Kathmandu, October 28: The government has introduced a provision requiring priority to be given to domestic products, locally available materials and indigenous technologies in public construction and procurement. Projects cannot be designed in a way that requires the use of foreign materials when suitable domestic alternatives are available. If foreign materials must be purchased, the technical justification for doing so must be clearly stated.
The Directive on the Use and Promotion of Domestic Products in Public Procurement, 2083 requires the use of domestic products to be ensured at every stage, from the selection of materials used in infrastructure projects such as roads, bridges and buildings to the preparation of cost estimates, technical specifications and procurement contracts. The government has introduced the directive with the aim of reducing dependence on imported materials in public procurement and promoting domestic industries and products.
Under the directive, public agencies must verify the availability of suitable domestic alternatives from the initial stages of project planning, feasibility studies, preparation of detailed project reports (DPRs), and design to the preparation of cost estimates and technical specifications. The use of domestic materials must subsequently be ensured during procurement, construction, installation and operation.
For road construction, concrete roads made with domestically produced cement must be prioritised over bitumen-based asphalt roads, provided they are technically suitable. Similarly, domestic marble, stone, slate or tiles must be used instead of imported granite and tiles in the construction and decoration of government buildings.
Projects cannot be designed, nor can technical specifications be prepared, in a way that makes foreign materials mandatory when suitable domestic alternatives are available. Tender conditions targeting only a particular foreign brand or materials produced in a specific country are also prohibited. Tender documents and procurement contracts must explicitly stipulate the requirement to use domestic materials.
Justification Required for Purchasing Foreign Materials
The directive discourages the practice of purchasing foreign materials without first verifying the availability of domestic alternatives. While preparing cost estimates and technical specifications, public agencies must establish whether the required materials are available in Nepal by examining domestic manufacturers, the market, electronic marketplaces and quality-related certification documents.
Foreign materials may be purchased if the required materials are not manufactured in Nepal or if domestically available materials and technologies cannot fulfil the technical objectives of a project. However, in such cases, the decision must clearly state the grounds and reasons for requiring foreign materials.
Although the directive prioritises domestic products, there can be no compromise on quality, safety, durability or technical standards. Materials procured must meet the quality standards prescribed by prevailing laws and the technical specifications stipulated in the contract.
Where a contract specifies the use of domestic materials, foreign materials cannot be used without the approval of the concerned agency. This provision requires public agencies to ensure the use of domestic materials through procurement contracts themselves.
Heads of Public Agencies, Consultants Held Responsible
The head of the concerned public agency has been assigned primary responsibility for ensuring compliance with the directive. Consultants involved in project studies and design, as well as officials responsible for approving their work, must also ensure that provisions concerning the use of domestic alternatives are followed.
Decisions to use domestic materials must be made not merely at the final stage of procurement but from the outset, when project designs and cost estimates are prepared. This means domestic products must be considered from the beginning when selecting materials for public construction projects.
The directive prohibits supplying foreign materials under the guise of domestic products, providing false information or labelling, and using counterfeit brands or trademarks. If such fraud or violations occur, the materials may be rejected and payments withheld.
Construction contractors, suppliers or service providers found guilty may be recommended for blacklisting under the Public Procurement Act. Further legal action may also be initiated in accordance with prevailing laws.
Not Applicable to Existing Procurement Processes
The directive will not apply to procurement processes already underway or contracts already concluded before its commencement. For new procurement processes, however, public agencies must verify the availability, quality and technical suitability of domestic materials before making procurement decisions.
The measure, aimed at increasing the use of domestic products, will directly affect the selection of materials used in public construction, government procurement procedures and the responsibilities of construction contractors. Although domestic industries will gain opportunities in the public procurement market, their products must meet the required quality standards and technical specifications.
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