PUBLIC PROCUREMENT REFORM

STRATEGIES:

ACHIEVING EFFECTIVE AND SUSTAINABLE OUTCOMES

by Emeka M. Ezeh, OFR

Director-General

Bureau of Public Procurement, Nigeria

VENUE: CIPS PAN AFRICA CONFERENCE,

NATIONAL THEATRE ACCRA GHANA

DATE: 21-22 MAY, 2013

Outline

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1. Information & Introduction

2. Procurement Reform Strategies

3. Implementation Challenges in Nigeria

5. Holding and Sustaining the Gains

4. Specific Achievements of the Bureau of Public Procurement in Nigeria (BPP)

Information About Nigeria

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Motto: Unity and Faith, Peace and Progress

Information About Nigeria Cont’d

Nigeria is a Federal Constitutional Republic

comprising thirty-six states and its Federal

Capital Territory, Abuja

Largest City: Lagos

Official Language: English

Three major languages: Hausa, Igbo, Yoruba

Type of Government: Presidential System

Total Area:923,768 km2 (356,667sqm)

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Information About Nigeria Cont’d

Population: by 2012 estimate is 170,123,740 million

Density: 184.2 / km2 (477.0 / sq mi)

The most populous country in Africa

The 7th most populous country in the world in which the

majority of the population is black

Listed among the “Next Eleven “ economies

GDP(nominal) 2011 estimate Total $238.920 billion

Per Capita $1,490

Total 2013 Federal Budget US$31.6 billion

Source: Wikipedia, the free encyclopaedia

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Introduction

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In the last two decades or so, a good number of African

Governments have implemented Public procurement

Reforms aimed at strengthening their public procurement

systems e.g. Ghana,Liberia,SierraLeone,Kenya, Zambia,

Lesotho, Nigeria etc.

These governments have obviously realized that sound

public procurement policies and practices are among the

essential elements of good governance and that good

procurement practices reduce costs and produce timely

results whereas Poor practices lead to waste and delays

and often lead to allegations of corruption and

government inefficiency.

Introduction Cont…

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 their

scarce resources.

That is why the United Nations(UN) through United

Nations Commission on International Trade Law

(UNCITRAL) established by the UN General Assembly

Resolution 2205 (XXI) of 17th December, 1966 was

mandated to:

“Further the progressive harmonization and

unification of the law of international trade and

procurement in the interest of all peoples, in particular

those of developing countries”.

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Introduction Cont…

The UNCITRAL Model Law On Public Procurement

seeks to ensure that transparency is achieved by:

a.The public disclosure of the rules that apply in the

procurement process.

b. The publication of procurement opportunities

c. The prior determination and publication of what is to be

procured and how offers are to be considered.

d. The visible conduct of procurement according to the

prescribed rules and procedures.

e. The existence of a system to monitor that these rules are

being followed (and to compel officials to follow them if

necessary)- An oversight body.

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Introduction Cont…

Nigeria’s Public Procurement Act, 2007 is

designed primarily after the UNCITRAL

Model Law on Public Procurement.

The ongoing Reforms in Nigeria is being

supported by the World bank, UNDP, EU

and other development partners.

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Procurement Reform Strategies

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Procurement Reform Strategies

The key elements of any reform program

include:

A Diagnostic / Baseline Study of existing

systems with a view to addressing

shortcomings.

Legal and Institutional Framework

Implementation / Evaluation of the

system.

Nigeria’s procurement reforms have

followed this pattern.

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Diagnostic / Baseline Study

the Federal Government of Nigeria under the

Leadership of former President, General

Olusegun Obasanjo GCFR (RTD), in 1999

invited the World Bank to conduct a Country

Assessment (baseline study) of Nigeria’s entire

Procurement System.

The objective of the exercise was to promote

dialogue with the various tiers of government on

how to strengthen their public procurement

systems and to assess, in practice, the

efficiency, transparency and integrity of the

country’s entire procurement system. (Source:

World Bank Memo of May 23, 2002)

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Major Highlights of the Diagnostic/Baseline Study

Previous reform efforts failed because those leading the

reforms were public servants who wanted to maintain

the status quo.

Contracts were used to reward those in government to

serve specific political interests.

Open abuse of rules and standards in the award and

execution of public contracts e.g. over invoicing, inflation

of contract costs, white elephant projects and diversion

of public funds through all manner of manipulations of

the contract award process.

Award of contracts to friends, relations and use of

primordial considerations in exercising public

procurement decisions.

Projects admitted into budget to serve personal

interests.

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Major Highlights of the Diagnostic/Baseline Study Cont…

Sharing of contracts to Civil servants through their own

registered companies as part of welfare especially

during festive seasons.

Loss of confidence in the public service by the public

and contractors.

The report also revealed that out of every N1.00 spent

by Government, 60k was lost to underhand practices.

Contracts awarded to unqualified and ill equipped

contractors.

Staff who insisted on doing the right thing were

threatened or posted out, or sacked in some cases.

All these resulted to abandonment of government

projects after huge sums of money had been paid out to

unqualified and ill equipped contractors.

