Nepal? The Public Procurement Monitoring Office (PPMO) is the primary authority overseeing public procurement in Nepal. Other relevant authorities include the Financial Comptroller General Office (FCGO), the Commission for the Investigation of Abuse of Authority (CIAA), and the Office of the Auditor General (OAG).
3. Can foreign companies participate in public tenders? Yes, foreign companies can participate in public tenders in Nepal, especially for high-value procurements conducted through International Competitive Bidding (ICB). However, some procurements may have domestic preference provisions or eligibility criteria that favor local companies.
4. What are the different procurement methods used? The main procurement methods used in Nepal are Direct Purchase, Sealed Quotation, National Competitive Bidding, and International Competitive Bidding. The choice of method depends on the estimated value of the procurement and other factors specified in the Public Procurement Act and Regulations.
5. How are procurement disputes resolved? Procurement disputes in Nepal are typically resolved through a multi-tiered process. Initially, complaints can be filed with the procuring entity. If unresolved, disputes can be escalated to the Review Committee at the Public Procurement Monitoring Office. In some cases, disputes may be referred to arbitration or the courts for final resolution.
6. How are e-procurement systems used in Nepal? Nepal has been increasingly adopting e-procurement systems to enhance transparency and efficiency in public procurement. The government has established an e-GP (electronic Government Procurement) portal where procuring entities can publish tender notices, and bidders can submit their bids electronically. This system aims to reduce paperwork, minimize human intervention, and increase competition in the procurement process.