TRAINING ON ENTRENCHING INTEGRITY IN THE PROCUREMENT PROCESS OF TERTIARY INSTITUTIONS Organised By ANTI-CORRUPTION ACADEMY OF NIGERIA (ACAN)

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TRAINING ON ENTRENCHING INTEGRITY IN THE
PROCUREMENT PROCESS OF TERTIARY
INSTITUTIONSOrganised ByANTI-CORRUPTION
ACADEMY OF NIGERIA (ACAN)

• UNDERSTANDING CORRUPTION RISK IN PUBLIC
  PROCUREMENT PROCESS IN TERTIARY INSTITUTIONS
• by
• Emeka M. Ezeh, OFR
• Director-General BPP
• DATE 9TH JULY, 2015
• VENUE AUDITORIUM, ICPC HEADQUARTERS, ABUJA

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HIGHLIGHTS

• What is Corruption Risk in public procurement
  process?
• Chain of Corruption
• Corrupt Practises identified in the award of
  contracts in the University Study System and
  Review (USSR)
• Corruption Risks identified by BPP in Procurement
  Processes of Tertiary Education Institutions
• Pre Bid Stage
• Bidding Stage
• Post Bid Stage

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HIGHLIGHTS (contd)

• Corruption Prevention Strategies
• Prior Reviews
• Post Review (Procurement Audits)
• Administrative Reviews
• Whistle Blowing
• Capacity Building
• Independent Observers
• Code of Conduct
• Offences
• Penalties for Violators

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Corruption Risk in Public procurement process

• Corruption Risk in Public procurement process is
  defined as the possibility that the underlying
  events in the process will facilitate corrupt
  tendencies which will adversely affect the
  achievement of the objectives of a transparent
  and competitively conducted procurement.

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Corruption Risk in Public procurement process

• The underlying contributory factors which
  facilitates corrupt tendencies and practices in
  public procurement occur throughout the various
  stages in the procurement process as observed by
  BPP though our prior reviews, post reviews
  (procurement audits), Administrative reviews and
  other investigations.

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Corruption Risk Issues Identified by BPP in
Procurement Processes of Tertiary Education
Institutions

• Failure to comply strictly with provisions of the
  law, laid down regulations, guidelines and
  directives at every step in the procurement
  process is an indication of corruption in
  procurement.

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CHAIN OF CORRUPTION
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Corrupt Practises identified in the award of
contracts in the USSR

• Contract cornering by Council members.
• Contract splitting.
• Non-adherence to rules and policies leading to
  award of contracts to corrupt and incompetent
  firms and suppliers.

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Corrupt Practises identified in the award of
contracts in the USSR (contd)

• Selection of projects on the basis of personal
  interests and opportunity of personal benefit.
• Abandonment of projects.
• Bribery and other forms of gratification.
• Inadequate project monitoring and evaluation.

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Corrupt Practises identified in the award of
contracts in the USSR (contd)

• Selection of projects on the basis of personal
  interests and opportunity of personal benefit.
• Abandonment of projects.
• Bribery and other forms of gratification.
• Inadequate project monitoring and evaluation.

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COMMENTS ON USSR

• Commendable but findings on corruption in
  contract awards and recommended strategies for
  combating it is not exhaustive.
• Study population not good representation of
  stakeholders involved in public procurement.
• The regulator (BPP), other state procurement
  regulators, Contractors and service providers not
  involved, so the real issues, facts and figures
  on corruption risk not exhausted.

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Corruption Risk Issues (contd)

• PROCUREMENT STEPS
• Pre Bid Stage
• Needs Assessment
• Procurement Planning
• Budgetary Allocation
• Preparation of Solicitation Documents
• Bidding Stage
• Advertisement
• Bid Collection and Submission
• Bid Examination and Evaluation
• Approvals
• Award
• Post-Bid Stage
• Contract Implementation

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Corruption Risk Issues (contd)

• Pre Bid Stage
• Needs Assessment
• Procurement Planning
• Budgetary Allocation
• Preparation of Solicitation Documents

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Corruption Risk Issues (contd)

• Pre-Bid Stage
• No or lack of adequate Needs Assessment
  Selection of Projects are influenced by
  individuals and funding Agencies (E.g, TETFUND
  etc) making the entire procurement process from
  beginning to the end skewed in favour of the
  alleged sponsor
• Undue and over bearing interference in the
  procurement process by parties/individuals who
  are not supposed to be part of the organisation
  of procurement. E.g Governing Council of
  Universities, Funding Agencies (TETFUND) etc