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Legal and Institutional Framework

The Country Assessment was therefore conducted

between FY1999 - FY2000 and a Country Procurement

Assessment Report (CPAR) was presented with

Recommendations to the Federal Government.

In order to address the shortcomings, the Federal

Government, in 2001, set up the Budget Monitoring and

Price Intelligence Unit (BMPIU) and to institutionalize the

operations of BMPIU, the Public Procurement Bill was

sent to the National Assembly in 2003/2004.

On May 31st 2007, the Public Procurement Bill was

passed into Law and

on June 4th 2007, the Bill was signed into Law by Late

President Umaru Musa Yar’Ardua GCFR.

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Major Highlights of the Legal/Institutional Framework

Establishment of the Bureau of Public Procurement , as

the Regulatory Authority responsible for Monitoring and

Oversight of Public Procurement and Practices by

regulating, setting the standards and developing the

legal framework and professional capacity for

procurement in Nigeria and for other related matters with

the additional mandate to achieve the following four Core

Objectives:

– Economy & Efficiency

– Competition – providing a level playing ground for all bidders

– Value For Money

– Transparency

Open Competitive Bidding as the default method for all

public procurement. 16

Major Highlights of the Legal/Institutional Framework Cont..

The Act empowers the Bureau of Public Procurement to:

- carry out prior review of award recommendations for

contracts in excess of defined value thresholds.

- Establish general policies, regulations, guidelines and

standard bidding documents relating to public sector

procurement.

- Supervise procurement implementation as well as

reviewing the procurement and award of contract

procedures of every public entity, including certifying all

Federal procurement prior to, during and after award of

contracts.

Holds Accounting Officers ( Permanent Secretaries and

Chief Executives of Parastatals) personally responsible

for implementation and compliance with the Act. 17

Implementation / Evaluation of the system

To give effect to the Law, the Bureau has implemented

the following measures:

since 2007 the Bureau with support from the World Bank

has rolled out various policies, regulations, standards and

guidelines and conducted series of capacity building

programs for public procurement officers and other

Stakeholders involved in the procurement process.

Established the Procurement Cadre within the Federal

Public Service since Year 2008 and the process is still

ongoing.

developed and adopted of a code of ethics for public

officers involved in procurement.

Created a Compliance and Audit Unit

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Implementation / Evaluation of the system

Developed robust complaint /recourse mechanism which

allows aggrieved parties in a procurement process to

petition such outcomes.

Developed a procurement manual and implementing

regulations; as well as National Standard Bidding

Documents (NSBDs) for the procurement of goods,

works and consultancy services.

Whilst the Procurement Law clearly sets out best

practices and principles which are consistent with

internationally accepted principles and practices, it is

also recognized that the successful implementation of a

modern procurement system hinges on the development

of the necessary institutional and organizational

structures and human resources for both the operational

and oversight dimensions of the system.

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Procurement Reform Strategies Cont…

Strategic Procurement involves three key

elements:

PEOPLE

PROCESS and

TECHNOLOGY

Having provided the Legal and Institutional

Framework, achieving effective and

sustainable outcomes will largely depend on

these three key elements.

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Plan

Technology

Web Services Data

Services

Management

Information System

PEOPLE

Those who are responsible - R

Those who are accountable - A

Those who are consulted - C

Those who are informed - I

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PEOPLE Cont…

Change Management – people who will drive the

reforms, the Change Agents.

Competence management – capacity building for the

actors or foot soldiers who will implement the reforms.

Ensure there’s a critical mass of contractors and civil

society organizations who understand the rules in order

to keep the operators of the system on their toes.

Relationship management – buy in from the political

class, Accounting Officers and senior Leadership, users

of the new systems and other stakeholders who will be

affected by the proposed changes.

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PROCESS

Service providers development and

management – capacity building for contractors

and consultants.

Procedures, Regulations and Guidelines

Complaints / Recourse Mechanism

Audits and Compliance Monitoring

Plan, Act and Check to ensure programs are

on track.

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TECHNOLOGY

Technology is key in diminishing

human contact in the procurement

process to minimize opportunities for

fraud and corruption.

Web services

Data services

Management Information systems.

Country Procurement Management

System

e-Procurement tools

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Authorization and Buy In

Need to Obtain political Authorization.

Carry out Stakeholders Engagement to secure Buy in

from Permanent Secretaries, CEOs, Political Leaders and

the workers (foot soldiers) who will implement the

reforms.

Secure Government Funding and Leadership

Commitment to implement the outcome of the reforms.

It’s important to note that CHANGE doesn’t come easy

and Reforms are never welcomed with open hands by all

concerned especially the Losers in the new system.

For any reform to succeed, the Leadership and Political

class must buy into the programs and must be seen to be

supporting the efforts to implement the changes

recommended. 26

Specific Achievements of the

Bureau of Public Procurement in Nigeria

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Specific Achievements of the

Bureau of Public Procurement in Nigeria

Publication and Circulation of the Public Procurement

Act (PPA) 2007.

Issuance of Procurement Procedures Manual.

