Chapter 3

Chapter 3
Methods of Procurement
Methods of Procurement
• Open competitive bidding
• Limited bidding
• Sealed quotation
• Direct Procurement
• Community Participation
• Force account
• Emergency procurement
• Lump sum rate method
• Catalog Shopping
• Limited Bidding
• Buy Back Method
Open competitive bidding
Open Tender System: Core of public procurement
• The open tender system, where information on procurement

is publicly advertised and participation is open to all, is the
corner stone of Public Procurement System.
• It fully meets the basic requirements of Public Procurement.
Open competitive bidding: Objectives
• To provide equal and non discriminatory access to all eligible
bidders
• To treat all bidders equally
• To improve competition
• Achieving the best value for money
• To award contract to the lowest evaluated bidder
• To enter into a fair contract
• Achieve transparency of processes and decisions
 Open Competitive Bidding System shall be adopted for all

purchases over Rs. 20 lakhs except procurement of medicine
and medical equipment for which Open Competitive Bidding
System shall be adopted for purchase over Rs. 50 lakhs .
Open competitive bidding cont…
International Competitive Bidding (ICB)

 An international competitive bidding shall be invited on any
of the following conditions :
• Where the goods or construction works as requisitioned by a
public entity are not available under competitive price from
more than one construction entrepreneur or supplier within
country.
• In making invitation to national tender for the procurement of
goods, construction works or other services, no tender is
submitted and same has to be procured aboard.
International Competitive Bidding (ICB) cont…

• Where foreign goods or construction works have to be
procured from foreign assistance under an agreement enter
into with a donor party.
• Where the public entity certifies the goods or construction
works, being of complex and special type, have to be
procured by means of an international tender.
• Notice on invitation to tender shall be published in English
language an all tender or prequalification documents shall be
published in English.
International Competitive Bidding (ICB) cont…

• In publishing a notice a period of at least 45 days shall be
given
• Notice shall be published in daily newspaper of national
circulation and it may also be published in any international
communication media.
• Notice shall be placed in website of concerned entity or that
of the Public procurement Monitoring Office (PPMO)
National Competitive Bidding (NCB)
 For any procurement having cost estimate more than 20 Lakh
except medicine and medical equipments (for procurement
more than 50 lakhs) for which ICB is not required, NCB shall
be preferred.
• In publishing a notice a period of at least 30 days shall be
given
• Notice shall be published in daily newspaper of national
circulation.
• Notice shall be placed in website of concerned entity or that
of the Public procurement Monitoring Office (PPMO)
Duration of Bid Invitation in case of re-bidding
• If procurement process is required to be cancelled and re-
invitation of bidding is required, in publishing bid invitation
notice for second time, a period of at least 15 days for NCB
and 21 days for ICB shall be given, provided that no change is
made in bid document.
• If procurement process is required to be cancelled in second
time of bid invitation also, then bid invitation notice can be
published third time with a period of at least 7 days for NCB
after sufficient justification and with approval from pertinent
higher level.
• If procurement process is failed in third time also and if
procurement is emergency, procurement process can be
completed using other procurement methods as per PPA.
Qualification
• Two forms of qualification (for procurement > 20 million in case of
works except in exceptional situation) – prequalification and post-
qualification – are used to ensure that bidders have adequate
capability and resources to perform the particular contract
satisfactorily taking into account their (1) experience record on
works of similar nature and complexity, (2) financial capability, (3)
personnel capability, (4) equipment capability and (5) litigation
history
• Post qualification is carried out after bids are received as part of the
bid evaluation process and it has the advantage of reducing the total
procurement time by cutting out prequalification steps.
Prequalification
• Prequalification is carried out in advance of bidding to
establish a list of capable firms to be invited to tender while
ensuring that a proper level of competition is safeguard.
• In order to procure such construction work as determined to
be large and complex by the PPMO from time to time or
procure goods of high value such as industrial plants or
identify qualified bidders, a public entity shall, prior to
making invitation to tender, prepare prequalification
documents and public invite to proposals for determination of
prequalification.
Prequalification cont…
• Where a public entity considers appropriate may also determine
prequalification for other procurement as well.
Steps:
• Prepare prequalification documents. The documents shall set forth
such qualification criteria required for prequalification and the
method for preparation of offers and the manner for the submission
of offers.
• Get the qualification criteria approved by department head
• The documents shall bear signature of chief of public entity or the
employee designated by him and seal of office
Prequalification cont…
• Publish notice for offer on national newspaper and website of
concerned entity or PPMO giving duration of submission at least 30
days for NCB and 45 days for ICB.
• Provide the prequalification documents to interested firms, person,
organization or company by collecting a fee as follows:
 For procurement of 20-100 million Nrs. 5000
 For procurement of 100-250 Million Nrs. 10000
 For procurement of greater than 250 Million Nrs. 15000
• Open the proposal and evaluate against evaluation criteria.
• Prepare a list of selected applicants and send to all applicants
• Provide reason of rejection to applicant who request to provide
reason within 30 days after the notice.
One stage bidding (NCB or ICB)
• The Single-Stage, One-Envelope bidding procedure is the default
or main bidding procedure and is used in most of the procurement.
Bidding Procedure
• Preparation of Bidding Document
• Invitation of Bid
• Sale of Bid documents
• Registration of Bids
• Opening of Bids
• Evaluation of bids
• Letter of intent
• Letter of Acceptance
• Contract agreement
Bidding Procedure…
Preparation of Bidding Document
(Detail of bid preparation will be discussed later)
Bid invitation
• For NCB or PQ proposal : Minimum 30 days
• For ICB or PQ Proposal : Minimum 45 days
• To be published in Web Site;
 For central level public entity, website of public entity or of
Website PPMO
 For district level public entity website of public entity or
website of PPMO
www.ppmo.gov.np
(Detail on tender notice will be discussed later)
Bid invitation cont…

