Procurement is the process to obtain something, which may be goods, works, services (consulting or non-consulting). According to Public procurement act 2063, Nepal, it is acquisition of goods, consultancy services or other services or carrying out or causing to be carried out any construction works by public sector.
The actors involved in procurement are:
a. Buyer, Employer, Owner
b. Bidder, Contractor, Consultants, Service providers, Sellers
c. Other stakeholders, Users, Consultants
Sound Principles of public procurement
a. Economy- Best value for money & competition
b. Efficiency- Timely action & completion
c. Fairness- On equal footing, no biasedness but sometimes may be against the efficiency
d.Transparency- Well informed to all potential/interested bidders/applicants but may be against the efficiency
e. Development of National industries
Ideally, all of these four parameters should be met 100%, but in practice it is not possible. Attempt should be made nearest of this.
Objectives of Procurement
3 R
a. Right item
b. Right price
c. Right time
Principles/aims of public procurement
1. To render the working procedures, process and decision related to procurement more open, transparent and credible.
2. To promote competition, clarity(non-discrimination), integrity, accountability and credibility.
3. To obtain the maximum output from public expenditure in a cost effective and judicious manner.
4. To enhance the capacity for procurement management.
5.To ensure that suppliers/procurement providers have equal opportunity for participation without discrimination.
6. To make felt the dispensation of good governance.
Legal Frameworks
Financial act regulation
Public Procurement act, 2063
Public Procurement regulation, 2064
Act provides institutional measures for public procurement. Government of Nepal has established public procurement monitoring office under the office of prime minister & cabinet for purpose of among other things, offering necessary advice, promulgating necessary guidelines, faciliating public procurement by preparing standarized example of bid/tender documents, monitoring the process of public procuremnt and submiting an annual report. Every public entity is required to establish a procurement unit for the purpose of public procurement. Act also provides following committees in respect to public procurement.
a. Rate fixation committee
b. Tender/Bid evaluation committee
c. Public procurement review committee (In case of complaints filed for procurement)
Some important provisions of Public Procurement act 2063
a. It is umbrella act
b. Establishment of PPMO office
c. Responsibility of public procurement to procurement unit/branch
d. Procurement proceeding or review of decisions
e. open call for tender and equal access to bidders
f. Provisions for neutral specification
g. Provisions for size of contract.
h. code of conduct for person involved in procurement
i. Contract award to lowest substantially responsible bidder
j. Shall not be rejected if one bid is responsive or registered.
k. Public notice shall be published in case of emergency procurement
l. Public notice of contract agreement and intention to agreement shall be published
m.Blacklisting right to PPMO office on the recommendation of public entity.
Some situations in which procedures of procurement act need not to follow
a. Procurement relating to security, strategic or defences.
b. Procurement to be made in accordance with the procurement guidelines of donor agencies.
c. In procurement of goods & services when it is required to compete with private sectors for purpose of trade.
d. When it is required to procure in foreign countries for works such as trade fair, exhibition.
e. To procure goods & services by Nepali embassy & consular office in foreign countries.
f. To procure equipment related to aviation of aircraft.
For last four options, separate guidelines shall be made by concerned public entity & procurement shall be carried out using this guideline only after acceptance & approval from PPMO.
Procurement Plan
a. Master procurement plan
for multiyear project, and procurement more than 10 crore annually.
b. Annual procurement plan
for more than 10 lakh annualy
cost estimate should be prepared than 1 lakh
Procurement Methods
1. Open bidding
2. Limited bidding
In open bidding
- ICB
- NCB (Single stage with pre-qualification and without pre-qualification)
- Sealed Quotation
- Direct Purchase
- Community Participation
- Force account
- Emergency Procurement
- Lump sum rate method
- Catalogue shopping
- Buy Back method
Risks in Public Procurement
1. Fraudulent Practice
2. Collusive Practice
3. Corrupt Practice
4. Coercive Practice
5. Obstructive Practice
6. Conflict of Interest
Rupee Exchange Rate
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