The Government of Nepal has issued the Public Procurement (Second Amendment) Ordinance, 2083 (2026) to enhance transparency, efficiency, and fairness in public procurement. This ordinance introduces important changes affecting contractors, suppliers, consultants, and service providers participating in government tenders.
Infinity & Partners provides this practical overview to help businesses understand the new rules and prepare effectively.
Key Highlights of the Public Procurement Ordinance 2026
1. Expanded Scope of Procurement
- Goods: Now explicitly includes both physical and non-physical goods.
- Other Services: Expanded to include advertisement, security services, cleaning services, air ticketing, infrastructure management, operation & maintenance, and other non-consulting services.
2. New Procurement Methods and Processes
- Reverse Auction: Newly introduced method where the public body’s cost estimate serves as the maximum ceiling. Bidders compete to offer the lowest price within a fixed period.
- Clear prohibition on splitting or bundling procurement packages in ways that restrict competition.
- Defined rules for One-Envelope (no qualification) and Two-Envelope (qualification required) bidding systems.
3. Bidder Qualification & Joint Ventures
- New emphasis on Technical and Financial Capacity / Bid Capacity as key qualification criteria.
- In joint ventures for construction works, all members are jointly and severally responsible. Responsibility cannot be transferred to any single member or third party.
- Bidding documents must clearly specify technical and financial weightage where applicable.
4. Notice Publication & Domestic Goods Preference
- Electronic procurement system minimizes the need for newspaper and international media publications.
- Domestic Goods Priority: Public bodies must prioritize domestic goods (produced using Nepali labor and raw materials or with at least 30% value addition in Nepal). Mere import and branding in Nepal does not qualify. This preference must be stated in bidding documents.
5. Bid Evaluation & Award
- Two-envelope system: Technical proposal evaluated first.
- Bids quoted more than 30% below the approved cost estimate require detailed rate analysis.
- Negotiation allowed with the lowest responsive bidder if the bid is substantially higher than the cost estimate (lump-sum discount permitted without changing specifications or quality).
- In case of tie for lowest bids: Selection through lottery.
6. Contract Implementation & Facilities
- Mobilization Advance: Up to 20%. Clarified for site preparation, labor camp, machinery arrangement, etc. Requires submission of work schedule.
- Variation Orders: Approval threshold reduced — variations above 15% can now be approved by the Departmental Chief.
- Construction work cannot be halted due to disputes between parties.
- Direct procurement from Government e-Marketplace (PPMO) up to prescribed limits.
7. Performance Incentives
- Contractors completing work on time with prescribed quality may receive incentives and appreciation letters.
- Procurement employees can also receive incentives for timely and quality delivery.
8. Institutional Development
Establishment of a new Government Procurement Service Office under the Office of the Prime Minister and Council of Ministers.
Practical Impact on Businesses
The amendments promote domestic industry, reduce delays, enhance competition, and ensure better project delivery. Bidders should strengthen focus on technical-financial capacity, accurate costing, and compliant joint venture agreements.
Conclusion
The Public Procurement (Second Amendment) Ordinance 2083 (2026) modernizes Nepal’s public procurement framework with tools like reverse auction, clearer evaluation criteria, and performance incentives while strengthening preference for domestic goods.