A notice on invitation to tender or prequalification shall contain
following matters:
• The name and address of the public entity inviting tender
• The nature of, and time limit for, procurement work and the
place of delivery of goods to be supplied, of the construction
work to be effected and the service to be delivered.
• Where tender security is required, amount and validity
period thereof;
Bid invitation cont…

• The means of obtaining the tender documents or
prequalification documents, the place from which they may
be obtained and the fees charged for the same;
• The place, manner, deadline and time for the submission or
forwarding the tender documents.
• The place, date and time for the opening of the tenders or
prequalification proposals, and the matter that the bidder or
their authorized agents shall be invited to attend the opening
of tenders.
• Such other matters as prescribed
Sale and registration of Bid

• Shall issue the bidding documents only to qualified bidders
where prequalification is used.
• Where post qualification is used, bidding documents shall be
issued only to eligible bidders
• Bidding documents shall not be transferable to other firm and
shall be submitted along with bid.
• Sale from two or more public entities
• Registration in one pubic entity
• E-Bidding also possible
Price of Bidding Documents

• 2 million to 20 million Rupees : Rs 3000
• > 20 million to 100 million Rupees : Rs 5000
• > 100 million to 250 million Rupees : Rs 10000
• > 250 million Rupees : Rs 20000
 Foreign bidders shall furnish following information in their

bids.
• Whether the bidder has a local agent or not
• Name and address of agent
• Type of service being provided by agent
• Amount of commission, currency and procedure of
payment
• Other agreement with agent if any
• Income tax registration certificate and acceptance of letter
of the agent.
Withdrawal and Modification of Bid

• Within last submission date of bid in sealed envelop in case
of bidder who submits bid electronically
• Within 24 hour before the last submission date for other
bidders
• Withdrawal or modification can be done at one time only.
Pre-bid meeting
• For NCB at least 10 days before of last submission date
• For ICB at least 15 days before of last submission date
• To be informed to bidders if any amendment within 5 days
pre bid meeting
Bid Security
• 2 to 3 % of estimated amount
• Validity of bid security 30 days more than bid validity
period
• Validity period of bid security to be extended if bid validity
is extended
• Needs counter guarantee of commercial bank in Nepal for
bid security of foreign bank
Bid security will be forfeited if
• If requested for withdrawal or modification within the
period of last bid submission date and last date of bid
validity
Bid Security cont…