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Corruption Risk Issues (contd)

• Pre-Bid Stage
• Lack of Procurement Planning (As at End of June
  2015 Ending, No University has forwarded Y2015
  Plans to BPP as required by law)
• No proper Records and where they exist, they are
  scanty and conflicting. (As at End of June 2015
  Ending, No University has forwarded Y2014
  Procurement Records to BPP as required by law
  which gives a deadline of 3 months after the end
  of the financial year-March 2015)

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Corruption Risk Issues (contd)

• Pre-Bid Stage
• Non Adoption of the BPP Standard Bidding
  Documents leading to ambiguity and
  unprofessionalism in the preparation of
  Solicitation Documents making requirements to be
  inadequately and/or not objectively defined.
• Non aggregation of Needs so as to perpetrate
  Contract splitting
• Use of Brand names in specifications of Goods,
  therefore creating undue patronage to preferred
  service providers.

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Corruption Risk Issues (contd)

• Bidding Stage
• Advertisement
• Bid Collection and Submission
• Bid Examination and Evaluation
• Approvals
• Award

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Corruption Risk Issues (contd)

• Bidding Stage(contd)
• Procurement Notices not placed in the required
  media (Minimum of 2 National Newspapers, Federal
  Tenders Journal, Website and Notice Board) and in
  some cases, local newspapers with very limited
  circulation are used in order to limit
  competition to selected contractors and aid
  collusive bidding.
• Minimum duration required for procurement notices
  not adhered to in order to limit competition.
• Criteria stated in Advertisement and Tender
  Documents made vague and crafted to suit
  preferred bidders in contravention of the
  provisions of the Act.
• Details of bid submission and opening not clearly
  stipulated so as to deliberately cause bidders
  not to attend public openings.

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Corruption Risk Issues (contd)

• Bidding Stage(contd)
• Exorbitant fees charged for collection of Bid
  documents thereby discouraging competition.
• Tender documents not made available for bidders
  immediately notices are published or different
  documents are issued to bidders.
• Bidders who did not start the process are
  admitted midway into the process.
• Bids are collected and accepted after the
  deadline stipulated in the Advertisement for
  closure of bid submission or bids are smuggled in
  after official bid closure.

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Corruption Risk Issues (contd)

• Bidding Stage(contd)
• Independent observers are sometimes not invited
  for public opening of bids.
• Bids are sometimes not publicly opened.
• Sometimes bids are not publicly opened
  immediately after expiration of date and time set
  for the submission of bids thereby allowing space
  and time for manipulation of bids.
• Bid return sheets are not signed by all the
  bidders present at bid opening sessions and/or
  not closed out.
• Pages of financial bids not countersigned by
  competing bidders, thereby allowing possibility
  of bid alteration and/or substitution during bid
  evaluation

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Corruption Risk Issues (contd)

• Bidding Stage(contd)
• Preliminary bid examination not done at bid
  opening to ascertain documents submitted by
  bidders in their bids.
• Technical bids not paginated by bidders, allowing
  for insertion of documents during bid evaluation.
• Wrong or preferential composition of members of
  Evaluation committee to include officers who are
  not Procurement officers or professional staff
  knowledgeable in the subject procurement.
• Insertion of mandatory documents not submitted in
  the bids by evaluation officers during bid
  evaluation thereby making unresponsive bids
  responsive. E.g TCC, PENCOM Certificate
• Use of criteria not stipulated in the
  solicitation documents during evaluation to
  favour preferred bidders

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Corruption Risk Issues (contd)

• Bidding Stage(contd)
• Use of forged or fake documents by bidders and
  acceptance of such documents by evaluation
  Officers.
• Deliberate manipulation and allocation of
  unearned marks to preferred bidders during bid
  evaluation.
• Manipulation in the identification and correction
  of arithmetical errors in financial bids.
• Leakage of in-house (Consultants)estimates to
  bidders.
• Award not recommend to least evaluated responsive
  bidder but rather use of deviation from
  in-house (Consultants)estimates as basis of
  recommendation for award

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Corruption Risk Issues (contd)

