PROFESSOR KUNLE ADE WAHAB

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IMPLEMENTATION OF PUBLIC PROCUREMENT REFORMS IN
NIGERIA.
by
BY PROFESSOR KUNLE ADE WAHAB SPECIAL ADVISER TO
THE PRESIDENT AND HEAD, BUDGET MONITORING PRICE
INTELLIGENCE UNIT STATE HOUSE, ABUJA AT A
WORKSHOP ON WORLD BANK PROCUREMENT PROCEDURES
ORGANISED BY THE NIGERIA ECONOMIC SUMMIT GROUP AT
THE GOLDEN GATE RESTAURANT IKOYI, LAGOS ON
THURSDAY, SEPTEMBER 28, 2006.
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INTRODUCTION

• I wish to thank the Director General, Nigeria
  Economic Summit Group, Alhaji Mansur Ahmed and
  the organizers of this event for the wonderful
  opportunity to share ideas with you on the policy
  targets and rudiments of the on-going Public
  Procurement Reforms being implemented by the
  BMPIU, popularly known as the Due Process Office.

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PRE-DUE PROCESS PROCUREMENT PROBLEMS

• A survey conducted by the Obasanjo administration
  shortly on assumption of office revealed that
  before May 29, 1999, Nigeria must have lost an
  average of forty billion naira annually through
  all kinds of manipulation of the procedure for
  award and execution of public contracts.
• These manipulations were open in the form of
  inflation of contract costs, use of contract
  system to divert public funds to private pockets,
  award of contracts for ghost projects, use of
  inexperienced contractors, over invoicing,
  influence peddling, ward of contracts to friends,
  relations and family members and above all award
  of contract without planning and budgetary
  provisions

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PRE-DUE PROCESS PROCUREMENT PROBLEMS Contd

• This major menace in public spending led to
  major leakage in the public treasury, abandonment
  of projects, proliferation of white elephant
  projects, poor service delivery, and denial of
  social amenities to the people. It was a major
  source of corruption and created poor image for
  our country. The introduction of the Public
  Procurement The Budget Monitoring and Price
  Intelligence Unit was set up in 2001 to implement
  a robust Public Procurement Reform Programmes
  designed to address these critical challenges in
  the management of public resources in Nigeria.

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OBJECTIVES

• To harmonize existing Govt Policies/Practices and
  Update same on Public Procurement.
• To ensure that packaging of project conception is
  geared to the realization of priorities and
  targets
• To determine whether or not Due Process has been
  observed in the Procurement of services
  contracts
• To introduce more honesty, accountability
  transparency into the Procurement Process

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OBJECTIVES (Contd)

• To establish and update pricing standards
  benchmarks for all supplies to Government
• To monitor the implementation of projects during
  execution with a view to providing information on
  performance, output and compliance with
  specification
• To ensures that only projects which have been
  budgeted for are admitted for execution.

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THE VISION OF BMPIU

• THE VISION OF BUDGET MONITORING AND PRICE
  INTELLIGENCE UNIT BMPIU IS TO MOVE NIGERIA TO A
  LEVEL WHERE GOVERNMENT PROCUREMENT IS CARRIED OUT
  WITH INTEGRITY, TRANSPARENCY, COMPETENCY AND
  COMPETITIVENESS AS A NATIONAL ETHOS.

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MISSION OF BMPIU

• THE MISSION OF THE BUDGET MONITORING AND PRICE
  INTELLIGENCE UNIT (BMPIU) IS TO USE DUE PROCESS
  MECHANISM TO ESTABLISH AN OPEN, TRANSPARENT AND
  COMPETITIVE FEDERAL PROCUREMENT SYSTEM, THAT IS
  INTEGRITY DRIVEN, UPHOLDS SPENDING WITHIN
  APPROPRIATION AND ENSURES SPEEDY DELIVERY OF
  PROJECTS, THUS ACHIEVING VALUE FOR MONEY WITHOUT
  SACRIFICING QUALITY AND STANDARDS.

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GOAL OF BMPIU

• The goal of BMPIU is to be in the vanguard of
  ensuring fiscal transparency, strict compliance
  with Federal Government guidelines on Due Process
  Certification with respect to budgeting for and
  procurement of facilities/services/contracts at
  appropriate costs.
• The Unit also performs monitoring and regulatory
  functions. The Unit sets standards for public
  procurements including enforcement of harmonized
  bidding process. It also formulates, develops and
  undertakes research in all areas in order to
  determine the information needs, projects costing
  and other relevant details. The aim is to
  ensure that such public expenditure is influenced
  by national priorities and value for money

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ADVERTISEMENT FOR BIDDING

• The policy provides that all contracts must be
  advertised. There must be a process of
  pre-qualification followed by invitation to
  tender, technical and financial bid process,
  opening of tender, bid evaluation process, before
  the winner of the contract can be determined.
• In order to make this process clear and simple to
  all spending agencies of the Federal Government,
  we designed and published a check-list of
  processes and documents required for reviews and
  certification of any public contract to be paid
  for with public funds.

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ADVERTISEMENT Contd

• The check-list are contained in the ABC of the
  Contract Due Process, and 20 Questions and
  Answers on the policy which are to be circulated
  in this hall free of charge
• We also took time to publicize the process in the
  media, at conferences, workshops, retreats and
  other events organized for this purpose.