• If the bidder does not accept the correction of arithmetic
error
• If the selected bidder rejects for agreement
• If the selected bidder fail to submit performance bond
within due date of contract agreement
• If clarification submitted by bidder makes substantial
change to the bid
• If the bidder violates the code of conduct as per clause 62
of PPA.
Bid validity Period
• Bid validity period is a period within which bidder’s rate are
valid
• Contract agreement is done within bid validity period
• For bid having estimated cost within 100 million : 90 days
• For bid having estimated cost above 100 million : 120 days
• Period to be counted from last date of bid submission
• Can be increased with justified reasons
• Who agrees to extend bid validity shall extend validity of bid
security also
• Bid bond amount shall be returned to bidder if he disagrees to
extend bid validity
Bid Opening
• Immediately after last date and time of bid submission in
presence of bidders as far as possible (Absence of bidders does
not disturb the opening process)
• Then bid submitted electronically are opened first and then
other bids are opened
• Before opening bid, envelop of letter of withdrawn or modified
bid shall be opened and read
• Then remaining bids shall be opened and matters like bid
security, discount if any etc. shall be read, noted and signed
• No bid shall be rejected at the time of opening
Bid Evaluation
(Detail of bid evaluation will be discussed later)
Bid Evaluation Report
(Detail of bid evaluation will be discussed later)
Selection for Award of Contract
• Does LEB meet each criterion; If not proceed to next
• Recommend bid for award.
Selected bidder is the lowest technically responsive qualified bid.
Performance security
• To be taken to ensure due performance of contract
• 5% Of Contract Value
Performance security …
• If bid price of the bidder selected for acceptance is up to 15
(fifteen) percent less than the approved cost estimate, the
performance security amount shall be 5 (five) percent of the bid
price.
• For the bid price less than 15 percent of the cost estimate, the
performance security amount shall be determined as follows:
Performance Security Amount = (0.85 × Cost Estimate –
Bid Price) × 0.5 + 5% of Bid Price.
• The Bid Price and Cost Estimate shall be inclusive of Value
Added Tax
Contract award
• Letter of intent is issued within seven days of bid selection &
information should be given to other bidders also.
• If there is no complaint from other bidders within seven days, letter
of acceptance is issued to notify the successful bidder to come with
performance security for contract agreement within 15 days.
• If successful bidder fails to furnish the performance guarantee and
to sign contract within 15 days, then his bid security shall be
forfeited and bid of next lowest responsive bidder is accepted and
called for agreement
Contract award…
• If lowest evaluated bidder does not sign the agreement, in
addition to forfeiture of bid bond PPMO on the recommendation
of PE blacklist the bidder.
• If any bidder requests for information on the reason for rejection
of within 30 days of issuing of letter of intent, the public entity
shall communicate such information to the bidder.
 Rejection of tender or cancellation of procurement
proceedings
• Where non of the tenders is substantial responsive
• Where the bid price of the lowest evaluated substantially
responsive bid is substantially higher than cost estimate
• Where the goods, construction works, consultancy service or
other services as required are no longer required.
 No tender shall be rejected or re tendering shall be invited only
by the reason that only a few tenders or only one tender is
substantial responsive.
 A public entity shall communicate a notice along with the reason
for the rejection of tenders or the cancellation of procurement
proceedings to all bidders.
 If any bidder within 30 days of communication of such notice
requests for information of the rejection of all the tenders or
cancellation of the procurement proceedings, the public entity shall
communicate such information to the bidder.
• While making re-invitation to tender because of non-submission of
any tender upon invitation to tender or cancellation of all the
tenders, the reason for such rejection of tenders or the cancellation
of the tender proceedings shall be appraised and necessary
modification shall also be made in the tender documents, technical
specification, cost estimate and conditions of procurement contract.
• Where any bidder is proved to have submitted tender consequent
upon mutual collusion, such tenders shall be cancelled.
Provision relating to procurement proceedings or review of

