The Public Procurement Monitoring Office under the Prime Minister’s Office says local federal administrations are buying arbitrarily, breaching legal provisions and avoiding competition.
Himal Lamsal: Centre for Investigative Journalism-Nepal
No epidemic or a natural disaster has occurred in the Kathmandu valley since the earthquakes of 2015. But the Kathmandu Metropolitan City procured brooming machines flouting the general procedure citing that there had been partial rain, extreme rainfall, floods and landslides, epidemic and an emergency.
As pointed out by the 2019 report of the Public Procurement Monitoring Office, the 13th meeting of the municipal executive on March 9, 2018 invited global bids for procuring five brooming vehicles based on the emergency provisions of Public Procurement Act.
The rules were flouted while buying broomers for removing dust from the roads in Kathmandu Valley. “No emergency situation as stated by the Public Procurement Act-2007 is seen before the metropolis initiated the procurement process,” the report states. “There was no situation for the metropolis incurring losses if the procurement was not made immediately.”
The metropolis did not follow the e-bidding process of the procurement Act. The requirement for the company winning a global bid to submit the bid security counter guarantee from one of Nepal’s commercial banks was not met either. The metropolis seems to have pushed forward the broomer procurement process with an intention to prevent competition and to invite tenders in a short span of time.
Italian company Dulevo International S.p.a. got the broomer supply contract for its lowest bid of Rs 108.924 million. While seven firms submitted bids, Dulevo had quoted a price 10.1 per cent lower than the estimate.
The Public Procurement Monitoring Office (PPMO) states that the Kathmandu metropolis had misused the procurement provisions in the tender process. The municipal executive meeting had given seven days for evaluation of bids, three days for the letter of intent, and seven days for the bidder to take up the task.
Earlier, in response to the bids invited nationally on October 12 and October 30, 2017, the quotations had exceeded the estimated costs. The metropolis then decided the Supply, Deliver and Commissioning model for broomer procurement.
Keshav Prasad Prasain, director of the Public Procurement Monitoring Office, says: “The Kathmandu metropolis misinterpreted the special circumstances. Had the tender process followed the procurement law, many would have got the opportunity to compete. But competition was blocked by shortening the period.”
“While the procurement should have been made competitive and cost-effective by ensuring lasting operation of the heavy equipment and inexpensive maintenance through the mention of the reference price of spare parts, no such effort was made,” the PPMO report says.
As the city’s procurement of five broomers has got embroiled in a controversy, the metropolis has forwarded the process to buy two more broomer vehicles. The 32nd meeting of the municipal executive on May 9, 2019 decided to purchase two machines from the same Italian Dulevo International supplier in the same rates and conditions agreed earlier.
The Commission for Investigation of Abuse of Authority on November 9, 2019 wrote to city authority to furnish the documents related to broomer procurement with seven days. Kathmandu Mayor Bidya Sundar Shakya reacted: “When there’s a complaint, it’s natural for the related authority to seek documents for an investigation. It would be easier for us to work if this issue is resolved soon.”
Irregularities in medicine purchase
Local federal administrations have been unsystematic even with the purchase of sensitive items such as medicines. Khijidemba Rural Municipality in Okhaldhunga is a case in point. The local government directly purchased medicines from two firms for Rs 947,000, without preparing the cost estimates as required by procurement regulations. The irregularities were such that even the expiry date of medicines was not noted.
The broomers unveiled by the Kathmandu Metropolitan City at the City Hall on March 26, 2019.
According to the standards of the Department of Health Services, the expiry date of procured medicines should be at least 18 months away or 75 per cent of a drug’s total life. But the purchases were made from Sohan Medi Health and Rizma Medico Suppliers without care for this rule. The annual report (2017-18) of the Auditor General states that the Khijidemba government violated the public procurement regulations while purchasing the medicines.
Procedure was violated in the payments too. The public procurement regulations require all procurements above Rs 25,000 to be made through cheques. But the rural municipality paid in cash after issuing an advance sum.
The Auditor General’s report states that the local government did not prepare the estimates for purchasing an ambulance. Rather than making the purchase through price bids as required by the procurement regulations, the ambulance was bought through direct quotation from the Sipradi Trading Private Limited.
