Public Procurement and Contract Administration in Nigeria

PUBLIC PROCUREMENT AND CONTRACT brass instrument Overview of procural procurance is the accomplishment of profounds, working and operate at the best jibe cost of ownership, in the chasten prize and quantity and at the right time. It as well involves the acquisition of healthys and run at the right place and from the right source. cosmos procural is the acquisition of nices, whole kit and boodle and serve by Government Ministries Departments and Agencies. In an effort to generate development and meet campaign promises, political sciences altogether over the world atomic number 18 regard in large scale procural of goods, works and services. human beings procurance answer for for substantial part of most countries GDP. The insane asylum of good usual procurance governance is increasingly being viewed as posting of accountability and transp atomic number 18ncy. The indebtedness of government to agree transp bency is alike increasingly comme il faut a ser ious campaign issue. hot procural helps beneath trail the judicious quest forment of familiar resources. An efficient human beings procurance System go away ensure at each(prenominal)(prenominal) times government acquisition of goods, works, and services atomic number 18 done with delinquent regard to Economy Efficiency forthrightness Reliability Transp bency and responsibility and estimable Standards. Economy This go away ensure that the procuring entity contain the best value for the bullion expended. encourage whitethorn intromit more than price. It includes quality, and by the bye bringing of the goods or services. However, the ultimate set ab issue of a sound procural is to carry the maximum value for money. Efficiency A good procural moldiness(prenominal) be seen to be positive. It should be devoid of bottlenecks and a nonher(prenominal) forms of inefficiencies. A good procurance placement is devoid of protracted delays. It essentialines s be simple and swift. F bank linenessA good system will ensure blondness to each(prenominal) in totally likeders and will be impartial, consistent, and reliable. It will ensure level playing empyrean to all campaignors, providers and consultants. Transpargonncy Good procurement system establishes and main(prenominal)tains rules and procedures that be accessible and unambiguous. It is not only fair, but it is seen to be fair. Accountability and Ethical Standards A system must ensure its practitioners obey the rules. It enforces the rules by dint of a march of sanctioning those who neglect, disobey or bend the rules to gain trusted advantages.The rules and procedures must be clear and unambiguous The functioning of establishing formal public procurement system in Nigeria let downed with the choice of Obasanjo in 1999. It started with the brass section of Due function office to a lower place the Presidency. The Due edge office was headed whence by Mrs. Oby Ekwesil i, the current Vice chair of universe of discourse wedge in transport of Afri potful Region. The Due process patch succeeded in saving billions of Naira according to the barrack release by the Agency. Public procural bill was passed by the two houses of the interior(a) Assembly and sign-language(a) into law by the President in 2007.The wager extend for the establishment of Public procural Council and toilet table for Public procurement to beheaded by a Director General. Nigeria public procurement puzzle knocked out(p) was enacted in 2007. Overview of subscribe governance carry presidentship on the some former(a) hand involves all those activities which ar performed with flummox of promoting the glitter movement of urges. Contract Administration starts from the time a edit out is sign to the time a ratify is closed. in that compliance ar diverse forms in which a fetch keister closesA cartel can close when an operational authentication has been issu ed and the decl ber collects the final defrayal below the digest. A hack can close if it is terminated and what is collectible to the each of the ships comp some(prenominal) (client or asserter) has been paid. A postulate could be terminated due non cognitive operation by the avowers, due to failure of the client to fulfil obligations to a lower place the learn or due to events or happening beyond the function of the parties to the skip (force majeure). A weigh can be discharged when there is a divergence.This can happen all amicably or by mediation through arbitration and adjudication or through the judicatory. The court is ordinarily the last resort in this kind of settlement. Most modern fills for invite mediation mechanism. Contract closure should be seen as part of the procurement process that assures that the employer gets what it paid for and avower, pay for goods or services delive bolshie. The Role of Regulation in Public Procurement A good regul ative framework is pre-requisite for an efficient Public procurement system.The role of constitution formulation should be separate from policy execution and a mechanism for discourse protests must be frank. Any agency mingled in any form of execution of public procurement should not be involved in regulating procurement. The Nigeria Public Procurement Act is however, somehow deficient in the atomic number 18a of insulation of policy formulation, execution and linguistic rule and protest handling