UNDERSTANDING THE PUBLIC

PROCUREMENT ACT 2007 AND ITS

CHALLENGES

MANDATORY TRAINING PROGRAMME FOR

OFFICERS ON GL15 AND 16
ORGANISED BY PUBLIC SERVICE INSTITUTE

BY
ENGR. EMEKA M. EZEH, OFR
Director General
BUREAU OF PUBLIC PROCUREMENT (BPP)

DATE: 31st October, 2013

VENUE: PSIN

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ON THE MARBLE

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 HIGHLIGHTS
Concept of Public
Procurement
Elements of the PPA, 2007
Public Procurement
Documents and Circulars
Linkages between
Procurement Process and
Work Plan
Medium Term Expenditure
Framework
Budget Implementation
Challenges of Public
Procurement
Conclusion
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 Concept of Public
Procurement
 Public Procurement is
defined as the process of
acquisition of goods, works
and services at the BEST
POSSIBLE TOTAL cost of
ownership, in the Right
Quantity and QUALITY at the
RIGHT TIME, in the RIGHT
PLACE for the direct
BENEFIT use of Government,
public, individuals, generally
via a contract through open
competitive method in a
transparent and
accountable manner.
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 A Process Perspective
 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

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 CORE OBJECTIVES
 four (4) core
objectives:
 Economy & Efficiency
 Competition – Providing
level playing
ground for all strata of
bidders
 Value for Money
 Transparency

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 Why is Procurement
Important
The African Development Bank
(AfDB) estimates, in a recent
concept note, that public
procurement accounts for as
much as 70% of the budgets of
Africa governments. The
concept note states further that
strengthening of procurement
systems is crucial in minimizing
the potential effects of
financial/economic crisis and
restoring of a level of economic
growth and development
sufficient to reduce poverty.

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 Cont..
A good size of National Budget
expenditure is incurred through
the public procurement process.
State of National Infrastructure
and standards of living are
largely dependent on
procurement effectiveness
Federal Attorney General
Aandokaa said 80% of
corruption cases in Nigeria
emanate from the procurement
of goods, works and services

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 Model Laws on Public
Procurement
WTO Government Public
Procurement Agreement

UNCILTRAL Model Law

European Treaty, Procurement

Directives and Court Decisions.

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 Background to Public
Procurement Reforms in
Nigeria.
The Country Procurement
Assessment Report 2000.
Covered the Federal structure
and Six States one from each
geo-political zone.
Administrative Reforms (BMPIU)
CPAR findings provided the
Basis for production of a draft
bill submitted to congress.
Public Procurement Act 2007
signed into law on 4th June,
2007

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 Setbacks in the procurement
process that necessitated
Reforms
Competition was limited
Limited or no advertising
Lack of transparency
Limited and ineffective public
bidding
Unclear evaluation and award
criteria,
Wrongful exclusion of qualified
bidders
Political interference and control
in contract awards was
predominant.
Selective Tendering, Sole Source
Contracting, contract price
negotiations, were dominant
practices rather than exceptions.

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 Cont..
The Procedure was not
primed to achieve value for
money
Absence of procurement
planning.
Limited or no prioritization
Limited mandates given to
tender boards
Excessive Advance payments
Delay in Execution and Cost
over-runs
Delay, uncertainty and some
times non payment for jobs
done.
Inflation of prizes and costs.

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 Cont...
Limited Regulation of
Procurement Procedures
Absence of independent
supervision and verification of
compliance
Absence of data base of
standard prizes.
 Absence of transparent periodic
reviews and evaluation.
 Limited Record Keeping and Access to
information.
 Disaggregated information collation
and registration of contractors.
 Lack of Uniformity in Procedure and
substance across MDA’s.
 Abuse of virement

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 Why..
The Results……..
 Bid splitting.
 Use of fake documentations and
falsification of facts,
 collusion between bidders and between
bidders and procuring agency staff.
 Conflict of interest was dominant and
unchecked
 Use of inferior materials in Public
Procurement,
 Multiplicity of prizes in different
departments for similar or same items.
 kick backs and bribery
 Abandoned Projects
 Value for Money became a mirage.
 CPAR conducted in 1999 – 2000
revealed that before 1999 Nigeria lost
$10 billion every year to corruption by
award of contract.

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PUBLIC PROCUREMENT
ACT
 The Public
Procurement Act 2007
puts Nigeria in the
league of countries
with legislation on how
Public Funds would be
expended. Prior to
now, Nigeria was
among the few African
countries without
legislation on Public
Procurement.

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Elements of the PPA,
2007
 Establishment of Institutions
 Scope of Application
 Principles of Public
Procurement
 Organisation of
Procurements
 Procurement Methods
 Procurement of Consultant
(Services)
 Procurement Surveillance
and Review
 Disposal of Public Property
 Code of Conduct
 Offences
 Miscellaneous
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SCOPE OF APPLICATION
OF THE ACT : Section 15
 The Federal Govt. of Nigeria &
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.

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SCOPE OF APPLICATION OF
THE ACT (Cont’d)
 Shall not apply to
procurement of Special
Goods, Works and
Services involving
national defence, or
national security
unless President’s
express approval has
been first sought and
obtained.

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 PRINCIPLES OF
PROCUREMENT (Section
16)

Procurement must be
based ONLY
 On Procurement Plans
supported by prior
budgetary provision or
appropriation.
 Open competitive
bidding except
otherwise allowed.

