Why Nigeria Procurement Activities Since 2007 Are Illegal, Group Writes Senate Committee
A non governmental organization, NGO, Procurement Observation and Advocacy Initiative, PRADIN has forwarded to the Senate what it terms as it recommendations towards the amendment of the procurement law in Nigeria.
According to the letter signed by the group’s National Coordinator, Mohammed Bougei Attah which was submitted to the Senate Committee on Public Procurement, the procurement professionals noted that there is need for an improved public procurement acts so as to maintain sanity in the system.
Below is the full details of the letter which was obtained by SECURITY MONITOR….
May 27, 2023
The Committee Secretariat
Senate Committee on Public Procurement
Room SB.61 Senate Wing – White House
National Assembly Complex
Abuja
Attention: The Chairman of the Committee
RE: CALL FOR MEMORANDUM / INVITATION TO PUBLIC HEARING
On A Bill for An Act to Amend the Public Procurement Act 2007 and for Other Matters Connected Thereto, 2023 – SB 1073
We write in response to the above to submit a Memorandum of the proposed amendments to the Public Procurement Act 2007
Our organization, Procurement Observation and Advocacy Initiative, PRADIN is a national non-governmental organization, NGO, of select nonprofit leaders trained under the Federal Government of Nigeria-World Bank Economic Reforms and Governance Project 2010. It has over 50 members spread across the country, and or primary focus is to ensure transparent procurement practices and application for a healthy economic development to the country.
Below are our reviews of the proposed amendments to the Public Procurement Act 2007 as contained in the Draft Bill
Proposed Amendment to Section 1 of Principal Act.
Our concern here is the moral or statutory need to amend the Act in its present state when it has not being fully implemented. The absence of the National Council for Public Procurement, NCPC as required in Part 1, Section 1, Subsection 1 of the Principal Act is not in place. It may not be wrong to assume that all the procurement activities under the Nigeria law since 2007 are illegal.
It is on record that the requirement to ensure the Bureau of Public Procurement, BPP that serves as the Secretariat of the Council (Part 1, Section 1) is not yet professionalized as required by law
Proposed Amendment (2(f)(iv) ) to include Nigerian Institute of Architects by inserting this after Subsection 2 paragraph (f) subparagraph(iii)
OUR OBSERVATION
If as proposed, the Nigerian Institute of Architects is added to the membership of the Council and remove Nigeria Engineers from the Council, what would Nigerians have achieved?
Our research shows that ENGINEERS are more relevant in the activity sector of the economy more than Architects. This is a global accepted practice and the activity sectors include: Earth Moving Machines, farm implements, Harvesters, storage facilities, Animal Pins, Sprayer equipments, etc. Others are Pipelines, Refineries Flow stations, Gas plants, Petrochemicals etc. To go further the engineering professionals and NOT ARCHITECTS are directly involved with Earth moving excavators, tunnel construction, mining equipment, and Quarrying machinery
In the construction sector, where we have build, engineers are also directly involved with Construction of power station, Transmission of power, Communication towers, pipeline construction, Dam & water facilities, etc Motor vehicle body, Railway coaches, Railway lines, Aero plane & Ship building, etc Construction of hostels, Laboratory facilities, Library facilities, Sport and Lecture theatre construction ,Health infrastructure, Health equipments, machinery and tools.
It is for the above reasons and the relevance of Engineers to procurement that their membership of the Council is a primary necessity
Proposed Amendment to Section 6 of the Principal Act – Section 6 – To insert a new
Paragraph (m) in subsection 1 and renumbering the existing paragraph (m)
1(m) shall ensure that Local content mandate is included in every procurement solicitation and any exception to be specifically justified and expressly stated in the solicitation document
(n) To do such other things as are necessary for the efficient performance of its functions under the Act.
OUR OBSERVATION
There is need to ensure that determination of Local Content in Products to be supplied is tied to Raw Materials Research and Development Council, RMDC, which has the statutory responsibility (Mandate) to determine local content in products
There is already an existing law under the Presidential Executive Order 5 where Local content mandate is included in every procurement solicitation and any exception to be specifically justified and expressly stated in the solicitation document. It is therefore not necessary but a DUPLICATION OF LAWS
All that BPP needs to do is to implement it ( See section 1 of Eo5 ) do such other things that are necessary in line with the law for the efficient performance of its functions under the Act without bringing it into the law
- PROPOSED – i. Section 16 is amended by Inserting after subsection (14) a new subsection15 and renumbering accordingly.
ii. The bureau shall collate and gazette all procurement by MDAs of the Federal Government of Nigeria, FGN not later than 31st March of every year in respect of the succeeding year’s procurement and publish same in its website disclosing the following data
Purpose of procurement
Date of award
Bidders /winning bids
Value of each award
Duration of contract and status as at report date
This paragraph should not be included at all because it WILL PROMOTE CURRUPTION. By implication, it will shut out the NATIONAL ASSEMBLY from their statutory responsibility of receiving Biannual Procurement Audit REPORT as required in section 5 (p) of the Public Procurement Act PPA.
