Nepal's Infrastructure Revolution: How New Procurement Rules Are Ending the Low-Bid Chaos

Nepal is finally moving away from the broken "lowest bidder" model that has long sabotaged its infrastructure projects. The Federation of Contractors' Associations of Nepal (FCAN) has officially welcomed the second amendment to the Public Procurement Act, 2063, calling the reform a critical milestone for the nation's development trajectory . General Secretary Shivahari Ghimire praised the government for replacing dangerous low-bidding practices with a smarter average-price contract award system, a shift expected to drastically improve construction quality and efficiency .

Why the Low-Bid Model Was Killing Projects

For two decades, Nepal's procurement law forced government bodies to award contracts to the bidder offering the lowest price, regardless of feasibility. This created a vicious cycle where contractors slashed prices to win bids, then delivered substandard work or abandoned projects entirely due to insufficient funds . The new ordinance explicitly tightens restrictions on taking contracts at artificially low rates, requiring companies to provide an 8 percent additional performance guarantee if they bid significantly below cost .

Bids falling more than 30 percent below the estimated cost are now flagged as "abnormal," forcing bidders to justify their technical and financial viability. If the explanation fails, the evaluation committee can cancel the bid outright . This stops the "race to the bottom" that previously resulted in crumbling roads and unfinished bridges.

Key Changes in the New Ordinance

The Public Procurement (Second Amendment) Ordinance 2083 (2026) introduces a suite of modern tools to enhance transparency and speed . Beyond the average-price system, the government has launched a new reverse auction mechanism where bidders compete online to lower prices within a set ceiling, ensuring competitive but realistic pricing .

The amendment also accelerates the timeline for public projects by reducing tender deadlines: international bidding is now 30 days instead of 45, and national tenders are 21 days instead of 30 . For smaller, low-value procurements, the sealed quotation period has shrunk from 15 days to just seven .

Crucially, the law now mandates pre-procurement preparation. No public body can start a tender without confirmed financial resources and budget allocation for the entire project duration, preventing the funding gaps that stall multi-year contracts . Additionally, the government e-marketplace will now be operated by the Public Procurement Monitoring Office, allowing direct purchases from listed suppliers with essentials delivered within 24 hours .

A Boost for Domestic Industry

The reform strongly favors local businesses by defining "domestic goods" as items with at least 30 percent value addition in Nepal . This provision aims to reduce dependency on imports and stimulate the local manufacturing sector. The FCAN expressed deep gratitude to the government, stating these changes will accelerate construction projects nationwide and finally eradicate the delays and corruption plaguing the sector .

With President Ram Chandra Poudel certifying the amendment and the Council of Ministers driving the changes, Nepal is overhauling a two-decade-old law that was widely seen as a major obstacle to progress . As the new rules take effect, the focus shifts to execution: ensuring that the next generation of Nepali infrastructure is built to last.