programme final report - sparc nigeria · lagos state public procurement agency (lasppa) as the...

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Scriptoria Communications

Report 1 – May 5 2009

SPARC Template

Report on Lagos Procurement Law sensitization programme Final Report

March 2012

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The opinions expressed in this report are those of the authors and do not necessarily represent the views of the Department for International Development

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Contents

Abbreviations and Acronyms

Executive Summary

Section One: Introduction and Background ............................................................................. 1

Objectives of the Assignment ................................................................................................ 1

Scope of Work ........................................................................................................................ 1

Approach and Methodology Adopted ................................................................................... 1

Overview of the Assignment .................................................................................................. 2

Section Two: Issues Arising ....................................................................................................... 5

Conclusions ............................................................................................................................ 5

Recommendations ................................................................................................................. 6

Further consultancy support ................................................................................................. 6

Section Three: Lessons Learned................................................................................................ 9

Annex One: Presentation and Overview of the Lagos State Public Procurement Law ........ 11

Annex Two Review of Lagos State Public Procurement Law ................................................. 27

Annex Three: Five Day Training Programme in Public Procurement .................................... 33

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Abbreviations and Acronyms

CSO Civil Society Organizations

FGN Federal Government of Nigeria

GDP Gross Domestic Product

HOD Head of Department

ICB International Competitive Bidding

LASG Lagos State Government

LASPPA Lagos State Public Procurement Agency

LCDA Local Council Development Area

LGA Local Government Area

MDA Ministries, Departments and Agencies

NCB National Competitive Bidding

SBD Standard Bidding Documentation

SME Small and Medium Enterprise

SPARC State Partnership for Accountability, Responsiveness and Capability

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Executive Summary

The assignment prepared material for and delivered a series of 10 workshops designed to sensitize key stakeholders about the main provisions of the Lagos State Public Procurement Law and the changes it requires to public procurement practices. The Law has also been reviewed to identify errors and clearly needed improvements, without raising policy issues, with a view to these changes being introduced at an appropriate opportunity, to ensure that there is clear authority for the procedures to be followed and the authority of the Lagos State Public Procurement Agency is not in doubt. As it is important that this basic sensitization programme should be followed by detailed training for the procurement cadre, the content of a 5-day training programme has been developed for future use.

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Section One: Introduction and Background

The Lagos State Government (LASG) passed a Law to Establish the Lagos State Public Procurement Agency and for Connected Purposes in October 2011. The Law establishes the Lagos State Public Procurement Agency (LASPPA) as the regulatory authority for public procurement by Lagos State institutions and prescribes the principles and practices by which public procurement should be conducted. The Law will come into effect on 2 April, 2012. At the request of LASG, State Partnership for accountability, Responsiveness and Capability (SPARC) agreed to support a sensitization programme to raise awareness among key stakeholders about the key provisions of the Law and the changes it requires to public procurement practices. The World Bank also supported this programme.

Objectives of the Assignment The assignment formed part of the required outputs under LAG-PFM1-12-B. The specific outputs, as amended, are:

Framework and appropriate materials developed for procurement process sensitization;

Sensitization workshop for public officers delivered;

Report for sensitization sessions produced.

Scope of Work The assignment was carried out in Lagos from 19 February to 15 March 2012 by an international consultant, Mr. Nigel Shipman, who was engaged by WYG International, and a local consultant, Mr. Umolo Ugwah. A representative of the World Bank, Miss Abimbola Ogunseitan, Country Procurement Specialist, contributed to the programme and participated as a presenter at the sensitization workshops. The General Manager of the Lagos State Public Procurement Agency, Engineer Akin Onimole, oversaw arrangements for the workshops and also participated as a presenter. The scope and format of the sensitization programme was agreed at meetings between SPARC and Lagos State Government officials chaired by Mrs. Florence Oguntunwase, the Commissioner for Establishment, Training and Pensions, on 28 February and 2 March.

Approach and Methodology Adopted The sensitization programme was carried out over a series of 10 one-day workshops from 1-15 March, 2012, for the following target groups:

Accounting Officers (Permanent Secretaries, Heads of Agencies and Parastatal Organizations);

Procurement Officers in Ministries, Departments and Agencies and LGAs/LCDAs2 (2 workshops); these officers were not yet in post but held other posts within LASG and had responded to an invitation for expression of interest in transferring to the procurement cadre;

1 Public Financial Management

2 Local Government Areas/Local Council development Areas

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Directors in key spend MDAs3 (GL 15-17);

Business community (organized private sector, CSOs4, Chambers of Commerce, professional Bodies and prospective bidders);

State Executive Council;

LGA/LCDA Chairmen, Council managers and HOD5 (Works);

Professional cadres (GL 12-14) connected with procurement (Engineers, Quantity Surveyors, Architects, Doctors, Pharmacists) (2 workshops);

Special Advisers (non-cabinet rank) and Senior Special Assistants.

Overview of the Assignment The programme of workshops was advertised in the press and invitations were sent to key target groups, so each workshop was well attended. Attendance records are shown below.

Date Workshop Number of Participants

1/3/12 Accounting Officers 74

2/3/12 Procurement Officers (attended by those interested in transferring to the Procurement Cadre)

350

5/3/12 Procurement Officers (attended by those interested in transferring to the Procurement Cadre)

370

6/3/12 Directors 511

7/3/12 Business community 95

8/3/12 State Executive Council 31

9/3/12 LGA/LCDA Chairmen, Council managers and HOD (Works) 152

12/3/12 Professional cadres (GL 12-14) connected with procurement 400

13/3/12 Professional cadres (GL 12-14) connected with procurement 280

15/3/12 Special Advisers (non-cabinet rank) and Senior Special Assistants

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Total 2332

Thus, 2,332 persons, drawn from a wide range of public service ranks, together with business and community leaders, have been sensitized on the Law. A workshop for the House of Assembly had been planned for 14 March but had to be deferred until a later date.