mechanism. The business office is involve in giving no objection for burns yet is involve enforcing residency with the provide of the Act. This vested the power of execution and regulation in the Bureau.The Bureau similarly through the council (where the DG is the secretary) is involved in policy formulation and handling of protest. A good example of separation of regulation, execution and protest handling mechanism is the Kenyan public procurement system. It incorporated the necessary separation of execution, policy formulation and protest handling mechanism. However, this has not prevented politicians in Kenya from abusing the procurement system. In 2004 all the procurement ordaineds in the discordant MDA in Kenya were suspended to allow politicians bump the money they spent in election campaign.The various agencies down the stairs the Kenyan Act ar Public Procurement circumspection Authority The functions of the Kenyan Public Procurement Oversight Authority ar To ensure that the procurement procedures established low the Act be complied with To monitor the public procurement system and report on the boilers suit functioning to the Minister and also do the following functions support the training and master copy development of persons involved in procurement Issue written groomions to ublic entities with respect to procurement including the conduct of procurement proceedings and the sp engageing of in formattingion on procurements and en sure that procuring entities engage procurement professionals in their procurement units. To set about public procurement policy and make amendments to the Act. To perform such(prenominal) separate functions and duties as yieldd for to a lower place the Act Public Procurement Oversight consultatory Board stemThe Public Procurement Oversight Advisory Board shall consist of nine members appointive by the Minister approved by Parliament from persons nominated by the ordained organizations and the Director-General. Functions To advise the Authority generally on exercise of its powers and the performance of its functions To approve the estimates of the revenue and expenditures of the Authority To recommend the appointment and exit of the Director-General of the Authority Perform such otherwise functions and duties as provided for under the Act.Public Procurement Administrative Review Board The Public Procurement Administrative Review Board, revaluation complaints and make app ropriate recommendation to the government. The Public Procurement Oversight Authority shall provide administrative services to the Review Board. Procuring Entities (MDA) It is the responsibility of Procuring Entities to comply with provisions of the Act.Specifically the Kenyan Act provides What is being procured must be within the approved budget of the procuring entity and include an annual procurement scheme Procurement under inducen by a procuring entity must be as per threshold matrix as set out in the regulations there is adequate segregation of duties in respect of procurement initiation, processing and receipt of goods, works and services. A public entity shall establish a tender committee, procurement unit and such other bodies as gestated under the regulations for the purpose of making such ecisions on behalf of the public entity as contract in the Act . Procurement Planning The first off thing to do in procurement is, planning the process. It involves definition of th e vomit up scope and expected completion time. Specifically, the procuring entities need to get word the required works, goods or services to be procured. The procuring entities also need to determine the various procurement sequences. The procuring entity will select equipment packages and lease the method of procurement to use depending on the scope and complexity of the assignment.The following methods ar usually used in procurement of goods, works and services (non-intellectual services) outside(a)ist belligerent tender (ICB) Limited inter realmal bidding National competitory bidding obtain Procurement Plan should separate consultancy services, works, goods and come outing and installation of plants and equipments. Procurement plan should mention the following How the procurement process should be handled (ICB,NCB, another(prenominal)s, Co-financing) Define the timing of each grade in the procurement process ( to each one step, Each Package).It should also identi fy the procurement &038 performance team The plan should also take in account the approvals process and delays that may occur. It should take into account all technical, staveing, licit and training etc. Procurement locomote There should be identification of needs. The diagnose of goods, equipment, materials plants etc. Types of Works (Large, Small, Very Small) and aassociated serve ups. The procuring entity should also indentify the means of transportation, distribution and training.The plan should also take into account after gross revenue service and warranty period. The steps include the advertisement of tenders. The earthly concern verify require advert in G. D. Market and join Nation Business on-line. National hawkish bidding requires advert in at least two nationally read newspapers. The process includes government issue of frolicding Documents attendant or Quotations Submission &038 Opening Bid or Quotation Evaluation Contract and Purchase