by Tony Akowe,
Stakeholders in the public procurement sector have voiced their opposition to a proposed amendment to the Public Procurement Act, which seeks to penalise contractors for delays or abandonment of awarded projects.
Dr. Adebowale Adedokun, Director General of the Bureau for Public Procurement (BPP), and his predecessor, Emeka Ezeh, argued before the House of Representatives Committee on Public Procurement that the amendment was unnecessary.
They emphasized that provisions for addressing such issues are already included in contractual agreements.
Dr. Adedokun highlighted the objectives of the existing Public Procurement Act of 2007, which harmonised government policies and practices, established regulatory standards, and developed a legal framework to ensure competition and transparency in public procurement processes.
The stakeholders urged the committee to focus on enforcing the current provisions rather than introducing new amendments, stressing that the existing law is sufficient to address contractor-related issues.
He said: “The intending amendment seeks to sanction contractors who delay in completion of contract within a stipulated time. This sanction globally is generally included in the conditions of the contract and it is outside the intendment of the PPA. The Public Procurement Act does not regulate contract implementation rather the standard condition of contract and contract of agreement regulates whatever transpires after a validly awarded contract.
“In this regard, the clauses in the contract agreement prescribing sanctions for contractors as Included in the Bureau’s Standard Bidding Documents should suffice. Therefore, the proposal to incorporate contract implementation procedures into the Public Procurement Act is overbearing and will negate the intentions of its establishment.
“The Bureau, as the regulatory body and by the powers conferred on it by the Act, has issued Standard Bidding Documents and Standard Conditions of Contract, which are of global standards and have already catered penalty for erring contractors.
“The Bureau, therefore recommends that the Committee should rather help in the proper implementation and enforcement of the existing laws by ensuring that funds for contracts awarded should be provided as and when due. This is because the solution the amendment intends to provide is not a matter of law but rather of implementation, as a procuring entity that fails to release funds to a contractor for the timely completion of a project, will be guilty of the contractor’s delay in completion of the project.
“In view of the above, the Bureau respectfully request the committee to reconsider the amendment and seeks the Parliament’s support for proper implementation of the Public Procurement Act to enhance efficiency in the public Procurement space in Nigeria”.
The immediate past Director General of BPP, Emeka Ezeh also argued that even though the amendment of the proposed amendment on the surface seems noble and well-meaning, it appeared focused on addressing an effect rather than the cause of an obvious challenge in our contracting environment.
He said: “I would rather advise that the challenge be seen from a holistic picture Starting from needs assessment to projects design/preparation/projects scoping through adequate budgetary provision to procurement process (selection of contractor) to contract execution( project implementation).
“The proposed amendment tends to focus on the last leg of the project delivery chain which is a contract management issue not usually covered by public procurement legislation. However, a project can be compromised at any of the stages leading to a delay in completion.
“For instance, if a need is not well articulated, the solution provided by the project could lead to the risk of abandonment or if the design was not competently done or due to time constraints detailed feasibility/engineering designs were not done, at the stage of implementation, issues of variations/augmentations could arise.
“In the same vein, if during procurement, an incompetent contractor is selected due to abuse in the application of relevant guidelines, the project is destined to be at risk of delays.
“Again, even if there were no risks up to contract award which is what the proposed amendment assumes, a project could be delayed due to nonpayment as and when due or due to new government fiscal policies that could impact on the cost of the project. The delays in adjusting the contract sum to align with such policies could pose a risk to the project.
“More importantly, the ill the amendment intends to cure is adequately contained as a standard provision in our standard conditions of contract. For every major project, this is part of the conditions of the contract.
“Any engineer or Quantity Surveyor or Architect worth his certificate knows this. Professionally, it is called “liquidated damage” —which is a penalty imposed on a contractor subject to a maximum of 5%, usually for the delay in completing a part or all of a project in line with the program of work except if the delay is due to force majeure or an extension of time duly granted by the employer through the engineer”.
Chairman of the House Committee on Public Procurement, Nyime Idem said one mischief that has plagued the public procurement space in the country is the practice by contractors to delay projections unduly, intentionally, and without any fear of sanctions, adding that this mischief is driven by several factors, including incompetence of the contractors, non – prioritization of Federal Government projects, intention to apply for price variation, bad faith, compromise, absence of patriotism, economic sabotage, corruption, among others.
He said members of the House have studied the difference in culture and approach in other jurisdictions when it comes to the issue of executing government projects, citing Egypt where contractors are required to work both day and night and all through the week as an example.
According to him, through that practice, project time is reduced by about 50% to 60%, and a project that should ordinarily take 24 months may take 12 months or less, while in Nigeria, a project that should take 12 months may take a minimum of 5 to 6 years, with the chances of such projects being abandoned standing at about 70% to 75%.
In addition, over 90% of capital projects are eventually subjected to requests for variation, which in part is driven by the issue of delay and poor project management that results in increased costs, driven by factors like inflation and devaluation.
He said: “While a contractor may argue that inflation and devaluation may impact its costs, it is expected that each contractor must have shown enough financial capacity, which would have contributed to the award of the contract. It is therefore expected that the contractor should deploy the best project management practice by purchasing materials upfront and locking down prices, if possible.
“I must also add that this culture of project delays preceded the current problem of inflation and devaluation. Hence, it is a problem that we now must address from a legislative perspective. The instant problem impacts governance in Nigeria and has affected our ability to deliver the dividends of democracy to the Nigerian people. We as legislators engage with our constituents, who are at the grassroots level, and when we are confronted with the issue of delayed and/or abandoned projects, we struggle to find answers and explanations”.