LASG gave strong support to the programme. Mrs. Florence Oguntunwase, the Commissioner for Establishment, Training and Pensions, officiated at many of the sessions and delivered the welcome address and on other occasions Mrs Fulashade Jaji, the Permanent Secretary of the Ministry was present. Mrs. Lyabo Ubaro, Permanent Secretary, Ministry of Local Government Establishment and Pensions and Mrs Shade Adeboye of the

3 Ministries, Departments and Agencies

4 Civil Society Organizations

5 Head of Deparment

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Civil Service Pension Office were present at the workshop for LGA/LCDA Chairmen, Council managers and HOD (Works). A slide presentation entitled An Overview of the Lagos State Public Procurement Law was prepared by SPARC in consultation with the General Manager of the LASPPA (Annex One), covering the following main aspects of the Law:

Part 1: Background to the 2011 Law;

Part 2: LASPPA and Procurement Planning;

Part 3: Procurement Practice;

Part 4: E-Procurement, Contract Management, Offences, Business Community.

The presentation was varied to meet the needs of each group of participants, for example, the session for the business community focused on the rights and protections afforded to bidders under the Law, as well as on their obligations.

The aim of the workshop was to enable participants to:

Be aware of the purpose, principles, and key features of the Law;

Understand their roles and responsibilities and those of other key players in the public procurement process; and

Have a basis for more detailed training at a later stage.

The presenters were:

Miss Abimbola Ogunseitan, Country Procurement Specialist, World Bank;

Engineer Akin Onimole, General Manager, LASPPA;

Mr. Nigel Shipman, Consultant, SPARC; and

Mr. Umolo Ugwah, Consultant, SPARC.

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Section Two: Issues Arising

There were two question sessions in each workshop. Most of the questions sought elucidation on particular features of the law and how it would be applied.

The Law has similar features to the 2007 Federal Nigeria Public Procurement Act, 2007, which reflected key aspects of the UNCITRAL Model Procurement Law. In common with the procurement laws of most other African countries, it provides for decentralization of procurement practices but supported by central regulation, including an agency to enforce the application of the Law’s provisions. Most participants considered that the Law would improve the integrity of the public procurement system and deliver better value for money though, particularly at the workshop for the State Executive Council, some participants felt that the malpractices under the present system had been exaggerated. There was noted to be need for close cooperation with other regulatory agencies of Lagos State Government. Some participants expressed concern that, while the Bureau on Public Procurement had been established under the 2007 Act, the National Council on Public Procurement which was intended to direct the work of the Bureau, had not yet been established, and they expressed concern that the appointment of the Governing Board for the LASPPA might be similarly delayed, though the General Manager assured them that this would not be the case.

Some participants expressed concern about certain features of the Law, including the threshold for open competitive bidding being set at the unusually high sum of 100 million Naira. It was expected that this high threshold would lead to some 98% of procurements being below the threshold. It was explained that the Agency was empowered to make rules for the conduct of procurements below the threshold. Some participants felt that the provision in section 45(3) and (4) for the successful bidder to be notified before the approving authority has conferred approval for contract award would constrain the approving authority in performing its role to scrutinize the basis for award. Force account is an important element of local government contracting and there was interest in learning how this would be affected by the Law.

The business community were generally supportive of the Law in addressing some of the malpractices that they have faced when bidding for State Government contracts. It was explained that the provisions in the Law that contracts may not be made unless funds are available, together with the provision for interest on delayed payments, would improve the prospect of receiving due payments on time. Some participants pointed to the need to help start-up companies.

Conclusions The sensitization programme was carried out during the preparatory stage for implementation of the new Law. The General Manager of the LASPPA had been appointed but the staffing structure had not been determined and supporting posts had not been filled. The Governing Board of LASPPA had not yet been appointed. Nor was the procurement cadre in place in the various ministries and agencies of LASG, though steps had been taken with the support of SPARC to identify the staffing requirements of each organization’s Procurement Office and staff within LASG who would be interested in transferring to the procurement cadre.

The Law itself is quite brief and confined to establishing the broad principles and practices by which procurement should be carried out. There are various errors and clearly needed improvements to enable the Law to work effectively and a suggested list of amendments to be made when a suitable opportunity arises are at Annex Two. The detailed requirements

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are to be set out in various Regulations and Guidelines, none of which have yet been made. A detailed training programme would be needed once these Regulations and Guidelines are in place, preferably together with one or more manuals that would provide detailed guidance to the procurement cadre and other key stakeholders on the procedures and criteria to be followed in the course of their work. This is particularly important, as most of those transferring to the procurement cadre will not have previous experience of procurement work and there is danger of bad practices that are not in conformance with the new Law becoming established, particularly where there are no senior procurement staff to provide guidance and on-the-job coaching.

There are few qualified purchasing professionals in Lagos State, which partly explains the decision to fill procurement posts in LASG by the transfer of staff from other grades. The calibre of the transferred staff and their ability readily to understand the requirements of the Law and how it should be applied is unclear. The main interest of the potential transferees who attended the workshops for Procurement Officers was to learn about career opportunities in the procurement grade, the application procedure for transfer and the chances of success. Until decisions have been taken on who will transfer, it is difficult to arouse much interest in the Procurement Law.