• Bidding Stage(contd)
• Deliberate evasion of monetary and approval
  thresholds by wrong classification of categories
  of procurement. E.g Goods are deliberately
  classified as Works
• Awards made without adequate budgetary provision.
• Deliberate refusal to seek and obtain necessary
  approvals before contract award.
• Deliberate act not to award contract to bidder
  not favoured despite approval by BPP and FEC.
• Adoption of selective tendering method of
  procurement and direct procurement without prior
  approval from BPP

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Corruption Risk Issues (contd)

• Post-Bid Stage
• Contract Implementation
• Abandonment of projects
• Bribery and other forms of gratification
• Inadequate project monitoring and evaluation
• Advance Payments made without necessary Bank
  Guarantees
• Work certification and Payments made beyond work
  done
• Payments made without Certificates

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Corruption Risk Issues (contd)

• Post-Bid Stage
• Deliberate act not to implement contract with
  bidder not favoured by Procuring Entity through
  frustration of contractor
• Refusal to honour obligations to contractor as at
  when due, especially payments.

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Strategies for Prevention of Corruption in Public
Procurement

• Strict adherence to provisions of the PPA, 2007,
  BPP Regulations, use of Standard Bidding
  Documents and established procedures would
  address risks in corruption
• To ensure this the BPP uses the instrument of
  reviews, complaints, audits and capacity building
  of procurement officers.

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Strategies for Prevention of Corruption in Public
Procurement (contd)

• Prior Review
• Post Review (Procurement Audits)
• Administrative Review
• Whistle Blowing
• Role of Independent Observers
• Capacity Building of Procurement Officers

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Strategies for Prevention of Corruption in Public
Procurement (contd)

• Prior Reviews
• Procuring Entities seek Certificate of No
  objection for Contract Award from BPP for
• Works from N1Billion and above
• Goods and Services from N100 Million and above
• BPP reviews process to determine substantial
  compliance with laid down procedures and
  regulations.

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Strategies for Prevention of Corruption in Public
Procurement (contd)

• Prior Reviews (contd)
• For procurements that fall under this threshold,
  corruption tendencies are greatly reduced as BPP
  conducts independent review of the entire process
  from solicitation to recommendation for award,
  inclusive of price competitiveness and
  reasonableness

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Strategies for Prevention of Corruption in Public
Procurement (contd)

• Post Reviews (Procurement Audits)
• BPP conducts Procurement Audits on the
  procurements carried out by Procuring Entities
  with a view to identify compliance with due
  process and shortcomings in procurement processes
  including parties involved in such contraventions
  of the law.
• Defaulters are sent to EFCC/ICPC for further
  investigation and possible prosecution to serve
  as deterrent to others and this constitutes
  corruption prevention mechanism.
• This is in line with the provisions of the Act
  and reports generated from the exercise are
  forwarded to the National Assembly.

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Strategies for Prevention of Corruption in Public
Procurement (contd)

• Administrative Review
• BPP conducts Administrative Review of procurement
  processes of procuring entities based on
  complaints from bidders in line with the
  provisions of Section 54 of the PPA 2007.
• Petitions from bidders have been on the increase
  in the Education sector in the last 3 years
• Education sector accounts for the largest number
  of complaints.(Especially from TETFUND funded
  projects.

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Strategies for Prevention of Corruption in Public
Procurement (contd)

• Administrative Review (contd)
• Based on findings, which most times include Right
  of Reply meetings with the procuring entity,
  petitioners and other bidders in attendance, the
  Bureau forwards issues of criminal infractions to
  EFCC/ICPC for further investigation and possible
  prosecution of erring parties.
• Administrative sanctions consequent on
  Administrative Reviews include
• Reversal of recommendations of procuring entities
  based on wrong/faulty process.
• Partial/full cancellation of process.
• Transfer of procurement officers from procuring
  entity.
• Report of erring consultants to professional
  regulatory bodies.

