Reforming Software Procurement in Nepal: A Quality and Cost-Based Selection Approach

Abstract

The rapid expansion of digital governance has significantly increased demand for software systems in the public sector. However, Nepal’s procurement framework, governed by the Public Procurement Act 2063, primarily emphasizes the Lowest Evaluated Bidder (L1) approach, which prioritizes cost over quality. This has resulted in project delays, cost overruns, poor system performance, and high failure rates. This paper proposes the adoption of a Quality and Cost-Based Selection (QCBS) model for public software procurement. The QCBS approach balances technical capability and financial evaluation, improving vendor selection and project outcomes. Based on empirical findings, including analysis of over 100 software tenders, the study demonstrates that higher bid discounts correlate negatively with project success. The paper recommends policy reforms including QCBS adoption, software-specific procurement guidelines, and capacity building for procurement officials to enhance Nepal’s digital governance ecosystem.