Public Procurement (Amendment) Bill, 2016

INTRODUCTION

The Senate on Thursday 16^TH of June, 2016 passed the Public Procurement Act 20‎07 (amendment) bill 2016 into law. The bill which is explained by its long title to be a bill for an Act to amend the Public Procurement Act to provide for and adopt Local Content Policy and timely completion of procurement processes and other related matters was sponsored by Senator Sam Egwu (PDP-Ebonyi North) and has 5 sections.

ESSENCE OF THE BILL

The major essence of the bill was to amend the existing Public Procurement Act 2007 to favour local manufacturers and ensure speedy completion of projects.

SALIENT PROVISIONS OF THE BILL

1. Standard Procurement Processing Time

Another laudable provision of the new Act is that it has shortened the process of awarding contracts by reducing the time spent on contract processing. This is as shown in the table contained in Section 4 as follows:

STANDARD PROCUREMENT PROCESSING TIME FOR QCBS[1]

This speedy procurement processing will go a long way in ensuring that most of the funds are available as quickly as possible and that jobs are actually completed timeously.

1. Infrastructure Concession Regulatory Commission (ICRC) Act

The Bill seeks to amend section 15 of the Act by substituting for subsection (1) thereof a new subsection. The difference between the old and new provisions is hereunder considered.

Old provision[2]

15.-(1) The provisions of this Act shall apply to all procurement of goods, works, and services carried out by :

(a) the Federal Government of Nigeria and all procurement entities;

(b) all entities outside the foregoing description which derive at least 35% of the funds appropriated or proposed to be appropriated for any type of procurement described in this Act from the Federation share of Consolidated Revenue Fund.

(2) The provisions of this Act 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 first sought and obtained.

New provision[3]

Section 15 (1) of the Principal Act is amended by substituting for subsection (1) thereof a new subsection, that is:

Subject to the provisions of the infrastructure Concession Regulatory Commission (ICRC) Act, the provisions of this Act shall apply to all procurement of goods, works and services carried out by:

• The Federal Government of Nigeria and all procurement entities
• all entities outside the foregoing description which derive at least thirty-five per cent of the funds appropriated or proposed to be appropriated for any type of procurement described in this Act from the Federation share of Consolidated Revenue Fund”

By the above inclusion, the provisions of the ICRC Act relating to procurement have to be considered side by side with the provisions of the Public Procurement Act in the procurement of goods, works and services.  Primarily, the ICRC Act sets out the requirements for competition and private sector participation in all public procurement as well as requisite approvals for all Public-Private Partnership (PPP) contracts.

• Mobilization Fee

Section 4 sought to amend section 35 of the principal Act by substituting for subsection (1) thereof a new subsection.

Old provision[4]

35.-(1) In addition to any other regulations as may be prescribed by the Bureau, a mobilization fee of not more than 15% may be paid to a supplier or contractor supported by the following:

New provision[5]

Section 35 of the principal Act is amended by substituting for subsection (1) thereof a new subsection, that is:

“(1) In addition to any other regulations as may be prescribed by the Bureau, a mobilization fee of not more than 25% may be paid to a supplier or contractor supported by the following:

By the above proposed amendment, the bill sought to jerk up mobilization fee from 15 per cent to 25 per cent that may be paid to a supplier or contractor. The chairman of the Senate Committee on Procurement, Joshua Dariye however explained while the committee was giving their report on the bill that the committee rejected part of the amendment proposed by the Bill, which seeks to review upwardly the mobilization fee to be paid contractors from 15% to 25%, saying this is in view of the current downturn in the nation’s economy whereby a considerable percentage of the national budget would be financed through borrowing. Consequently, this part of the bill was rejected and as such, the mobilization fee still stands at 15%.

1. Mandatory procurement of made-in-Nigeria goods

By section 3, the principal Act is amended to the following extent:

Old provision[6]

34.-(1).A procuring entity may grant a margin of preference in the evaluation of tenders, when comparing tenders from domestic bidders with those from foreign bidders or when comparing tenders from domestic suppliers offering goods manufactured locally with those offering goods manufactured abroad.

 (2) Where a procuring entity intends to allow domestic preferences, the bidding documents shall clearly indicate any preference to be granted to domestic suppliers and contractors and the information required to establish the eligibility of a bid for such preference.

New provision[7]

Section 34(1) and (2) of the Principal Act is amended by substituting the existing subsections (1) and (2) with new subsections (1) and (2) as follows:

(1) A procuring entity shall grant a margin of preference in the evaluation of tenders, when comparing tenders from domestic bidders with those from foreign bidders or when comparing tenders from domestic suppliers offering goods manufactured locally with those offering goods manufactured abroad.

(2) Where a procuring entity has allowed domestic preferences, the bidding documents shall clearly indicate any preference to be granted to domestic suppliers and contractors and the information required to establish the eligibility of a bid for such preference.

Here, what the legislators have done is to change the operational word from ‘may’ to ‘shall’ thereby making it compulsory for a procuring entity to grant a margin of preference to locally produced goods.

Consequently, Ministries, Agencies and Departments will be mandated to purchase certain percentage of made-in-Nigeria goods. This will hopefully close the gap between the consumption of locally-made goods and foreign goods and as such, contribute largely to the development of the economy.

This is to encourage local manufacturers and champion procurement of made in Nigeria goods. It will encourage Nigerians to patronize locally-made goods thereby stimulating the growth of the Nigerian economy by creating more opportunities for small and medium scale business owners.

Kindly share your opinions on this newly passed Act.

[1] Section 4 Public procurement (Amendment) Bill, 2016

[2] Section 15 Public Procurement Act, 2007

[3] Section 2 Public Procurement (Amendment) Bill, 2016

[4] Section 35 Public Procurement Act, 2007

[5] Section 4 Public Procurement (Amendment) Bill, 2016

[6] Section 34 Public Procurement Act, 2007

[7] Section 3 Public Procurement (Amendment) Bill, 2016