3 Are there proposals to change the legislation? 4 What is the relevant legislation for the procurement of military equipment?

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1 Nigeria Gbenga Oyebode and Olubunmi Fayokun Aluko & Oyebode Legislative framework 1 What is the relevant legislation and who enforces it? The relevant legislation for public procurement in the Federal Republic of Nigeria (the Federal Government) is the Public Procurement Act 2007 (the Act). The Act came into force on 4 June The Act applies to the procurement of goods, works and services carried out by: the Federal Government of Nigeria and all procurement entities; and all entities outside the foregoing description that derive at least 35 per cent of the funds appropriated or proposed to be appropriated for any type of procurement described in the Act from the Federation s share of the Consolidated Revenue Fund. The Act is regulated by the National Council on Public Procurement (the Council) and the Bureau of Public Procurement (the BPP). The Council, which is headed by the Minister of Finance, supervises the BPP in order to ensure adequate implementation of the procedures provided in the Act. The Council s functions include approving the following: the appointment of the directors of the BPP; the audited accounts of the BPP; and policies on public procurement. The BPP, on the other hand, is directly involved in enforcing the provisions of the Act. Its functions include, formulating general policies and guidelines relating to public sector procurement and supervising the implementation of established procurement policies Besides the Act, other laws and regulations are applicable to public procurement procedures in Nigeria. These include the Infrastructure Concession Regulatory Commission (Establishment, etc) Act, 2005 (the Concession Act) and the Federal Government of Nigeria Financial Regulations, However, the Act has precedence over the aforementioned law and the regulations on issues of public procurement. 2 In which respect does the relevant legislation supplement the EU procurement directives or the GPA? The Act does not supplement the EU procurement directives or the GPA. The Act does, however, reflect the principles embodied in the EU procurement directive and the GPA in terms of transparency, competition and accountability. 3 Are there proposals to change the legislation? At the current time, there are no proposals to amend the Act; particularly as the Act is relatively new legislation that was put in place to fill the lacuna that previously existed with regard to the regulation of public procurement. 4 What is the relevant legislation for the procurement of military equipment? The Act does not regulate the procurement of military equipment in Nigeria. The Ministry of Defence has oversight over the procurement of military equipment whilst the Federal Government of Nigeria Financial Regulations provide the regulatory framwork for such procurement. The Act specifically stipulates that it shall not apply to the procurement of special goods, works and services involving national defence or national security unless the President s express approval has been sought and obtained. It would appear that where the President s express approval is granted, the provisions of the Act may, in some circumstances, apply to the procurement of military equipment. Applicability of procurement law 5 Which, or what kinds of, entities have been ruled not to constitute contracting authorities? In the Act, the entities described above as contracting authorities, are referred to as procuring entities. The term procuring entity is defined in the Act as a public body engaged in procurement and includes a ministry, extra-ministerial office, government agency, parastatal and corporation. The Act does not specifically exclude any entity from being a Procuring Entity. However, where an entity is neither a public body nor a private body that derives 35 per cent of the funds appropriated for procurement from the Federation s share of Consolidated Revenue Fund, such an entity would not constitute a procuring entity. 6 For which, or what kinds of, entities is the status as a contracting authority in dispute? We are not aware of any entity whose status as a contracting authority has been in dispute since the Act came into effect on 4 June Getting the Deal Through public procurement

2 7 Are there specific domestic rules relating to the calculation of the threshold value of contracts? Under the Act, the Council and the BPP are charged with responsibility for setting prior review thresholds for the conduct of public procurement. The Federal Government has recently proposed new thresholds for public procurement, as follows: government projects below 200 million naira (approximately US$1.7 million) in the case of ministries, agencies and parastatals; and road construction contracts below 500 million naira (US$4.24 million). These contracts are to be approved by the due process office of each institution and would be subject to the approval of the Federal Executive Council. It is, however, pertinent to note that the Act is yet to be amended to reflect the proposed thresholds. 8 Does the extension of an existing contract require a new procurement procedure? The extension of an existing contract is only permitted in limited circumstances. These include the following: where the goods, works or services are only available from a particular supplier or where a particular supplier has exclusive rights in respect of the goods, works or services and no reasonable alternative exists; and where there is an urgent need for the goods, works or services and engaging in tender proceedings or any method of procurement is impractical due to unforeseeable circumstances giving rise to the urgency which is not the result of dilatory conduct on the part of the procuring entity. If an existing contract meets the criteria for extension, the usual procurement procedure of open competitive bidding would not be required. Rather, the contracting authority would procure the goods or services directly from an existing supplier by inviting the supplier to tender a proposal or price quotation in respect of that contract. 