PROCUREMENT OVERVIEW

PUBLIC PROCUREMENT REFORM IN NIGERIA

At the Inception of democratic Government in 1999, the Federal Government observed that
contract award system lacked the required competition and transparency. Consequently, the
World Bank was commissioned in 1999 to undertake a Country Procurement Assessment Review
(CPAR). The CPAR report revealed that 60 kobo was lost to unethical practices out of every
N1.00K spent by the Government.

Some Key Problems Identified by the World Bank amongst others was:

i. Lack of competition and transparency in project procurement leading to high cost of

projects and loss of confidence in Government by the public.
ii. Non publication of contract opportunities.
iii. Non-disclosure of rules to be used in the selection process.
iv. Lack of qualified Procurement Specialists to conduct and manage procurement process.
v. Lack of standard Bidding Documents

As a result of the aforementioned, carelessness become the order of the day giving rise to:

-Contract Splitting-division of a major piece of procurement into a number of smaller contracts in

order to avoid evade threshold.

Collusion between bidders-this is an illegal practice wherein some bidders secretly agree on the
prices to bid in order to favour a particular bidder or for collective interest.

Conflict of Interest was dominant and unchecked.

Abandoned Project.

Decreased valued-for-money.

Used of Inferior/ sub-standard materials in public procurement.

COUNTRY PROCUREMENT ASSESSMENT REVIEW (CPAR) RECOMMENDATION

The CPAR report made the following recommendation

i. Enactment of a Procurement Law to underpin the reforms being proposed

ii. The establishment of a Public Procurement Commission to be vested with oversight
responsibilities for Public Procurement
iii. The revision of key areas of the Financial Regulations to make them more transparent
iv. A complete restructuring of the Tender Boards and approval procedures for contracts
v. Building procurement capacity in the public sector through restoration of professionalism in
procurement and intensive training of procurement staff.

As a result of the foregoing, Government decided in 2001 to set up the Budget and Price
Intelligence Unit (BMPIU) to mitigate these corrupt practices. The desire to institutionalize the
operations of BMPIU and also implement the CPAR recommendation gave rise to promulgation of
the Public Procurement Act which was signed into law on June 4,2007.

WHAT IS PUBLIC PROCUREMENT

The Public Procurement Act, 2007 defines Public Procurement as the acquisition by any means of
goods, works or services by the government.

It has further be defined as the use of public fund by public entities for the delivery of Public
goods, works and services usually through a third party otherwise known as contractor. It
encompasses a sequence of related activities starting with needs assessment through to award of
contract, management and then final payment-Section 60 of PPA, 2007 and Amendments in
Finance Act,2020.

PUBLIC PROCUREMENT AT A GLANCE

For a process to be termed as procurement it must follow the following steps:

Step 1-Procurement Plan driven by Needs Assessment

Step 2-Adequate Appropriation

Step 3-Advertisement

Step 4-Transparent Prequalification/Tender

Step 5-Bid Submission/Opening

Step 6-Bid Evaluation-Technical and Financial

Step 7-Approval-Tenders Board/Federal Executive Council

Step 8-Contract Award/Signing of Agreement

Step 9-Project Implementation

PRINCIPLES OF PUBLIC PROCUREMENT

COMPETITION:
This has to do with elimination of unnecessary barriers to competition like discriminatory
specification, publication of contract opportunities and provision of level playing field to bidders
by disclosing relevant information. This is in tandem with the provision of section 24 of the Public
Procurement Act, 2007which provides that "except as provided by this Act, all procurement of
goods,and works by all procuring entities shall be conducted by open competitive bidding".

TRANSPARENCY:

Procurement must be carried out in a manner that is open ensuring accountability and in
conformity with the law. Examples of steps and process that are put in place to engender
transparency include:

a. Open and competitive bidding;

b. Public Opening of bid;

c. Transparent Evaluation;

d. Participation of NGOs and CSOs on Procurement Process;

e. Publication of Award; etc.

