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Make Public Procurement And Fiscal Responsibility Acts More Effective

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One of the objectives of the National Economic Empowerment and Development Strategies (NEEDS) of the former President Olusegun Obasanjo was to eliminate waste and corruption in public institutions and government. While the Federal Ministry of Finance initiated the Fiscal Responsibility Act, the office of the Budget Monitoring and Price Intelligence Unit at the Presidency initiated the due process.

The due process was later translated to the Public Procurement Act which sets out to regulate the procurement of goods and services, works and construction contracts in the public sector.

It also provides for adequate legal framework and financial mechanism to achieve the laudable goals of government. However, Obasanjo was unable to sign the bills into law before the expiration of his tenure in 2007. They were signed by the late President Umaru Yar’Adua.

Highlights of the Act included the  provision for the establishment of Bureau of Public Procurement and National Council on Public Procurement to be headed by a chairman; bringing all procurement plans to open competitive bidding; stipulating penalties for delayed payments and by implication penalties for delayed performance; fixing of contract guarantee at 10 per cent of contract value or mobilization fee, whichever is higher; restriction of mobilisation fee to 15 per cent (this has been increased to 25 per cent by the new amendments at the National Assembly) of contract value for local contractors and suppliers and 10 per cent for foreign contractors. The Bureau also has powers to undertake compliance, surveillance audit, and investigation of process and statutory instructions, administrative review and enforcement. Funding of the Bureau will be a direct line charge equivalent to 0.5 per cent federal capital votes in addition to subvention fees and charges.

The Fiscal Responsibility (Act) 2007 is one of the strategies for reforming the Nigerian economy and ensuring greater accountability, transparency and prudent management of the nation’s resources in all the three tiers of government, including their agencies and parastatals. It is the Act that provides for the establishment of Bureau for Public Procurement which is charged with the responsibility of monitoring and enforcing the Act.

One of the challenges of  the Public Procurement and the Fiscal Responsibility Acts is the inability of federal and state governments to constitute the relevant commissions and Board members as required by the Acts. Rather, their functions are been executed through the federal and the state executive councils.  This contravenes the provisions of law setting them up. Another challenge of the Acts is the inability of many state and most local governments to domesticate them. This has created a situation in which 80 per cent of corruption at the state and local governments are perpetuated through the award of construction contracts. Only few states and local governments advertise and call for tender as required by law.

Federal and States’ Tenders Boards in most states have been rendered impotent. Many states do not even have Tenders Boards. It is only the state governors or the President through the Ministries, Departments and Agencies that authorise award of any reasonable contract. The result is poor execution of contracts, improper supervision and monitoring.

There is, therefore, the need to have national costing guidelines for various projects awarded in all tiers of government in Nigeria to reduce corruption. There is also the need for the law to provide stiff penalty including percentage refund of the already paid amount by the contractor and revocation of membership of professional bodies by any professional who confirms payments for any failed or poorly executed contract. In some states, particularly Benue and Katsina, the process of domesticating the Acts, including the public procurement council or commission, have gone into second reading. It is expected that all relevant commissions or councils and Tenders Boards will be put in place when the Bills become law.

The Bills must go into public hearing at the State Houses of Assembly. Presently, the Fiscal Responsibility Act of 2007 is undergoing amendments at the National Assembly. It is therefore pertinent that state Houses of Assembly would have to reflect the ongoing amendments at the National Assembly in their respective State Assembly before passing the Bills into law.

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