9 Does the amendment of an existing contract require a new procurement procedure? The Act makes no provision for the amendment of an existing contract. However, in practical terms, once a contract has been duly executed, it may not be varied or amended without the consent of the contracting authority. 10 May an existing contract be transferred to another supplier or provider without a new procurement procedure? The Act makes no provision for the transfer of a contract from one supplier to another. Hence, general contractual principles would apply such that a supplier wishing to transfer an existing contract to another supplier or provider would have to obtain the prior consent of the contracting authority. 11 In which circumstances do privatisations require a procurement procedure? Public property is defined in the Act as resources in the form of tangible and non-tangible assets: created through public expenditure; acquired on financial instruments; acquired as a gift or through deeds; acquired in respect of intellectual or proprietary rights; and acquired by good will and any other gifts of the Federal Government. The Act, as it relates to disposal of public property, is subject to the Public Enterprises (Privatisation and Commercialisation) Act, 1999 (the Public Enterprises Act). The Public Enterprises Act also adopts the open competitive bidding process for the privatisation of public enterprises. 12 In which circumstances do public private partnerships (PPPs) require a procurement procedure? The Act does not make specific provision for public private partnerships. It, does, however, state that all public procurements should be conducted by way of open competitive bidding. The Concession Act specifically provides for public private partnerships in the area of infrastructure development and maintenance and stipulates that contract awards made to public private partnerships should be conducted by way of open competitive bidding. 13 What are the rules and requirements for the award of services concessions? The Act makes no provision for service concessions. The Concession Act, however, provides rules for the grant of concessions in respect of infrastructure development and maintenance. The Concession Act stipulates that the appropriate authority must ensure that the contractors possess the financial capacity, relevant expertise and experience to undertake such infrastructure development or maintenance. It also stipulates that the approval of the Federal Executive Council must be obtained prior to the grant of guarantees or undertakings by the contracting authority in respect of any concession agreement. The process for awarding such contracts should be by open competitive public bidding. 14 What are the rules and requirements for the award of an in-house contract without a procurement procedure? The Act does not make specific provision for the award of inhouse contracts. It does, however, stipulate that the procurement of all goods and services shall be conducted by open competitive bidding. Hence, in-house contracts would not appear to be exempt from the procurement procedures. The procurement procedures 15 Does the relevant legislation specifically state or restate the fundamental principles for tender procedures: equal treatment, transparency, competition? The principles of equal treatment, transparency and competition are expressly stated in the Act as the fundamental principles for the conduct of procurement procedures. Privatisations involving the disposal of public property would require a procurement procedure. The open competitive bidding procedure would, typically, be adopted as the primary source of receiving bids for the purchase of public property. 162 Getting the Deal Through public procurement 2008

3 16 Does the relevant legislation or case law require the contracting authority to be independent and impartial? The Act stipulates that the contracting authority is to be governed by principles of honesty, accountability, transparency, fairness and equity. 17 How are conflicts of interest dealt with? The Act makes copious provisions for dealing with conflicts of interest. Below are some of the instances in which the Act recognises that a conflict of interest may arise, namely where a person: possesses an interest outside his or her official duties that materially encroaches on the time or attention that should otherwise be devoted to affairs of the government; 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 construed to be, or make possible personal gains due to the person s ability to influence dealings; entertains relatonships compromising the reputation or integrity of the contracting authority he represents or the government; and receives benefits by taking personal advantage of an opportunity that properly belongs to the contracting authority he or she represents or the government. According to the Act, where a public officer is involved directly or indirectly in matters of public procurement, he is not to engage or participate in any commercial transaction involving the federal government, its ministries, extra-ministerial departments, corporations where his capacity as a public officer is likely to confer any unfair advantage on him or any person directly related to him. Also, where the public officer or a person engaged in public procurement has assumed or is about to assume, a financial or other business relationship that might involve a conflict of interest, such a person must immediately declare to the authorities any actual or potential interest. 