Recommendations Following the sensitization programme, the following course of action is recommended:

The Governing Board of the LASPPA should be appointed, so that the Agency may act with necessary authority;

The staffing structure of the LASPPA should be finalized (SPARC has offered advice on the structure) and the posts filled by people of high calibre and skills in transformational development, so that the LASPPA has the resources to prepare the necessary materials and develop capacity in the Procurement Offices;

The Regulations and Guidelines that are specified in the Law should be made promptly, as without them a large part of the required procedures remains unclear. Some Regulations are required to be made within six months after enactment of the Law. The full set of requirements and advocated practices should then be set out in an explanatory manual that will be readily understood by the procurement cadre. A full set of standard bidding documents that are in compliance with the Law and Regulations should be prepared;

The corrections identified in Annex Two should be considered for making at an appropriate opportunity, so that there is clear authority for the procedures to be followed and the LASPPA’s authority is not in doubt;

The LASPPA should develop a website that will provide easy access to the Law, Regulations, Guidelines, manuals and standard bidding documents, as well as serving as a conduit of advice to the procurement cadre;

A comprehensive training programme should be prepared for the procurement cadre and others who perform important roles in the procurement process. This might be a 5-day programme designed to develop key procurement skills. A suggested programme is at Annex Three.

Further consultancy support It is recommended that early consultancy support should be provided for the drafting of Regulations, Guidelines, an explanatory manual and standard bidding documents. Many of the procedures to be carried out are to be specified in Regulations and the procurement

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cadre will not be able to function effectively without them. Moreover, several Regulations are required to be made within six months after enactment of the Law, which will constitute a formidable task for the LASPPA while it is building up its own staff. Assistance could also be provided in making corrections to the Law.

As can be seen from the outline training programme at Annex Three, so many aspects of procurement practice are intended to be governed by Regulations, that it would be difficult to conduct authoritative training of the procurement cadre without reference to them. When the Regulations and other authoritative documents have been prepared and promulgated, consultants could support the training programme and other capacity building efforts of LASPPA.

Consultancy support may also be needed in setting up the LASPPA’s website and in advising on how electronic procurement should be taken forward.

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Section Three: Lessons Learned

The assignment has succeeded in the aim of familiarizing public officers, community leaders and the business community because it was recognized as meeting a need by workshop participants to gain familiarity with the new procurement law, which would come into effect very soon and which would have significant impact on the course of their procurement work. The strong support by LASG, in particular by the Commissioner for Establishment, Training and Pensions and her senior staff, was crucial, as it demonstrated that the Law would be enforced and that all participants in the procurement process would be expected to follow its requirements strictly. Also important was the participation by the General Manager in each of the workshops, as this provided an occasion for him to demonstrate leadership to the procurement cadre and others who play an important role in procurement.

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Annex One: Presentation and Overview of the Lagos State Public Procurement Law

Purpose of the Session

To provide a general introduction to the Lagos State Public Procurement Law, 2011;

At the end of the session, participants should

Be aware of the purpose, principles, and key features of the Law;

Understand their roles and responsibilities and those of other key players in the public procurement process;

Have a basis for more detailed training at a later stage.

Outline of Presentation

Background to the Law;

Expected benefits and outcomes;

Establishment of the Lagos State Public Procurement Agency;

Procurement in the Procuring Entities;

Key principles;

Structure and roles;

Procurement planning and budgeting;

Procurement under competitive bidding;

Alternative procurement methods;

Complaints and administrative reviews;

Procurement and contract performance audits;

Investigations by the Authority;

Offences and Penalties;

Disposal of public property;

Electronic procurement;

How to make the Public Procurement Law work successfully.

Background to the Lagos State Public Procurement Law

World Bank Country Procurement Assessment Report on Nigeria 2000

“Potential to become an economic giant…However, Nigeria is poor and poverty has been getting worse…”

Procurement in developing countries accounts for about 10% of Gross Domestic Product (GDP);

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“Getting public procurement systems on the right footing, at both federal and state level, is one of the highest priorities for a new government seeking to control corruption and begin getting value for money in public procurement.”

Cost of public contracts among highest in world: 60k lost through underhand practices for every N1 of Government spending on social services;

Various improvement measures initiated, leading to FGN6 Public Procurement Act, 2007

Also applies to State procurement where 35% from Federal funds;

States of Nigeria have been enacting State Procurement Laws, modelled on Federal Law but adapted to local circumstances.

Lagos State Procurement Assessment Report

Prepared by World Bank in 2003 and updated 2010

Improvement of public procurement system important as estimated 60-70 percent of budget expenditure in Lagos through procurement;

Procurement is main area for corruption in Lagos State;

Found that procurement function merged with administrative function and not generally performed by professionally qualified staff;

Most common procurement method to invite small number of contractors from list of registered contractors to submit quotations ;

Newspaper advertising seldom done;

No public bid opening;

Bid evaluation criteria not disclosed in bidding documents;

Price and contract conditions negotiated with several suppliers before award decision made;

Conflict of interest in award decision;

Some contractors default after payment for mobilization;

Payment to contractors for completed work delayed

Contractors add 30-40% to bid price as compensation;

No provision for administrative review of bidders’ complaints;

Performance on public contracts of lower quality compared with private sector-sponsored projects.

Business Community’s Perception of Public Procurement

Survey of Private Sector Perception of Public Sector Procurement Reforms 2007/8

62.5% believed contracts pre-determined and won by paying bribe;

Companies with influence and power repeatedly won contracts and those with connections are favored by government;

6 Federal Government of Nigeria

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40% felt government procurement policies benefit large and medium firms.

Importance of Good Procurement System

Public procurement is a fundamental part of the State’s governance and public financial management system

Efficiency of procurement process may determine whether there are funds to buy 1 million or 2 million textbooks;

5 tests of good public procurement system:

Economy;

Efficiency;

Fairness in competition;

Transparency;

Accountability;

Expected Benefits and Outcomes from New Law

Reduced opportunities for corruption and malpractices;

More efficient conduct of tendering;

Contracts awarded to supplier offering best value;

Professional procurement cadre;

Business community has confidence in fairness and integrity of public procurement system.