VALUE FOR MONEY/ECONOMY:

This is the achievement of a desired procurement outcome at the best possible price based on a
balanced judgment of financial and non-financial factors relevant to the procurement. This means
that Value for Money is not about achieving the lowest price, it about getting optimum
combination of whole life cost and quality.

Before, it was viewed as getting the right quality, in the right quantity, at the right price. This view
has however, been updated to obtaining better quality of goods and services in more suitable
quantities just in time, from better suppliers at prices that continue to improve.

EFFICIENCY:

Efficiency as a principle in procurement means optimal deployment of resources like time, money
and human in procurement process. It targets to minimize waste and unnecessary cost while
maintaining quality standards and compliance with relevant laws.

OTHER THINGS TO NOTE ABOUT PUBLIC PROCUREMENT

i. Evaluation criteria must not be changed mid-way

ii. Procurement must not be formalized until funds are available to meet obligation. However,
the Bottom-Up Cash Management Policy of the Government may have modified this provision.
iii. There must be prior disclosure of all the rules
iv. Prior determination and publication of how offer will be considered etc.

STAGES OF PUBLIC PROCUREMENT

There are three (3) stages in Public Procurement, there are:

i. Pre Bid Stage-This covers a series of activities by procuring entities undertake prior to
launching of tender or solicitation for bid. It includes activities like needs assessment, budgeting,
procurement planning, Market survey etc.
ii. Bidding Stage- This stage occurs with the publication or issue of solicitation document. It
covers series of activities among which are issue and receipt of bidding documents, preparation
for bid evaluation including constituting the Evaluation Committee, bid opening etc.
iii. Post Bidding Stage-This phase begins after submission and includes evaluation, seeking and
getting necessary approvals, negotiations debriefing, award, contract management etc.

DRIVERS OF PUBLIC PROCUREMENT

1. Accounting Officers

2. Tenders Board

3. Procurement Planning Committee

4. Procurement Officers

5. Contractors

6. Civil Society/Professional Bodies/Interested Public

7. Bureau of Public Procurement

8. ICPC,EFCC

ACCOUNTING OFFICERS

Accounting Officers are Officers of the Government saddled with the responsibilities of the day to
day running/management of the of MDAs -Procuring Entities

They are include:

Permanent Secretaries
Managing Directors

Director Generals

Executive Secretaries

Chairman/CEO etc.

FUNCTIONS OF THE ACCOUNTING OFFICERS

They are charged with line supervision of the conduct of all procurement process -Section 20, PPA
Act, 2007.

Responsible for the planning, organization, and evaluation of tenders; execution of all
procurements and in particular shall be responsible for:

Constituting Procurement Planning Committee and its decision; and

Approval of low-value procurement; etc.

PARASTATAL TENDERS BOARD

Section 22 (1) of the PPA 2007 provides for the establishment of the Tenders Board.

Composition of the Tenders' Board

The Accounting Officer shall be the Chairman of the Tenders Board.

Other Heads of Department within the Procuring Entity.

The Procurement Director of the Procuring Entity or his Representative shall be Secretary to the
Tenders' Board.

FUNCTIONS OF THE TENDERS' BOARD

The Tenders' Board shall be responsible for the award of procurements of goods, works and
services within the stipulated thresholds as contained in the procurement regulations from time
to time (Sections 17 and 22 of PPA Act, 2007).The decision of all Tender's Board shall be
confirmed respectively by the Political Heads of the procuring entities, provided that the Political
Heads are not the Chairman of the Tender's Board (Section 22 (5) Finance Act 2020).

Section 12 of Procurement Procedure Manual provides that all meetings shall be held in the
presence of the Secretary or his/her Alternate.

PROCUREMENT PLANNING COMMITTEE (PPC)

Section 21 (1) of PPA 2007; states that "for each financial year, each procuring entity shall
establish a Procurement Planning Committee". Section 21 (2) outlines the Composition of the
Committee.

