ANTI-CORRUPTION ACADEMY OF NIGERIA THE TRAINING ARM OF THE

ANTI-CORRUPTION ACADEMY OF NIGERIA THE TRAINING ARM OF THE INDEPENDENT CORRUPT PRATCICES AND OTHER RELATED OFFENCES COMMISSION WORKSHOP ON ACADEMIC AND PROCUREMENT INTEGRITY FOR UNIVERSITIES PRESENTATION ON THE PRINCIPLES AND PRACTICE OF PUBLIC PROCUREMENT THURSDAY 9th JULY, 2015 BY AFOLAYAN KEHINDE WAHEED, MNIM, FCAI ASSISTANT COMMISSIONER (PROCUREMENT) ICPC, ABUJA

INTRODUCTION Prior to the enactment of Public Procurement Act 2007, there was Country Procurement Assessment Report(CPAR) conducted in 19992000 which revealed that before 1999 Nigeria lost 10 billion every year to corruption through award of contracts. In view of the above, the Budget Monitoring and Price Intelligence Unit (BMPIU) was set up in 2001 to serve as a radical response to address the problem.

INTRODUCTION CONT’D Though there was no law to back the operation of BMPIU, thus the operations were guided by Treasury circulars, based on 1958 Act authorizing the Accountant General of the Federation to issue guidelines on public expenditure. Pursuant to the above, the Public Procurement Bill was sent to the NASS in 2003/2004. The Bill was passed on the 31st May, 2007 and was signed into Law by then President Yar’adua, in June 4th, 2007.

WHAT WERE THE SETBACKS IN PROCUREMENT PRACTICE THAT NECESSITATED PROCUREMENT REFORMS IN NIGERIA? Selective Tendering Sole source contracting Contract price negotiations were common practices rather than exceptions Limited or no advertisement Limited and ineffective public bidding: the process lacked competitiveness Unclear evaluation and award criteria Extra budgetary projects Abandoned projects

setbacks in procurement practice that necessitated procurement reforms in Nigeria? Cont’d Political interference and control in contract awards . Bid splitting Inflation of prices and costs Abuse of virement Lack of transparency Absence of procurement planning, leading to poor prioritization or even no prioritization at all, cost overruns and failure.

Cont’d. Limited or no procurement planning Limited mandates given to tender boards Excessive advance payments Delay, uncertainty and some times nonpayment for jobs done Wrongful exclusion of qualified bidders Use of fake documents and falsification of records.

Cont’d kick backs and bribery collusion between bidders, between bidders and procuring agency staff, conflict of interest were dominant and unchecked use of inferior materials in public Procurement Multiplicity of Prices in different departments for similar or same items Absence of transparent Lack of periodic reviews and evaluations of procurement practices.

WHAT DOES THE PUBLIC PROCUREMENT ACT 2007 PROVIDE FOR? The Act provides for the establishment of supervisory Institutions and operational structures for procurement practices as well as defined scope, process, method, supervision complaint mechanism, code of conduct and offences relating to Procurement of goods, works, services and disposal of assets at the federal level in Nigeria.

SCOPE OF APPLICATION OF THE ACT The Federal Government of Nigeria and all Procurement Entities. All entities outside the foregoing which derive at least 35% of funds appropriated or proposed to be appropriated for any type of procurement described in this Act from the Federation Share of Consolidated Revenue Fund. Shall not apply to procurement of special goods, works and Services involving national defence, or national security unless the president’s express approval has been first sought and obtained.

WHAT IS PROCUREMENT? Procurement is defines as the acquisition of goods and or services at the BEST POSSIBLE TOTAL cost of ownership, in the Right Quality and Quantity at the RIGHT TIME, in the RIGHT PLACE for the direct BENEFIT or use of government, Corporation or individuals, generally via a contract. - Wikipedia Encyclopedia

WHAT IS PROCUREMENT (CONT’D) The overall process of acquiring goods, works and services, from the identification of need to contract administration and through the end of a services’ contract or the useful life of an asset - Procurement Manual, Bureau of Management, office of legal and procurement support, Jan 2005.

CORE OBJECTIVES OF PROCUREMENT Regulatory function of the procurement Act 2007 is to achieve the following four (4) core objectives: - Economy and efficiency - Competition – Providing level paying ground for all strata of bidders - Value for money - Transparency and ethical standard.

