PROPERTY TRANSACTION GUIDE

Public Procurement Act And Building Experts

Independent, Monday, 25th May 2009

Chairman, Lagos chapter of the Nigerian Institute of Quantity Surveyors (NIQS), Mr. Jide Oke, emphasises in this piece he delivered recently to a gathering of town planners that, in the light of the Public Procurement Act, professionals in the built environment, now have a chance to make the difference by setting the country on the path of recovery

There are several definitions of procurement depending on their sources, but the Wikipedia defines it as the acquisition of goods 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 or use of government, corporations or individuals, generally via a contract.

Mark Hackett, Ian Robinson and Gary Statham defines it as the process of obtaining goods and services from another for some consideration. It is purchasing, hiring or obtaining by any other contractual means, goods, works or services or any mixture thereof.

Peter Gershon defined it as the whole process of acquisition from third parties (including logistical aspects) and covers goods, services and construction projects. This process spans the whole life cycle of the exercise from initial concept and definition of business needs through to the end of the useful life of an asset or the end of a service contract. Both conventionally funded and more innovative types (e.g. PFI/PPP) are included.

From these definitions, the underlining fact is that procurement is about acquisition of goods, works or and services.

The characteristics of public procurement, according to Ndanusa differs from that of private procurement, while public procurement takes into account accountability, transparency and competition, private procurement which can influence profit levels of the organisation has more incentive to secure the best price for goods, services and works through negotiations (with or without competition).

There are many methods of procuring projects, and these can be broadly classified into traditional and international/modern methods.

The traditional methods include Bills of Quantities method, Schedule of rates method, Bills of Approximate quantities, Lump sum contract and Cost Reimbursement contract.

The international/ modern methods are Built, operate and transfer (BOT) or concession contracts which have many variants such as Build, Own and Operate (BOO), Build, Operate and Maintain (BOM) and Maintain, Operate and Transfer (MOT); Design and Build, often referred to as turnkey or package deal; Management contracting; Construction Management; and, Joint Venture contract.

Of all these procurement strategies, it shall be noted that the type to adopt at any given time depends on the circumstance of the project or the source of funding.

Regardless of the method used, the basic characteristic of good procurement system is that the services or goods should be delivered to perform its functions in a timely manner and at a reasonable price, or alternatively, it should be economical and efficient.

The Public Procurement Act was signed into law in June 2007. The Act with all intents and purposes establishes the National Council on Procurement and the Bureau of Public Procurement as the regulatory authorities responsible for the monitoring and oversight of public procurement, harmonizing the existing government policies and practices by regulating, setting and developing the legal framework and professional capacity for public procurement in Nigeria.

With this giant stride, Nigeria has joined other African countries like Ghana and South Africa who have in the past enacted such procurement act.

Suffices to say here that the whole essence of the Procurement Act is to fight

corruption and punish corrupt persons involved in procurement. The latest survey conducted by the World Bank on procurement activities prior to the enactment of the Act showed that bribery and corruption dominated Nigeria's N775 billion contract awards in 2007.

Sequel to its release in 2007, the act was trailed with a horde of criticisms to protest among others the composition of its council members.

Is it not therefore curious to see that in enacting such Act, quantity surveyors, who are principal members and relevant professionals in the procurement process, are excluded?

Other amendments to the Act cover the approving authority, mobilization payment, time limit for procurement exercise, advertisement among others.

Though the proposed amendments to the Act have passed through first, second and third readings and in fact actual passage of it was done in October last year, report available to us indicate that the act is not free with more tinkering.

The coming of the Procurement Act on the heels of several corruption scandals in the history of this country, the latest being the Power Project and the Halliburton among others should be a source of huge relief to professionals in the built environment.

As players in the sector, which is direct recipient of heavy injection of capitals in the nations growth and development, the enactment of the Act should be a prayer answered, the putting in place of due process and correcting the ills of the past.

Rather than being a challenge, the Act should in fact be a blessing. However, it is noteworthy to mention a few gaps which mighty negate the true intents of the act.

One of these is the clause S. 16 (b) of the act which makes any procurement exercise subject to issuance of the "Certificate of No objection to contract award".

Section 16 (4) states that subject to prior review thresholds as may be set by the bureau, any procurement purported to be awarded without a "Certificate of No objection to contract award" duly issued by the Bureau shall be Null and Void".

Certificate of No objection is defined in the act as the document evidencing and authenticating that due process and the letters of this act have been followed in the conduct of a procurement proceeding and allowing for the procuring entity to enter into contract or effect payments to contractors or suppliers from the treasury.

It is obvious that this certificate is the heart and soul of the procurement act in this country. Apart from giving such discretionary power to such procurement officers, it is counter productive for such fundamental document not to have a time frame for its issuance.

Otherwise, issues are bound to arise with validity of several contracts due to prolonged delay in the issue of this document. Else we go back to the era of business as usual.

It is a known fact that corruption thrives in procurement process, and this is because of the wide discretionary powers given to procurement officers. According to Okereke-Onyeri, if the huge discretionary power wielded by the procurement officers is eliminated in the social fabric of the nation, corruption will drastically reduce to an acceptable level. Maintain the status quo, without the current Act, and then the government would have created a Frankenstein monster. Evidence of plethora of abandoned projects dotting the entire landscape is a Pointer to this fact.

Also the definition of the word "works" in Section 60 of the act, falls short and precariously too of the intents and purposes of the procurement act.

Works in the act are defined as all works associated with the construction, reconstruction, demolition, repair or renovation of a building, structure or works, such as site preparation, excavation, erection, building, installation of equipment or materials, decoration and finishing as well as services incidental to construction such as drilling, mapping, satellite, topography, seismic investigation and similar services provided.

This definition does not include works of civil engineering nature such as roads, bridges, culverts, marine works and habour, jetties, environmental works such as erosion and flood control works.

It also excludes heavy engineering works such as petrol chemical, railways, power etc which are works carried out by government department or agencies.

It is therefore clear that this lacuna might be explored by mischief makers to the detriment of the industry professionals.

Other aspects of the act which might work against the interest of the built environment professionals are expected to be taken care in the final amendment to the act. It is however pertinent to emphasize the need for constant education and awareness campaign for full understanding of the act.

With the coming of the long awaited procurement act, it is a clarion call to professionals in the built industry for excellence of services. It will no longer be fashionable to complain of non-patronage, but for professionals to close ranks and act in the best interest of the public, respect our commitments, remain nonpartisan in all our activities and provide our clients with the best advice possible.

As town planners, who are the professionals at the front end of the execution of the procurement decision, the act promises sanity, but all support would be necessary in ensuring that the tenets of it are not derailed. The industry looks up to you, as no development takes place without your approval to proceed, even with the contract award, a lot depends on your sound judgment.

The need to be firm, but fair in our actions is required by us all more than ever before.

The country is in its present state of comatose in all infrastructure because of actions or inactions of some professionals that made themselves willing accomplices in circumventing the rules and procedures of sound procurement.

The attendant problems of collapsing facilities such as roads and electricity are evidence of compromise and connivance in the name of corruption in all facets. As professionals in the built environment, we now have a chance to make the difference by setting this country on the path of recovery once again.