Kathmandu. Public bodies contract to build and select suppliers for competitive prices. However, in the last year, the practice of awarding contracts only to complete the process by selecting the contractor in advance has been flourishing. Such 'planned contracts' are giving space to the businessmen and government officials who are limited in the resources of the state and the resources of the avoidable state are being misused.
According to former secretary Madhu Prasad Regmi, until a few years ago, big contractors used to take 'chulthe-mundre' and try to limit competition by stopping small contractors from buying bids. However, with the introduction of online bidding through electronic bidding, large contractors have started collaborating with government technicians and employees to reduce competition in the contract.
Before this, it was customary to bring in foreign contractors, break up contracts with large prices and workloads, and award them to limited contractors working on large projects in Nepal. Similarly, small works have been added to the same package and contracted for large sums of money to be given to such big contractors.
However, now not only the big contractors but also the contractors doing medium and small works in collaboration with the officials and employees of the public bodies have started winning tenders in collusion. Such diseases have started appearing from the federation to the state and local governments.
It has become a common practice to create a situation where only a company can qualify by placing special conditions while inviting bids for construction projects. Limited politicians, employees, and contractors are reaping unlimited benefits from this crime of looting government funds through competition.
The number of government agencies inviting contracts based on the qualifications and experience of the contractors who have agreed to compromise has increased since the onset of the epidemic. Ravi Singh, president of the Federation of Construction Entrepreneurs of Nepal, says that only a limited number of contractors are allowed to compete.
Singh, who said that he had participated in the collusion of more than 150 Nepali construction businessmen in the contract of the Kakadvitta-Inaruwa section of the railway department last year, is now surprised to see that even in small contracts.
"To reduce the competition, the Tarai village councils have also started asking for the experience of working as stonemasons in building buildings. There are very few companies in Nepal that have done such work," he said. Now it is happening everywhere. '
There is a growing tendency to disqualify contractors who have done similar work on a compromised contract because they do not have the general experience demanded in the bid document. For this reason, in recent days, only one company has passed the technical assessment and the practice of awarding contracts at the same price as it promises has become popular.
With a higher level
Complaints have been lodged with the regulatory bodies after fake contracts were rife between contractors and government officials. However, there are almost no instances of such contracts being postponed due to the government-contractor alliance and action being taken against the concerned. Instead, there are examples of the Prime Minister himself responding to a public question about a non-competitive contract.
Disobeying the directive of the Public Accounts Committee of the Parliament to sign a new contract on April 3, the Nepal Army left the contract for the second package of tunnel construction on the expressway to China's Polychanda Engineering Corporation.
Although 21 companies competed for the contract worth Rs 25.09 billion, only 'Poly Changda' was selected in the technical evaluation. The Chinese company 'China State Construction Engineering Company', which was awarded the contract for the first package of the tunnel, was not included in the second package.
The Accounts Committee had concluded that the procurement process was not conducted in a competitive, transparent and economical manner as per the Public Procurement Act. The committee held discussions with the representatives of the Ministry of Defense and the Nepal Army and was directed to cancel the procurement process and resume it as per the regulations.
Army Spokesperson and Assistant Rathi Santosh Ballabh Poudel, on the other hand, said that the parliamentary committee had given instructions to the government and not to the army.
Prime Minister KP Sharma Oli, who was also the Minister of Defense at the time, had expressed dissatisfaction over the directive given by the Public Accounts Committee to cancel the contract on April 7, 2008.
Inaugurating the Constituency Strategic Road Program, Prime Minister Oli said, "I am a parliamentary committee and should not be ordered to stop work." 'We give orders to stop, we give orders not to build tunnel bridges. What is the effect? ' He had earlier said, "If there is any irregularity, it is written to look at the place concerned."
Letter from the Accounts Committee
After the Prime Minister stood in favor of awarding the contract, the army has already called the contractor to the field without answering the question raised by the parliamentary committee.
The same style in supply contracts
The same style of work has been done not only in construction projects but also in supply contracts. On 2 February 2077, the Security Printing Center called for a contract for the purchase of a security press machine, and the supplier companies claimed that the competition was limited to a partnership with Max International through a 'specification'.
The security center, which initially denied the allegation of collusion, accepted the allegation a week before the March 3 deadline and changed the specification on March 10. The experience of supplying the printing system and reducing the output resolution of the printing material made other companies compete, but the contract was won by Max International.
Even though the competing company promised a higher price than Ilimick International, the printing center awarded the contract to Max, saying that only Max could fulfill all the required qualifications.
Max is a joint venture with the Omni Group on a Rs 3.5 billion contract set up by the International Telecommunication Authority to set up IT labs in schools. Omni's venture company, which was involved in the purchase of medical supplies during the epidemic, had already decided to get the contract.