PROCUREMENT OFFICERS

These are employee of Government (civil servants) in the procurement cadre who daily assist the
Accounting Officer carry out the procurement function in line with the provisions of the PPA
2007.

CONTRACTORS

According to the Act, a Contractor is any potential party to a procurement contract with the
procuring entity and includes any corporation, partnership, individual, sole proprietor, joint stock
Company, Joint Venture or any other legal entity through which business is conducted.

In other words he is that third party through whom public entities usually use to deliver Public
goods, works and services using public fund.

CIVIL SOCIETY/PROFESSIONAL BODIES/INTERESTED PUBLIC

These are interested stakeholders in public procurement whose interest is not pecuniary. They
act as watch dogs of public procurement - section 19 of PPA 2007 mandates procuring entities in
implementing its procurement plan to solicit for bids and to invite two credible persons as
observers. They are to represent Private Sector professional organization whose expertise is
relevant to the subject procurement and non-Governmental Organization working in transparent,
accountability and anti-corruption areas.

Civil Society and professional Bodies are members of the National Council on Public Procurement
(Section1 of the PPA2007).

BUREAU OF PUBLIC PROCUREMENT (BPP)

BPP is established by section 3 of the PPA. The Bureau harmonizes existing Government policies
and practices on public procurement; ensure application of fair, competitive, transparent
standards in procurement and disposal of public assets and services.

Their functions and powers are clearly provided for in sections 5 and 6 of the PPA respectively.

ICPC,EFCC

Let's discuss

SOME EXPECTATIONS FROM PROCURING ENTITIES

PROCUREMENT RECORD

Documentation is very essential in procurement. It must be comprehensible and systematic. See

Section 26 PPA 2007.

Procurement records both file and electronic shall be maintained for 10years from the date of
award by the Procuring entities-Section 16 (12) PPA 2007

Records are to be sent to the BPP not later than 3 months after the end of the financial year

None submission of record could be a reason for denying or delaying PE's request for approvals
from the BPP.

SOME SANCTION THAT COULD BE ATTRACTED FOR BREACH OF THE PPA 2007

i. Debarring the Contractor involved for a term as be specified in the Regulation

ii. Suspension/Dismissal of Officer(s) concerned
iii. Replacement of Head of Procurement
iv. Discipline the Accounting Officer
v. Nullification of the whole or any part of the Procurement Process
vi. Jail term as prescribed in the Act

ADMINISTRATIVE REVIEW

Steps to take if a bidder is not satisfied with a procurement proceeding

i.Bidder-15 working days to write to MD stating complaints

ii.MD-15 working days to take a decision

iii.Bidder-10 working days to appeal to BPP if not satisfied with decision of MD

iv.BPP-21 working days to make a decision

V. Bidder-30 working days to appeal to Federal High Court if not satisfied with decision of BPP.

PROCUREMENT AT A GLANCE-STEP OF PROCUREMENT

NEEDS ASSESSMENT

This is the very first step to be taken in the spectrum of procurement activities.It is very crucial
when it comes to managing procurement and ensuring effective operation.

Needs Assessment simply put is mapping out or identifying what is needed/required for
procurement and why.
It is a systematic process for determining and addressing needs, or "gaps" between current
conditions and desired conditions or "want"(Wikipedia.org)

It is the process of analyzing the current inventory, identifying areas for improvement and cost-
saving opportunities, as well as understanding employee needs and preferences (Obolo).

REASONS FOR NEEDS ASSESSMENT

i. It helps you streamline and plan the procurement process

ii. It saves cost via aggregation of need
iii. It provides platform for informed decision
iv. It reduces/eliminates waste as only what is required is procured and in the right quantity
v. It helps in achieving the organizational goal
vi. It makes for judicious deployment and utilization of resources

NEEDS ASSESSMENT PROCESS

Needs assessment process consist of four steps; there are:

Identification: involves clearly defining why the assessment is needed by setting objectives

Data Collection and Analysis-this stage involves collecting the required data base on the
objectives and resources determined within the identification phase. In practice (among
Government MDAs) this data is usually requested from the "USER" Departments.