Leading to

Greater competition for government contracts and better value in government expenditure;

Good governance

Dividends of democracy delivered to citizens.

Scope of Application (s.71)

Law applies to all procurement of goods, works and services carried out by Procuring Entities

State Government, Local Government Councils/Development Authority and all PEs in the State;

Any public body in the State engaged in procurement;

All other entities deriving any funds from State Government’s share of Consolidated Revenue Fund;

Transitory period of 3 months after assent to Law

Commencement 2 April 2012.

Lagos State Public Procurement Agency Governing Board (s.2-3)

Governing Board consisting of

Commissioner for Finance;

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Commissioner for Economic Planning and Budget;

Attorney-General and Commissioner for Justice;

3 members from public, including one from CSO;

General Manager of the Agency;

Governor appoints one member as Chairman;

Board sets and reviews prior review benchmark threshold for provisions of the law;

Approves public procurement policies;

Recommends guidelines or regulations;

Approves employment of Agency Directors;

Gives other directions and functions as necessary to achieve objectives of the Law.

Objectives of Agency (s.8)

Ensure probity, accountability and transparency;

Establish fair pricing standards and benchmarks;

Ensure application of fair, competitive, value-for-money standards and practices for procurement and disposal of public assets and services;

Create opportunities for Small and Medium Enterprises (SMEs)

Should lead to creation of jobs;

Establish complaints mechanism.

Functions of Agency (s.9)

Review monetary benchmark for application of Law;

Change procurement processes to adapt to changes in technology;

Formulate general policies and guidelines relating to public sector procurement for approval of Governor;

Publicize provisions of the Law;

Certify State procurements;

Superintend compliance by PEs with State procurement policies;

Monitor prices;

Publish major contracts.

Powers of Agency (s.10)

Enforce rules;

Inspect procurement transactions to ensure compliance with Law;

Investigate PEs;

Blacklist any supplier or contractor;

Maintain database of contractors and service providers;

Act on complaints;

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Nullify whole or part of any procurement proceeding or award;

Recommend stoppage or suspension of payment due from State Treasury;

Undertake procurement and contract performance audits;

Capacity building;

Recommend to approving authority award of contracts;

Issue Certificate of Compliance;

Recommend disciplinary measures including suspension or removal from office and temporary transfer of procurement function to third party.

General Manager (s.12)

General Manager is Chief Executive and Accounting Officer of Agency;

Responsible for execution of policy and administration of affairs of Agency.

Regulations and Reports (s. 16, 19)

With recommendation of Board, Agency may make regulations for proper implementation and enforcement of Law

Some regulations require approval of House of Assembly;

Agency to prepare Annual State Procurement Assessment Report for submission to House of Assembly.

Governing Rules on Public Procurement (s. 22)

Promotion of competition, economy, efficiency and equal opportunity

Open competitive bidding using clearly defined criteria;

Each interested bidder given equal information and opportunities;

Accountability

Those involved in public procurement may be investigated and held liable for actions;

Public monitoring;

Procurement plans supported by prior budgetary appropriation;

In addition to meeting requirements in bidding document, bidders must possess professional and technical qualifications to perform contract and have financial capacity, equipment, personnel and legal capacity.

Governing Rules on Public Procurement (s. 22-23)

Award of contract to lowest cost evaluated and qualified bidder from bidders substantially responsive to bid solicitation. The agency may refuse to endorse award of contract if price is manifestly excessive or unreasonably below pre-determined price or procurement process violates Law

May cancel procurement or direct that PE re-tender amongst substantially responsive bidders;

Exclusion of bid or tender where

Supplier given or promised gift or other benefit;

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Supplier failed to perform satisfactorily on contract in last 3 years;

In receivership of insolvency proceedings;

In arrears with taxes, etc;

Bidder or manager/part-owner convicted of crime connected with procurement or to gain financial profit;

Fails to submit statement on relationship with other bidders;

PEs to maintain file and electronic records of annual procurements;

Forwarded to Agency within 3 months after end of financial year;

All procurement contracts shall contain warranties for durability of goods, exercise of requisite skills in service provision and use of genuine materials and inputs.

Structure for Procurement in PEs (s.24-25)

Each PE to establish a Public Procurement Office to carry out procurement functions;

Approving authority subject to monetary and prior review benchmarks as determined by Agency

Parastatal Tender Board for government agency, parastatal or corporation;

Ministerial Tender Board for ministry or extra-ministerial entity;

2-year interim period contracts within benchmark approved by State Tenders’ Board.

Role of Accounting Officer (s.29)

Accounting Officer charged with supervision of conduct of procurement

Planning, organization and evaluation of tenders;

Ensure compliance with Law

Liable in person for breach;

Ensure no splitting of procurements to evade appropriate method;

Constitutes Procurement Planning Committee and Evaluation Committee;

Integrate procurement expenditure into yearly budget;

Liaises with Agency to ensure implementation of Regulations.

Procurement Planning (s.26-27)

Procurement Planning Committee chaired by Accounting Officer;

Prepare needs assessment and evaluation;

Identify goods, works and services (both consultancy and non-consultancy) required and cost implications;

Aggregate requirements wherever possible (Framework contracting is good method of achieving aggregation);

Integrate procurement expenditure into annual budget;

Ensure no splitting to evade appropriate procurement method.

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Importance of Integrating Planning with Budgeting

2010 Lagos State Procurement Assessment Report found

No proper linkages between planning and budgeting to ensure that project and procurement activities are properly conceived, analysed, planned, and implemented;

“The system is characterized by poor project funding, irregular cash releases, and delays in project implementation, with the consequence of delivering poor and costly service to the population.”

Procurement plan should be on template showing

Envisaged costs, source of funds, procurement method;

Critical path for completion of each action if goods or services are to be delivered/completed by due date.

