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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
2
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
3
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)
4
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
5
Introduction
6
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”.
7
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.
8
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.
9
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.
11
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)
12
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.
13
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.
14
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.
15
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
18
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.
19
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.
.20
PEOPLE
Those who are responsible - R
Those who are accountable - A
Those who are consulted - C
Those who are informed - I
22
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.
23
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.
24
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
25
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
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.
28
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.
29
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.
30
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.
31
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.
33
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.
34
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.
35
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.
36
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.
37