INSTITUTIONS AND STRUCTURES The National Council on Public Procurement The Bureau for public procurement (Industry Regulator) Recognized MDAs as PE’s - Procurement Planning Committee - Tender Board - Accounting Officer - Procurement

THE BUREAU OF PUBLIC PROCUREMENTS AND ITS FUNCTIONS Formulate general policies and guidelines relating to public procurement for the approval of the council. Issue procurement rules with Council approval Publicize and explain the provisions of the Act Certify Federal Procurement prior to award subject to thresholds approved by Council Supervise the implementation of established procurement policies and rules Monitor prizes of tendered items and keep a national data base of prizes (predictability).

CONT’D Publish details of major contracts procurement journal (transparency) in the Publish paper and electronic copies of the Procurement journal and maintain an archival system for it (transparency) Collate and maintain an archival system of all federal procurement plans and information Procurement Research and surveys Organizing Training Professionals and development for

CONT. Periodically review socio-economic effects procurement policies and advise the council of Prepare and update standard bidding and contract documents (predictability) Prevent fraudulent and unfair procurement. Perform Procurement Audit (accountability) Establish a single internet portal (primary and definitive source of procurement information at all times (transparency)

POWERS OF THE BUREAU To enforce the monetary and review thresholds approved by council. Issue certificate of no objection subject to the thresholds and guidelines. Stipulate to PE’s the procedures and documentation for no objection within the approved threshold. (Clarity). Inspect and review a procurement process to ensure compliance.

POWER OF THE BUREAU CONT. Determine whether there has been contravention of the act Debar supplier or service provider in contravention of the act Maintain a national data base of contractors and to the exclusion of PE’s prescribe categorization and classification for the companies in the register Apply sanctions

Cont. Recommend to the Council The suspension of officers concerned with procurement or disposal proceedings. The disciplining of accounting officer of any procuring entity. Temporary transfer of procuring and disposal functions of a PE to another entity or constant. Reference to ICPC or EFCC for investigation and prosecution Issuance of variation orders Any other sanction that the Bureau may consider appropriate.

PRINCIPLES FOR PUBLIC PROCUREMENT Subject to set threshold the principles are based on: Prior procurement plans and prior budgetary appropriation Procurement shall not be formalized until funds are available There must be open competitive bidding (exceptions) The process must be transparent, timely and ensure accountability. Promote Competition Economy and efficiency Must be in accordance with the laws\rules issued there from

GENERAL QUALIFICATION OF BIDDERS Professional and Technical qualifications to carry out particular procurement Financially capability Technical capability Qualified manpower Legal capacity to enter into contract Has no criminal records either directly or indirectly

GENERAL QUALIFICATION OF BIDDERS (CONT.D) Have fulfilled all its obligations to pay taxes, pensions contributions Not have any director who has been ‘convicted in any country for any criminal offence relating to fraud or financial impropriety.” etc. Accompany every bid with an affidavit of disclosure-whether any officer of relevant MDA or Bureau is a former or present Director, Shareholder or has any pecuniary interest in any bidder. Provide any documentary evidence or otherwise required by the MDA as proof of its qualification.

GROUNDS FOR DISQUALIFICATION OF BIDS AND OR BIDDER o Established evidence of promise or gift of money, tangible item or other quantifiable benefit (former or current employee) of MDA or Bureau to influence procurement o A contractor failing to perform or exercise due care in performance of a procurement contract in the preceding three years. o Bidder whose name is in the list of debarred contractors o In receivership or insolvency o Failed to pay taxes or pension contribution

CONT. Bidder is convicted and sentenced for a procurement crime or one relating to financial impropriety or; Has in its board, management or is owned by a person so convicted. Bidder fails to submit a statement in respect to its dominating or subsidiary relationship with any other bidder.

PROCUREMENT PLANNING WHAT IT ENTAILS

PROCUREMENT PLANNING (PPC) - (CONT.) Preparing the needs assessment & evaluation Identifying the goods, works or services required Carry out appropriate market and statistical survey and on that basis prepare cost implications of proposed procurement Aggregating its requirement to obtain economy of scale and reduce procurement cost Specify standards of goods, works or services Specify qualifications of bidders Recommend method for procuring each item. (Part V section 18 refers)

PROCUREMENT PLANNING COMMITTEE (PPC) (Cont’d) In accordance with the Procurement Act 2007, part V section 18-21 subsection (1) which says “for each financial year, each procuring entity (PE) shall establish a (PPC) Procurement Planning Committee with membership as follows:

PROCUREMENT PLANNING COMMITTEE (PPC) (Cont’d) MEMBERSHIP Accounting officer or its representative to chair the committee Procurement Unit- to serve as Secretary Unit directly in requirement of procurement Financial Unit of the MDA PRS Department of MDA Technical personnel of MDA with expertise in the subject matter for each particular procurement. Legal Unit of procuring entity.