decision
• Within seven days after the date when became aware, any bidder
or proponent that claims to have suffered, or that is likely to
suffer, loss or injury due to commission of any error or breach of
a duty to be performed in making the procurement proceedings
or decision may make an application, accompanied by the reason
for such loss or injury, to the chief of the concerned public entity
for the review of such error or decision prior to the entry into
force of the procurement contract.
• Chief of public entity should give decision within five days
after the receipt of that application.
decision…
• For the procurement having value twenty million or more, a
bidder or proponent may make an application with guarantee
equal to 0.15 % of amount he quoted (cash or bank guarantee
having validity 90 days) and 10 % of bid bond for proposals,
when quoted amount is not known, to the Review Committee if
he is not satisfied with the decision of chief of public entity or if
the chief of public entity did not make any decision within five
days. The application shall be made within seven days of
decision of chief of public entity.
• Bidder or proponent can make an application to review
committee regarding contract agreement also within thirty days
of contract agreement.

decision…
• No later than three days after the receipt of application review
committee shall send a notice with a copy of such application
and documents, if any, accompanied with application to the
concerned public entity to provide information of proceedings
made in that respect and comments on that matter.
• No later than three days after the receipt of notice the public
entity shall provide information and comments on that matter.
decision…
• Based on information and comments received, evidence,
documents submitted along with the application by the applicant,
and upon inquiring both parties into the matter, if so required, the
review committee shall issue a decision within thirty days after
thirty days after the receipt of application.
• The decision may be
 Dismiss the petition
 Issue an order to public entity not to do unlawful act or not
to make an unlawful decision or not to follow unlawful
procedure.
decision…
 Issue an order to annul in whole or part of unlawful decision.
 In case where the evaluation of tenders or proposals appears
to suffer any error and reevaluation of the same appears
necessary, issue an order to make reevaluation, citing such
error, as well.
• In the case where the procurement contract has already entered
into force, and the review committee is of the opinion that such
contract such contract should have been awarded to the applicant,
make a recommendation to the public entity to make payment of
compensation in a reasonable sum, taking into account the
grievance that the applicant has suffered.
decision…
• If the decision is made to dismiss the petition, the guarantee will
be forfeited.
• Review Committee is a independent committee appointed by the
government constituting following members
• One person from amongst the sitting or retired judges of the high
court or employees having retired from the position of special
class of the Government of Nepal : Chairperson
• One person from amongst the employees having retired from the
position of Gazetted First class of Nepal Engineering service
: Member
• One from amongst the expert in the field of public procurement
: Member
Two stage bidding
• The Two-Stage bidding procedure may be adopted in large and
complex contracts where technically unequal proposals are
likely to be encountered or
• where the Executing Agency is aware of its options in the
market, but for a given set of performance requirements there
are two or more equally acceptable technical solutions
available to the Executing Agency.
• In the Two-Stage bidding procedure, the bidders initially
submit their technical proposals in accordance with the
specifications, but without prices.
• The technical proposals are opened at the date and time advised
in the bidding documents.
Two stage bidding cont…

• The technical proposals are evaluated by the Executing Agency
and discussed with the bidders.
• Any deficiencies, extraneous provisions and unsatisfactory
technical features are pointed out to the bidders whose
comments are carefully evaluated.
• The bidders are allowed to revise or adjust their technical
proposals to meet the requirements of the Executing Agency.
• The objective of the exercise is to ensure that all technical
proposals conform to the same acceptable technical standard and
meet the technical requirements of the Executing Agency.
Two stage bidding…
• Bids of bidders who are unable or not prepared to amend their
technical bids so as to conform to the technical standard
required by the Executing Agency may be rejected as
deficient bids.
• After the evaluation of technical proposals the second stage is
to invite bidders to submit revised technical proposals and to
submit price proposals based on the revised and agreed upon
technical proposals.
• The price proposals and revised technical proposals are
opened in public at a date and time advised by the Executing
Agency.
Two stage bidding…

• In setting this date, the Executing Agency should allow
sufficient time for bidders to prepare price proposals and
incorporate the changes required in the technical proposals.
• The price proposals and revised technical proposals are
evaluated and the award of contract is made to the lowest
evaluated substantially responsive bidder.
Two Envelop System
• For procurement of construction work costing above 20 million.

