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TRAINING ON ENTRENCHING INTEGRITY IN THE PROCUREMENT PROCESS OF TERTIARY INSTITUTIONS Organised By ANTI-CORRUPTION ACADEMY OF NIGERIA (ACAN). UNDERSTANDING CORRUPTION RISK IN PUBLIC PROCUREMENT PROCESS IN TERTIARY INSTITUTIONS by Emeka M. Ezeh, OFR Director-General BPP
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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
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
HIGHLIGHTS (cont’d) • Corruption Prevention Strategies • Prior Reviews • Post Review (Procurement Audits) • Administrative Reviews • Whistle Blowing • Capacity Building • Independent Observers • Code of Conduct • Offences • Penalties for Violators
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.
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.
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.
Contractor influences project to suit him/or product Project conception Consultant over designs or designs to suit a particular product or contractors’ technology. Project Design Contractors/consultants lobby NASS to over appropriate funds. Project Admitted into National Budget Consultant manipulates figures/documents/process to suit a pre-arranged outcome usually with connivance MDA. Project Implementation (Pre-Contract Stage) Contractors delivers poor quality job, consultant looks the other way, quality overstated, Consultant/contractor/MDA colludes. Project Execution Auditor confirms project completed. Auditor admitted into the chain. Project Completion Consultants, contractor, MDA all happy, project delivered at high cost when good, poor quality of work, value for money lost, Nigeria loses. OUTCOME: Corruption CHAIN OF CORRUPTION
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.
Corrupt Practises identified in the award of contracts in the USSR (cont’d) • 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.
Corrupt Practises identified in the award of contracts in the USSR (cont’d) • 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.
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.
Corruption Risk Issues (cont’d) 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
Corruption Risk Issues (cont’d) Pre – Bid Stage • Needs Assessment • Procurement Planning • Budgetary Allocation • Preparation of Solicitation Documents
Corruption Risk Issues (cont’d) 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
Corruption Risk Issues (cont’d) 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)
Corruption Risk Issues (cont’d) 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.
Corruption Risk Issues (cont’d) Bidding Stage • Advertisement • Bid Collection and Submission • Bid Examination and Evaluation • Approvals • Award
Corruption Risk Issues (cont’d) 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.
Corruption Risk Issues (cont’d) 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.
Corruption Risk Issues (cont’d) 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
Corruption Risk Issues (cont’d) 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
Corruption Risk Issues (cont’d) 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 (Consultant’s)estimates to bidders. • Award not recommend to least evaluated responsive bidder but rather use of % deviation from in-house (Consultant’s)estimates as basis of recommendation for award
Corruption Risk Issues (cont’d) 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
Corruption Risk Issues (cont’d) 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
Corruption Risk Issues (cont’d) 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.
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.
Strategies for Prevention of Corruption in Public Procurement (cont’d) • Prior Review • Post Review (Procurement Audits) • Administrative Review • Whistle Blowing • Role of Independent Observers • Capacity Building of Procurement Officers
Strategies for Prevention of Corruption in Public Procurement (cont’d) 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.
Strategies for Prevention of Corruption in Public Procurement (cont’d) Prior Reviews (cont’d) • 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
Strategies for Prevention of Corruption in Public Procurement (cont’d) 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.
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.
Strategies for Prevention of Corruption in Public Procurement (contd’) Administrative Review (cont’d) • 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 infractionsto 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.
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.
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.
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.
CODE OF CONDUCT CONT’D (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.
CODE OF CONDUCT CONT’D (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.
CODE OF CONDUCT CONT’D (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
CODE OF CONDUCT CONT’D (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
CODE OF CONDUCT CONT’D (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.
CODE OF CONDUCT CONT’D (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 ;
CODE OF CONDUCT CONT’D (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
CODE OF CONDUCT CONT’D (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
OFFENCES (PART XII) • Bid Rigging:– pre-arrangement of offers where winners have been predetermined • Collusion • Splitting of contracts • Using fake documents like TCC, etc.
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.