Procurement Implementation (s. 28)

Procurement plans to be implemented by

Advertising/soliciting for bids in accordance with Law and guidelines;

Inviting observer;

Receiving, evaluating and selecting bids in adherence to Law and Guidelines;

Obtaining approval of Approving Authority (e.g. relevant tender board) before making award;

Debriefing losers on request;

Resolving complaints/disputes;

Obtaining and confirming validity of any performance guarantee;

Executing contract agreement;

Announcing and publicizing award.

Open Competitive Bidding (s.31-32)

Open Competitive Bidding applies to procurement of goods and services above 100 million Naira

Board to make rules for procurements ≤ 100 million Naira;

National Competitive Bidding or International Competitive Bidding to be determined by benchmark set by Agency;

Advertisement;

Under ICB7 use 1 internationally recognized newspaper as well as 2 national newspapers, Website of PE, Agency and State Procurement Journal at least 6 weeks before deadline for bid submission;

Under NCB8 use notice board of PE and State Procurement Journal at least 6 weeks before deadline;

7 International Competitive Bidding

8 National Competitive Bidding

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Agency shall issue guidelines on advertisement.

Restricted Tendering (s.58)

Should be exception not norm;

Requires approval by Agency;

Used where

Goods, works or services only available from limited number of suppliers;

Where time and cost to evaluate large number of tenders disproportionate to value of procurement;

Invitations should be issued to all suppliers who can provide the goods, works or services being sought;

Where time and cost factors, select in non-discriminatory manner sufficient bidders to ensure effective competition;

Other provisions of open competitive bidding apply.

Direct procurement

To be covered in rules made by Agency;

Use for

Patented products;

Compatibility;

Emergencies.

Emergency Procurements (s.59)

Used where

State seriously threatened with disaster;

Condition or quality of goods, equipment, building or publicly owned capital goods may seriously deteriorate unless urgent maintenance undertaken;

PE may initiate direct contracting with approval of Board.

Bid Documentation (s.34-35, 39)

Bid documentation to be prepared by PE based on standard forms and manuals issued by Agency;

Must include

Approved budget for the contract;

Criteria for eligibility and bid evaluation;

Date, time and place for submission of bids;

Description of products, services or works concerned;

Plans and technical specification;

Delivery time/completion schedule;

Form and amount of bid security (min. 1%);

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Period of bid validity;

Form of contract and General and Specific Conditions;

Bidders may seek clarification on bid documentation.

E-Procurement (s.60)

LSPPA to design and set up secure electronic portal Lagos State Government Electronic Procurement System

To be introduced no later than 12 months from enactment of Law or at such other time as Governor considers appropriate

Technical Specifications

“Be in terms of performance rather than design or descriptive characteristics and be based on international standards, where such exist”

WTO Government Procurement Agreement

Should take account of what is available in the commercial market;

Use brand name, product or feature only when essential to Government’s requirements and should be accompanied by equal purchase descriptions.

Submission of Bids (s.36, 40)

Separate technical and financial components;

Kept in secure bid box;

Bid opening immediately following deadline;

All bids to be opened in public, in presence of bidders or representatives and interested public (attendance recorded);

Call out name and address of each bidder and amount of bid;

Bids received after deadline to be returned unopened.

Clear Evaluation Criteria

Evaluation criteria must be included in bid document (s. 34(1));

May not be changed in course of any procurement proceeding (s.22(15));

Evaluation and comparison of bids to be based only on criteria stipulated in bid documents (s. 42(1)).

Examination and Evaluation of Bids (s.41-42)

Preliminary examination to establish bid meets minimum eligibility requirements in bidding documents;

Bids that pass preliminary examination proceed to formal evaluation;

Based strictly on method or criteria stipulated in bid document;

No negotiations with bidders for goods and works (s. 31(3));

May be negotiations for consultancy services;

Objective to determine lowest cost evaluated bidder from among responsive bidders for goods and works or highest rated bidder for services;

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Another bidder may be selected provided PE can show good grounds derived from provisions of law.

Domestic Preference (s.61)

PE may grant margin of preference;

When comparing domestic bidders with foreign bidders;

When comparing tenders from domestic suppliers offering goods manufactured locally with those offering foreign manufactured goods;

May apply to all tenders under international competitive bidding;

Bid document must indicate preference to be granted and criteria for eligibility;

Agency to make Regulations to set limit and formulae for computation of margins of preference.

Responsiveness (s. 41)

Offers must be substantially responsive to bidding documents;

Conform with all essential requirements in bidding documents;

Major deviation (e.g. unacceptable alternative design, price adjustment, time schedule when time of essence or sub-contracting) → rejection;

Minor deviation (e.g. use of codes, alternative design or workmanship, omission of minor items) → seek clarification but not allow change to price or substance;

PE may correct arithmetic mistakes and must notify correction to bidder in writing.

Qualification (s.22(5), 33)

All bidders must possess

Relevant professional and technical qualification;

Financial capacity;

Equipment and other relevant infrastructure;

Adequate personnel;

Legal capacity, not in receivership/bankrupt, paid taxes;

No directors who convicted for fraud or financial impropriety;

May be assessed through pre-qualification or post-qualification.

Pre-qualification of Bidders (s.33)

Where PE decided on minimum qualification of suppliers, contractors or service providers, may request interested persons to submit applications to pre-qualify;

Regulations on pre-qualification to be issued by Agency;

Post-qualification ensures bidder who met qualification criteria at pre-qualification stage remains qualified;

Normally used for critical and high-value purchases;

Capability of potential suppliers to provide suitable products and to meet installation, maintenance and other service requirements examined on a non-price basis;

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Invitation to tender confined to companies assessed to be qualified.

