Govt to gauge contractors' capacity while awarding contracts
KATHMANDU, Oct 27:
The government is preparing to incorporate number of measures in the Public Procurement Act (PPA) to rein in unscrupulous contractors who win tender by quoting the lowest price but do not complete project in time.
The draft of PPA Amendment Bill sent to the Finance Committee of legislature-parliament by the Public Procurement Management Office (PPMO) says contractors will have to furnish additional performance security (bank guarantee) of 25 percent of the total amount calculated by deducting bid amount from the estimated cost of the project. At present, contractors are required to furnish only 5 percent of the contract amount as performance security while signing the contract.
Talking to Republica, Tanka Mani Sharma, acting secretary of PPMO, said the new amendment will discourage contractors that bid low amount. "Bids will be evaluated in such a way that genuine bidders with reasonable bid amount will get the contract. This will ensure completion of project in time," he added.
An engineer with the Department of Roads (DoR), preferring anonymity, said calculation of mean while awarding contract is against the fundamental principle of competitive bidding.
Sharma, however, said the proposed provision will ensure healthy competition.
CA member Janardan Dhakal, who is also a contractor, said contractors will not be able to furnish such a huge performance guarantee. Dhakal is also the member of Finance Committee.
Similarly, bidders are also requires to furnish all details of their capacity and contracts that they have already won. This will help officials to judge the contractors´ capacity. By judging contractors´ capacity, officials hope they will be able select contractors who have sufficient equipment, resources and workforce to complete the project.
Some contractors remain idle until the eleventh hour after receiving mobilization amount of 20 percent from the implementing agency. Later, they rush to complete work within the deadline which often lead to substandard work.
The draft has a provision of paying mobilization fund only after evaluating materials supplied by the contractors to the project sites.
According to officials, there are around 17,000 licensed contractors in the country and the newest among them tend to win contract by bidding low amount. They later demand extension in project term and cost variation.
In a bid to discourage bid rigging, the draft says all bids for government tender will be received via e-bidding from the beginning of 2015/16. Similarly, bidders can withdraw their bids 24 hours before the deadline only. Officials believe this provision will discourage bid-rigging at the eleventh hour.
The draft of PPA Amendment Bill, however, does not have any provision to assure quality of construction works. Engineers say there should be a longer periodic guarantee of construction works to make contractors responsible for their projects. At present, contractors have responsibility of maintenance for only a year.
Even though works construction work is poor, officials hesitate to terminate contracts fearing that it would put extra burden on the government as it takes time to award new contract.
To do away with the situation, the draft includes a provision that requires contractors, whose contracts are terminated on different grounds, to pay additional cost needed for construction.
The government can recover the amount -- difference between new cost estimate and terminated contract amount -- from the bank guarantee furnished by the contractors. If it is insufficient, the government can recover the amount from other assets of contractors, according to the draft.
CA member Dhakal, however, said such provision would be unjustifiable as contractors face different problems of field clearance to local hurdles while implementing the projects. "This will only add discretionary authority to the civil servants," he added.
Source: Republica