RESPONSIBILITY RESTS ON: Permanent Secretaries for the Ministries; Directors- General/CEO of Corporations/ Commissions Vice Chancellor/Provost/Rector of the various institutions

RESPONSIBILITIES OF ACCOUNTING OFFICERS (CONT’D) Line Supervision of procurement (must not influence outcomes). Constituting the Procurement Committee and its decisions. Ensure that adequate appropriation is provided specifically for the procurement in the Federal Budget. Integrates their entity’s procurement expenditure into its yearly budget Ensure that no reduction of values or splitting of procurement is carried out such as to evade the use of the appropriate procurement method Constituting the Evaluation Committee

RESPONSIBILITIES OF ACCOUNTING OFFICERS (CONT’D) Ensure that the department is adequately staffed with people with technical and Procurement expertise in relation to the mandates of the Ministry. Ensure that the department is allowed free hand to operate without undue directives that might affect the integrity of the procurement process. Shall not influence in which ever manner the outcome of the evaluation process Initiate disciplinary action against any person who violates the provisions of the Act or regulations Encourage all staff to disregard any directive that is not in consonance with the Regulations of the Act. Determining Complaints

METHODS OF PROCUREMENT Open competitive Bidding (default Method) with following exceptions - Two Stage Tendering – part VII section 39 - Restricted Tendering - part VII section 40 - Request for proposals part VII section 41 - Emergency procurement Part VII section 42 – 43 - procurement of Consultant section 44 -52

PRE-QUALIFICATION/EXPRESSION OF INTEREST MDA’s that have decided the minimum qualification of contractors or service providers required for a particular procurement can call for pre-qualification. Solicitation for Expression of interest by newspaper advertisements. They must set out the precise criteria upon which it will pre-qualify or shortlist and apply

CONT’D Supply same set of pre-qualification documents/ requirements to all contractors. Charge a price that reflects only costs of printing and provision to contractors. For services, issuance of RFP follows shortlisting ( Request for proposal). The differences arising from the different parameters for selection of winners.

PROCUREMENT IMPLEMENTCATION ALLOW (COMMON STRATEGY-TB) Section 19 of the Act provides that all PE’s should implement THEIR Procurement plans in this order: - Advertise for solicitation of bids in national newspapers and federal tenders journal Invitation of TWO credible persons-representing a relevant private sector professional body and non-governmental anti-corruption organization to observe. Transparent Bid Opening Proceedings Transparent Examination & Evaluation Process Approval by the authority before award. Debrief the bid losers on request

SUBMISSION OF BIDS All bids shall be deposited in secured tamper-proof bid box. All procuring entities shall issue receipts showing the dates and time Bids were delivered Any bid received after the deadline for the submission shall not be opened and must be returned to the supplier or contractor A supplier or contractor may withdraw or modify his bid prior to the deadline for the submission of bids and is effective so long as it is received by the MDA before the deadline for the submission of bids.

OPENING OF BIDS Bidders must be permitted to examine envelopes to ensure bids have not been tampered with. Bids must be opened in public with bidders in attendance and any interested members of the public Bids must be opened immediately following the deadline stipulated for submission Registration of names & addresses of all those present at the bid opening indicating the organization they represent. Call to the hearing of all present and address of each bidder, the total amount of each bid and bid currency, and ensure they are recorded in Bid opening register by tender board secretary or his nominee.

BID EVALUATION Bid evaluation will generally be preceded by examination of bids to ensure that the minimum eligibility requirements are met, that the bid is responsive and duly endorsed After opening of bids, information relating to examination, clarification and evaluation of bids and recommendations, concerning awards shall not be disclosed to bidders or persons not officially concerned with the evaluation process until the successful bidder is notified of the award.

