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Public procurement : Experts reject Buhari’s request for sweeping powers

By Mathias Okwe, (Assistant Business Editor) and Chuka Odittah (Abuja)
18 September 2016   |   3:58 am
The need to insulate politicians in government from the award of juicy contracts to themselves, cronies or firms in which they have interests, with the attendant consequences of inflation of contract sums, which robs government of value for money....
President Muhammadu Buhari

President Muhammadu Buhari

• Call For Council Inauguration
• Say No To Upward Review Of Contract Mobilisation Fee

The need to insulate politicians in government from the award of juicy contracts to themselves, cronies or firms in which they have interests, with the attendant consequences of inflation of contract sums, which robs government of value for money was the driving force behind introduction of the Due Process mechanism during former President Olusegun Obasanjo’s administration, which latter culminated in the enactment of the Public Procurement Act of 2007. The act establishes the National Council on Public Procurement, (NCPP) as the regulations Authority for the monitoring and oversight of public procurement, as well as the harmonization of the existing government policies and practices by regulating, setting standards and developing the legal framework and professional capacity for public procurement in the country.

The Act establishing the Council, though proposed and passed by the National Assembly in the latter days of the tenure of Obasanjo’s government in May 2007, it received assent on June 4 2007, shortly on assumption of office by former President Umaru Musa Yar’Adua (now late), who was supposed to immediately inaugurate the Council to take over the business of public procurement through competitive bidding, through the supervision of the Bureau of Public Procurement (BPP), which according to the Act is merely the Secretariat of the Council, akin to what the Bureau of Public Enterprises (BPE) is to the National Council on Privatization (NCP), headed by the Vice President, which oversees all privatization activities in the country.

Unfortunately, more than nine years after the enactment of the Law, the Council, which former President Yar’Adua failed to set up, which his former Vice President and latter successor, Dr. Goodluck Ebele Jonathan equally failed to set up after almost six years in office, has thus provided opportunity for the politicians at the Federal Executive Council (FEC) to continue to hijack the role of public procurement.

Indeed, most Nigerians expected that one of the earliest actions the administration of the President Muhammadu Buhari, who had promised to clean the Augean stable, would be the immediate inauguration of that Council to instill transparency and accountability in public life. But fifteen months after, that is yet to be seen, as his ministers continue to constitute themselves into contracts approving body, without exercising effective monitoring of the activities of the Bureau of Public Procurement (BPP), to ensure that envisaged malfeasances as articulated in the Act establishing the Council are either prevented or where established infractions are noticed, appropriate sanction are meted in accordance to the Law.

Part 1 (2) of the Establishment Act of the Council listed its membership as follows:The Minister of Finance as Chairman; the Attorney-General and Minister of Justice of the Federation; the Secretary to the Government of the Federation; the Head of Service of the Federation; the Economic Adviser to the President; six part-time members to represent Nigeria Institute of Purchasing and Supply Management; Nigeria Bar Association; Nigeria Association of Chambers of Commerce, Industry, Mines and Agriculture; Nigeria Society of Engineers; Civil Society; the Media; and the Director-General of the Bureau who shall be the Secretary of the Council.

The Act added that notwithstanding the provisions of Section (2), the Council may co-opt any person to attend its meeting, but the person so co-opted shall not have a casting vote or be counted towards quorum.Part 1(4) Act said the President shall appoint the Chairman and other members of the Council.

Part 2 (a – f) of the Establishment Act listed the functions of the Council to include: “consider, approve and amend the monetary and prior review thresholds for the application of the provisions of this Act by procuring entities; consider and approve policies on public procurement; approve the appointment of the Directors of the Bureau; receive and consider, for approval, the audited accounts of the Bureau of Public Procurement; and “approve changes in the procurement process to adapt to improvements in modern technology” ; give such other directives and perform such other functions as may be necessary to achieve the objectives of this Act.”

Also considered highly unethical include; the possession of: “a direct or indirect interest in or relationship with a bidder, supplier, contractor or service provider that is inherently unethical or that may be implied or construed to be, or make possible personal gain due to the person’s ability to influence dealings; entertains relationships which are unethical, rendering his attitude partial toward the outsider for personal reasons or otherwise inhibit the impartiality of the person’s business judgments ; places by acts or omissions the procuring entity he represents or the government in an equivocal, embarrassing or ethically questionable position ;entertains relationships compromising the reputation or integrity of the procuring entity he represents or the government ;receives benefits by taking personal advantage of an opportunity that properly belongs to the procuring entity he represents or the government ; creates a source of personal revenue or advantage by using public property which comes into his hands either in course of his work or otherwise ; and discloses confidential information being either the property of his procuring entity, the government or to a supplier, contractor or service provider to unauthorized persons.

The implementation of the public procurement principle in the country without the requisite Council, which should carry out the policing or over sighting of the Bureau has continued to attract criticism from the civil society community as well as finance and economic experts, with some alleging that the absence of a supervisory council as conceived was responsible for the low level of budget performance year in year out. Others yet accused the Bureau of corruption and favoritism contract awards and have maintained calls for the quick inauguration of the Council to supervise its activities and punish offenders, bearing in mind that the penalty for the commission of the above listed infraction carries in some instances a five year jail term without option of fine and in other cases, fines ranging huge sums of money.

