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by Ahmed Abdu, MNSE Ag. Director-General, BPP

PUBLIC PROCUREMENT ACT, 2007: AN EFFECTIVE TOOL FOR DELIVERING MORE FOR LESS!. A Presentation at the 2016 Procurement Retreat for Chief Executive Officers of Federal Government Parastatals. by Ahmed Abdu, MNSE Ag. Director-General, BPP. Date: 17 th to 19 th March, 2016

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by Ahmed Abdu, MNSE Ag. Director-General, BPP

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  1. PUBLIC PROCUREMENT ACT, 2007: AN EFFECTIVE TOOL FOR DELIVERING MORE FOR LESS! A Presentation at the 2016 Procurement Retreat for Chief Executive Officers of Federal Government Parastatals by Ahmed Abdu, MNSE Ag. Director-General, BPP Date: 17th to 19th March, 2016 Venue: Sheraton Hotel & Towers, Ikeja, Lagos

  2. Structure of Presentation • Wisdom Notes • Retreat Objectives & Expected Outcomes • Introduction • Implementation of Public Procurement Act, 2007 • Administrative Review • Procurement Records • Procurement Audit

  3. Structure of Presentation Cont’d • Capacity Building and Procurement Officers Cadre Career Management • Update on Database and Technology • Offences and Sanctions • Conclusion

  4. My presentation today is supported by the following wisdom note:

  5. Words on Marble “Change will not come if we wait for some other person or some other time. We are the ones we've been waiting for. We are the change that we seek” by BarackObama (American President)

  6. Words on Marble “Progress is impossible without change, and those who cannot change their minds cannot change anything” by George Bernard Shaw (Irish Dramatist)

  7. Words on Marble “If you do not change direction, you may end up where you are heading” by Lao Tzu (Chinese Philosopher)

  8. Words on Marble “The first step toward change is awareness. The second step is acceptance” by Nathaniel Branden (American Psychologist)

  9. Retreat Objectives • Understand the Scope of Application of the Act • Highlight the responsibilities of Accounting Officers under the Public Procurement Act, 2007 • Review of Approval Thresholds for Prior Reviews and Procurement Methods • Overview of the Procurement Processes • Update on BPP’s Database and Technology processes • Update on Procurement Cadre • Fast Tracking 2016 Budget Implementation

  10. Introduction • Public Procurement means the acquisition of goods, construction or services by a procuring entity (Article 2, UNCITRAL) • It encompasses a sequence of related activities starting with assessment of needs through to Contract award to Contract management and then final payment • Public Procurement is a Global System adopted by both the Developed and Developing Nations on how to derive value for money and improve efficiency in the use of its scarce resources.

  11. Introduction Cont’d • At the inception of democratic government in 1999 Federal Government observed that the contract award system lacked the required competition and transparency in the award process. • The World Bank was commissioned in 1999-2000 to carry out a Country Procurement Assessment Review (CPAR). • The CPAR report revealed that 60k was lost to underhand practices out of every N1:00 spent by Government.

  12. Introduction Cont’d • Some other key problems identified by the World Bank included: • lack of competition and transparency in project procurement leading to high cost of projects and loss of confidence in Government by the public; • non publication of contract opportunities; • non prior disclosure of rules to be used in the selection process; • lack of standard bidding documents;

  13. Introduction Cont’d • Budget Monitoring and Price Intelligence Unit (BMPIU) was set up in 2001 to address these short comings. • BMPIU operations were guided by Treasury Circulars issued by the Accountant-General of the Federation. • Nigeria became signatory to the United Nations Convention against Corruption (UNCAC) on 9th of December, 2003 and ratified it on 24th October, 2004. • In line with Article 9 of the UNCAC Nigeria was required to establish an appropriate procurement system.

  14. Introduction Cont’d • To Institutionalize the operations of the BMPIU, the PPA was signed into Law on June 4, 2007. • Nigeria’s Public Procurement Act is modelled after the UNCITRAL Procurement Model Law which has been adopted by several other countries. • Nigeria’s procurement reform was one of the important reforms that the International Monetary Fund (IMF) and World Bank got Nigeria to commit to during the debt relief negotiations

  15. Introduction Cont’d • Like the UNCITRAL Law, the PPA 2007 has 5 key elements of: • Disclosure of all the rules that apply in the procurement process; • Publication of the opportunities; • Prior determination and publication of what is to be procured and how offers can be considered; • Visible conduct of procurement according to the prescribed rules and procedures; and • The existence of a system to monitor that these rules are being followed - a Regulator to enforce compliance.