18 How is the involvement of a bidder in the preparation of a tender procedure dealt with? The Act creates an absolute bar on the involvement of a bidder in the preparation of a tender procedure. It specifically states that a person who has been engaged in preparing for a procurement or part of the proceedings is prohibited from bidding for the procurement in question or any part thereof, either as a main contractor, sub-contractor or cooperating with bidders in the course of preparing their tender. A person who contravenes this provision would be liable to conviction for a term of not less than five years and summary dismissal from government service. 19 What is the prevailing type of procurement procedure used by contracting authorities? The prevailing procedure used by procuring entities, in the procurement of all goods, works and services, is the open competitive bidding process. The phrase open competitive bidding is defined as the process by which a procuring entity effects public procurement by offering to interested bidders, equal simultaneous information and opportunity to offer the goods and works required. There are, however, other procedures that may be adopted in Getting the Deal Through public procurement 2008 special cases. These are as follows. The two-stage tendering process Contracting authorities may engage in a two-stage tendering process in certain situations. These include, where the contracting authority seeks to enter into a contract for research, experiment, study or development or where the tender was rejected by the contracting authority, under an open competitive bidding procedure. In this case, the process for open competitive bidding shall be conducted in two stages. The first stage should involve an invitation to suppliers or contractors to submit initial tenders containing their proposals, without a tender price and the second stage should involve an invitation to suppliers whose tenders have not been rejected, to submit final tenders with prices. The restricted tendering process This process involves inviting a limited number of suppliers to bid. This procedure may be used where the goods, works or services are available from a limited number of suppliers or contractors or the time and cost required to examine and evaluate a large number of tenders is disproportionate to the value of the goods, works or services to be procured. In this case, quotations are required to be obtained from at least three unrelated contractors. Direct procurement This process is adopted in limited situations including where the goods, works or services are only available from a particular supplier or where a particular supplier has exclusive rights in respect of the goods, works or services and no reasonable alternative exists. In this case the contracting authority shall procure the goods, works or services by obtaining a quotation from a single supplier or contractor. 20 Are there special rules or requirements determining the conduct of a negotiated procedure? The conduct of a negotiated procedure is only applicable where goods or works are procured by the use of a two-stage tendering process and in the procurement of certain services. The two-stage tendering process should be adopted where it is not feasible for the contracting authority to formulate detailed specifications for the goods or works or to identify the characteristics of the services sought. Also, it is used where the character of the goods or works are subject to rapid technological advances or where the contracting authority seeks to enter into a contract for research, experiment, study or development. The first stage of the two-stage tendering process should involve calling the suppliers to submit initial tenders without a tender price. At this stage the contracting authority may engage in negotiations with the suppliers with respect to any aspect of the tenders. After negotiations, the proceedings shall continue to the second stage where the tenders should be evaluated and compared in order to ascertain the successful tender. In the case of procurement for services, where the contracting authority elects to choose the successful proposal based on technical and price factors, the proposals that meet the minimum criteria set by the contracting authority, should be invited for negotiations which shall focus mainly on the technical proposals. 21 When and how may the competitive dialogue be used? The Act makes no provision for competitive dialogue. 163

4 22 What are the requirements for the conclusion of a framework agreement? The Act makes no provisions for framework agreements. However, there is precedent for the use of framework agreements by contracting authorities. Such agreements are enforceable under Nigerian law provided they are not against public policy and do not contravene the provisions of any Nigerian legislation. 23 May several framework agreements be concluded? If yes, does the award of a contract under the framework agreement require an additional competitive procedure? We are not aware of any precedent for the execution of several framework agreements. 