Vikal Poudel, head of the center, said that even though Ilimik had offered to keep the server in the system, it did not match the equipment specification of Huawei. "The decision to award the contract came after Max International, which offered the second-lowest price, appeared to have all the qualifications," he said.
Lumbini's contract in the setting
FNJ complaint letter
In the tender of Rs 3.5 billion called by the Lumbini Development Fund on 10 June 2078, the 'Qualification Criteria' was set to limit the competition.
Seeing that only one construction businessman could fulfill all the conditions of experience specified in the contracts, the Federation of Construction Entrepreneurs of Nepal lodged a complaint with the Commission for Investigation of Abuse of Authority to the Public Procurement Monitoring Office.
According to the federation, when a single contractor was hired for the same contract, it was divided into four. However, the federation is of the view that the package will be given to a maximum of nine construction companies including Khani, CM, Babul, Lama, Sharma, and Kalika in a joint venture with Lumbini Construction. The federation alleges that the fund has asked them to match the contract.
"Except for Lumbini Construction, they are not qualified for the contract alone. Now, out of the four packages, JV (Joint Venture) of which company has already decided how much to invest in which package," said an FNCCI official.
To participate in this contract, the experience of working in the archeological field on the same contract of Rs. 200 million is required. However, few contractors in Nepal have done such a great job in the construction of archeological heritage.
In addition, the fund has narrowed the competition by demanding that the company, which has an annual turnover of more than Rs 580 million in the last 10 financial years in road and sewerage infrastructure, with at least Rs 600 million inexperience, has worked on 5,000 square meters of M35 interlock cable block from a single contract. Was
Although 80 percent of the total amount of work is required for such experience, the condition is set to reach 20 percent to match the qualifications of the companies involved in the alliance. Entrepreneurs have taken the issue to the Supreme Court, demanding that the controversial contract process be stopped. The bidding period for this contract has expired on Thursday.
Matching at Damak Stadium
The contract for the construction of Madan Bhandari International Stadium in Damak Municipality-3 of Jhapa was also agreed upon. The competition was ended with the specification specified in the contract called by the National Sports Council on 16 April 2078.
Despite complaints to the Commission for Investigation of Abuse of Authority, the Office of the Auditor-General, and the Public Procurement Monitoring Office that only one company was invited to bid, nobody dared to stop the contract for the stadium being built in the hometown of then Prime Minister KP Sharma Oli.
Elker-Great Sportstech MA Construction JV, which has been claiming the contract, won the contract at a price equal to the estimated cost.
Sanak Singh Rai, the manager of Kiranteshwar Construction Company, says that many other provisions, including the requirement of 'water absorption technology', which are not required by the FIFA directive on the football field, have prevented other companies from competing.
The council initially sought experience working on a large stadium in a South Asian country. If the Nepali company was to bring a foreign company in the joint venture, a letter certifying the company was also sought on the date after the tender notice was issued by the embassy of the concerned country in Nepal. However, almost all embassies were closed due to the epidemic.
Companies that have built large stadiums in China, Central Asia, and Europe were also barred from participating. Although the council relaxed the terms and extended the deadline by 17 days after the question was raised, other companies could not bring the documents of the joint venture company from abroad in the midst of the lockdown, and the contract was awarded to Elkar-Great Sports Tech MA Construction JV. Spokesperson of the National Sports Council Kul Bahadur Thapa said, "Everything has been done after completing the process."
Same story at Mahendranagar Airport
The contract for the upgrade of Mahendranagar Airport signed by the Civil Aviation Authority of Nepal on 19 February 2077 was also agreed upon. In this contract, NEA sought the experience of doing a 'cemented base (concrete) course' in 27 thousand 982 square meters.
The Nepali company does not have much experience in laying ballast with concrete in a large area. Only Kancharam Construction in Nepal had fulfilled the qualifications required in the contract. He had gained experience by doing this work at Nepalgunj Airport.
In the end, Kancharam-KS-Uma & Company JV got the contract almost without estimating the cost. Technically, only Kancharam-KS-Uma & Company was selected and the company was the sole competitor in economic evaluation.
Apart from Civil Aviation Authority Director Pradip Adhikari Kancharam, one or two other companies have also gained experience in the field at Tribhuvan Airport. However, he said that Kancharam got the contract as other companies did not compete.
"We had asked for the qualifications according to the work to be done," he said.
Dispute over the highest contract
There was no competition in the contract for the new building of the Supreme Court. The contract for the new building to be constructed at Ramshahpath, signed by the Supreme Court on December 26, 2077, had similar conditions.
Information of the Supreme after technical evaluation
According to the construction businessman, the work was done in the Supreme Court in the same manner as the contract for the Bhaktapur District Court building was awarded.