  16. Introduction Cont’d • Some key functions of BPP- Section 5 of the PPA 2007 • Formulate general policies and guidelines on public sector procurement for the approval of the Council; • subject to thresholds as may be set by the Council, certify Federal procurement prior to the award of contract; • Supervise the implementation of procurement policies; • Maintain a national database of federal contractors and service providers; • Organize training and development programmes for procurement professionals • Prevent fraudulent and unfair procurement and where necessary apply administrative sanctions

  17. Introduction Cont’d • Some Powers of the BPP- Section 6 of the PPA 2007 • enforce the monetary and prior review thresholds set by the Council; • issue certificate of “No Objection” for Contract Award" within the prior review thresholds • where a reason exist: • cause to be inspected or reviewed any procurement transaction to ensure compliance with the provisions of this Act; and • review and determine whether any procuring entity has violated any provision of this Act • debar any supplier, contractor or service provider that contravenes any provision of this Act/Regulations

  18. Introduction Cont’d • call for such information, documents, records and reports in respect of any aspect of any procurement proceeding • recommend to the Council, where there are persistent or serious breaches of this Act or regulations or guidelines for: • the suspension of officers concerned with the procurement or disposal proceeding in issue ; • the replacement of the head or any of the members of the procuring or disposal unit of any entity or the Chairperson of the Tenders Board; • the discipline of the Accounting Officer of any procuring entity ; • the temporary transfer of the procuring/disposal function of a procuring /disposing entity to a third party procurement agency or consultant; or • any other sanction that the Bureau may consider of appropriate ;

  19. Introduction Cont’d • Like the UNCITRAL Law, the PPA also has an Integrity Pact incorporated into it to address bribery and corruption. • Along the procurement value chain multiple opportunities exists for both public and private sector actors to divert public funds for private gains (this is what corruption is). • This 2016 Retreat will familiarise participants with the basic processes in public procurement and the offences punishable under the Public Procurement Act, 2007.

  20. (i) Scope of Application (ii) Responsibilities of Accounting Officers (iii) Procurement Processes & Approval Thresholds IMPLEMENTATION OF THE PUBLIC PROCUREMENT ACT, 2007

  21. Scope Of Application • Section 15 of PPA, 2007:-The scope of application: • is to all Ministries, Departments and Agencies of Federal Government; • is to all entities outside the foregoing description which derive at least 35% of the funds appropriated or proposed to be appropriated for any type of procurement described in PPA, 2007 from the Federation share of the Consolidated Revenue Fund; and • does not apply to the procurement of special goods; works and services involving national defense or national security unless the President's express approval has been first sought and obtained.

  22. Responsibilities of Accounting Officers • The Accounting Officer of a procuring entity shall: • be the person charged with line supervision of the conduct of all procurement processes- Section 20(1) of PPA 2007 • have overall responsibility for planning and execution of all procurement activities including evaluation of tenders • be liable in person for the breach or contravention of this Act or any regulation made hereunder whether or not the act or omission was carried out by him personally or any of his subordinates- Section 20(2a) of PPA 2007 • be responsible for constituting the Procurement Planning Committee and the Technical Evaluation Sub-Committee

  23. Responsibilities of Accounting Officers • Other responsibilities of Accounting Officers are: • ensuring compliance with the provisions of this Act • ensuring adequate appropriation is provided for the procurement; • integrating his entity's procurement expenditure into its yearly budget ; • ensuring that no reduction of values or splitting of procurements is carried out such as to evade the use of the appropriate procurement method; • Liaising with the Bureau to ensure the implementation of its regulations

  24. Approval Thresholds • The Bureau is empowered to enforce monetary and prior review thresholds- S.6(1) of the PPA 2007 • In the absence of the Council, Mr. President approved the current thresholds which was conveyed vide SGF Circular Ref No SGF/OP/1/S.3/VIII/57 of March 11, 2009 • Accounting Officers are expected to comply with the current Prior Review and Procurement Method Thresholds shown in Tables overleaf:

  25. Prior Review Thresholds

  26. Procurement Method Thresholds

  27. Composition of Tenders Boards

  28. Overview of the Procurement Process • The basic stages of Due Process in Public Procurement are as shown in flow chart below:

  29. The Procurement Process Cont’d • Pre Bid Stage- Section 18 of the PPA, 2007 • Needs Assessment: • Needs of the procuring entity should be properly ascertained and clearly articulated before commencing the procurement process. • Feasibility Studies should be completed and should form the basis for preparing Final Designs for construction projects • Goods, Works or Services required should be identified • Develop cost estimates/In-House Estimates for the proposed procurement • Appropriate Procurement Method should be adopted • Source of funding should be provided for the procurement