Once BPP is allowed amend the law to Gazette the following data: (a) Purpose of (b)procurement, (c) Date of award, (d) Bidders /winning bids and (e) Value of each award as well as duration of contract and status as at report date without an approval of procurement audit report by the National Assembly then the gazette of the above data by BPP become a law which will prevent the National Assembly of their statutory role in the Act to examine Procurement Audit Reports prepared by BPP for National Assembly to see if there is CORRUTION from BPP or the MDAs
PROPOSED – Section 35 is to be amended to increase mobilization fee from 15% to 30% for works and include Consultancy services as one of the procurement processes to benefit from 30% of mobilization based on Presentation of Bank or Insurance Guarantee from reputable organizations
OUR OBSERVATIONS
Banking system in Nigeria should be improved and not “KILLED”
The proposal to provide 30% Mobilization instead of the present 15% is a clear way of encouraging corruption. This cannot in our view stop or reduce instances of project abandonment.
The Nigeria economy will not only continue to suffer under this proposal, it will weaken our efforts to reduce financial flows.
Take for instance 400 out of the existing Ministries, Departments and Agencies (MDAs) of government are to award contracts to the tune of N500m each (of course there is the likelihood of up to 100 contracts and may reach above N1bn by each MDAs). If you mobilize each contractor with 30% of the total amount, you will be paying in advance the total profit in advance
It is a requirement in PPA 2007 that any contractor bidding for contract under the extant law MUST have the financial capability.
This is further stressed with the condition that a Contractor is required to provide BANK GUARANTEE (Bond) as security before the award of the Contact.
A non-compliance with this requirement implies that contract cannot be awarded in the first instance. And this clearly put to rest the issues of abandoning projects sites by contractors if followed to the letter.
The 15% as contained in the law S.35 is purely a MOBILIZATION FEES, which implies assisting or mobilizing the contractor to site
Consultants are not meant by law to receive Mobilization because they have no equipment etc to be mobilized to site
PROPOSAL – Section 44 is amended by Inserting new paragraphs c ,d,e and f
To give preference to registered NIGERIAN ARCHITECTS in Built environment in consultancy contracts. To give preference to registered NIGERIAN ENGINEERS, QUANTITY SURVEYORS in consultancy contracts
Foreign firms to partner with competent local companies in full compliance with local content Act
Consultant engagements to be stand alone separate from the construction works or services it may supervise and to be also entitled to 30% for mobilization based on Bank or Insurance guarantee while subsequent fees should be aligned with mile stones certification of the Main contractors deliverables as in the agreement
OUR OBSERVATION
This paragraph c,d,e and are not necessary and merely duplication of laws because it is a already a law in Nigeria to give Preference to Nigerian Contractors and Consultants and including that Registered and Qualified Consultants in Nigeria are to lead in Consultancy Projects
PROPOSAL Section 49 – To amend subsection 2 and put new subsection 2 to include that margin of preference as determined prior to tender domestic consultants and other Local contractors
OUR OBSERVATION
This is not clear and will bring confusion and conflict of laws
A local contractor can be a company registered in Nigeria by a Foreigner? Margin of Preference in Consultancy Service does not arise as it is already a law that a foreign Consultant shall not practice in Nigeria without registration in Nigeria.
By interpretation of the above law, all consultants must be domestic through registration in Nigeria or through a registered Nigerian firm leading in the project. If this paragraph is allowed, it will legalize foreign companies coming into Nigeria to bid for Jobs without registration with Local Professional Bodies
CONCLUSION
While we have engaged with 7th, 8th and the 9th National Assemblies on similar cases in the past, we are very conscious of the efforts of some people to undermine the efforts of the Federal Government in the fight against corruption.
Procurement alone accounts for over 70% of total Corruption cases in the public sector. As such all efforts must be put in place to protect the Sunshine Laws, of which Public Procurement Act 2007mis a strong tool.
We therefore pray that all the above amendments sought should be critically reviewed in line with our observations and recommendations
Yours faithfully,
Mohammed Bougei Attah
National Coordinator
About Author