24 Under what conditions may consortium members be changed in the course of a procurement procedure? The Act does not expressly provide for consortium members or subsequent changes in consortium members. However, section 29(5) of the Act states that modifications to bids would be accepted if received by the procuring entity before the deadline for submission of the tender. It appears from this provision that consortium members may be changed before the deadline for submission of the tenders. According to the Concession Act, where a consortium participates in a bid pertaining to the development and maintenance of infrastructure, the consortium must provide evidence that all its members have agreed to be bound jointly and severally under the contract. The withdrawal of any member of the consortium before or during the implementation of the project may, therefore, be a ground for review or possible cancellation of the contract. 25 Are unduly burdensome or risky requirements in tender specifications prohibited? Unduly burdensome or risky requirements in tender specifications are not expressly prohibited by the Act. 26 What are the legal limitations on the discretion of contracting authorities in assessing the qualifications of tenderers? Generally, the discretion of contracting authorities is limited by the provisions of the Act and the regulations made by the BPP. The Act stipulates basic requirements that all bidders must satisfy which are separate from any additional conditions that the contracting authority may stipulate in the solicitation documents. These include professional and technical competence, financial capability, possession of requisite equipment or infrastructure and adequate personnel to perform the obligations under the procurement contract. 27 What are the requirements for the admissibility of alternative bids? The Act makes no provision for alternative bids. 29 What are the consequences if bidders change the tender specifications or submit their own standard terms of business? The effect of a change in the tender specifications would depend on whether the change is minor or major. Where the change is minor, the procuring entity would request further clarification from the bidder but where the change is major the bid would be rejected. The Act stipulates the changes which should be considered to be major and those that should be considered to be minor. Major changes are as follows: with respect to clauses in an offer: unacceptable sub-contracting, unacceptable time scheduling if time is of the essence, unacceptable alternative design and unacceptable price adjustment; with respect to the status of the bidder; if he or she is ineligible or not prequalified or if he or she is uninvited; with respect to bid documents: an unsigned bid; and with respect to time, date and location for submission: any bid received after the date and time for submission stipulated in the solicitation document, and any bid submitted at the wrong location. Minor changes are as follows: the use of codes; difference in standards; difference in materials; alternative design; alternative workmanship; modified liquidated damages; omissions in minor terms; discovery of arithmetical errors; sub-contracting that is unclear and questionable; different methods of construction difference in final delivery date; difference in delivery schedule; completion period where these are not of the essence; non-compliance with some technical local regulation; payment terms; and any other condition that has little impact on the bid. Where there is doubt as to whether a change is major or minor, the impact the deviation would have on cost is considered. If the impact is major, the change would be considered to be major but where the impact is minor, the change would be considered to be minor. As the Act prohibits changes in the substance of a bid, if a bidder were to submit its own standard terms of business, this may be regarded as a change in the substance of the bid and therefore cause the bid to be rejected. 30 What are the award criteria provided for in the relevant legislation? The award of a procurement contract is usually granted to the lowest evaluated responsive bid. The lowest evaluated responsive bid is defined in the Act as the lowest price bid amongst the bids that meet the technical requirements and standards as contained in the tender document. 28 Must a contracting authority take alternative bids into account? The Act makes no provision for alternative bids. 31 What constitutes an abnormally low bid? The Act does not specify what would be considered to constitute an abnormally low bid. However, it stipulates that the successful bidder need not be the lowest cost bidder, where the procuring entity can show good grounds for rejecting the lowest bid. 164 Getting the Deal Through public procurement 2008

5 Update and trends The regulation of public procurement in Nigeria is an emerging trend geared towards ensuring that due process is followed in public procurement procedures. The Federal Government is making concerted efforts to ensure that the principles of transparency, competition and accountability are adhered to by all stakeholders involved in public procurement. It is to this end that the Federal Government promulgated the Public Procurement Act 2007 on 4th June 2007 with the stated objective of harmonising existing government policies and practices by regulating, setting standards and developing the legal framework and professional capacity for public procurement in Nigeria. 32 What is the required process for dealing with abnormally low tenders? The Act makes no provision for dealing with abnormally low tenders. authority involved in that particular proceeding. For an action to be justiciable, the bidder would be required to prove that an offence was committed as a result of an omission or breach by the contracting authority. 