  30. The Procurement Process Cont’d • Standard Bidding Documents and the Standard Conditions of Contract should be prepared for the procurement in compliance to SGF Circular Ref. No. SGF.50/S.52/II/469 • Drawings and Bill of Engineering Measurement and Evaluation/ Bill of Quantities should be completed and up-to-date for construction projects before proceeding to tender • Detailed description and comprehensive technical specifications for goods should be provided to bidders

  31. The Procurement Process Cont’d • The Bidding Stage-: Advertisement • Advertisements should be placed in at least 2 National Newspaper and the Federal Tender Journal - Section 25 of the PPA, 2007. • Period of Advertisement should not be less than 6 weeks • Specific Dates, Time & Venue for submission should be clearly stated -Section 23(3)(d) of PPA, 2007 • Prequalification requirements should be stated in the advertisement -Section 23, of PPA, 2007 • Bid security should not exceed 2% of tender price and is applicable to all bidders- Section 26 of the PPA 2007

  32. The Procurement Process Cont’d • Bidding Stage-: Bid Submission Procedures • secured tamper-proof bid-box should be provided for submission of tenders- Section 27(2) of the PPA 2007 • receipts should be issued to bidders showing the date and time bids were submitted- Section 27(4) of the PPA 2007 • Any bid submitted after the deadline should be returned unopened to the bidder- Section 27(5) of the PPA 2007 • A supplier or contractor may modify or withdraw its bid prior to the deadline for the submission of bids- Section 29(4) of the PPA 2007

  33. The Procurement Process Cont’d • Bidding Stage-: Bid Opening Procedures • Independent Observers should be invited to Bid Opening Sessions- Section 19(b) of PPA, 2007 • permit attendees to examine bid envelopes to ascertain that the bids have not been tampered with- S.30(a) of the PPA • bid opening should take place immediately following the stipulated deadline and should be opened in public- S.30(c) • names of bidders and their bid prices should be call-over to the hearing of all present and should be recorded- S.30(e) • Pages of tenders should be counter-signed by competing firms to prevent substitution of pages after opening- Clause 60 of the Public Procurement Regulations for Goods & Works

  34. The Procurement Process Cont’d • Bidding Stage-: Bid Examination (Section 31) • All bids shall be first examined to determine if they: • meet the minimum eligibility requirements; • have been duly signed; • are substantially responsive to the bidding documents; and • are generally in order. • Clarification may be sought during Bid Examination. The following shall not be sought, offered or permitted: • changes in prices ; • changes of substance in a bid; and • changes to make an unresponsive bid responsive

  35. The Procurement Process Cont’d • Bidding Stage-: Detailed Bid Evaluation (Section 32) • No other method or criteria shall be used except those stipulated in the solicitation documents • Only substantially responsive bids are subjected to Detailed Bid Evaluation which involves the comparison of bids. • The purpose of comparison is to determine the lowest evaluated cost that will be incurred from the substantially responsive bids received. • Bid prices expressed in foreign currency or multiple currencies, should be converted into Naira at the CBN exchange rate prevailing at the date stated in the bid document.

  36. The Procurement Process Cont’d • Bidding Stage-: Detailed Bid Evaluation (Section 32) • A bid should not be rejected solely because the price deviated by some pre-determined margin of the Engineer’s Estimate. • The measure of acceptability should rather be based on the “reasonableness” of a bid price as determined during the Evaluation Exercise. • Post qualification may be carried out on the recommended bid to confirm their capacity prior to award. A bidder that fails to prove their capacity again shall be disqualified. • The recommendations and other findings of the Evaluation Committee should be incorporated into an Evaluation Report for approval by the Tenders Board.

  37. The Procurement Process Cont’d • Post Bidding Stage • Contract Award procedures include: • Issuance of award letter by procuring entity • Submission of Acceptance letter by recommended Contractor • Submission of Unconditional Performance Guarantee by Contractor • Preparation and signing of Agreement by both parties • Submission of Advance Payment Guarantee by Contractor prior to payment of mobilization fee

  38. The Procurement Process Cont’d • Post Bidding Stage • Contract Administration/Management procedures • Ensure proper supervision and monitoring of Contractor’s performance • Ensure that Conditions of the Contract are professionally administered • Ensure that Contractual Claims such as variations, fluctuations, and delays are settled in accordance with the Conditions of the Contract • Ensure that proper documentation is in place and that site meetings are held regularly to address implementation challenges • Ensure that valuation certificates are based on actual measurements and that approved payments are made expeditiously to prevent interest on delayed payments • Ensure proper Project Close-out and Commissioning