Evaluation of Bids (s.43-45, 47)

Confidential information not to be disclosed;

No information on progress of evaluation to be given to bidders;

Complete technical evaluation, then compare prices of those bids found to be substantially responsive;

No changes allowed to prices (s.41(3));

Successful bidder to be notified immediately;

Contract award to be made only after approving authority has certified assent;

Period between opening of bids and award of contract not to exceed 3 months;

Agency to issue Regulations for evaluation of bids.

Financial Evaluation

Price evaluation should be based on life-time costs

Product life;

Running costs;

Maintenance costs;

Residual value;

Ease of use by existing staff;

Cost of training.

Failure of Bidding (s.37-38, 48)

No bids received or no bid qualified;

Refusal of best rated bidder to proceed to contract

Contract to be re-advertised;

PE may reject bids or cancel procurement proceedings without incurring liability if

All compliant tenders substantially exceed budget;

Number of compliant tenders less than 3 and does not ensure genuine competition;

PE may terminate award proceedings.

Contract Management (s. 22(9), 62-64)

Provision for advance payment of 20% subject to bank guarantee;

Contractor may be required to submit performance guarantee or bond;

Contract prices to be considered as fixed

Any upward variation only allowed in extraordinary circumstances and subject to approval of Agency;

Payment for goods, works and services received to be settled promptly and diligently;

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Interest at rate specified in contract document due on payments delayed by more than 60 days;

Contracts to contain provision for arbitration (s.22(26)).

Disposal of Public Property (s.69)

Every PE also a disposing entity;

Disposal primarily through open competitive bidding;

LASPPA determines policies and practices for disposal and issues guidelines, standardize documentation, monitors implementation, sets reporting standards.

Procurement of Services (s.46, 50)

Consultancy (e.g. engineering supervision) and other intellectual services (e.g. training,) not cleaning, security etc, which should be procured by same method as goods;

Expressions of interest to be sought by advertisement in 2 national newspapers and the procurement journal;

If below 1 million Naira approach 3-10 local consultants;

Should provide information on

Services to be undertaken;

Documentary evidence required to establish qualifications;

Whether selection based on

Lowest cost among qualified bidders;

Cost + quality or ;

Cost + quality + other criteria (fixed budget selection);

Consultant may request clarification;

Same information to be provided to every consultant.

Evaluation of Services (s.52-53)

Technical and financial proposals to be submitted in separate envelopes before deadline;

Technical evaluation committee to complete before public opening of financial proposals;

Evaluation based on

Qualification, experience, reliability, professional and managerial competence of consultant;

Effectiveness of proposal in meeting PE’s needs;

Price, including ancillary costs;

Extent of participation by local personnel (may be margin of preference for domestic consultants) and economic development potential;

Security considerations.

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Selection of Service Provider (s. 54-56)

Selection based on lowest evaluated price or best combined evaluation in terms of general criteria in Request for Proposals;

Where based on technical and price factors

Each factor to be weighted (e.g. 70%:30%) with baseline score for technical;

Only proposals that meet the baseline technical score compared on price;

Successful proposal shall be

(Under quality and cost-based selection) best combined evaluation;

(Under least cost selection) lowest price among proposals above technical benchmark;

(Under fixed budget selection) highest ranked technical proposal within budget;

Under quality based selection, price negotiated after best rated technical proposal determined.

Investigation (s. 66)

Agency empowered

To investigate conduct of procurement proceedings by PE or procurement contract;

Enter and search premises of PE/bidder/supplier/contractor upon order of State High Court and require production of records;

Examine and make excerpt or remove records;

Require explanations from staff;

If finds contravention of Law may

Nullify procurement proceedings;

Cancel procurement contracts.

Administrative Review and Complaints (s.67-68)

Bidder may seek administrative review of any omission or breach under provisions of Law and Regulations

Complaint first to Accounting Officer of PE;

AO must decide within 15 working days and make corrections;

If bidder dissatisfied may complain to Agency within 10 working days;

Agency notifies PE and all interested bidders and suspends further action on the procurement;

Agency to decide within 21 working days;

Complaints against Agency may be taken to Lagos State Executive Council.

Administrative Reviews

Provide important safeguard for suppliers that procurement carried out

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In accordance with stipulated procedures;

Fair to all bidders;

Transparent ;

Key feature of procurement regulation throughout the world.

Offences (s.70)

Open or tamper with and sealed bid or document and divulging contents

Altering any procurement document with intent to influence outcome;

Using fake documents;

Delay screening for eligibility, opening of bids, evaluation and contract award;

Collusion and bid-rigging;

Procurement fraud;

Attempt to influence procurement process in order to obtain an advantage;

Split tenders to evade monetary benchmarks;

Refusing Agency officers access to procurement records;

Withdrawing an accepted bid or refusal to accept award.

Penalties (s.70)

Person who contravenes any provision of this Law commits offence and liable on conviction to term of imprisonment of 5-10 years without option of fine;

If corporate body or firm, barred from all public procurement for not less than 10 years and fine equal to value of procurement;

Officer of Agency or PE who commits offence liable to term of imprisonment of 5 years without option of fine and summary dismissal from government service.

How to Make the Public Procurement Law Work Successfully

Prompt recruitment of Agency staff and Procurement and Disposal Offices in PEs;

Appointment of Boards and Standing Committees;

Early making of Regulations, issue of Guidelines, Operating Manual, User Guide and Standard Bidding Documentation (SBD)

Critical instruments for implementation of Law;

Good SBD facilitates compliance, encourages competition and raises confidence of business community in fairness of process;

Capacity building

Training;

Provision of adequate office accommodation and equipment;

LSG prepared Procurement Capacity Assessment Report in October 2011 with support from SPARC;

Effective Enforcement.