Issuance of Procurement Regulations.

Issuance of Standard Bidding Documents for Works,

Goods and Consultancy services.

Translation of PPA, 2007 into the three Major Nigerian

Languages of Hausa, Igbo and Yoruba.

Functional Procurement Data Centre.

Functional BPP Website.

Publishing of a Quarterly Procurement Journal since

Year 2008.

Publishing the Procurement Plans of the MDAs since

Year 2009.

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Specific Achievements of the

Bureau of Public Procurement in Nigeria Cont…

Publishing of Procurement Records of MDAs since Year

2009.

Uploading of FEC Approved Contracts on the BPP

Website.

Publishing of details of all contracts awarded in the print

media and Bureau’s website.

Ongoing development of a contractor categorization and

classification system to ensure only competent and

capable contractors are invited to tender for government

projects.

Development of a robust complaint /recourse

mechanism which allows aggrieved parties in a

procurement process to petition such outcomes.

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Specific Achievements of the

Bureau of Public Procurement in Nigeria Cont…

Through the Right of Reply mechanism, a level playing

ground is being provided for all bidders such that more

bidders are emerging successful in Federal government

tenders without knowing anybody in government.

Ongoing Capacity Building(skills) training for

Procurement Officers.

Ongoing Capacity Building (skills) training for

Professional Associations, Civil Society Organizations,

Military and Para-Military & Academic Institutions.

Development of a debarment procedure whereby

companies who have consistently flouted the provisions

of the Act are debarred from participation in procurement

activities.

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Specific Achievements of the

Bureau of Public Procurement in Nigeria Cont…

Ongoing development of an integrated Procurement

Management System which will enable the Bureau detect

and prevent corruption as it will greatly diminish human

contact in the procurement process

Regular and Adhoc Procurement Audits of government

agencies’ procurement activities to check for compliance

with the Law, regulations and procedures.

Introduction of the Health Check (compliance monitoring)

System where the Bureau sends out consultants to

various MDAs to assist in their procurement process

thereby ensuring compliance with the rules.

Currently 14 States have so far passed their own versions

of the Procurement laws.

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Sustaining the Outcomes and Holding Gains

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Sustaining the Outcomes and Holding Gains

National Database of Particulars, Classification and

Categorisation of Federal Contractors and Service

Providers. (Registration in progress)

Ongoing development of a Tool to Monitor Prices of

Tendered items and Develop a Catalogue for Standard

Prices of items.

On-going implementation of a Databank Management

System (e-procurement) for the country.

Development of a National procurement management

system with the support of UNODC-ITS office.

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Sustaining the Outcomes and Holding Gains Cont…

Aggressive monitoring of contract thresholds that fall within the value

threshold of MDAs through:

regular procurement audit,

continuous process health checks/compliance monitoring

observation of bid openings and

Bids evaluation in the MDAs.

Media campaign through various electronic and print media to

increase awareness on Due Process.

Making compulsory the use of Standard Bidding Documents

approved by the World Bank for the conduct of all government

procurements.

Prosecution of identified corrupt high ranking officials in the public

service based on the Public Procurement Act as a deterrence to

others.

Administrative sanctions on officers who have contravened the

procurement law such as dismissal from service or demotion.

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Sustaining the Outcomes and Holding Gains Cont…

Prosecution of High Profile Public Officials who have contravened the

procurement Law.

Encouragement of whistle blowing by the general public, contractors

and procurement officers to report corrupt practices and any attempts

to contravene the procurement law.

Detailed investigation of all petitions and complaints from contractors

and the public through the Recourse Mechanism under the Law.

Continued professionalization of the procurement cadre in the public

service.

Continued capacity building programs for civil society observers,

MDAs, NGOs, professional bodies and the general public.

Projects go through Needs assessment as required by the

procurement law and only projects with adequate designs get

admitted into the budget as long as there’s sufficient funding

availability.

Yearly budget to recognize and give priority to ongoing and long term

projects.

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Sustaining the Outcomes and Holding Gains Cont…

Continue procurement reviews, compliance audits and field

inspection/ monitoring of on -going projects and apply appropriate

sanctions for contravention of the Act.

As a result of increased awareness campaign by the Bureau,

there’s a growing consciousness in the public domain and amongst

contractors who do business with government and this has led to

increased number of petitions.

In 2012 a total of 167 petitions were received out of which 74 have

been closed out and 93 are still ongoing.

18 (Eighteen) cases of infractions on the Public Procurement Act

are being investigated by Anti Corruption Agencies.

As at end FY2012 a total Value Improvement Savings of N420

billion has been recorded through the Bureau’s intervention (prior

review) efforts.

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CONCLUSION

In conclusion, sustaining procurement reforms and

achieving effective and sustainable outcomes require

continuous engagement of all Stakeholders especially

the political class and civil society groups who

understand the rules to mount pressure on the operators

of the system to comply with the Law.

Building of a critical mass of people who understand the

rules and processes along the procurement value chain.

A mechanism for sanctioning non compliant actors must

be put in place.

Deployment of Technology to minimize human

interaction.

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Thank You!