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How 2007 Public Procurement Act failed

The Public Procurement Act 2007 established the Bureau of Public Procurement (BPP) as the regulatory authority responsible for the monitoring and oversight of public procurement.

It was saddled with the responsibility of harmonising existing government policies and practices by regulating, setting standards and developing the legal framework and professional capacity for public procurement in Nigeria.

The bureau was then hailed as a key government institution that would help drive the much-needed transparency, competitiveness, cost effectiveness and professionalism in the public sector procurement system. It was also to help prevent corruption, enhance active citizen participation towards achieving better service delivery and improve ease of doing business in Nigeria.

To aid public procurement, the government further put in place the Nigeria Open Contracting Portal to enhance an open and transparent public system in the country through increased disclosure of procurement information to all stakeholders.

Despite these initiatives, the procurement process in the public space is still plagued by massive insider abuse, sabotage, corruption and other sharp practices.

These practices often culminate in huge inflated contract sums, loss of government revenue, demand for contract variations/augmentations, poor execution of projects, as well as high incidences of judgement debts.

Section 16, 6(f) of the Act states: “All contract bidders in addition to requirements contained in any solicitation documents shall: accompany every bid with an affidavit disclosing whether or not any officer of the relevant committees of the procurement entity or bureau is a former or present director, shareholder or has any pecuniary interest in the bidder and confirm that all information presented in its bid are true and correct in all particulars.”

Also, Section 16 subsection 8 (a&b) states: “Whenever it is established by a procuring entity or the bureau that any or a combination of the situations set out exist, a bidder may have its bid or tender excluded from any particular procurement proceeding if: (a) there is verifiable evidence that any supplier, contractor or consultant has given or promised a gift of money or any tangible item, or has promised, offered or given employment or any other benefit, item or a service that can be quantified in monetary terms to a current or former employee of a procuring entity or the bureau, in an attempt to influence any action, or decision making of any procurement activity;

“(b) a supplier, contractor or consultant during the last three years prior to the commencement of the procurement proceedings in issue, failed to perform or to provide due care in performance of any public procurement.”

But those sections of the Act, among others, have been flagrantly violated as BusinessDay findings show that some civil servants did not only get involved in contract execution of contracts through proxies, but also circumvented the BPP Act by engaging in contract splitting and bypassing of the regulators.

Segun Adeniyi, a procurement expert, said the 15 percent mobilisation fund to contractors provided for in the Act is seen as a disservice to public procurement and successful execution of projects.

Adeniyi, who also teaches at Baze University, Abuja, believes that the Act encourages over-invoicing as it also allows different pricing for different locations.

He said: “We have witnessed very ugly situations where government agencies engage in contract splitting, over-invoicing and other forms of sharp practices that have infringed on the BPP Act of 2007.

“Unless we have well-defined procedures to ensure compliance, these things will continue to happen.”

Adeniyi, who has served as a World Bank consultant with the BPP, urged the federal government to review the 2007 Act in order to strengthen compliance.

“Studies have shown that contracts are executed in Nigeria at more than twice what it costs in other African countries, with inflation and corruption contributing mainly to this problem,” he said.

Under the 2023 threshold approved by the federal government, the Ministerial Tenders Board is now empowered to approve contracts below N500 million for works and N100 million for services.

Ministries, departments and agencies (MDAs) previously had powers to only approve contracts worth between N20 million and N300 million for services and N30 million-N1.5 billion for works projects.

These new thresholds essentially mean that they can award contracts without following BPP requirements empowered by the Act.

Contractors with projects worth over N300 million were meant to go through nine steps in the public procurement procedures before this new threshold was introduced.

The aim of the public procurement procedure by the BPP is to ensure accountability, transparency, and probity in the procurement process.

But in a study, the African Journal of Politics and Administrative Studies observed that the high cost of contracts in Nigeria remains one of the major challenges faced by successive governments in Nigeria.

It said: “The largest proportion of the country’s annual budgets goes to the procurement sector as part of efforts by the government to provide basic social and economic infrastructures to the citizens in order to improve the general quality of life, and engender good governance for development in the country.

“However, despite the government’s enormous budgetary spending on development projects, Nigeria has only recorded very minimal progress in the efforts at attaining sustainable development of the country and alleviating extreme poverty and sufferings among the majority of its citizens since independence.

“The huge government financial expenditures on development projects over time are yet to match the general expectations and development needs of the country and its citizens. The trend has been a major concern of successive governments in the country for many years and it is generally attributed to the high level of corruption that permeates the country’s public procurement system.”

Also, a recent report by the Chartered Institute of Project Managers of Nigeria revealed that Nigeria currently has well over 56,000 abandoned projects across the country.

The institution blamed this on several factors, including failure to engage professionals in the construction of projects and other sharp practice by civil servants which negates section 16 – 6(a&b) of the procurement Act which provides that “all bidders, in addition to requirements contained in any solicitation documents, shall possess the necessary professional and technical qualifications to carry out particular procurements; financial capability; equipment and other relevant infrastructure; shall have adequate personnel to perform the obligations of the procurement contracts ; as well as possess the legal capacity to enter into the procurement contract.”

In 2019, Ahmad Lawan, the then president of the Senate, called for a holistic review of the BPP Act to address loopholes.

“The public procurement in Nigeria as far as I can see is not the best in the world. The public procurement must be reviewed and amended. We must see how we can make it more practical and holistic within the shortest possible time,” Lawan said at the time. “From the stage of bidding to mobilisation, the costing of any government contracts must be uniform in order to avoid imbalances and embarrassment in the processes.”

“A situation where about twenty agencies of government buy the same brand of vehicles at grossly different prices is not good. Market prices must be determined and adhered strictly to ensure that Nigerians are not shortchanged through abuse of processes or over-invoicing,” he added.

A report published on the website of the Office of the Auditor General for the Federation on December 23, 2020 revealed how some MDAs caused huge contract infractions worth over N105 billion by bypassing the BPP and contract splitting to avoid queries.

Some of the concerns raised in the audit report include under and non-remittance of revenues generated by the MDAs, irregular expenditures including what the OAuGf described as “high magnitude of unretired advances”.

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“Overall, our findings are indicative of significant weakness in expenditure control, and financial reporting,” it said.

Dave Umahi, minister of works, recently lamented the poor state of the Nigerian roads, while accusing civil servants of working with some contractors to derail government projects.

Umahi had vowed to petition the contractors to the Independent Corrupt Practices Commission for poor quality jobs.

He said the current administration inherited about 18,897 kilometres of road projects valued at a total cost of N14 trillion.

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He lamented that some of the road projects had been ongoing for over 20 years and would now require argumentation due to the present high cost of materials.

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