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Lagos State Government should ensure all requirements and provisions of Law are met so that Agency’s authority is not subject to legal challenge

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Annex Two Review of Lagos State Public Procurement Law

The purpose of this paper is to identify amendments that would correct errors in the Law and improvements to express agreed policies more clearly. It does not seek to introduce new policies.

Section Suggested amendment Comment

Date of enactment

This should be 21st October, 2011, not 21st October, 2012 as stated.

3 (a) Should read “Consider, set and amend prior review benchmark for the application.......’

Need to insert “ review” after prior and delete “and review”

9(vii) Agency shall “certify all State procurements prior to, during and after the award of any contract”

It should be clarified whether it is really intended that the Agency should certify all State procurements, even of items below the threshold for open competitive bidding. The procedures for certification at each of the 3 specified stages should be included in the Law or Regulations. See also comments under 24(3) below.

10(1)(e) “to the exclusion of all procuring entities” presumably should mean “for reference by all procuring entities”

10(1)(j) “complaints by public procuring entities” should read “complaints about procuring entities”

Presumably refers to complaints brought under section 68

10(1)(o) “recommend to the approving authority contracts…”

This would seem to be a function of the PE under section 25 rather than the Agency.

11(2) The percentage and description of the revenue to be charged should be stated clearly.

16 The house of assembly should not really be involved in procurement operations.

Clause requiring the agency to seek approval from the House of Assembly for all regulations and procurement operations to not feasible as Procurement is a wholly executive function

24(3) To clarify for which type/ value of procurement a PE should apply to the

The Law empowers the Agency to issue a Certificate of Compliance (s.

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Agency for a Certificate of Compliance 10(1)(q)) and obliges a PE to award a contract once a Certificate has been issued but it does not make clear when a PE should apply for such a Certificate (e.g. for all contracts or for those above a particular value) nor the procedure for such an application. See section 19(h) of the Federal Procurement Act, 2007, which makes clear that the Certificate applies to procurements subject to the prior review threshold.

25(c) Suggest deletion of “ the State Tenders Board” from the end of this clause for clarity

Inclusion of “the State Tenders Board” beclouds the sense in this clause as the STB cannot set thresholds in the Regulations.

26 To add sections on

Determining the appropriate method of procurement; and

Identifying the time at which each stage of the procurement process should be carried out.

These are important features of a procurement plan that have been omitted. See suggested procurement plan template attached.

31(4) The monetary threshold for open competitive bidding should be set by the Agency.

As pertains in the 2007 Act.

31(4) &(5) The law should have included the procurement of “works” in these clauses

It appears that the procurement of works is omitted from these two clauses.

32(3) Advertisement for National Competitive Bidding should include at least two national newspapers.

At present, Invitation for bids under NCB would not be made known outside of Lagos State and should be made known throughout Nigeria.

35(2) Bid security should not exceed 2% of bid price.

To align with section 26(1) of the 2007 Act. At present there is no upper limit to bid security in the Lagos State Law. High amounts of bid security may deter SMEs from bidding.

36(2) The requirement to submit the technical and financial components in separate sealed envelopes should apply only where specified in the bidding documents.

As worded the requirement to submit technical and financial components in separate sealed envelopes applies to all bids. The provisions of section 40 could not therefore apply as the financial envelope would only be opened after technical evaluation had been completed. Two-envelope bid

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submission is normally applicable to procurement of consultancy services, as is provided by section 52, or where exceptional circumstances apply to the procurement of goods, such as rapid technological advance (see section 39 of the 2007 Act where these limitations are specified.

37(2) Re-advertisement of contract The requirement to re-advertise the contract when the best evaluated bidder refuses to proceed to contract would add to costs and delay the completion of procurement. Other jurisdictions allow the PE to accept the second lowest or second best evaluated bid if otherwise found to be suitable.

41(1)(c)(3), (6)-(9)

Move to section 42 The determination of whether a bid is substantially responsive and the identification of major and minor deviations should form part of tender evaluation, not preliminary examination.

45(3) & (4) Notification should be to all bidders and be made after approval has been given by the approving authority.

A bid cannot be deemed to have succeeded until the approving authority has conferred its assent. Prior notification to the best evaluated bidder would compromise the approving authority in ensuring that the procurement procedures have been carried out in accordance with the Law. Moreover, communication of award should be made simultaneously to the successful and to unsuccessful bidders; so that the latter may exercise the appeal provisions under sections 67-68 before a written contract is made.

46 onwards

The provisions that apply to procurement of consultancy services should be contained in a separate Part of the Law. These provisions should be defined as applying to the procurement of consultancy and related services, not to non-intellectual services (cleaning, guarding, etc) which should be

It is not clear which provisions apply only to the procurement of consultancy services and which apply to all procurements.

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procured by similar methods to the procurement of goods.

53(2) “the Commission” The Commission is not defined. This should refer to the function of the regulatory Agency.

55(3) “procurement entity” should read “procuring entity”

57 Should read “awarded by procuring entities”

Agency does not award contracts

58(3) Delete “only to the extent of” and replace by “except for”

The wording does not support the intended meaning, that other provisions applicable to open competitive bidding should apply also to restricted tendering.

59 Direct procurement

Approval for emergency procurement

Direct procurement may also be justified when purchasing patented goods or to ensure compatibility with existing equipment. It does not apply only to emergency procurement.

Approval should be by the Agency rather than the Board.

59(1) Change the Board approval to Agency approval.

The Agency and not the Board should give approval for the initiation for emergency procurement as this relates to core regulatory operations.

60(1) Change responsibility from Board to the Procurement Regulatory Agency.

The Agency should be responsible for the design and set up of an electronic portal rather than the Board.