Utilization-this is where the data analysed above is used to create a plan of action and
implementation.

Evaluation - here the expected is that you evaluate plan against the objectives, i.e will the plan
when implemented take organization from its current to the desired condition thereby achieving
the organizational goal?

SPECIFICATION

As stated above, Needs Assessment is the mapping out or identification of what is needed. That
identification is however, not detailed enough as to communicate to the third party (the
contractor) who will eventually supply the product or undertake the assignment what actually is
required or needs to be done hence the need for more details, technically called specification.

DEFINTION

According to the Oxford Languages specification is a detailed description of the design and
materials used to make something.
A specification is a detailed description of the dimensions, construction, workmanship, materials
etc., of work done or to be done prepared by an architect, engineer etc., (Shorter Oxford English
Dictionary).

It is a set of documented requirements to be satisfied by a material,design, product or service

(Wikipedia).

TYPES OF SPECIFICATION

Specification can be divided into three types as follows:

i. Functional Specification-the most general and cover all aspects of the product. It describes
the requirement of a system or subsystem, the required functionality, desired performance
operability etc. It is not a design document.
ii. Technical Specification-this cover the features and performance of the product.
iii. Administrative Specification-covers things like packaging and labeling. Some others would
rather view specification in these two ways:
a. Attributes - relates to things such as the part, component or raw material.
b. Action - relates to things such as functions, processes, procedures, services, performance.

WHAT MAKE A GOOD SPECIFICATION

For any description to qualify as specification, it must be

i. Unambiguous - there should be only one way to interpret the requirements given by the
client.
ii. Verifiable-it should be possible to know by observation of the finished system/product that
the requirement has been met.
iii. Traceable - It should be possible to know where the specification originated. It a key
characteristic necessary to validate whether the requirement is correct.
iv. Complete-incomplete specification will most likely not deliver/lead to the desired outcome.

MARKET INTELLIGENCE

One of the things that good specification does for you is that it makes it easy for an estimate or
possible cost of the intended procurement to be made. This is usually done via Market
Intelligence as provided for in section 18 of the PPA 2007;which is one of the functions of the
PPC.

ADEQUATE APPRPRIATION
This is the next step procurement activities after Procurement Plan driven by Needs Assessment.
It is meant to ensure that the funds required for the procurement of the needs that have been
identified is duly provided for. This therefore takes us to Budget.

WHAT IS BUDGET

It is the process of calculating how much money you must earn or save during a particular period
of time, and of planning how you will spend it (dictionary.cambridge.org)

Budgeting is a systematic approach that predicts revenue and expenditure of an individual,

family, group, business entity or government (Wallstreetmojo Team)

A budget is a way to balance income, expense and financial goals for specific length of time
(Lauren Schwan).

A budget is a spending plan based on income and expenses. It is an estimate of how much money
you'll make and spend over a certain period of time such as a month year (NerdWallet)

TYPES OF BUDGET

Generally, budget can be classified into personal, corporate, government, static, flexible etc., but
the different types of budget are:

1.Recurrent Expenditure Budget-covers personnel and overhead

2. Capital Expenditure Budget

3. Revenue Budget

KINDS OF BUDGET

There are two kinds of budget; there are:

a. Budget Surplus; and

b. Budget Deficit.

BUDGETING METHOD

1.Increamental/Traditional Budgeting: Here the previous period's budget is taken as a

benchmark, and then anticipated percentage change is either summed up or deducted to
formulate the current budget.
2.ZERO-BASED BUDGETING (ZBB): In this method, all the figures are reset to zero, and the one
making the budget begins with fresh interpretation of all the items. Every new number has to be
justified with reason in contrast to using figures from the previous budget. This eradicates
expenditures that are no longer required.

