Being Paper Presented at the 2nd Procurement Summit of the Nigerian Institution of Procurement Lagos in Lagos
The Procurement Act 2007 has been in operation for the past twelve years in Nigeria. Prior to that from 2004, there was the Budget Monitoring and Price Intelligence Unit (BMPIU) in the Presidency which scrutinized and vetted all major procurement proposals for contract awards in Ministries, Departments and Agencies (MDA). This was done via a Central Due Process Resident Team for each Ministry, Department and Agencies.Having robustly participated in these two procurement evolutionary stages till date, I wish to outline in this paper, observed major susceptible breaches and challenges in public procurement process in our country.Some well-considered strategies on how to overcome the breaches will also be proffered as my humble contribution to anti-corruption efforts.
1.2 Procurement Definition &Skills/Attitude Factors
It is important to appreciate what Procurement is all about. In my opinion, Procurement is a planned arrangement and due process for the delivery of fully specified quality personnel, products, projects and programmes at the best price to the lowest evaluated, competitive bidder to obtain value for money at the optimum time . It demands critical attitudes and skills.
1.2.1 Skill requirements
Procurement is a techno-managerial exercise requiring the following major skills amongst others.
a) Sound judgement – to specify and deliver at right quality, cost and time.
b) Planning and Scheduling – Realistic projection of future activities and providing milestones for cost-effective execution.
c) Estimating and Budgeting – ability to decide financial Implications thoroughly, and assess provided fùnds.
d) Cost Control – Able to avoid cost overruns and promote cost-effectiveness.
e) Team-work – Ability to play productively in a group and carry others along.
f) Problem-solving – Knack for providing solutions and be result-oriented.
g) Price Intelligence and Monitoring – Ability to forecast basic cost element, build on its trends intelligently.
h) Coordination and Control- disposition to Multi-task Professionalism , plans thoroughly and use planned benchmarks to control outcomes/results.
i) Entrepreneurship – Takes intelligent calculated risk to achieve defined goals.
j) Communication – Ability to exchange meanings and ideas fluently.
k) Technical expertise – Knows the rules, norms, principles, and codes of practice of his professional discipline.
l) Measurement and Evaluation – Knows how to design, compute, assess and appraise issues of procurement.
1.2.2 Human Traits/Attitude
Desired attitude demands the human quality of integrity, selflessness, thoroughness, result-orientation, insightfulness, focus, honesty, courage, professionalism, balance, resilience and diligence. It also requires intelligent flexibility without compromising principles that are susceptible to manipulation.
The weaknesses on these skill-sets and desired human attitude are the origin of most of the major susceptible breaches and challenges in procurement. It is therefore, important that continuous training and improvements in these areas are taken seriously. This will go a long way in mitigating major susceptible procurement breaches. We enumerate below these major susceptible breaches and challenges.
1.3 Categorization of Major Susceptible Procurement Breaches.
Going forward, we shall categorize the susceptible breaches and discuss them under following sub-heads:
a) Influence and role of governance authority
b) Budgetary and financial issues
c) Professional weaknesses
d) Planning deficiency
e) Process drawbacks
2.0 Challenges and breaches of governance and authority influence
Every procuring entity has governance structures and authority figures who man the establishments. These authority figures are significant persons who have value and belief systems. Some value systems of authority figures incline them to greed and excesses. These leadership excesses skew the procurement process negatively and make authority figures to observe the Public Procurement Act in the breach.
This is especially with respect to (i) Appointment of Consultants (ii) Introduction of short-cuts and promotion of selfish interests in the procurement process (iii) The exceeding of approval limits (iv) bid rigging (v) disposal of assets, without due process, at ridiculous prices (vi) contract splitting.
The solution to these corruptive inclination is to recruit matured Chief Executives for MDAs with proven integrity, trustworthiness , desired skills and appropriate human traits as listed in 1.2.1 and 1.2.2 above. However, one major challenge here is how to keep members of Board of MDAs outside the procurement process by CEOs of MDAs in line with extant guidelines.
