Enhanced capital budget implementation through Public Procurement Act

(By Victor Abel)

Research has shown that 80 per cent of higher-performing projects use competent project managers and 50 per cent of project failures is traced to poor (or no) project management such as bad estimates/deadlines, scope changes and poor resource planning. It is worthy of note that the failure of project implementation in Nigeria is not surprising as the nation has inadequate number of competent and certified project managers. And until capital projects are handled by competent project managers, failed projects and poor implementation will remain a talking point for a very long time to come.

NIGERIA has come a long way since inception of civilian rule in 1999. Right from the time of the Budget Monitoring and Price Intelligent Unit (BMPIU), to the enactment of the Public Procurement Act (PPA) and the establishment of the Bureau of Public Procurement (BPP), steady progress has been made in the area of procurement reforms despite the myriad of challenges.

Before the introduction of procurement reforms, Nigeria was reported to be losing 60 per cent of every sum spent in public procurement. This in essence meant that corruption was in vogue; value for money was lacking and needed infrastructure essential for development was unavailable. With the advent of procurement reforms, especially the enactment of the PPA in 2007, it has become imperative to continue to monitor, review and evaluate the implementation of the reform agenda to identify successes, best practices and challenges along the line. The PPA is so central to the economic revival of Nigeria to the extent that it regulates the capital component of the annual budget; and the annual budget is the most important economic tool for the transformation and the re-engineering of national life and securing of the well-being of the people. With the objectives of the PPA 2007 in mind (economy efficiency, competition, value for money, transparency), it becomes clear that Nigerian economy and its citizens’ standard of living is sure to be on the increase.

 The capital component of the annual budget is the hallmark of development for any country. This portion of the budget is divided into administrative capital (such as procurement of office equipment, cars, buses, computers, software etc) and developmental capital budget which deals with construction of roads, building and equipping of hospitals, schools, provision of water, etc. The administrative capital does not have a direct contribution to the well being of the citizens as this could be considered in the real sense as governance cost and does not contribute to development. The amount made available for developmental capital will determine the level of development to be witnessed within the fiscal year. This in turn has a direct contribution to the wellbeing and standard of living of the citizens.

 The 2013 budget which is pegged on Fiscal Consolidation with inclusive growth having a total aggregate expenditure of N4.987 trillion with capital budget recording 32.51 per cent and recurrent 47.84 per cent as amended by the National Assembly is indeed an improvement over last year’s budget that had 28.53 per cent and 71.47 per cent for capital and recurrent expenditure respectively.   Yes the capital budget increased to 32.51 per cent leaving 47.84 per cent to recurrent. This is just a figure and will mean nothing if not implemented to touch the lives of Nigerians. More action is needed than just an increase in figure. It is expected that the government should map out measures that are geared towards full implementation of this little portion provided for capital budget. The contract agreement signed between the President and his ministers should have measurable output indicators that will be used to assess their key performances in 2013.

 Now that the President has signed the budget into law, it is important for us to look into a key factor, which has always, to a large extent, hampered the implementation of the capital component of the budget. The capital component of the budget is procurement driven because everything about it is awarding of contracts. These contracts if well awarded and executed will bring the long-sought development that the country over the years has not had. The reverse has been the case in our country. The corrupt mind-set with which contracts are given out has denied Nigerians the dividends, as they say, of democracy. Contract award attracts the interest of all in government. Top on the list is the Executive Council of the Federation (EXCO). The EXCO has assumed powers not supported by any of the provisions of the PPA or any other law. The weekly meeting of the EXCO on Wednesdays, and sometimes bi-weekly, is dominated by a contract bazaar; contracts are awarded and it seems to be the dominant agenda item of every such meeting. No wonder the President has refused to inaugurate the National Council on Public Procurement as stipulated by the PPA.