PURPOSE OF EVALUATION To determine and select the lowest evaluated responsive bid. (Goods &Works) No other criteria shall be used except as stipulated in the solicitation documents Prompt notice shall be given to the contractor of any arithmetic errors that are discovered during the examination of tenders.

CRITERIA FOR SELECTING WINNING PROPOSALS The responsive proposal with the lowest price in case of least cost selection, or The responsive bid or proposal with the best combined evaluation in terms of criteria set with respect to technical and price factors in the case of quality and cost based selection, or The responsive bid with the highest technical ranking within the budget goods, works and services.

PAYMENT TO CONTRACTORS (CONT’D) Mobilization fees- NOT COMPULSORY! Maximum of 15% Contract sum allowed, but On provision of UNCONDITIONAL Bank guarantee or insurance Bound Performance Bond to be provided by successful bidders. Delay in payment after 60 days of valuation of certification attracts interest at a rate; usually at CBN rate. (Section 37 of the Act refers).

ACCESS TO INFORMATION PE’s shall; Grant public access to information, after a tender proposal, offer or bid has been accepted or proceedings have been terminated without resulting in procurement. Section 38 refers Provide for debriefing of Bid losers on request Section (19e) o All communications must be in writing o PE’s (Procuring Entities) to submit records and information on procurement to the Bureau in a format determined by the bureau. o Prior to selection of a winner, procurement information can only be disclosed by leave of court.

ACCESS TO INFORMATION CONT’D All unclassified records of procurement shall be open to inspection by the public at the cost of copying and certifying of the documents as an administrative fee. The Bureau is to establish a single internet portal which shall be a primary definitive source of procurement information in the country The Bureau shall publish details of all Procurement contracts.

DISPUTE RESOLUTION All complaints must first be addressed to the Accounting officer. Accounting officer to decide complaint in writing, addressed to complaint within 15 working days, Provides right of appeal to Bureau if there is (Failure to decide or If unsatisfied by decision) Bureau has to decide in writing within 30 working days. Provides access to courts.

DISPOSAL OF ASSETS Every procuring entity shall also be a disposing entity Open Competitive Bidding shall be the primary source of receiving offers for the purchase of public property Methods of disposal shall include; sales and hire purchase, licenses and tenancies, franchise and auction Planning of disposal shall include valuation by independent professional.

OFFENCES Bid rigging – pre-arrangement of offers where winners have been predetermined. Collusion Splitting of contracts Procurement fraud using undue influence, favour, bribery Altering procurement documents Willful refusal to allow Bureau and its officers access to any procurement records Using fake documents like TCC (TAX Clearance Certificate), etc.

PENALTY FOR VIOLATORS (SANCTIONS) Debar any supplier or Contractor for a termas may be specified in the regulations. May recommend to Council for: Suspension of officers concerned; Replacement of Head of Procurement; Discipline the Accounting officer in charge; Temporary transfer of procuring function of the Entity to a third party

PENALTY FOR VIOLATORS (CONT’D) Refer cases to ICPC or EFCC for investigation and prosecution. Issuance of variation orders Any other sanction that the Bureau may consider appropriate Contractors, suppliers, vendors - Jail term of 5 calendar years but not more that 10 years without option of fine For officers of the Bureau, MDAs - not less than 5 calendar years but not more that 10 years without option of fine. - Summary Dismissal from Government Service

PENALTY FOR VIOLATORS (CONT’D) For Corporate Bodies - Debarment from all public procurement for a period of not less than 5 calendar years, plus - Fine equivalent to 25% of the value of the procurement. - Directors of the Company as listed in CAC shall be liable to a jail term of not less than 3 calendar years but not exceeding 5 years without option of fine.

CONCLUSION The Public Procurement Act 2007,provides the legal and institutional framework for the enthronement of TRANSPARENCY, ACCOUNTABILITY, VALUE FOR MONEY and EFFICIENCY in the procurement of works, goods and services within the Federal Ministries, Extra Ministerial Department and various Institutions.

CONCLUSION CONT’D - It is envisaged that with this system in Government will reduce to the barest minimum associated with procurement matters will be achieved. - Every citizen of Nigeria has a role and obligation under this act.

CONCLUSION CONT’D A system like this one should help the Federal Government to work more efficiently and effectively with: - Contractors - Complete more projects - Achieve value for money - Improve infrastructure and lives of all citizens. -

THANKS FOR LISTENING