• The bidders submit simultaneously two sealed envelopes, one
containing the technical proposal and the other the price proposal.
• Initially, only the technical proposals are opened at the date and
time advised in the bidding documents.
• The price proposals remain sealed and are held in custody by the
Executing Agency.
• The technical proposals are evaluated by the Executing Agency.
No amendments or changes to the technical proposals are
permitted.
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Two Envelop System
• The objective of the exercise is to allow the Executing Agency to
evaluate the technical proposals without reference to price.
• Bids of bidders who do not conform to the specified requirements is
rejected.
• Following approval of the technical evaluation, and at a date and
time advised by the Executing Agency (7 days duration to be given
after notice), the price proposals are opened in public.
• The price proposals of the technically responsive bidders are
evaluated and, the award of contract is made to the lowest evaluated
substantially responsive bidder.
• Financial proposal of bidders who fail in technical proposal shall be
returned to concerned bidder without opening
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Sealed Quotation
 Procurement of works up to 2 million except medicine and

medical equipments (5 million) can be carried out adopting
sealed quotation.
Procedure
Preparation of Sealed Quotation Document
(Detail of bid preparation will be discussed later)
Invitation
• Notice in national or local newspaper with minimum period
of 15 days
Sale and registration of Bid :Same as open bidding
Bid validity period : 45 day
Sealed Quotation
Bid security : same as open bidding (validity 75 days)
Withdrawal and Modification of Bid
Not allowed
Sale and registration of Bid
Same as open bidding
Bid Evaluation & Bid Evaluation Report
Same as open bidding except if less than three sealed quotations
are submitted, it shall be cancelled and re-notice is published.
However for the second time less than three sealed quotations can
be evaluated.
Selection for Award of Contract
Same as open bidding
Sealed Quotation
Price of Bidding Documents: Rs. 1000

Performance security
• Same as open bidding
Contract award
• The public entity shall accept the sealed quotation within 15
days of opening.
• Notice is issued to selected bidder within seven days of
acceptance of the sealed quotation. Notice is issued to other
bidders also.
• The sealed quotation bidder who receives the notice shall enter
into the procurement contract by furnishing the performance
guarantee within seven days of date of receipt of such notice.
Direct Procurement
 Goods or Consultancy Services or Other services or
construction work may be procured by means of direct
procurement in the following circumstances:
• The value of miscellaneous procurement does not exceed the
prescribed threshold.
 Medicine and medical equipments : Up to 20 Lakh
 Other procurement : Up to 5 Lakh
 In this situation quotation shall be demanded with at least three
firms which are registered in the standing list of office.
• Only one supplier or construction entrepreneur or consultant or
service provider has technical capacity or capability to fulfill the
procurement requirement. (public notice to be published)
Direct Procurement cont…
• Only one supplier has the exclusive right to supply the goods to
be procured and there is no other suitable alternative . (to be
purchased with authorized supplier and public notice to be
published)
• Additional goods or services of proprietary nature within the
prescribed threshold are to be procured from original supplier or
consultant or service provider after it is established that if there
is a change of supplier or consultant or service provider so as to
replace or extend the existing goods or services or spare parts of
installations, it will be difficult to replace or extend the existing
goods or services in the public entity.
 Up to 30 % of the existing contract price
 Approval of one level higher authority for making procurement
in this way. (Public notice to be published)
• It is necessary to procure essential construction works, goods,
consultancy services within the threshold as prescribed, which
were not included in the initial contract because of
unforeseeable reasons and have become necessary since the
separation of such works, goods or services from the initial
contract would be difficult for the technical or economic
reason.
• The service of a particular consultant with any unique
qualification is immediately required for the concerned task or
it is indispensible to obtain service from the then consultant.
(public notice to be published)
 Except miscellaneous procurement or procurement of
proprietary nature, direct procurement is made according as
the decision made by council of ministers.
 Council of ministers decide according to the recommendation