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Status of Petitions received from 2012 to 2014 by
Ministry
Ministry/Procuring entity On-going On-going On-going Closed Closed Closed
Ministry/Procuring entity FY2012 FY2013 FY2014 FY2012 FY2013 FY2014
Education 21 12 29 23 47 70
Presidency 15 7 2 16 13 9
Health 4 4 3 2 15 11
Transport 6 3 4 5 10 3
Power 11 1 2 7 10 3
Agriculture Rural Development 2 1 1 0 8 4
Environment 0 2 3 1 6 4
Finance 2 3 1 1 5 0
FCTA 5 2 1 5 5 7
Aviation 7 1 1 2 4 4
Water Resources 2 1 3 0 4 3
Petroleum Resources 6 0 1 0 5 3
Lands, Housing Urban Development 1 0 1 1 4 1
Works 4 0 0 1 4 2
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Status of Petitions received from 2012 to 2014 by
Ministry
Ministry/Procuring entity On-going On-going On-going Closed Closed Closed
Ministry/Procuring entity 2012 2013 2014 2012 2013 2014
Communication Technology 0 1 0 2 2 1
Niger Delta Affairs 1 0 0 0 3 2
Police Affairs  0 0  0  0  0 1
Justice  0 2 0  0 0 1
Tourism, Culture National Orientation 2 0 1 2 2 2
Trade and Investment 0 0  0 1 2 0 
Interior  0 0 1  0 2 2
Central Bank of Nigeria 0  1 1  0 0 1
Science and Technology 0  1 1  0 0 0
Special Duties Inter-governmental Affairs 0  1  0 0  0 0 
Mines and Steel Development 0 0 1 1 1 1
Youth Development 0 0  0 1 1  0
Defence 4  0 0 1  0 2
Information 0  0  0 1  0  0
TOTAL 93 43 57 73 153 137
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Comparative analysis of Closed Petitions (2012
2013)
Closed Cases (in whose favour) Number Number Closed Cases (in favour of)
Closed Cases (in whose favour) 2013 2014 Closed Cases (in favour of)
In favour of Petitioner 53 31 Petitioner
In favour of Procuring entity 74 41 Procuring entity
In favour of Third party 7 16 Third party
Wrong Administrative Procedure 19 37 Wrong Administrative Procedure
Re-procure 0 13 -
TOTAL 153 125
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Strategies for Prevention of Corruption in Public
Procurement (contd)

• Whistle Blowing
• Whistle blowers are encouraged and in line with
  the provisions of sections 6(d) and 53 of the PPA
  2007, investigations are conducted to establish
  the alleged contraventions of the law and if
  criminal investigations are required, the matter
  is forwarded to EFCC/ICPC.

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Strategies for Prevention of Corruption in Public
Procurement (contd)

• Capacity Building of Procurement Officers
• Training of Procurement officers
• BPP Training Centre, Abuja
• Public Procurement Research Centre (PPRC), FUTO
  Owerri.
• On-site Training Programs
• Comprehensive Public Procurement Corruption Risk
  Management Training at (PPRC), FUTO Owerri.

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CODE OF CONDUCT

• Section 57. (1) stipulates that The Bureau
  shall, with the approval of the Council,
  stipulate a Code of Conduct for all public
  officers, suppliers, contractors and service
  providers with regards to their standards of
  conduct acceptable in matters involving the
  procurement and disposal of public assets.
• (2) The conduct of all persons involved with
  public procurement, whether as official of the
  Bureau, a procuring entity, supplier, contractor
  or service provider shall at all times be
  governed by principles of honesty,
  accountability, transparency, fairness and equity.

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CODE OF CONDUCT CONTD

• (3) All officers of the Bureau, members of
  Tenders Boards and other persons that may come to
  act regarding the conduct of public procurements
  shall subscribe to an oath as approved by Council
• (4) All persons in whose hands public funds may
  be entrusted for whatever purpose should bear in
  mind that its utilization should be judicious.
• (5) Where a transaction involves the disposal of
  assets, principles of honesty, accountability,
  transparency, fairness and equity shall continue
  to apply to the same extent as where it involves
  procurement.

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CODE OF CONDUCT CONTD

• (6) These principles shall apply at all times,
  particularly when
• (a) making requisition for or planning of
  procurements
• (b) preparing solicitation documents
• (c) receiving offers in response to any form of
  solicitation towards a procurement or disposal
• (d) evaluating and comparing offers
  confidentially and in complete neutrality
• (e)protecting the interest of all parties
  without fear or favor and
• (f) obviating all situations likely to render an
  officer vulnerable to embarrassment or undue
  influence.