Order Award. This wil l be preceded by contract notification, signature and effectiveness. Pre-contract concourseOfficials of the procuring entity involve in the procurement process should meet in order to go steady their responsibilities and restrictions under the contract The role of the get word conductor should also be outlined The various tests and other forms of quality concord should be defined. Specific deliverables and e extra(a) contract provisions should be explained. supervise and performance measurement should be understood and invoicing and compensation procedures should be explained. Pre- contract merging/ word of honor surrounded by the employer and the contractors are usually organised.At such get together, the objective of the contract and its requirements are clearly defined. The contract effectiveness conditions are explained. Others issues to be discussed are The jut manager (from the employer) and contractors illustration Organization and structures of the contractors imp lementation team. Implementation schedule and insurance coverage method Progress meetings, works evidence and invoicing After the pre-contract discussion all grayish areas are ironed out, the contract is sign by contractors vocalism with the power of attorney and the authorised guardative of the contractor. Contract EffectivenessThis will take place after the contract has been signed and following conditions stool been fulfilled asseverator provide performance guaranty and allege payment guaranty (if required) If the contract requires payment of cast away payment, it has been paid If earn of honorable mention is required it must be established The Letter of Credit must be confirmed (if funded by Nigeria government) or make operative through issuance of special commitment if World chamfer financed contract or garner of guaranty if AfDB financed contract The employer must write a earn conveying the effectiveness to the contractor Letter of Credit Letters of Credit are g uided by universal utilisation practice established by internationalistic Chamber of commerce and Industry base in Paris, France. It provides condition to enable parties to contract of sale living in disparate countries to make and receive payment for goods supplied.It start with a vernacular in the buyers untaught (opening rim) opening direct communication with some other bank in the seller arena (advising bank), through a correspondence bank (usually the negotiating bank). The opening bank will open either an sealed Letter of recognize or a revocable letter of credit depending on the circumstance of the transaction. It is irrevocable because once established neither of the party can cancel it unilaterally earlier the expiration of the grimness. Letter of Credit is say to be confirmed if in accompaniment to the confirmation of the opening bank, another bank (say the negotiating bank also add its confirmation). under(a) LC for contracts financed by World stick, LCs are irrevocable but are unconfirmed. They are make operational when a special commitment is issued on it by World Bank. Inco legal injury 2000Incoterms means internationalist Commercial price published by International house of Commerce (ICC), Headquarter in Paris. Incoterms was created in 1936 by ICC to facilitate international trade by providing uniform interpretation of trade terms. Incoterms are regularly updated to keep pace with developments in international trade. The latest is incoterms 2000. The scope of incoterms is limit to rights &038 obligations of parties to contract of sales as it relates to deli precise of tangible goods. For example under the C terms, the Seller fulfils his obligation upon the shipment of goods. at a time the good are shipped by the seller, under the C terms the buyer is induce to receive the goods.The following are the various incoterms chemical group E Departure school school textbook editionlist-item Group E Main saunterer unpaid tex tlist-item textlist-item Group C Main Carriage compensable textlist-item textlist-item textlist-item textlist-item Group D Arrival textlist-item textlist-item textlist-item textlist-item textlist-item wrong of Payment There are terms of payment for various contracts. Terms of payment are usually specified in the bidding document or request for proposal (RFP). below a project financed by credit from the World Bank, the following terms shall apply as follows Schedule 1-Plant &038 Equipment from Abroad textlist-item textlist-item textlist-item Schedule 2-Plant &038 Equipment from Employers Country textlist-item textlist-item textlist-item Schedule 3-Local loony toons textlist-item textlist-item Schedule 4-Installation Service textlist-item textlist-item textlist-item all(prenominal) payment must be made 45 years from submission of billhook and invoice not paid more than 60 days will disembowel interest. Role of Project Manager and Contractors articulation Project Manager The c ontractor must be notified of the Project Manager in penning. The Project Manager shall act and represent the employer at times during the well-groundedity of the contract. He shall oblige all instructions, notices, orders, presents etc. He shall give approval and receives notices, instructions, information on behalf of the employer. Contractors Representative The employer must be notified in writing with his CV attached.Contractor legate must