made by following committee.
• Chief secretary : Coordinator
• Secretary, ministry of finance : Member
• Secretary, concerned ministry : Member
• Financial Comptroller General : Member
 This provision is applicable only for pure governmental entity
 Except Pure governmental organization direct procurement is
made according to decision made by highest executive body of
concerned entity.
 Approval of one level higher shall be obtained for making
procurement of goods or service of proprietary nature.
 Goods manufactured in Nepal can be purchased directly up to
15 lakhs in published price
 Medical equipments can be purchased with manufacturer
directly up to 20 lakhs in published price
 Goods produced in domestic industry can be purchased directly
up to 25 lakh
 Hotel expenditure of VIP guests invited by Nepal government
up to 50 lakh can be procured directly.
 Building maintenance of embassy situated in foreign countries
can be procured directly up to 25 thousand US$.
• If manufacturer of goods to be procured is only one in Nepal
and there is not another alternative, chief of public entity can
procure directly under following conditions:
 The manufacturer shall publish list of retail and dealer price
in national newspaper
 The manufacturer shall give discount same as he gives to
local dealer.
 PPMO can make inspection to such manufacturer regarding
manufacturing cost. If PPMO founds abnormal
manufacturing cost, it may blacklist the manufacturer.
• Procurement by one public entity with other public entity
• Procurement with international inter Government organization
• Medicine procurement with medicine manufacturer pre
qualified by WHO if the pre qualified manufacturer is only one
Community Participation
 This method is used for executing small labor intensive works
where the objective is to:
• Provide employment and income directly to persons living in the
project area.
• Increase the utilization of local know how, appropriate
technologies and materials
• Hand over the completed works for operation and maintenance
directly by persons living in the project area.
• When objective of project is to create employment which
enhances the economy, quality or substantiality of beneficiary
community then this method is used.
 Works up to 10 million (including VAT, contingencies & portion
of community) may be carried out by community participation.
Community Participation cont…
 The public entity may solicit proposals by publishing a public
notice setting out the nature, quantity and concerned work or
service, the amount that a user community or beneficiary
community is to bear or should bear and other necessary matters
or such committee or community may itself submit a proposal
or application.
 Upon receipt of proposal or application the concerned public
entity and such user community shall hold discussions,
negotiations or make site visit, as required, and enter into
procurement contract in relation to such work or service.
 Such contract shall set out following matters:
• Nature quantity and cost estimate of the construction work or
service, amount that the user committee is to bear, period for
completion of the work or service.
• Contribution of community on each item incase of works having
cost estimate more than 6 million.
• The public entity is to prepare and approve cost estimate of the
concerned work, give technical advice, make measurement, test and
clearance, provide other required technical assistance, and make
supervision and quality control.
• The construction work or service is to be completed or provided with
the participation of the public entity and user committee.
• The user committee shall be responsible for the operation or
maintenance of the completed construction works.
• Advance payment to be provided by the public entity to the user
committee
• Terms and mode of payment for the completed construction work or
service.
• Other necessary matters
 Payment to the user committee shall be made only after deducting
value added tax (VAT), overhead contingency amount and the
portion of public participation set forth in the cost estimate.
 Public entity may make an advance of amount not exceeding one
third of the contract price to such committee. The public entity
shall make settlement prior to making payment of the final
installment of advance so made.
 The user committee shall get the technical evaluation of each
installment, bills, receipts, and other documents substantiating
expenses endorsed by the meeting such committee and submit the
same to the concerned public entity.
 The user committee shall post the information of expenses made by
it in each installment on a public place. Also social audit shall be
done as per procedure and within period fixed by PPMO.
 If public entity is not able to provide technical assistance to user
committee the committee itself may appoint on contract the technical
human resources for that task. Remuneration to be paid to the
technician so appointed shall be paid from the contingency and the
amount shall not exceed 3 % of cost estimate.
 Heavy machines such as a loader, excavator, roller, dozer, grader,
bitumen distributor and bitumen boiler shall not be used in
construction work to be conducted by user committee. But if in
estimate it is stated that the work is of complex nature and heavy
equipment is to be used, in this situation, heavy equipment can be
used taking permission from public entity.
 The user committee shall itself complete the work provided to it and
such works shall not be sub-contracted to any construction
entrepreneur. If for any reason the committee is not able to complete
that work itself in time, it shall give information thereof to the public
entity. Upon receipt of such information, the public entity shall make
necessary inquiry there into, break the contract entered into with
such committee and take over the work by public entity to complete.
 After the user committee has completed the construction work, it
shall get the work checked and cleared by the technical employee
deputed by the concerned public entity and submit total expenses
including the contribution of community. The public entity shall keep
the record of works with details obtained including name and
designations of authorities and other persons involved in survey,
design and construction.