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CODE OF CONDUCT CONTD

• (7) All public officers shall handle public
  procurement and disposal of assets by
• (a) ensuring adequate time for preparing offers
• (b) complying with this Act and all derivative
  regulations and
• (c) receiving strict confidentiality until
  completion of a contract.
• (8) All public officers involved in public
  procurement and disposal of assets shall maintain
  the highest standards of ethics in their
  relationships with persons real or corporate who
  seek government commerce whether as a bidder,
  supplier, contractor or service provider by
  developing transparent, honest and professional
  relationships with such persons

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CODE OF CONDUCT CONTD

• (9) Every public officer involved directly or
  indirectly in matters of public procurement and
  disposal of assets shall
• (a) divest himself of any interest or
  relationships which are actually or potentially
  .inimical or detrimental to the best interest of
  government and the underlining principles of this
  Act and
• (b) not engage or participate in any commercial
  transaction involving the federal government, its
  ministries, extra-ministerial departments,
  corporations where his capacity as public officer
  is likely to confer any unfair advantage
  pecuniary or otherwise on him or any person
  directly related to him

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CODE OF CONDUCT CONTD

• (10) Any person engaged in the public procurement
  and disposal of assets who has assumed, or is
  about to assume, a financial or other business
  outside business relationship that might involve
  a conflict of interest, must immediately declare
  to the authorities any actual or potential
  interest.
• (11) Such a declaration shall be given such
  consideration at the relevant level as is
  necessary so that, where it is seen that remedial
  action is taken, a conflict of interest is
  present.

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CODE OF CONDUCT CONTD

• (12) A conflict of interest exists where a person
• (a)possesses an interest outside his official
  duties that materially encroaches on the time or
  attention which should otherwise be devoted to
  affairs of government
• (b)possesses a direct or indirect interest in or
  relationship with a bidder, supplier, contractor
  or service provider that is inherently unethical
  or that may be implied or constructed to be, or
  make possible personal gain due to the person's
  ability to influence dealings
• (c) entertains relationships which are
  unethical, rendering his attitude partial toward
  the outsider for personal reasons or otherwise
  inhibit the impartiality of the person's business
  judgments

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CODE OF CONDUCT CONTD

• (d) places by acts or omissions the procuring
  entity he represents or the
• government, in an equivocal, embarrassing or
  ethically questionable position
• (e) entertains relationships compromising the
  reputation or integrity of the
• procuring entity he represents or the
  Government
• (f) receives benefits by taking personal
  advantage of an opportunity that
• properly belongs to the procuring entity he
  represents or the Government
• (g) creates a source of personal revenue or
  advantage by using public
• property which comes into his hands either in
  course of his work or otherwise and

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CODE OF CONDUCT CONTD

• (h) discloses confidential information being
  either the property of his
• procuring entity, the Government or to a
  supplier, contractor or service provider to
• unauthorized persons.
• (13) A person involved in the disposal of assets,
  shall not either by a third party or by himself
  be interested in any manner in buying directly or
  indirectly these assets and shall not have or
  obtain any type of advantage or revenue from the
  disposal for a period of three years after the
  disposal

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OFFENCES (PART XII)

• Bid Rigging pre-arrangement of offers where
  winners have been predetermined
• Collusion
• Splitting of contracts
• Using fake documents like TCC, etc.

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PENALTY FOR VIOLATORS

• Sanctions
• Debar any Supplier or Contractor for a term as
  may be specified in the regulations.
• May recommend to Council for
• Suspension of officers concerned.
• Replacement of Head of Procurement.
• Discipline the Accounting Officer
• Temporary transfer of procuring function of the
  entity to a Third Party .
• Nullify the whole or any part of the procurement
  process.

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PENALTY FOR VIOLATORS (Contd)

• AND
• Contractors, Suppliers, Vendors
• Jail term of 5 Calendar years but not more than
  10 years without option of fine.
• For officers of the Bureau, MDAs
• Not less than 5 Calendar years but not more than
  10 years without option of fine.
• Summary Dismissal from Government Service,

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PENALTY FOR VIOLATORS (Contd)

• For Corporate Bodies
• Debarment from all public procurement for a
  period of not less than 5 Calendar years plus
• Fine equivalent to 25 of the value of the
  procurement.
• Directors of the company as listed in CAC shall
  be liable to a jail term of not less than 3
  Calendar years but not exceeding 5 years without
  option of fine.

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Thank You!