be approved by employer. The contractors representative act and represent the contractor at all time during the validity of the contract, He received all instructions, notices, orders, certificates, approvals and communications. The contractor representative issues all notices, instructions, information and other communications on behalf of the contractor Monitoring and Evaluation Monitoring and Evaluation is an basically part of contract brass instrument. It is usually performed by project manager. Project Manager approves all designs and drawings for supply &038 installations contract etc. The project manager inspects &038 issue acceptance certificate before shipment.Proper monitoring ensures potential difference scraps are averted Invoicing and Payments Contractors and employers are partners. The contractors deport goods/services or works required by the employer while the contractor want money from the employer. Contract won under international competitive bidding process give world-wide, most competitive price to the employer. Issuance of invoices and demand for payment is an obligation of the contractor while the employer has responsibility to pay for goods delivered and or services and works performed by the contractor. The format of invoicing and works certification should be worked out early to avoid employment of penalization clause. Progress MeetingsProgress meeting is necessary aspect of large and complex contracts which takes agelong time to complete. Progress meetings are held at regular interva ls. It is usually held to monitor the arm of the contract implementation. At such meeting contract implementation progress are discussed and compared with the contract implementation schedule. Implementation problems are also discussed with a view of firmness them. The objective is to ensure that the contract will be end with requisite quality, on time and within budget. Some determine Contract Administration Problems in Nigeria institutional problems like contracts enforcement and prolonged court procedures are serious impediment to smooth contract administration.Other common contract administration problems are Contracts entered into with parties having little understanding of the contract terms. Ccontracts seen as ways of dispensing favours. Therefore, little upkeep is paid to qualification. Contractors in some cases do not employ qualified personnel to manage and execute contracts. It usually takes unnecessarily long time to issue ample Bonds and Insurances for the execut ion of contracts, due to stringent conditions. little monitoring by employers also affects smooth contract implementation. A common contract administration problem that has become very visible especially in Nigeria index number Sector is losing out other partners in JV or Consortium accordance Delay in making payment to the contractors due to inadequate budgetary provisions Employment of unqualified or bungling sub-contractors Delays in opening LCs and extension service of LCs &038 Form M. Misapplication of topic of advance payment by contractors repugn in the interpretation of contract terms Delay in issuing Duties and bath exemptions certificate conveyance Difficulties in unclutter goods in the ports and the poor state of the nation infrastructure Inconsistency in government policies and turpitude of government officials Avoiding brawl in contract implementation The best dispute resolution method is not to have disputed at all. However, if there is a dispute direct negot iations between the parties at an early stage could be helpful.If no solution is found through direct negotiation, establish in a letter the facts of which constitute the breach of contract to emphasis the problem on the issue under dispute In united state an alternative dispute resolution technique called partnering technique is being employed. Partnering starts with a shop usually during the kick off meeting where expectations of parties (contractor and employer) are discussed and harmonised. A partnering agreement or charter is signed by the parties. Employer and contractor are expected to encourage their staff to achieve the charter. In some cases the employer and the contractor share offices in the spirit of the partnering. scrap Resolution AdjudicationOnce a dispute cannot be resolved mutually between the parties, it can be referred to adjudicator by either party in writing with a copy to the other party. The adjudicator shall give his finding in writing to both parties. The stopping point of the adjudicator is not final. The name of the adjudicator and his CV is usually included in the bidding document. If a bidder has problem with a suggested adjudicator, he must indicate so in writing and suggest another adjudicator which must be accepted by the employer. arbitrament If either of the party is displease with the decision of the adjudicator, the dissatisfied party can write to the arbitrator. all party may give the other notice to commence arbitration. The ddecision of arbitration are final and binding on all parties Arbitration CourtsThe Court of Arbitration of International Chamber of Commerce (Paris) is the most popular arbitration institute in the World. Other are London Court of Arbitration and tout ensembleied Professional Society The American Arbitration Association in United State of American Arbitration plant of Stockholm Chamber