Kathmandu-Despite introducing a new procurement evaluation system for development projects funded by the World Bank and the Asian Development Bank (ADB), doubts persist about its implementation.

The 'Rated Criteria' system, implemented in 2025, has caused uncertainty among project implementing agencies and may delay new project launches. Under this system, both financial and technical evaluations are assessed equally (50 percent each) before selecting a contractor.

Contractors’ applications are evaluated based on 50 percent financial and 50 percent technical proposals. This approach aims to select capable contractors, preventing technically weak companies from winning contracts despite low financial bids.

However, project implementing agencies are hesitant to adopt the system due to Nepal’s existing practices and concerns raised by Commission for Investigation of Abuse of Authority (CIAA).

Donor agencies initially applied the system with only 20 percent weight given to technical proposals, but now demand a full 50 percent. Officials are reluctant to accept the system due to fears of corruption charges.

Currently, technical proposals are evaluated first, and companies that technically qualified are grouped together for financial proposal evaluation. This practice has failed, as weaker companies win contracts with low bids but later fail to deliver due to lack of financial and technical capacity.

A senior official at the Ministry of Physical Infrastructure and Transport says accepting 50 percent weight is not a problem in principle, but it’s impossible under Nepal’s current conditions.

The official explains that the current practice allows only the lowest bidder to win contracts, and they often fail to complete work on time due to financial or technical capacity issues. Even if minimum technical criteria are met, highly capable companies don’t submit very low bids. However, the government lacks the technical expertise to properly evaluate technical capacity.

Officials suggest gradually increasing the technical weight from 20 percent to 50 percent in the near future, but doing so immediately would risk everyone.

A company with 10 machines and working capital of Rs 200 million can pass technical evaluation, while a company with 30 machines and working capital of Rs 1 billion also eligible and is placed in the same basket. The smaller company may bid Rs 2 billion for a project, while the larger company bids Rs 2.5 billion.

The smaller company faces problems in managing equipment and capital, leading to delays. Under a combined evaluation, the larger company’s proposal would be selected.

Another official at the ministry warns that applying this system today would result in companies filing complaints with the anti-corruption body, potentially leading to corruption charges and social media backlash.

When projects are financed with loans from institutions like the World Bank and ADB, their procurement standards must be followed. The government agrees to this while taking the loan. These standards define contractor eligibility, required capacity, blacklisting status, and basic qualifications. However, the procurement process itself follows the Public Procurement Act.

Donor agencies have recently expressed dissatisfaction over the growing number of corruption investigations and complaints in loan funded projects. Over the past two years, they have said that projects have faced abnormal delays due to complaints and court cases.

Officials at the Ministry of Finance say that donors express dissatisfaction in every meeting, stating that projects are being stalled under the excuse of complying with domestic laws even though their procurement guidelines are supposed to be followed.

Due to this dispute, the risk of delays in project financing has increased. The World Bank and ADB remain firm that the technical evaluation share must be increased since the system has already been implemented. Government officials are not willing to comply. As foreign loans are the sole source of capital expenditure, this dispute could become serious.

Public procurement expert and former government secretary Suresh Pradhan says problems in procurement are increasing. He has expressed concern that recent developments are making procurement more complex. According to him, while the government as the executive body should guarantee transparency in procurement processes, handing this responsibility to judicial and punitive bodies has created chaos.

Pradhan says that questions are now raised in every procurement process, and resolution through judicial and constitutional bodies has brought work to a halt. This is one of the reasons the new standards of the World Bank and ADB are not being followed.

What is 'Rated Criteria'
To accelerate slow and poor quality development works, the World Bank introduced the 'rated criteria' provision in its procurement framework in 2016. Instead of focusing only on the lowest bid, the system prioritizes evaluating quality, sustainability, and innovation through a scoring based approach.

The bank said the system was introduced to ensure effective use of public resources and to achieve long term returns from projects. Under the rated criteria system, contract evaluation considers not only price but also technical capacity, work methodology, environmental and social impact, and long term operating costs as a whole.

The World Bank introduced this system to reduce the risk of losing time benefits and increasing long term costs when low bid contractors cause delays due to weak capacity.

In developing countries like Nepal, where delays, disputes, and cost overruns are common in contracts, both the World Bank and ADB believe that using rated criteria helps improve the quality of public procurement systems.