 After completion of the construction work the public entity shall
transfer ownership of the project to user committee also specifying
the responsibility of the repair, maintenance and care of such project.
 If a user committee is found to have abused any amount received by
it, the concerned public entity shall inquire into the matter and
recover such amount from office-bearers of the user community on
pro rata, as a governmental due.
Force Account
 Procurement execution by force account means execution of public
works using the resources of a public agency of the government,
without recourse to competitive bidding. Use of force account may
apply in the following situation:
• The size, nature and location of the works make it unsuitable to
adopt competitive bidding, e.g. maintenance and repairs works
and where the cost is difficult to estimate accurately.
• Work must be carried out without disrupting existing operation,
by crews familiar with those operations.
• The risks of unavoidable work interruption are better borne by
the than by a contractor.
• No contractor is interested in carrying out the work at a
reasonable price.
Force Account cont…
• Emergencies needing prompt attention.
• Institutional development e.g. training of maintenance crews.
 The implementing agency is responsible for management of the
works and must assign sufficient staff for supervision.
 A public entity shall obtain prior approval of one level higher
authority in order to procure a work through force account.
 While doing work through force account, the public entity shall
procure the technical service and construction materials required
for that work in accordance with the procedures of procurement
of goods and services.
Emergency Procurement
• In special circumstances, emergency procurement is carried out.
• Special Circumstances means a circumstance resulted from natural
or divine calamity and sudden or unexpected special circumstance
such as
 Draught
 No rainfall
 Deluge
 Earthquake
 Flood
 Landslide
 Firing
 War or internal conflict
Emergency Procurement…
• Where the occurrence of special circumstance has created a
situation in which, if a procurement is not made immediately, the
public entity will sustain further loss, the Public Entity may
procure or cause to be procured immediately.
• The chief of the Public Entity shall have to give information of the
circumstances and the detailed description concerning the
procurement to be made immediately to one level higher authority.
• Competition in procurement shall be made as far as possible.
• Records of procurements including justification of special
circumstances shall be maintained.
• For procurement in special circumstances of amount more than
one million , public notice shall be published and information
shall be sent to PPMO.
Other methods of procurement
 Limited bidding
• Limited bidding is competitive bidding by direct invitation
without open advertisement. This method is appropriate when
• There are only a few well known manufacturers/suppliers,
e.g. complex industrial plants or highly specialized
equipment or works.
• Small amounts are involved, e.g. procurement and
installation of special items such as telecommunication
facilities and airfield lighting.
• Other exceptional reasons, e.g. emergency actions required
in a major natural disaster which justifies waiving the
advertisement for competitive bids.
Other methods of procurement …
 In such cases, all potential suppliers/manufacturers should be
invited for bids to ensure competition.
 All procedures related to open competitive bidding shall apply
to this process of bidding other than advertising,
prequalification and preference to all contracts and services.
For example, formal bidding documents should be issued to
selected bidders.
 Limited bidding system requires forming a list of registered
suppliers for each category of goods
 Registration of suppliers by the purchaser
 Selection of bidders
• Bidders (generally more than 3) from list of registered
suppliers, and also through market survey, if required
Other methods of procurement …
• Ensure competition
 Bid document – simplified
Invitation of bids – 15 days time for submission
 Bid opening –public opening
 Evaluation
 Processing and selection of bid
• As in open bidding, but on a smaller scale and simplified
format
• Award of contract
 Approval of one level higher authority is required
 Not allowed in multiyear contract
Other methods of procurement
• Lum sum Rae Method
 Method in which bid is submitted stating that to what
percent the bid amount of each item is more or less in
comparison to the total amount of quantity and cost
estimate of each item
 Upto 20 million rupees
 Not allowed in multiyear contract
• Catalog shopping
 Goods like vehicles, X-ray machine, machinery
equipments can be procured by this method
 Duration of notice 7 to 15 days
Other methods of procurement…
• Catalog shopping…
 After publishing the price fixed in brochure or website
as per feature, quality and facility by any manufacturer
company, then procurement made by making
competition in price fixed by manufacturers of goods
having similar standard.
 Application with specification, catalog, quality etc. to
be given in public entity by manufacturer/suppliers. No
bank guarantee is required at this stage.
 List of manufacturers/suppliers to be prepared by public
entity.
 Then financial proposal with discount and facilities is
asked with manufacturers/suppliers which are in list.
• Catalog shopping…
 Lowest evaluated bidder is selected and agreement is
made after submitting performance bond.
 Not allowed in multiyear contract.
• Buyback method
 The method of getting new machinery equipments from
manufacturer or supplier by returning after appropriate
valuation the machinery equipments to concerned
manufacturer or supplier that are going to be unusable
or obsolete after few times later and it is unsuitable to
store or sell up.
• Buyback method…
 After getting the price proposal of new machinery
equipment, agreement is made on price obtained by
deducting the price of old machinery equipment from
price of new.
 Quality to be approved by authorized organization
 Can be procured only after taking the consent of
Department Head.
 Not allowed in multiyear contract.
Situations not necessary to follow PPA
• Procurement relating to security, strategic or defense as per