33 How can a bidder, that would have to be excluded from a tender procedure because of past irregularities, regain the status of a suitable and reliable bidder? Is self cleansing an established and recognised way of regaining reliability? The Act does not stipulate the steps that can be taken by a bidder to regain the status of a suitable and reliable bidder. However, there is nothing in the Act to suggest that a bidder that has been excluded from a particular procurement procedure would be unable to bid in subsequent proceedings where the circumstance giving rise to the exclusion has been rectified. In particular, the Act sets out the grounds for excluding bidders. Some of those grounds are restricted by time, for example where a supplier, contractor or consultant during the three years prior to the commencement of the procurement proceedings in issue, failed to perform or to provide due care in the performance of any public procurement. In this scenario, once the three-year period has elapsed, the bidder would be entitled to bid again. Review proceedings and judicial proceedings 34 Which authorities may rule on review applications? Under the provisions of the Act, a bidder may seek administrative review for any omission or breach by a contracting authority. A complaint by a bidder against the contracting authority shall first be submitted in writing to the accounting officer within the contracting authority. Where the complainant is dissatisfied with the decision of the accounting officer, the complainant may apply to the BPP. If still dissatisfied with the decision of the BPP, the complainant may appeal to the Federal High Court. 35 How long does a review proceeding or judicial proceeding for review take? The Act stipulates that an application for review made to an accounting officer shall be decided within 15 days of receiving the complaint. Where the complainant is not satisfied with the decision of the accounting officer, the complainant may complain to the BPP. The BPP is required to reach a decision within 21 days of receiving the complaint. Where the BPP fails to render its decision within the stipulated time, or the complainant is not satisfied with the decision of the BPP, the complainant may appeal to the Federal High Court within 30 days of receiving the decision. 37 What are the deadlines for a review application and an appeal? A complaint by the bidder must be submitted to the accounting officer within 15 working days from the date the bidder first became aware of the circumstances giving rise to the complaint. The accounting officer is required to make a decision in writing within 15 working days of receiving the complaint. Where the bidder is not satisfied with the decision of the accounting officer, the bidder may make a complaint to the BPP within 10 working days of receiving the accounting officer s decision. The BPP must reach a decision within 21 working days of receiving the complaint. An appeal to the Federal High Court must be made by the bidder within 30 days of receiving the decision of the BPP. 38 Does an application for review have an automatic suspensive effect blocking the continuation of the procurement procedure? An application for review made to the BPP shall have a suspensive effect on the continuation of the procurement procedure. However, the suspension is not automatic as the Act requires the BPP to take positive steps to promptly suspend any further action by the contracting authority until the matter is settled. 39 Must unsuccessful bidders be notified before the contract with the successful bidder is concluded? Unsuccessful bidders are not required to be notified until after the successful bidder has been notified. The Act specifically states that information and recommendations concerning awards shall not be disclosed to bidders or persons not officially concerned with the evaluation process until the successful bidder has been notified of the award. 40 Is access to the procurement file granted to an applicant? Access to the procurement file would be granted to an applicant who was involved in the proceedings but was not awarded the contract. An applicant may also apply to the court to order a disclosure of the procurement proceeding records, prior to the award of the contract. 36 What are the admissibility requirements? A bidder involved in a procurement proceeding shall be considered to have standing to bring an action against the contracting Getting the Deal Through public procurement Is it customary for disadvantaged bidders to file review applications? The Act makes provision for the filing of review applications. Given the recent promulgation of the Act, this is not yet customary. 165

6 42 May a contract be cancelled or terminated if the procurement procedure that led to its conclusion violated procurement law? According to the Act, where a contract is purported to be awarded without a Certificate of no objection to Contract Award issued by the BPP, the contract would be deemed to be a nullity. A Certificate of no objection is a document issued by the BPP evidencing and authenticating that due process has been followed in the conduct of a procurement proceeding and allowing the contracting authority to enter into a contract or effect payments to contractors or suppliers from the treasury. Consequently, a contract may be cancelled or terminated where a Certificate of no objection has not been issued in respect of the contract. 43 Is legal protection available in cases of a de facto award of a contract, namely, an award without any procurement procedure? The Act makes no provision for the award of de facto contracts. All public procurements are expected to comply with the procurement procedures, as stipulated in the Act. Gbenga Oyebode Olubunmi Fayokun 35 Moloney Street Tel: / Lagos Fax: Nigeria Getting the Deal Through public procurement 2008

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