68 Regulations for administrative reviews The procedures for initiating an administrative review and the conduct of such reviews will need more detailed coverage than is contained in this section. For example, are decisions to be taken only on the basis of written submissions or may hearings be held? How should clarification be obtained on any point in the complaint or the PE’s response?

69(2) Methods for disposal of public property

Open competitive bidding is appropriate only for high-value items, whereas most items to be disposed of have little value. The other methods listed in sub-section (5) may be appropriate in certain circumstances

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and there are some items where the cost of disposal would exceed any residual value and which should be written off and destroyed.

69(3) Replace Board with approval of the Governor by Agency

The authority for making regulations on other aspects of procurement practice rests with the Agency. It is not clear why guidelines for disposal should be outside of the Agency’s competence.

These are operational matters where the Board and Governor may not need to be involved.

70(2)(k) Offence of refusing to accept an award

Withdrawal of an accepted bid or refusal to proceed to contract will constitute grounds for forfeiture of the bid security. It may be double jeopardy for such action also to constitute an offence, particularly having regard to the severity of the penalty.

70(3) Introduce a lesser penalty than that of 5 years imprisonment without option of a fine for lesser offences.

Such a severe penalty may be appropriate for serious cases of fraud but are perhaps inappropriate for offences as splitting tenders or refusing to allow the Agency access to its procurement records. If a penalty is unreasonably severe, the Courts may be reluctant to enforce it.

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Annex Three: Five Day Training Programme in Public Procurement

Time Subject Content

Day 1, Session 1

Introduction and Legislative Framework

Background and purpose of the Lagos State Public Procurement Law; application of the Federal Act and Regulations to procurement in Lagos State; application of World Bank Guidelines; the procurement cycle from planning to contract management

Day 1, Session 2

Role and Authority of LASPPA

Structure of LASPPA; role in capacity building, certification, investigations and procurement audits (reviews); information available through LASPPA: policies, guidelines, standard bidding documents, price data; right to call for information, documents and records; authority to give directions; certify compliance; right to nullify procurement proceedings and awards; offences and penalties

Day 1, Session 3

Procurement Planning

The requirement for planning in the Law and in the Regulations that the LASPPA will make under section 16(a); the format of a procurement plan and how to complete it; integration with the budget; estimating costs and total acquisition time within a procurement plan

Exercise: completing a procurement plan

Day 2, Session 1

Specification of Requirements

Key principles of good practice when writing

specifications for goods;

specifications for works;

use of national and international standards; inclusion of evaluation criteria to accompany the specifications; special considerations when purchasing goods from overseas sources: currency, transport and insurance costs and INCOTERMS, local maintenance support, legal issues and arbitration

Exercise: expressing a requirement in tender specifications

Day 2, Session 2

Bid Documentation

Preparation of an invitation to bid; guidelines on advertisement of invitations (section 32(4)); requirements on the standard and content of bid solicitation documents ( section 16(b)); use of standard bid documentation (section 34(1));

Day 2, Session 3

Qualification of Suppliers and Contractors

Defining objective qualification criteria; correct use of pre-qualification (as in Regulations under section 33(3)) and post-qualification; qualification for consultancy contracts

Exercise: defining qualifications for a specified service provider

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Time Subject Content

Day 3, Session 1

Choice of Procurement Method

Use of open competitive bidding for goods, works and services; aggregation and splitting; framework contracting; domestic preference (ref. Regulations under section 61(4)); procurement methods for goods and services below the threshold for bidding (ref. rules to be made under section 31(5)); good practice in restricted bidding and direct procurement; emergency procurement; electronic procurement and the Lagos State Government Electronic Procurement System (section 60)

Day 3, Session 2

The Bidding Process

Distribution of tender documentation; the charging of fees (to be specified in Regulations under section 16(3)); handling enquiries; receiving bids; public bid opening and examination (ref Regulations under section 41(11)); role of observers; failure of bidding and cancellation

Day 3, Session 3

Evaluation of Bids Structure for tender evaluation; good and bad ways to evaluate bids for goods, works and non-intellectual services; using stated criteria and their weightings; ref. guidelines for the evaluation of bids to be issued by the LASPPA under section 42(3) Exercise: evaluation of bids

Day 4, Session 1

Procurement of Consultancy Services

Procurement procedures under Request for Proposals; writing specifications for consultancy services; defining service levels; unascertained needs (section 49); evaluation of consultancy proposals; assessing qualifications; QCBS, QBS, FBS and LCS; negotiations in selection procedures

Day 4, Session 2

Formation of Contract and Contract Management

Approving authorities for contract award; Certificate of Compliance; register of awards; briefing of unsuccessful bidders; advance payments and performance guarantees; forms of contract (fixed price, cost reimbursable, etc); contract management planning; milestones and payment terms; handling variations and claims; monitoring and evaluating progress; bonuses and damages Exercise on settling a contract dispute

Day 4, Session 3

Management of Procurement Records

Record-keeping requirements (ref. Regulations under section 65); importance of record-keeping and consequences of failure; responsibility for maintaining records; accommodation and facilities for record-keeping; electronic records; annual submission of procurement records to Agency

Day 5, Session 1

Disposal of Public Property

Annual review of disposal requirements; disposal policies and practices, guidelines and standard documentation as prescribed by LASPPA under section 69(3); disposal by open competitive bidding; other methods of disposal (auction, trade-in, destruction, disposal to staff)

Day 5, Session 2

Handling Complaints and Administrative Reviews

Right of bidder to complain and seek administrative review; complaint and administrative review procedures; suspension of procurement proceedings pending resolution

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of complaint; common mistakes that may lead to challenge

Day 5, Session 3

Special Types of Procurement

Procurement of non-intellectual services (cleaning, guarding, etc); procurement of public works; health procurement; procurement for schools; procurement of information and communications technology; procurement of insurance

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