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GENERAL
PREQUALIFICATION OF
BIDDERS (Cont’d)
 Possess legal capacity
to enter a contract.
 Not be in receivership
 Have fulfilled all its
obligations to pay
taxes.

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GENERAL
PREQUALIFICATION OF
BIDDERS (Cont’d)
 Not have any director who has
been “convicted in any country
for any criminal offence relating
to fraud or financial
impropriety.”
 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.

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 Linkages
between
Procurement
Process and
Work Plan

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 Linkage and
RESPONSIBILITY RESTS
ON
 Permanent
Secretaries for the
Ministries;
 Directors-General/
CEO for
Corporations/Commis
sions

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PROCUREMENT PLANNING
– WHAT IT ENTAILS!
Section 18
 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 & reduce
procurement cost

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 PROCUREMENT PLANNING
COMMITTEE (PPC) Section
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 Each MDA must

have a PPC to do
the afore-
mentioned
responsibilities.

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 PROCUREMENT PLANNING
COMMITTEE (PPC) –
(Cont’d)
 Membership
 Accounting Officer or its
representative to chair.
 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 the procuring
entity

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 STRATEGY
 Advertisement for solicitation
of bids in National
Newspapers/Federal Tenders
Journal
 Observation of every
procurement process by TWO
credible persons – a relevant
private sector professional
and non-governmental anti-
corruption organization.
 Transparent Evaluation
Process
 Approval by the authority
before award.
 DEBRIEF the bid losers on
request!
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SUBMISSION OF
BIDS

All bids shall be deposited in

secured tamper-proof bid box.
All procuring entities shall issue
receipts showing the date and
time the bid was delivered.
Any bid received after the
deadline for the submission shall
not be opened and must be
returned to the supplier or
contractor

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SUBMISSION OF
BIDS (Cont’d)
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
bidders

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OPENING OF BIDS
(Section 30)
Bids must be opened in public
with bidders in attendance and
any interested members of the
public.
Bidders must be permitted to
examine envelopes to ensure bids
have not been tampered with.
Bids must be opened immediately
following the deadline stipulated
for submission

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OPENING OF BIDS
(Cont’d)
Register 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.

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PURPOSE OF
EVALUATION
To determine and select the
lowest evaluated responsive bid.
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

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 BID EVALUATION:
Section 31-32)
Bid Evaluation will generally be
preceded by examination of bids
to ensure that the minimum
eligibility requirements stipulated
in the bidding documents are
met, that the bid is responsive
and duly endorsed.

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 Approving Authorities to
award based on approved
Thresholds

Accounting Officer
Tenders Board
BPP (for Certificate of
No Objection)
Federal Executive
Council

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 Budget
Implementation
 Accounting Officer should ensure that all
Officers involved in the Procurement
Process :
 have copies of PPA, 2007, relevant
circulars, Standard Bidding Documents,
Standard Request for Proposals, National
Shopping Documents, and other
publications of BPP
 Undergo regular training to update their
knowledge and understanding of the
process
 Accounting Officers are to treat all matters
relating to Budget implementation
expeditiously
 Relevant Officers in Procurement Process
are to draw the attention of the
Minister/Permanent Secretary to
Procurement matters that need their
urgent attention
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 Budget
Implementation
 All planning Process should be finalised
within 2 months after release of the
Budget
 All request for clarification to Procuring
Entities by BPP shall be responded to
within 2 weeks
 Authorisation for payment should be
given by:
 the Honourable Minister (for Ministries)
or in his or her absence the Accounting
Officer should ensure that all Officers
involved in the Procurement Process
 The Accounting Officer for Parastatals

 Provided that all requirement for

payment have been met
 All payment should be by electronic
transfer
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PAYMENT TO
CONTRACTORS (Cont’d)
 Mobilization Fees –
NOT COMPULSORY!
 Maximum of 15%
Contract Sum
allowed, but;
 On provision of
UNCONDITIONAL
Bank Guarantee or
Insurance Bond

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PAYMENT TO
CONTRACTORS (Cont’d)
 10% 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.

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Challenges of Public
Procurement
Challenges of Public Procurement
include:
Use of officers that have not
been properly converted to
head or drive the Procurement
Process
Bid Splitting to avoid approval
thresholds
Fraudulent practices by
Contractors, Service providers
and public Officials
 Failure to adhere to the
provisions of PPA, 2007,
relevant Circulars, etc
Unethical behaviours
Character 39
OFFENCES (PART
XII)
 Bid Rigging – re-
arrangement of
offers where winners
have been
predetermined
 Collusion
 Splitting of contracts
 Using fake
documents like TCC,
etc.
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PENALTY FOR
VIOLATORS
 Sanctions
 Debar any Supplier or
Contractor for a term – as
may be specified in the
regulations.
 May recommend to Council
for:
 Suspension of officers
concerned.
 Replacement of Head of
Procurement.
 Discipline the Accounting
Officer
 Temporary transfer of
procuring function of the
entity to a Third Party .
 Nullify the whole or any part
of the procurement process.
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PENALTY FOR
VIOLATORS (Cont’d)
AND
 Contractors, Suppliers,
Vendors
 Jail term of 5 Calendar years but
not more than 10 years without
option of fine.

 For officers of the Bureau,

MDAs
 Not less than 5 Calendar
without option of fine.
 Summary Dismissal from
Government Service,

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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.

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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 and Extra-Ministerial
Depts. With this, the Seven-
Point Agenda of the
Government shall be delivered
for DIRECT BENEFIT OF
NIGERIANS!

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Thank You!
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