The Public Procurement Monitoring Office has blacklisted 27 construction and supply firms so far this fiscal year, with several more slated to enter the list in the months ahead, a senior official has said.

“We are also evaluating more than 30 firms sent by the government agencies for blacklisting,” Rajesh Kumar Thapa, director of the office told the Post on Friday.

A blacklisted firm cannot take part in the government bids from one year to three years as per the Public Procurement Act.
During December, four firms—Araniko Trishuli JV, Chaulagain Nirman Sewa, Shree Shanti/Ram JV and Sunaula Khimti Construction Limited—were added on the blacklist.

“Three joint venture firms involving defamed Pappu Construction is also under our review for blacklisting,” said Thapa.

In August, the procurement monitoring office had barred Raman-Pappu JV from participating in government bids, citing possible negative impact on the government projects until a decision on blacklisted firms is taken by the office.

Offices under the Department of Roads have sent blacklisting requests for two joint venture firms involving Pappu which were tasked with the job to build a bridge over Bagmati river in Tinkune and two bridges on Mid-Hill Highways.

The Public Procurement Monitoring Office blacklists those firms that violate the public procurement law, fail to complete projects in time, delays works deliberately or breach the contract terms.

Based on the recommendation of the government agency that procures construction equipment, goods and services, the procurement monitoring office blacklists a firm after giving them an opportunity to submit clarifications.

The procurement monitoring office had blacklisted as many as 50 companies in the last fiscal year.

If all of the 30 firms currently under investigation are blacklisted, the number of blacklisted firms will be the highest ever in a year.
The highest number of firms blacklisted in a single fiscal year was in 2017-18 when as many as 52 firms faced action.

Officials at the procurement monitoring office said the country is likely to witness a surge in blacklistings this fiscal year because of a new provision in the recent amendments to the Public Procurement Regulation and the instruction of the Commission for Investigation of Abuse of Authority to terminate the contracts of those firms that have failed to complete projects within set deadlines.

The recent eight amendments to the regulation permit the government agency to extend the deadline of sick projects until June 4 next year, provided that the concerned contractors are considered capable of completing the works by the extended deadline.

Those firms that cannot complete the projects within the extended deadline will have their contracts terminated and blacklisted after recovering the losses borne by the government, according to the regulation.

“As the amended regulation does not allow further extension of sick contracts beyond June 4 next year, the government agencies are likely to send a large number of firms for blacklisting this fiscal year,” said Thapa. “The contracts of the projects which are extended until June 4 next year, will also be terminated and the concerned government offices will send them for blacklisting.”

According to the Federation of Contractors’ Association of Nepal, around 2,200 contracts are sick and they are seeking contract extension as per the latest amendment to the regulation.

“Despite opening doors for a deadline extension, the government offices have not extended the deadline for most of them so far,” said Rabi Singh, president of the federation.

A recent study by the Commission for Investigation of Abuse of Authority has identified 1,848 sick projects related to seven development ministries.

The commission had recently advised the government to either terminate the chronically sick contracts or expedite the construction works. To put pressure on the government, it also sought details about the contracts terminated since mid-July 2017.