The extant guidelines are prudently designed to keep politicians on Governing Boards from playing any role in the Tenders Board and Procurement Planning Committees of MDAs. Only matured forthright CEOs can faithfully comply with the guidelines and contain susceptibleinfractions and breaches from their Board members. It is important that CEOs of MDAs live up to this billing to avoid or minimize deliberate procurement breaches.
3.0 Budgetary, Financial Challenges and Breaches
Proper cost control and estimating for fair and reasonable prices of items in procurement bills are major challenges prone to breaches. Theirabsence result in overpricing, excessive profiteering and manipulation of bills. To solve this challenging breach, it is important to always have recourse to original product manufacturers or those with franchise on the products and items in the procurement list. In this age of the global village, internet communication with original product manufacturers/suppliers solves this problem in a swift and practical manner. The Bureau of Public Procurement May also develop and avail Midas data base on price trends in our geopolitical zones to check this susceptible breach.
With the Financial Responsibility Act and Freedom of information bilĺ in place, the challenge of overpricing in procurements and award of contracts without specified satisfactory sources of funding or Financial plans (budget) could be handled legally and pragmatically. This however, is subject to ensuring that clear-headed and selfless CEOs and Management staff of procurement entities observe these Acts responsibly.
Nevertheless, cost overrun due to high inflation spiral and unstable high exchange rate are major challenges which all procurement stakeholders should vigorously address by sound judgement in administration of advance payment. In addition, bulk purchase of major procurement items will aid in elimination of this share of breaches and minimize other professional weaknesses.
4.0 Professional weaknesses
Use of quacks as consultants and/or contractors results in major procurement and project failure.It also a known promoter of corruption in Nigeria. Professional deficiencies result in poor judgementS, faulty designs, invalid assumptions, lack of specific site surveys, use of cheap, poor unsuitable materials and project abandonment. To solve this weakness, Professional Engineers, Quantity Surveyors, Architects, Estate Valuers, etc., involved in the procurement process must discharge their responsibilities to clients, Employer, the Public, Regulating bodies and their professions in accordance with their ethics and laws of practice. They also need to refresh and update themselves regularly in this respect through Continuous Mandatory Professional Development. The bottom line solution is for professionals in the procurement process to apply best practices in their procurement services to the nation that gives value for money without compromise of standards, integrity and ethics.
The importance of professionalism in procurement exercise, as a key and major susceptible breach cannot be overemphasized. This is solved by proper prior planning that promote thorough preparations and prevents poor performance.
5.0 Planning deficiencies
Planning is very crucial to all procurement success. Planning uses hindsight and foresight to formulate, set and implement desired goals to bring about an expected beneficial future. In procurement, the hindsight and foresight lie in utilizing verifiable experiences, reasons and norms of practice to select consultants, contractors and in employing other needed processes to give MDAs resounding success in the award, execution and delivery of quality projects, programmes and products. Procurement planning deficiencies in Nigeria often manifest in lack of time to schedule all elements/activities of work in the procurement process for execution at reasonable timeframe. Due to paucity of time, draft advertisements are often rushed with errors of commission and omissions in the solicitation documents. These errors are currently being minimized by the Bureau of Public Procurement (BPP)vetting of adverts before their publication mandatorily in the Federal Tenders Journal.
Late engagement of consultants also results in rushed works with inadvertent design and arithmetical errors. MDAs can solve this deficiency by formulating approved strategic and masterplans. From these master/strategic plans, they can develop elements of relevant procurement plans in anticipation of their implementation in due budget year. This right step will ameliorate some majorprocurement process drawbacks.
6.0 Some major process drawbacks and solutions
Procurement is a process with many milestones and points of action. Each leg of the process must be meticulously handled to avoid acts of omission and commission as well as ensure that proper actions are taken timeouslywith all requirements duly and diligently specified, evaluated and firmly determined.