Experience of working as a 'double basement' in two buildings costing a minimum of Rs.
It was also said that a letter certifying the date of opening the tender from the embassy of the concerned country in Nepal is also required for bringing JV from abroad. The contract was called from the Nepali embassy in the concerned country without recognizing the certification. When the contract of more than one billion rupees was published, the practice of giving 45 days was broken and 30 days was kept.
The Federation of Construction Entrepreneurs of Nepal (FCEN) had written a formal letter on January 19 asking for an extension without a technical assessment. At that time, the news was made public that the JV of 'Kalika and Samantar' was about to get the contract.
Even though four companies signed contracts, only Binapuri-Kalika-Parallel JV was passed as discussed in the technical evaluation. Other companies participating in the court contract were technically disqualified for failing to submit experience documents as requested. Binapuri-Kalika-Parallel JV Company became the sole competitor in economic evaluation. He had promised a contract amount of only 0.99 percent less than the estimated cost.
Kathmandu metropolis on the same road
In the tender called by the Kathmandu Metropolitan City for the office building to be built in Teku on 31 April 2077, only 'parallel construction service' was technically passed. The other five companies that participated in the contract failed because they were not qualified.
Despite fulfilling the conditions laid down in the contract, other companies were not allowed to participate in the financial competition as they did not fulfill 80 percent of the qualifications for the same type of work as per the Public Procurement Act.
In the tender document of the tender, the qualification of constructing a 21-meter high building and experience of special lighting system connection was sought. According to the entrepreneurs, despite reaching all the other qualifications, some entrepreneurs could not compete due to these provisions. So the latter conditions are set to 'setting'. The corporation had only technically passed the 'parallel' saying that others could not fulfill the condition.
Conditions set by the corporation for setting
Rajeshwar Gyawali, chief administrative officer of the Kathmandu Metropolitan City, admits that other companies could have passed the technical test if they had fulfilled the minor qualifications. "According to the public procurement law, only a company with all the qualifications has passed technically," he says. He said that the contract was signed after completing all the procedures.
The companies that failed in the Public Procurement Monitoring Office have lodged a complaint alleging that the contract was signed in collusion. The complaint is under consideration in the Public Procurement Monitoring Review Committee of the office.
"Qualified people come to ask for the experience of wearing a red jacket, but everyone has failed because your red jacket should have six stitches instead of six," said a KMC technician.
Contract only to complete the process
Lately, similar connotations have been seen in the contracts of drinking water and sewerage-related projects. Only a limited number of contractors have experience in laying sewers in large urban areas in Nepal. Kalika, Sharma and other companies that have gained experience by working in a joint venture with a foreign company while working for Melamchi in Kathmandu are now being given projects to lay sewage in other urban areas in the country.
The work is being done by breaking the contract and giving it to the limited company as a foreign company has to be brought in the project costing more than one billion rupees. The Urban Water Supply and Sanitation Project under the Department of Drinking Water and Sewerage Management has awarded a contract worth Rs. Kalika-Ashish-Kankai JV also won a contract worth Rs 678 million for the drinking water project in Panchthar. These contracts were based on specifications. Other companies could not technically qualify for these contracts.
In recent days, the competition for the contract of the building of the health institution under Karnali province has intensified. In the contract signed on 17 December 2077 for the staff quarters, educational building, and other structures of the Karnali Institute of Health Sciences, the experience of working on double glazed glass windows was sought.
Only a limited number of companies in Nepal have such experience. Due to this, the competition was reduced and only Rasuwa-Lama and Kshamadevi JV passed in the technical evaluation. The company won the contract at an estimated cost of Rs 6.76 million.
In the contract called by the District Health Office, Dolpa on 19 April 2078, only Khani-Caravan-Buddhahimali JV was declared technically qualified. The company won the contract.
It is difficult to ascertain the extent of the loss to the state exchequer due to such contracts. But, if you only count the contracts that have been disputed in public, it seems that tens of billions of rupees a year are easily reaching the pockets of those who are 'setting'.
In the contract of upgrading the district hospital signed by the District Health Office West Rukum on 24 April 2078, only Thodung-Mission JV with the mine was technically passed. The company won the contract worth Rs. 203.1 million. This is also the value equal to the estimated cost. Experience working in 'Ashlar Machinery' (special work of stone) was sought in these contracts.
Recently, competition has also started to shrink in the contracts signed by the tourism department. To reduce the competition in the specification, the department has also started asking for the experience of 'Asler Machinery'. Companies with such experience are limited in Nepal, even if it is a normal job that other companies can do.
The contracts signed by the Irrigation Department for irrigation projects including Ranijamara and Babai are also in dispute. Last year, the railway department's contract worth Rs 32 billion was canceled after a four-way dispute.