3. ACTIVITY-BASED BUDGETING: Here operations or activities that generate cost to the entity are
identified and ways of reducing the cost strategized.

4. PARTICPATIVE BUDGETING: This is a bottom-up method of budgeting where inputs from

different levels are received and considered by the top Management.

5. NEGOTIATED BUDGETING: This has both top-down and bottom-up characteristics.

6. VALUE PROPOSITION BUDGETING: Every cost is re-evaluated and justified based on its impact.
Unnecessary expenses are eliminated.

MERITS OF BUDGETING

i. Helps attain short and long term financial goals

ii. Aid informed decision making-not made blindly.
iii. Avoid cash crunch
iv. Reduce Debt Exposure
v. Relieves Stress
vi. Reorganize Expenses

WHY ADEQUATE APPROPRIATION:

The Public Procurement Act 2007 section 16 (1) provides that subject to any exemption allowed
by this Act, all public procurement shall be conducted:

(a) subject to the prior review thresholds as may from time to time be set by the Bureau pursuant
to section 7(1) (a)-(b);

(b) based only on procurement plans supported by prior budgetary appropriations and no
Procurement proceedings shall be formalized until procuring entity has ensured that funds are
available to meet obligations...

However, the Bottom-Up Cash Management Policy of the Government may have modified the
aspect of having the funds before formalizing any procurement proceedings but the requirement
for procurement plans supported by prior budgetary appropriations remains sacrosanct.

PROCUREMENT PLANNING
1.0 WHAT IS PROCUREMENT?

Procurement is the use of public fund by public entities for the delivery of Public goods, works
and services usually through a third party otherwise known as contractor.

It encompasses a sequence of related activities starting with needs assessment through to award
of contract, management and then final payment-Section 60 of PPA, 2007 and Amendments in
Finance Act, 2020. This necessarily implies that, procurement is a process that involves different
steps requiring planning and management to be achieved.

2.0 WHAT IS PLANNING?

Plan/planning is a management tool that has come to affect every sphere of human life. For
instance, a housewife plans her domestic chores, a teacher his teaching, a student plans his
studies businessman his business, a farmer plans his farming activities even the Government plan.
The reason for this, is succulently captured by Abraham Lincoln, "if we could first know where we
are and from wither we are tending we could better judge what to do and how to do it".

It need be noted that, the need for planning cannot be overemphasized; like the economist will
tell us resources (money, timne, material and even human) are scarce and if not planned one is
bound to run a risk. Other factors that necessitate planning include fluctuation in demand,
growing competition, introduction of new products, changing technology etc.

3.0 SOME DEFINTIONS OF PLANNING

1. Planning is a psychological process of thinking and deciding in advance about what is to be

done. It is a menta activity, in which the manager decides about the goals to be achieved and
actions through which they are to be accomplished. It is futuristic in nature as it involves looking
ahead, along with analyzing and predicting the future.

2. Planning is a process of setting up of goals and objectives for a given a given period of time,
formulating alternatives for the course of action to be taken and finally deciding an appropriate
action from the various alternatives (Byjus.com).

3. Planning is the process of thinking regarding the activities required to achieve a desired goal. It
is based on foresight, the fundamental capacity for mental time travel (Wikipedia).

4. Planning is preparation for action. It is an endeavor to apply foresight to human activity which
is based on knowledge and research (Sp Shoaib Khan).
5. A plan is a statement by a person what he intends to do a certain thing by a certain means.
Planning is the process by which he develops that statement (Richard T. Cass).

6. Planning is the construction of an operating programme, comprehensive enough to cover all

phases of operations and detailed enough that specific attention may be given to its fulfillment in
controllable segments (James L.Pierce, Management Expert).

7. Planning is the thinking process, the organized foresight, the vision based on fact and
experience that is required for intelligent action (Alford and Beatty).