Some of the envisaged malfeasances which the Council is supposed to keep an eye on the BPP staff in their day to day exercise of procurement activities to avoid compromise as provided for under the Act in Part Eleven under Code of Conduct include: making requisition for or planning of procurements; preparing solicitation documents; receiving offers in response to any form of solicitation towards a procurement or disposal; evaluating and comparing offers confidentially and in complete neutrality; protecting the interest of all parties without fear or favor; and obviating all situations likely to render an officer vulnerable to embarrassment or undue influence.

In 2013, the World Bank raised an alarm that the Nigerian Government had refused to draw down on a $450m facility meant to institutionalize the operations of a Public Private Partnership (PPP) regime in Nigeria, aimed at reducing the cost of infrastructure financing in the country from public resources, apparently due to the selfish enrichment through public contracts inflation and other fraud, which are not common in a PPP arrangement.

The World Bank Sector Manager, Finance and Private Sector Development (Western & Central African countries), Mr. Paul Noumba who expressed the Bank’s shock said the faculty had then been lying fallow for the past three years, signifying the lack of interest of the Nigerian Government in the PPP regime which was introduced by the late President Musa Yar’Adua Administration.

The Guardian equally learnt from sources close to the World Bank and the Infrastructure Concession and Regulatory Commission (ICRC), the PPP regulatory agency in Nigeria that part of the seeming failure of the ICRC pioneer Director General, Dr. Mansur Ahmed to deliver on his mandate was the allegedly masterminded by the MDAs functionaries who effectively ‘blocked ‘ their projects from the ICRC for preparation and execution under the PPP window and insisted that the projects be funded direct from Government’s allocation where they would have total control of resources and award for the projects.

The World Bank source who asked not to be named said: “It’s really disturbing that the Nigerian Government with a huge infrastructure deficit appears not to be interested in PPP, which could save her a lot of money to tackle other challenges. The Government has even frustrated the World Bank’s attempt to collaborate with her on some projects to set example on the benefits of a PPP.

“Specifically, we approached the Government to lease the Lagos – Ibadan Expressway to us on a PPP, arrangement, that was about three years ago. They foot-dragged. When we realised they were not too enthusiastic, we said okay, lets unbundle it, give us the Lagos-Shagamu section while the Government does the Shagamu-Abeokuta section, still they turned down the offer and latter offered it to Babalakin, which they have also terminated and the Road has remained in bad shape with the attendant risk to road users,” added the source disturbingly.

Mr. Paul Noumba said that Nigeria was the first country, which the World Bank picked for a pilot project for PPPs but regretted that for three years, funds released for the purpose then had been lying fallow. He explained that because of the non-utilisation of the fund, the World Bank had decided to restructure and scale it down to USD$25m at the first instance to take care of technical assistance and capacity building while in phase two, it would release USD$85m. The initial ratio was USD$150 million and USD$300m.The immediate past Director General of the Bureau, Engr. Emeka Eze, however, refutes these claims, insisting that activities of the Bureau remain transparent and within the best international standards.

He explained that in an effort to improve budget implementation by Ministries, Departments and Agencies (MDAs) of the Federal Government, the Bureau decentralized the approving authorities along certain threshold sum, thus empowering either the parastatals or the Ministries to award certain contracts without necessarily having to wait for the Federal Executive Council (FEC) approvals.

He listed the rolling threshold within which the accounting officers in the ministries or agencies of Government can undertake awards after the tendering procedure has been faithfully undertaken by the resident TendersBoards: for ministries, from N5m to less than N100m to be approved by the Permanent Secretary who is the accounting officer; for parastatals and agencies, from N2.5m to less than N50m, except in the Ministry of Petroleum Resources and agencies where they are empowered to award contracts ranging for N1.40b, but less than N2.7b for ministerial tenders ; N540m and above, but less than N1.4b for the Group Executive Council of the NNPC Headquarters Tenders Board and N270m, but less than N540m for agencies within the refinery, petrochemical , production and corporate supply chain tenders boards of the NMPC agencies.

According to Eze in a circular to all MDAs: “The Bureau of Public Procurement wishes to observe that by these new thresholds, greater procurement responsibilities have been placed on the Ministries, Departments and Agencies while the Bureau would be paying greater attention during post-procurement reviews in compliance with Clause 16(13), Part IV (Fundamental Principles for Procurements) of the 2007 Public Procurement Act, which states that: “Copies of all procurement records shall be transmitted to the Bureau not later than 3 months after the end of the financial year and shall show:-information identifying the procuring entity and the contractors; the date of the Contract award; the value of the Contract, and, the detailed records of the procurement proceedings.”

He further clarified that: “Only projects in excess of N300m for Works and N100m for Goods & Services qualify for Pre-qualification. In other words Ministries/Department / Agencies (MDAs) should go straight to invite Bids for Tender for projects costing less than N100m for Goods (Supply Items) and N300m for works (Construction).

