Explainer: What you should know about contract awards in Nigeria

The Federal Executive Council (FEC) is the highest body that approves/awards contracts in Nigeria and its stamp on a contract signals an authority for contractors to smile to the bank.

According to the Bureau of Public Procurement (BPP) the council, which is headed by the President, the Vice President and ministers, usually gives the nod to contracts that exceed N500 million, though, the amount varies on the kind of activity to be procured.

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The threshold is the parlance used to determine who has authority over contract approval with a certain financial bracket. In approved revised thresholds for service-wide application, the hierarchy of award goes as follows: FEC; Ministerial Tenders Board; Parastatal Tenders Board; Accounting Officer: Permanent Secretary and Accounting Officer Director General/CEO, with each having its threshold on what it can and not approve.

However, the listing of FEC as an approving body by BPP is contentious. An activist and human rights lawyer, Femi Falan declared that the act of awarding contracts by FEC is unconstitutional as there is no law that gave it such responsibility.

According to him, “the Federal Executive Council has no power to award contracts as it is done on a weekly basis, that is the duty exclusively conferred on the public procurement bureau to be supervised by the National Council on Public Procurement (NCPP). But since 2007, successive regimes have failed to constitute the council, it is an [sic] eleven-member council that has five government representatives and six professionals who are part-time members of the body. For a regime that loudly proclaims to be fighting corruption, that body ought to be constituted instead of the weekly awards of contracts… there is no provision for the federal executive council to award contracts.”

What the laws on contract say

The Public Procurement Act 2007 contains laws that regulate contract award/approval in the country. The act came up as there was no clear law regulating the public procurement process, leading to shoddy deals and corruption in the procurement process. In the award of contracts, there was no transparency and accountability to the citizenry. With the secrecy, Olusola et al. stated that a report by the World Bank Country Procurement Assessment Report (CPAR) disclosed that Nigeria was losing an average of $10 Billion (Ten Billion United states dollars) annually due to various abuses associated with public procurement and contract awards.

2007 finally saw the assent on the bill that sought reform on the procurement process and it saw the establishment of the Bureau of Public Procurement. The preamble of the act says the act is “to establish the National Council on Public Procurement and the Bureau of Public Procurement as the regulatory authorities responsible for the monitoring and oversight of public procurement, harmonizing the existing government policies and practices by regulating, setting standards and developing the legal framework and professional capacity for public procurement in Nigeria.”

With the new regulation, it was hoped that the regulatory institution will be given unfettered power to carry out its activities but as noted by Falana, NCPP which was supposed to oversee and monitor the bureau is however yet to be inaugurated 11 years after.

Part 1, section 2 of the act detailed the functions of the council, which is to “consider, approve and amend the monetary and prior review thresholds for the application of the provisions of this Act by procuring entities; consider and approve policies on public procurement; approve the appointment of the Directors of the Bureau; receive and consider, for approval, the audited accounts of the Bureau of Public Procurement; and approve changes in the procurement process to adapt to improvements in modern technology; give such other directives and perform such other functions as may be necessary to achieve the objectives of this Act.

The composition of the council was fashioned out to ensure accountability as the onus was rest not rest on the government alone as members were drawn from the private sector for transparency and sturdy perusal of contracts.

Who is responsible for procurement?

Section 17 of the act stated that “Subject to the monetary and prior review thresholds for procurements in this Act as may from time to time be determined by the Council, the following shall be the approving authority for the conduct of public procurement; in the case of (i) a government agency, parastatal, or corporation, a Parastatals Tenders Board; and (ii) a ministry or extra-ministerial entity, the Ministerial Tender Board.

The parastatal tenders’ board is headed by the Director-General or CEO while the ministerial tenders’ board is headed by Permanent Secretary and both double as the Accounting Officers to approve contracts in their threshold. However, their power is subject to the approval of the NCPP, through the BPP.

With the NCPP yet to be inaugurated, FEC usurped its power as to the void created by the federal government refusal to obey the law it passed into law with its consent.

Martins Oloja, a columnist with The Guardian wrote that when he confronted former President Jonathan’s spokesperson, Dr Rueben Abati, on the legality of FEC’s action, he retorted, “What would you want the FEC to do after the inauguration of the Council.” His remarks show that the act of not inaugurating the council is deliberate to give FEC an authority that is not bestowed on it by law.

In an opinion piece Ebuka Nwankwo opined that not constituting the NCPP, BPP has been turned into a rubber stamp institution.

According to him, “this is a major flaw in the fight against corruption. The NCPP is best suited to make guidelines concerning projects that are supposed to be given special procurement status. Also, by not inaugurating the NCPP, the President exposes his ministers to corruption. Presently, ministers, in conjunction with the unsupervised BPP, formulate all kinds of policies governing procurement. This shouldn’t be.”

He added that the non-inauguration of the NCPP would always be a major distraction to current ministers, as they are likely to spend a lot of effort attending to contracts. And this is on the premise that they are not there because of contracts.

What FEC does

In the revised thresholds for service-wide application BPP says it issues “No Objection” to award/ FEC approves. It lists the contract as starting from N100 million and above for Goods; N500 million and above for Works; N100 million and above for non-consultant services and N100 million and above for consultant services.

Prof. Wahab Egbewole (Former Chairman, Nigerian Bar Association, Ilorin branch) said “after the obliteration of Tenders Board within the Federal Civil Service and with the advent of the Bureau for Public Procurement, that leadership has been given to them and since the FEC is actually presided over by the President, I think they can award contracts and they should be able to award contracts because at the end of the day, the only way the government can run is through such a procedure.”

“Whether we like it or not, we must give them a level of trust that they actually represent us because we are the ones that gave our mandate to the President to appoint ministers to be members of FEC. Do not forget that these ministers have passed through Senate screening as it were, which on its own is also an indication that somehow legitimate power has been given to them.”

On if external forces reign on the federal government to eventually inaugurate the council, A lawyer, Giwa Victor said contracts approved by FEC would be rendered void and not illegal as the body has been institutionalised to carry out the task it is not asked to by law.