3.1 NOTE:

It should be noted that Planning is not an activity but a process that involves selection from
among many alternatives and for anything to qualify as a plan the following must be present.

i. Futuristic: It must be concerned with the future, looking ahead.

ii. Thinking and analysis of information
iii. Setting Objectives: The must be definite objective the plan is seeking to achieve.
iv. Time Period: The plan must be formulated for a definite time period
v. Formulating Alternatives for Course of Action - How the Plan is to be achieved: For
achievement of any objective there can be various alternative course of action. These alternatives
must be appropriately formulated/selected.
vi. Deciding a Course of Action: From the various available alternatives, the best one must be
decided/selected in order to achieve a better result.

4.0 TYPES OF PLAN

i. Ad hoc Plan
ii. Annual Plan
vii. Segmented Plan
iii. Comprehensive Plan
viii. Regional Plan
vii. National Plan
ix. Financial Plan
x. Material plan (How to manage/deploy resources)
viii. Business Plan
xi. Estate Plan
xii. Procurement Plan etc.

5.0 PROCUREMENT PLANNING

Procurement planning is the process of identifying and, consolidating requirements/needs

(Goods, Works and Service) and determining the timeframes for their procurement with the aim
of having them as and when they are required.

5.1 IMPORTANCE OR MERITS OF PROCUREMENT PLANNING

i. It provides direction.
ii. Limits scope of non-compliance with acceptable procurement procedure.
iii. Helps to ensure that the right items are being procured in the most cost-effective way
possible.
iv. It enhances transparency and predictability.
v. It facilitates the measurement of progress, efficiency and effectiveness.
vi. It ensures proper management of the treasury by spreading out annual procurement
activities consistent with the needs and resources available.
vii. It forestalls splitting of procurement to defeat the use of appropriate procurement method.
viii. It helps achieve economy of scale via aggregation of needs.
ix. It makes for risk mitigation.
x. It is a pre-requisite for successful implementation of projects.

5.2 CHALLENGES OR DEMERIT OF NOT HAVING A PROCUREMENT PLAN

i. Inaccurate needs assessment.

ii. Use of inappropriate procurement method and procedures.
iii. Delay in project implementation.
iv. Increase cost.
v. Inappropriate and inefficient procurement function.
vi. Lack of direction and predictability.
vii. Inadequate appropriation.
viii. Risk may abound as he who fails to plan, plans to fail.

6.0 WHEN DO YOU PLAN

Section 21 (1) of Public Procurement Act (PPA), 2007; states that "for each financial year, each
procuring entity shall establish a Procurement Planning Committee".

7.0 COMPOSITION OF THE PROCUREMENT PLANNING COMMITTEE (PPC)

Section 21 (2) outlines the Composition of the PPC as follows:

1. The Accounting Officer or his Representative Chairman;

2. Representative of:

a. Procurement Department Secretary;

b. Unit directly in need of the Procurement Member;

C. Financial Unit

d. Planning Research and Statistics Unit

e. Technical Personnel with expertise in the subject matter for each procurement "

f. Legal Unit
8.0 FUNCTIONS OF THE PPC

The functions of the PPC, pursuant to Section 18 of the PPA, 2007 includes:

(i) Preparing the needs assessment and evaluation

(ii) Identifying the goods, works or services required
(iii) Carrying appropriate market and statistical surveys and on that basis prepare analysis of

the cost implications of the proposed procurement

(iv) Aggregating its requirement whenever possible, both within the procurement entity and
between procuring entities, to obtain economy of scale and reduce procurement cost
(v) Ensuring that no reduction of values or splitting of procurement is carried out such as to
evade the use of appropriate procurement method
(vi) Prescribing any method for effecting the procurement subject to the necessary approval
(vii) Ensuring that the procuring entity functions stipulated shall be carried out by the
Procurement Planning Committee.