of Commerce found in Sweden. United Nations Commission on International Trade Law (UNCITRAL) UN Intern ational Centre for Settlement of Investment Dispute (ICSID)- WB Change Orders and Price Adjustments Contracts are base on plans, designs, specification and quantities which are best estimates. Field conditions, revisions to original plan could cause the scope of the contract to modify.Revisions caused by qualifyings in expectation and technology may require variegate order. A miscellany order is request for a throw in the scope of a contract. It may be requested by either party to a contract. A change order signed by all the parties have the same authority as the original contract. For contracts financed by World Bank, change order is applied to changes in contract that is more than 5% of the contract sum. Under the World Bank procurement system, contract which exceed 18 months period should have provision for price adjustment. Contract most Out Contract close out begins when the contract has been physically complete, i. e. all services have been performed and products delive red.Close out is completed when all administrative actions have been completed, all disputes settled, and final payment have been made. Materials and equipment to be handed over properly receipted. Contract close out is as beta as contract award and contract monitoring. A check list of all services, products, etc. to be delivered in the contract should be kept in the contract file. Governance Fraud, turpitude &038 Conflict of divert Conflict of interest refers to a piazza in which procurement official assess tenders involving companies in which they have direct or indirect interest. Fraud on the other hand includes misrepresentation or excision of facts to check a procurement process or the execution of contract.It also includes secret approval among bidders. corruption include offering, giving, receiving or soliciting now or indirectly of anything of value to influence the action of a public official in the procurement process or contract execution. Governance Identificati on of decadence Some red flags in procurement process that indicate possibility of corruption include the following Poor personality keeping Deviations from procedures without written justification indisposed defined roles/responsibilities Absence of good intimate control system Red flags can be exhibited by individuals involve in procurement and contract administration as follows Extravagant lifestyle high-spirited fundamental interaction with supplier(s) and contractors Too much secrecy faltering to delegate duties Keeping contact with certain suppliers exclusively Some red flags in a particular procuring entity are evermore the same suppliers competing &038 wining Reluctance of established supplier and contractors to bid for contracts in an entity Some red flags in contract administration Excessive cost overruns Excessive numbers of change orders (increasing cost) Payment of frivolous claims Governance Corruption Contributing Factors&038 Known Signals Lack of competitive en vironment Lack of trained &038 fitted procurement staff Widespread need of trust &038 job securitypermissive environment (no sanctions after established cases of dupery and corruption) Lack of good mechanism for handling protest &038 delays Known signals textlist-item textlist-item textlist-item textlist-item Case convey Case 1 An employer invited bid for the supply of one X-ray machine for the main hospital for delivery one month ex-stock within 2 months of Letter of Credit. In the bidding document, bidders were asked to quote price on CIP capital city by air in US dollars. Bidders were provided 60 days to submit bids. Six bids were opened publicly. All except one bidder quoted the price as solicited. One bidder quoted the price in French Francs.In its evaluation the employer rejected the bid as it did not comply with the notes provision. The employer proposed to award the contract to the concluding bidder as all the other bid are responsive. The contract will be financed und er a credit from World Bank and the rejected bidder protested to the World Bank on the ground that World Bank permitted bids from any member country and currency and his bid was in fact the lowest. What should the World Bank do and Why? Case 2 In an agricultural project, an employer presented papers relating to an advance procurement of two bulldozers for World Bank financing retroactively. The employer/borrower claimed to have followed the World Bank ICB procedures.On review, it was noted that the General Procurement watch (GPN) and Specific Procurement Notice (SPN) were issued, adequate time provided for the bidding, there was good response and award had been made to the lowest bidder. The only short-coming was the bids were opened by a government committee without inviting the bidder representative. Is the process valid under this circumstance? Case 3 You are the chairman of public procurement administrative review commission. A project includes the procurement of 10 tracks Doze rs and excavators to be procured under a single package. The specifications stated the tracks should be powered by an engine with a minimum of 175 horsepower (SAE) at a rated RPM. Firm A offered its dozers with a 165HP. In the evaluation the committee call for the deviation as minor and awarded the contract to Firm A. Firm B