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THE IMPLEMENTATION OF PROCUREMENT REGULATIONS

• The implementation requires, proper planning of
  any procurement exercise to be undertaken by
  spending units such as Ministries, Agencies and
  Departments. These include the presence of a
  project file, tender returns, tender evaluation
  report, contract award letter and agreement,
  original contract bills of quantities, contract
  drawings if any. Others include financial summary
  and statements, progress report on the project,
  variation request or interim valuation reports as
  the case may be.

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DECENTRALISATION OF PROCUREMENT

• As part of measures to decentralize the
  operations of the BMPIU, the Unit created
  thresholds of approval for contracts. For
  instance, contracts from one to fifty million are
  being handled at the level of spending units with
  a BMPIU staff representative as an observer under
  what we call Resident Due Process. Contracts
  above fifty million are to be submitted to the
  BMPIU by the MDAs for what we call full review
  and certification before it is sent to the
  Federal Executive Council for approval.

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DECENTRALISATION OF PROCUREMENT Contd

• We work quite closely with the Federal Ministry
  of Finance, the Budget Office of the Federation
  and the Office of the Accountant-General of the
  Federation for harmony and coordination. Copies
  of Due Process Certificates are promptly sent to
  these agencies for necessary action leading to
  cash releases. The BMPIU is also a member of the
  Federal Government Economic Team that meets every
  Wednesday to appraise and re-appraise the
  Economic Reform Project.

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BENEFITS OF DUE PROCESS MECHANISM

• The application of this standard procedure has
  saved the Federal Government over N200 Billion
  Naira since 2001. The savings were in the form of
  reductions from inflated contract prices.
  Besides, all projects implemented under this
  policy have no problems of cash backing if there
  is enough provisions in the budget. In fact,
  under Due Process mechanism more projects are
  implemented with available resources.
• We enjoy strong and stoic support from Mr.
  President, Chief Olusegun Obasanjo without whom
  we can hardly achieve much. This is because
  no capital project at the federal level can be
  paid for without a due process certificate issued
  by the BMPIU.
• The consideration of Nigerias case for debt
  relief by creditor nations was influenced partly
  by the success of the procurement reforms in
  particular and other aspects of the Economic
  Reforms in general.

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BENEFITS OF DUE PROCESS MECHANISM

• I am pleased to state that since the introduction
  of Due Process, our experience shows that
  sanitizing our public procurement system is
  achievable.
• You might have heard about huge savings which we
  recorded from reductions from over inflated
  contract costs in the past. These have gradually
  come down. This is because everybody is now aware
  and alert. Compliance with the policy has
  improved and our sustained advocacy/public
  education has also assisted to drive home the
  message.
• The Challenge before the Unit in the
  implementation of this policy at the moment is
  how to spread the message of the reforms to all
  states and local governments in Nigeria.

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BENEFITS OF DUE PROCESS MECHANISM Contd

• The concern remain that unless and unit these
  tiers of government emulate and adopt the
  reforms, the expected impact on the economy and
  the standard of living of an average Nigeria
  would remain difficult to achieve. This is
  because while the Federal Government gets 48
  from the share of the resources, the states and
  local governments get 52.
• This underlines the need for states and local
  governments to adopt similar reforms to ensure
  prudence, competition, and transparency in public
  spending.

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ADOPTION OF DUE PROCESS AT STATES AND LOCAL
GOVERNMENT LEVELS

• As a result of the gains of the policy at the
  Federal level, 28 states showed interest to adopt
  the reforms and subsequently sent their staff to
  under-go relevant trainings to kick-start the
  policy in their respective states. However, our
  findings in some states so far visited to assess
  the level of adherence to due process principles
  in the award and execution of contracts is not
  encouraging. I therefore use this forum to plead
  with the State Governors to give the reforms the
  needed political will to take off in their
  states.

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PROCUREMENT LAW

• As a result of the need to ensure continuity in
  the implementation of the policy, a Bill on
  Public Procurement Reform was introduced to the
  National Assembly for consideration and passage
  into law. The Bill was carefully packaged to
  close all deficiencies in our procurement system.
  It also provides for the creation of a Public
  Procurement Bureau to regulate public procurement
  in Nigeria. The House of Representatives is
  almost set to pass the Bill into law any moment
  from now the Bill comes up for its third reading.
  
• Action on the Bill has also made positive
  progress in the Senate. I request that you join
  me in pleading with the National Assembly to make
  sure that this Bill becomes law before the end of
  this year.

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BMPIU NESG PARTNERSHIP

• Ladies and Gentlemen, let me use this forum to
  call on the Nigeria Economic Summit Group to
  partner with the Budget Monitoring and Price
  Intelligence Unit in ensuring the successful
  implementation of the Public Procurement Reform
  policy of this administration. The Nigeria
  Economic Summit Group and the BMPIU share a lot
  in common. The two agencies believe that only a
  private sector led economy can address Nigerias
  socio-economic problems. The BMPIU and the NESG
  should work together to restore the culture of
  competition, transparency, hard work, creativity,
  innovation, and entrepreneurship as basis for
  business success.

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BMPIU NESG PARTNERSHIP Contd

• These virtues explain largely why some economies
  are developed why others remain stagnant.
  Nigerias desire to join the developed world lies
  on our ability to allow competition, transparency
  and good policies to last in our nation. I
  believe quite strongly that close partnership
  between the Nigeria Economic Summit Group, the
  public and private sectors would create the right
  framework and opportunities for the on-going
  reforms to yield the desired result.

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• Thank you