Construction companies including Kalika, Rasuwa, Kumar Shrestha, Lumbini, Lama, Samantar, and Khani are active in such contracts.
The disease has spread to the local level. The competition was also limited in the contract signed by the Bardagoria village municipality of Kailali for the construction of a 15-bed hospital on February 10, 2077 BS. The village municipality asked for the experience of working in multi-colored M35 interlocking concrete blocks in the construction of the hospital.
Only a limited number of companies, including Lumbini Construction, have experience working on such a block in Nepal recently. Out of the nine bids submitted, only Lumbini Thodung Shivakhimti JV passed technically. He got a contract worth Rs 176 million.
In recent days, only one company has technically passed the contract for hospital building contracts being carried out by different villages. The competition was also limited in the contract of the hospital building signed by the owner HTC for Rs.
In the contract of Rs. 117.8 million for the hospital building awarded by the Jagannath Municipality of Bajura, Khadka remained the sole competitor in the construction service financial proposal. Khani, Jagdamba JV did not have to compete for the contract of Rs. 193.7 million even in the hospital building of Purchaundi Municipality of Baitadi.
The Diprung Chuichumma Municipality of Khotang has been in dispute over the contract for the Dhiplung Jharna Tourism Development Project.
A complaint has been lodged with the Public Procurement Monitoring Office after the village municipality started awarding the contract at an estimated price of Rs.
The controversy erupted after the contract was awarded to Ashirwad PR JV forbidding more than Sky Sagarmatha JV Company.
Showing weakness in the architect engineer's document submitted by Sky Sagarmatha JV, the village municipality had awarded the contract to the company that promised the highest price.
The deficit incurred by the state is in the tens of billions
It is difficult to ascertain the extent of the loss to the state exchequer due to such contracts. However, if we only take into account the contracts that have been disputed in public, it seems that tens of billions of rupees a year are easily reaching the pockets of those who are 'setting'.
There are examples of contracts being awarded at up to 40 percent less than the estimated cost when there is competition in Nepal. Most contracts are reduced by 20 to 30 percent. However, the price of compromised contracts has dropped by only 1 to 2 percent.
Entrepreneurs say that the state will incur a loss of over Rs 1 billion if the contract is signed in the Lumbini area. Even though the contract is worth around Rs 3.5 billion, as it is a site in the Terai region, competition can be reduced by 25 to 30 percent, said a businessman.
Ilimik, which did not get a contract for security printing, had offered a security press for around Rs 675 million, while Max International, which is about to get the contract, had offered a price of Rs 738.89 million. If there was no agreement in this contract, the machine could have been supplied for less than Rs 60 million.
The stadium to be built in Damak, Jhapa at an estimated cost of Rs 4.35 billion has been contracted for Rs 4.33 billion. The state would have saved more than Rs 1.30 billion if the contract had been signed for less than 30 percent due to competition. However, as the project was of intense interest to the then Prime Minister Oli, the contract was signed despite the revelation of a 'setting'.
The contract of Mahendranagar Airport was won by JV including Kancharam for Rs. The estimated cost of the project was Rs 460 million. Had there been competition, this project could have saved about Rs 100 million in state resources.
The estimated cost of the new Supreme Court building was Rs 5.22 billion. However, the contract cost Rs 5.19 billion. The contract was signed without less than one percent of the estimated cost. Entrepreneurs claim that the building will be constructed at a cost of less than Rs 4 billion if there is fair competition.
Parallel Construction Services has won the contract for the building of Kathmandu Metropolitan City for Rs. 695.81 million. However, its estimated cost was Rs. 700 million. The contract was priced at 0.5 percent less. In most contracts, the work is done at a lower price than the estimated cost.
Declining transparency and good governance
Public procurement experts say the pervasive distortion in procurement is deteriorating the state of good governance and transparency in the state. He says that when the capacity of the government in contract management is weak, the burden falls on the state and the people.
Former Secretary of the Public Procurement Monitoring Office, Madhu Prasad Regmi, says that the trend of conciliation in contracts has been seen and the aspect of transparency and good governance has been declining due to the silence of the regulatory bodies.
He says the collusion that is disturbing the basic aspects and objectives of the procurement law will have multifaceted effects.
"The compromise affects the time, cost, quantity, and quality of the contract," he said. "It disrupts the management of our projects." He said that the number of powerful contractors has increased at the policy-making level and its shadow has started appearing at the bottom.
Suresh Pradhan, the drafter of the Public Procurement Act and an expert in procurement law, says that the problem is increasing as the trend of non-compliance with the law is on the rise. He said that the contract which will be completed only will affect the basic objectives of the act.
