Major Changes in the Public Procurement Act Made by 2083 Ordinance
1. Expanded Definitions and Scope
- Public Entity: The definition now explicitly includes "Projects" (आयोजना) alongside government bodies and offices.
- Goods and Services: The definition of "Goods" now includes intangible (अभौतिक) items. "Other Services" has been expanded to cover security, cleaning, flight tickets, advertising, and infrastructure management.
- Domestic Goods: A new definition is added, requiring at least 30 percent domestic value addition (labor or raw materials). Simply branding imported products in Nepal no longer qualifies them as "domestic".
2. New Procurement Methods
- Reverse Auction (कबोल अङ्क घटाघट गर्ने विधि): This new method (#11) allows bidders to compete by lowering their quotes within a set timeframe, with the cost estimate serving as the maximum ceiling.
- Government E-Marketplace: A new system (Section 41ka) allows public entities to make direct purchases of goods and services listed in a centralized electronic marketplace up to a specified amount.
3. Changes to Bidding Procedures and Timelines
Shortened Notice Periods: The amendment significantly reduces the time for bid invitations compared to the 2063 Act:
- National Bids: Reduced from 30 days to 21 days.
- International Bids: Reduced from 45 days to 30 days.
- Re-invitation (1st): Reduced to 7 days (national) or 15 days (international).
- Short Notice (Urgent): Reduced from 7 days to 3 days.
Electronic Priority: If bids are invited through the electronic system, the requirement to publish notices in other media (like newspapers) is removed.
One-Envelope vs. Two-Envelope: The amendment clarifies that the two-envelope system (separate technical and financial proposals) is mandatory for construction works above a certain threshold and for complex goods/services.
4. Bid Evaluation and Low Bidding
- Bid Capacity: "Bid Capacity" (बड क्यापानसटी) is now explicitly listed as a legal basis for evaluating a bidder's technical and financial qualification.
- Handling Extreme Low Bids: If a construction bid is more than 30 percent below the cost estimate, the evaluation committee must demand a rate analysis. If the analysis shows the work cannot realistically be performed at those rates based on standard norms, the bid must be disqualified.
- Lottery for Tie-Breaks: If two or more bidders provide the exact same lowest price, the winner is now chosen via lottery (गोलाप्रथा), a change from previous practice.
- Negotiation: Public entities can now negotiate with the lowest bidder to obtain a lump-sum discount if their bid is significantly higher than the cost estimate, provided it doesn't compromise quality or specifications.
5. Contract Management and Execution
- Mobilization Advance: Capped at 20 percent. Bidders must now submit a schedule of main activities before receiving the advance.
- Variation Order Authority: New limits are set for approving changes to a contract:
- 5%: Gazetted 3rd Class.
- 10%: Gazetted 2nd Class.
- 15%: Gazetted 1st Class.
- Above 15%: Requires Department Head approval.
- Joint Venture (JV) Responsibility: The amendment mandates that all members of a JV bear full liability for the project; responsibilities cannot be transferred to just one member.
- Contract Termination: If a contract is terminated due to contractor default, the additional cost the government incurs to complete the work will be recovered from the defaulting contractor as government dues.
6. Institutional and Administrative Changes
- Departmental Action: The amendment lists specific failures by officials—such as failing to provide site clearance, delaying designs, or not making timely payments—that will lead to departmental action.
- Incentives: New provisions allow for bonuses or letters of appreciation for both employees and contractors who complete quality work ahead of schedule.
- Government Procurement Service Office: A new office is established under the Office of the Prime Minister to assist public entities in supplier selection and procurement.