A comprehensive process of public procurement covers the following: budgeting, planning, design, solicitation, technical bid opening and evaluation, financial bid evaluation, considerations of tender reports by Procurement Planning Committee and Tenders Board, the issuance of no-objection certificate and award letter, signing of contract agreement, approval of programme of work, project team and supervision, raising of interim-payment certificates and timely cost-effective completion of quality projects. The breaches in these processes constitute major susceptible procurement drawbacks. These are outlined and discussed below:
(i) Late budget defence sessions with the House of Representative and Senate. These arms of the National Assembly sit at different dates for MDAs budget defence. The National Assembly should harmonize their sittings to the same day for MDAs. The National Assembly should control their desire to inject extraneous budget heads and projects in budgets of MDAs in apparent competition with the Executive arm.
(ii) Also there is late and inadequate annual budget releases . This stallsprojects after procurement and fear of thisscenario could produceunhealthy practices
iiiMDA Procurement Units should proactively develop Procurement Plans for all projects in their proposed Budget and proactively source the design drawings and unpriced bills to early commence making draft of solicitation and tender documents. Procurements Units should be manned by high caliber trained personnel who are not cronies of management.
ivTechnical and Financial evaluation of bids should be done by independent committees empanelled by managements of MDA from time to time to ensure that all mandatory requirements are strictly observed to eschew favoritism while assuring that scoreable items are objectively evaluated.
Evaluation of Tender Reports by Procurement Planning Committees and Tenders Board by Management of MDAs should be fair, objective, and neutral. MDAs Tender Board members should also be made to swore affidavit of neutrality and lack of collusion with all bidders as is currently done by bidders with respect to the disclose of lack of interest by members of the procuring entity on their board
v) Release of letters of award should not be delayed on approval by the MDAs Tenders Board. Letter of contract award must be worded to protect public interest by specifying Arbitration as the means of resolving contractual disputes amongst others
vi) Contract agreements should be diligently crafted to include approved programmes of work, drawings, bills, relevant general conditions of contracts and arbitration clause. This should be done within one week of the issuance of letter of award.
vii) It is important to start tying the release of 15% Advance Payment with not only verifiable certified Guarantees but to specified critical materials that are inflation–prone in the bill of the contract.
viii) Time overrun is often used as a cover to demand price adjustments, cost overrun,poor quality job and project abandonment. To solve this, an affidavit of commitment to commence and complete the project within contract timeframe should be introduced.
ìx) In view of the recent fall in the value of the Naira, it is needful to review upwards the approval threshold of CEOs of MDAs so that the temptation to contract splitting andnepotic process shortcuts should be eliminated.
x) Contract Administration expenses or project management/supervision expenses should be provided by MDAs and paid independently by MDA to consultants and in-house staff supervisors. This will avoid the exposure of supervisors to the influence of/and collision with contractors
xi) A non-bogus Bill 1 should be comprehensively priced and utilized professionally strictly for the purpose it is provided.
Major observed susceptible breaches of Public Procurement Act 2007 have been identified in this paper. Being a player in and a close observer of this process before, during and after the enactment of the Act, the categorization in this paper of five major areas of challenging corrupt breaches also provided, practical thoughts for their strategic solutions. This is with a view to alleviate the breaches in the anti-corruption efforts in the country.
The importance of the influence and roles of the Governance authorities of the procurement entity is central. They and all players in the process must have desired skills, integrity, selflessness and personal maturity for the job. The job also demand techno-managerial skills for planned delivery of fully specified quality consulting personnels, products, projects and programmes of MDAs at best evaluated prices and timeframe to the best bidder who offers value for money.
The need to ensure Budgetary outlay and clear source of project funds were often breached in the past. However, enactment of the Fiscal Responsibility Act is a right step in tackling this. The manning of Procurement Units and Committees with high caliber trained staff is also needed to contain identified major susceptible deficiencies that foster corruption in the process.
Professional weaknesses and planning deficiencies often produce deliberate time-overrun which can expose procurement processes to corrupt influence. These will result in process drawbacks and breaches whose solutions were outlined in this paper.
Presented By Engr. Sir. Chris C. Chukwurah FNSE, FNIM, KSM, MNI ProcE, Special Adviser to vice chancellor on Projects, Michael Okpara University of Agriculture, Umudike.
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