  39. (i) Administrative Review Procedures (ii) Challenges observed ADMINISTRATIVE REVIEW

  40. Administrative Review Procedures • Bidders who are not satisfied with the conduct of a procurement proceeding are entitled to seek Administrative Review- Section 54 of the PPA 2007 • Administrative Reviews can be time-barred and should be handled expeditiously by procuring entities. • The petitioner is expected to first notify the accounting officer within 15 working days from the date the bidder first became aware of the circumstances giving rise to the complaint- Section 52(2)(a) of the PPA 2007

  41. Administrative Review Procedures Cont’d • The accounting officer has 15 working days to address the issues raised by the aggrieved bidder- Section 54(2(b) of the PPA 2007. • Where the complainant is not satisfied with the decision, or where there is no response from the accounting officer, the bidder may make a complaint to the Bureau within 10 working days from the date of communication of the decision of the accounting officer- Section 54(3) of the PPA 2007

  42. Administrative Review Procedures • Section 54(4): Upon receipt of a complaint, the Bureau shall promptly: • (a) give notice of the complaint to the respective procuring or disposing entity and suspend any further action by the procuring or disposing entity until the Bureau has settled the matter ; • (b) unless it dismisses the complaint: • i. prohibit a procuring or disposing entity from taking any further action • ii. nullify in whole or in part an unlawful act or decision made by the procuring or disposing entity • iii. declare the rules or principles that govern the subject matter of the complaint ; and revise an improper decision by the procuring or disposing entity or substitute its own decision for such a decision.

  43. Administrative Review Procedures Cont’d • In resolving a complaint the Bureau may request for a Right-of-reply Meeting with all interested bidders and the procuring entity- Section 54(5) of the PPA 2007. • The Bureau has 21 working days to take a decision on the complaint stating the reasons for its decisions and remedies granted, if any- Section 54(6) of the PPA 2007 • Where the Bureau fails to render its decision within the stipulated time or the bidder is not satisfied with the decision of the Bureau the bidder may appeal to the Federal High Court within 30 days- Section 54(7) of the PPA 2007

  44. Administrative Review Procedures Cont’d • Some key challenges observed by the Bureau from administrative reviews include: • Intimidation of bidders that make complaints to the Bureau. • Late and incomplete submission of procurement documents required for administrative review by MDAs • Failure to adhere or delay to comply to the Bureau’s directives • The Bureau is taking steps to enforce appropriate sanctions on procuring entities that fail to comply with directives issued after administrative reviews.

  45. (i) Submission Requirements (ii) Challenges Observed (iii) Way Forward PROCUREMENT RECORDS

  46. Procurement Records • Procuring entities are statutorily required to transmit copies of all procurement records shall be transmitted to the Bureau not later than three (3) months after the end of the financial year -Section 16 (13) of the PPA, 2007 • The SGF Circular Ref No. SGF/S.52/T/3dated 11th December, 2014 directed all procuring entities to submit their procurement records on or before 31st May, 2015. • By the end of 31st May, 2015, only four (4) Ministries complied with this directive

  47. Procurement Records Cont’d • Challenges observed from procurement records submitted by MDAs include: • Late submission contrary to the provision of Section 16 (13) of the PPA, 2007 • Late submission of procurement records which is a mandatory requirement of the law. However, 92% of the MDA’s complied with the submission of 2014 procurement records in 2015 though late. • Submission of incomplete information by some ministries • Submission of procurement records in un-editable formats such as scanned copy and PDF by some ministries

  48. Procurement Records Cont’d • In 2016, the way forward is that Procuring entities: • should submit their 2015 procurement records on or before 31st March, 2016 in line with the provision Section 16(13) of the PPA, 2007 while awaiting the SGF Circular on same • should Use of the updated Excel format which can be downloaded from the Bureau’s website • should submit soft copy of the fully completed downloaded updated Excel format without alterations to the Bureau

  49. (i) Background (ii) Findings fro Audit Exercises (iii) Way Forward in 2016 PROCUREMENT AUDIT

  50. Procurement Audit • Procurement Audit is one of the core functions of the Bureau- Section 5(p) of the PPA 2007 • Procurement Audits identify weaknesses in the procurement systems of MDAs • The Bureau develops policies, programmes and strategies to address these shortcomings. • Where it is required relevant agencies may be invited to conduct criminal investigations- Section 53(1) of PPA 2007

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