Besides, the government violated the procurement procedure while purchasing goods worth Rs 3.578 million directly from several firms on different dates.
Dhruva Nepal, an expert on public procurement, says: “Since the local level buys medicines in small volumes, only retailers compete [to supply them]. So while the cost is maximum, there is also the risk of getting low quality medicines.”
Asked about the matter, Khijidemba Rural Municipality Chairman Bed Bahadur Roka said he had no information about it. He asked that section officer Yuvaraj Acharya be enquired about it. Acharya argued that medicines worth up to Rs 2 million could be purchased directly through quotation in line with the Public Procurement Act. He added that the cumbersome tender process was not followed and the suppliers were paid in cash as another form of payment was not easily accessible.
Directive for action not carried out
Birgunj Metropolitan City invited sealed quotations on July 11, 2018 to purchase 10 items including inverter, battery, computer, air conditioner and furniture. But the metropolis is found at fault since the start of the process. According to the report of the Public Procurement Monitoring Office, the metropolis flouted the rules while procuring goods worth over Rs 6 million.
The report states that the total estimate was made in a faulty manner without preparing the specifications on the goods, their types and costs and without approving cost estimates topic-wise. The mandatory process to be followed in purchases exceeding Rs 6 million as specified by the electronic procurement directives (2017) was flouted.
The annual report of the PPMO has recommended departmental action against officials who prepared the purchase list and cost estimate, those who prepared the bid document, evaluated bids, reached purchase contract and sanctioned the purchase reasoning that the procurement went against the public procurement Act and regulations.
However, no action was taken against any one. When the Birgunj metropolis invited bids, Sudir Rana was the acting chief of its internal management and procurement section. Rajiv Giri headed the section when the winning bid was selected. Yagyaraj Koirala, spokesperson for the Public Procurement Monitoring Office, said, “We have no information about the metropolis taking action against its staff. We’re preparing to seek clarifications on this.”
Birgunj Mayor Bijay Sarawagi said officials had conspired to hide the letter demanding action against the guilty officials. “I’ve directed the administration to look for the letter. Guilty staff will be probed and taken action against,” he said.
Bulldozer instead of ambulance
Champadevi Rural Municipality in Okhaldhunga bought furniture five times a year citing office requirements. While all the furniture could have been bought through a single tender, goods were bought several times. Computer and other items were also bought in phases.
According to the Auditor General’s annual report for the fiscal year 2017-18, Champadevi Rural Municipality had breached the process while purchasing items worth Rs 3.148 million. The Public Procurement Act bars parceling procurement in a way to limit competition. The report shows that the requirement of buying things with an estimated price range of Rs 500,000 to Rs 2 million through sealed quotations was ignored.
“While the rules required a bulk purchase plan to be executed through sealed quotations and tender, goods worth Rs 3.148 million were found to have been purchased directly over a number of times,” the report says.
Accountant Milan Luintel admitted that the procurement law had been violated in the rush of buying some items. “The mistake happened due to the confusions over the procurement process,” he said.
There is a nationwide trend of local governments procuring goods in violation of the laws and procedure. Annual reports of the Public Procurement Monitoring Office and the Auditor General’s Office have been highlighting the practices.
Shankar Pande, former chairman of the Public Procurement Monitoring Review Committee, says local federal administrations have been procuring things arbitrarily. “Several malpractices have cropped up in the procurements at the local level. This anomaly is taking root,” he says. “If this is due to the absence of manpower informed about the process or what, fiscal indiscipline is seen at the local level.”
Pande argued that the situation arose as the state’s attention was only on empowering the local level, not on making trained workforce available to exercise the constitutional rights. “It looks essential for the Public Procurement Monitoring Office and the Auditor General’s Office to train the local level on the provisions of the procurement Act and regulations.”
Dhruva Nepal, the expert on public procurement issues, says the anomalies were caused due to the absence of workforce informed on the procurement process at the local level in adequate numbers.
“Some have made mistakes due to their ignorance about the law while some local units have tried to take undue advantage by using the legal loopholes,” says Nepal. “When a rural municipality needing an ambulance purchases a bulldozer, this shows ill intention rather than misperceptions about the law. Therefore, there is the need to make every activity at the local level transparent and accountable.”