decision of Government of Nepal
• If as per the agreement between government of Nepal and
donor party, procurement is to be made in accordance with
the Procurement Guidelines of a donor party.
• In procurement of goods and services when it is required to
compete with privates sector for the purpose of trade.
• When it is required to procure in foreign countries for works
such as trade fair, exhibition etc. for the purpose of social
cultural program or industrial, financial, technical
promotion.
Situations not necessary to follow PPA…
• To procure goods and services by Nepali Embassy and

consular office in foreign countries.
• To procure equipment related to aviation of aircraft.
• For last four options, separate guidelines shall be
prepared by concerned public entity and procurement
shall be carried out using this guideline only after
acceptance and approval from PPMO.
Any Question?

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Chapter 3

Open Tender System: Core of public procurement

• The open tender system, where information on procurement

 Open Competitive Bidding System shall be adopted for all

International Competitive Bidding (ICB)

International Competitive Bidding (ICB) cont…

International Competitive Bidding (ICB) cont…

Bid invitation cont…

Bid invitation cont…

Sale and registration of Bid

Price of Bidding Documents

 Foreign bidders shall furnish following information in their

Withdrawal and Modification of Bid

Bid Security cont…

Provision relating to procurement proceedings or review of

Provision relating to procurement proceedings or review of

Two stage bidding cont…

Two stage bidding…

• For procurement of construction work costing above 20 million.

 Procurement of works up to 2 million except medicine and

Price of Bidding Documents: Rs. 1000

 Council of ministers decide according to the recommendation

• Procurement relating to security, strategic or defense as per

• To procure goods and services by Nepali Embassy and

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