Now, reacting to the current request being planned by President Buhari for emergency powers on budget spending, a public finance expert and social justice advocate, Mr. Eze Onyekpere, who is also Lead Director, Center for Social Justice (CENSOJ), faulted the President’s move and rather advised him to immediately put the Council in place to enable it deliver on the public procurement vision. Eze also faulted the agitation for the upward review of the contract mobilization percentage, saying the current level of 15per cent was the internationally acceptable threshold.

Eze, who x-rayed the activities of the BPP since its establishment pointed out some observed loopholes: “As lofty as these goals are, the agency created about a decade ago still grapples with ability to comply in total with the core objectives as envisaged by law, leading to outright subversion of the nation’s public procurement standards.

“Although these objective appear clear in black and white, observers, especially potential investors who have had a bitter taste of the shoddy compliance with these ground rules are of the opinion that something must be done, and urgently to address the situation, especially at this time when the economy is in dire need of resuscitation. “For this purpose, the Federal Government was recently reported to be seeking additional powers through legislation on a bill known as Emergency Economic Stabilization Bill 2016’ to reflate the nation’s economy. The bill, which is yet to be presented to the lawmakers, is expected to grant the president sweeping powers to formulate a rapid economic recovery plan within a year to jump-start the economy.

“Some of the powers sought by the bill include: amending the procurement processes to support stimulus spending on critical sectors of the economy; making orders to favour local contractors/suppliers in contract awards; reduce the process of sale or lease of government assets to generate revenue; allow virement of budgetary allocation to projects that are urgent without recourse to the National Assembly; to embark on radical reforms in visa issuance at Nigeria’s consular offices and on arrival in the country and to compel some agencies of government like the Corporate Affairs Commission (CAC), the National Agency for Foods Administration and Control (NAFDAC) and others to improve on their turn around operation time for the benefit of business, among other requests.

“The Public Procurement Act in its present form and state is one of the most beautiful laws ever made in Nigeria. It is an Act to establish the National Council on Public Procurement and the Bureau of Public Procurement as the regulatory authorities responsible for the monitoring and oversight of public procurement, harmonizing the existing government policies and practices by regulating, setting standards and developing the legal framework and professional capacity for public procurement in Nigeria; and for related matters.”

Eze continued: “Government officials have always complained that the processes involved in implementing the Act is cumbersome and time consuming. They cite the time lag for preparation of documentation, advertisements, assessment of bids, etc. The alternative, which they advocate is a fallback to the old ways of procurement based on whims and caprices, rather than rules. If the rules are abrogated, what will be the basis for public procurement decisions? Essentially, government officials do not want restrains and rules in the way and manner they award contracts. But if they follow the rules stated in the Act, from procurement planning, pre-qualifications (where necessary), invitation to bid, etc., there would be no major challenges.

“No law is perfect, but a law needs to be worked and implemented to see its flaws. Right from inception, the executive (including previous administrations) signed the law, but refused to fully implement it. The National Council on Public Procurement being the policy arm of the procurement function was never constituted, whilst attempts have been made to subvert other provisions of the Act. The Bureau of Public Procurement, which was supposed to be the technical arm and the secretariat of the Council was established and has been working without the oversight of the Council,” he said.

According to Onyekpere, the present economic challenges facing the country are partly result of refusal to entrench “evidence and rules based approach to public procurement.” He said if MDAs start the process of procurement planning on time, they would not have any major challenges in following through the process up to the award of contract.

On the issue of upward review of mobilization fee for contractors up to 50%, the lawyer cum activist argued that there is no basis for the review, but maintained that 15% mobilization was in line with world best practices.

“Again, no reasonable contractor or service provider needs 50% mobilization fee. The current 15% mobilization fee is in order and is in line with international best practices. Thus, if anyone is asking for the abrogation of the process so as to facilitate the award of contracts, that person is simply asking for a license to mismanage and misappropriate public resources. This should not be allowed to fly. Payment of contractors starts from appropriate works, services, generation of certificates and effective supervision by MDAs down to the processing of payment,” he said.

In his own intervention, the Executive Director of Niger Delta Monitoring Group (NDEBUMOG), Dr. Georgehill Anthony expressed disappointment that President Muhammadu Buhari has not inaugurated the Council yet and urged him to do it immediately, before he completely loses whatever remaining confidence the people have in him.

Accordingly, before constituting the Council, he advised that the 2007 Act should be amended to insulate the Finance Minister, who is provided for in the Act as Chairman or even the President to head the Council, to insulate them from the influences of politics and ensure that ordinary Nigerians ultimately benefit from the provision.

Dr. Anthony said: “ We the Non-Governmental Organisation (NGO) Community in Nigeria thought that that was the first thing President Muhammadu Buhari was going to inaugurate as part of institutional efforts to check corruption. It is hard to believe that he could disappoint us this way. In fact, we advise that the Act should be amended to make an independent professional from bodies conversant with public procurement to head it, so that there can be checks and balances. We do not want politicians to head that Council, to check against the current situation where ministers and the rich political class who are the owners of the companies who bid for contracts preside over the affairs of the Council or the Bureau to feather their nests at the expense of ordinary Nigerians.”