 The procurement process seems not to be transparent as enshrined in the PPA. Most MDAs’ contracts awarding process is not done in the spirit of integrity.  Cases abound where contracts are awarded to contractors who are not qualified for the job because of political connections.  The portfolio contractors don’t even have any office.   Other evils are: Contracts are awarded at inflated prices. This contravenes the principle of economy as enshrined in the PPA. Civil Society Organisations are merely invited during bid opening, after that they are not involved in other procurement processes such as evaluation, selection of the qualified company/contractor, contract award etc. This makes the procurement process not to be transparent. Most MDAs do the other components of the procurement process behind closed doors.

It can be recalled that a 20-man Presidential Project Assessment Committee set up by the President in March 2010 came up with a report of 11,886 abandoned federal projects scattered across the country that would require N7.78 trillion to complete. The rub was the discovery by the panel that most of the contracts were riddled with corruption, with public officials at the highest levels colluding with contractors to plunder the treasury.    These fraudulent contracts have led to the incidents of poor and dilapidated roads, decrepit railway tracks, ill-equipped hospitals, schools, dams and a dire infrastructure deficit that keeps 70 per cent of Nigerians in poverty. The committee identified poor project management as one of the major features. They also reported in their findings that some of the projects did not have direct bearing on the peopl

To stop overloading specific contractors with more contracts than they can handle, the MDAs are required to take inventory of contracts already awarded to companies that do business with them and the level of completion of those contracts. If this information is not available with the MDAs, it can be sourced from the Bureau of Public Procurement.  If funds have been released and the delays in contract execution are from the contractor, then there is no reason awarding further contract to a company that lacks the capacity to perform. The MDAs should not use public resources to reward suboptimal performance.

 Research has shown that 80 per cent of higher-performing projects use competent project managers and 50 per cent of project failures is traced to poor (or no) project management such as bad estimates/deadlines, scope changes and poor resource planning.

 It is worthy of note that the failure of project implementation in Nigeria is not surprising as the nation has inadequate number of competent and certified project managers. And until capital projects are handled by competent project managers, failed projects and poor implementation will remain a talking point for a very long time to come. There is therefore a call for the BPP to use the PPA to ensure adequate implementation of the capital component of the budget by ensuring strict adherence to Public Procurement Act. Other important steps that should be taken to maximise the capital budget by the BPP include the BPP not stopping at procurement but moving ahead to monitor contracts awarded to ensure Nigerians get value for their money.

BPP rules and standard documents should be revised to ensure that procurement process is used to support National Economic Growth and Development under an objective “Buy Made in Nigeria Products” policy. This should be applied where appropriate, based on minimum national standards of goods, works, and services specified by the BPP in collaboration with Standard Organisation of Nigeria, Consumer Protection Council etc. Civil societies should build up a high spirit in procurement issues such as bid observatory, procurement monitoring, contract execution monitoring etc. There should be uncompromising adherence to the time frame on bid invitation. Advertisements should be published as required by the law and Adoption of Project Management Strategic (project initiation, design, implementation, control and completion).

This is the time for MDAs to prepare their procurement plans and get them approved by the Bureau of Public Procurement in readiness for the commencement of capital budget implementation. It is also the time for the Bureau to organise the procurement planning workshops for MDAs. The BPP should ensure that contracts are not awarded on preliminary designs, which will lead to requests for cost and time overruns in the future. The regulations should make this clear and sanctions provided against officers of MDAs who present preliminary designs as the final designs. If contract awards are delayed for no apparent reason, the accounting officer of the MDA should be called upon to explain the circumstances surrounding the tardiness. If the explanations are unsatisfactory, then sanctions must follow that breach of public trust. MDAs have no discretion to exercise on the implementation of projects contained in the Appropriation Act, which in the first place, emanated from their request to the legislature. Apparently, sanctions have not been used in the procurement process to ensure that laid down rules and regulations are followed to the letter

Finally, Nigerians in general should show more interest in budget/contract tracking, monitoring and public procurements, ask questions, litigate issues, demonstrate and rally on the streets to ensure that the small percentage provided for capital development is fully utilised.

  • Abel wrote from Centre for Social Justice, Abuja.

“Opinion pieces of this sort published on RISE Networks are those of the original authors and do not in anyway represent the thoughts, beliefs and ideas of RISE Networks.”

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