SB 232: Public Procurement (Est. etc.) Act 2004 (Amendment) Bill, 2016

Bill Analysis:

SHORT TITLE

Public Procurement Act (Amendment) Bill, 2016

OBJECTIVE OF THE BILL

The objective of the Bill is to:

• Provide for and adopt a local content policy and timely completion of procurement processes;

SCOPE

The analysis of the Bill was done before the Committee consideration and reporting

PROPOSED AMENDMENT

Clause 2 proposes to insert “Subject to the provisions of the Infrastructure Concession Regulatory Commission (ICRC) Act” to Section 15(1) which states that the provisions of the Act shall apply to all procurement of goods, works and services carried out by the government and its entities as well as all entities that derive at least 35% of funds appropriated to it from the Federation share of Consolidated Revenue Fund

Clause 3 proposes to amend Section 34 (1) & (2) by replacing the word “may” in subsection (1) with “shall”; and replacing the phrase “intends to allow” under subsection (2) with “has allowed”.

Subsection (1) deals with granting a margin of preference in the evaluation of tenders when comparing that of domestic bidders to foreign bidders.

Subsection (2) provides that bidding documents shall clearly indicate any preference to be granted to domestic suppliers

Subsection (3) proposes that the margin of preference be applied to only tenders under international competitive bidding

Subsection (4) proposes that the Bureau of Public Procurement shall regulate from time to time the limits and formulae for the computation of margins of preference and determine the contents of goods manufactured locally.

Clause 4 proposes to increase the mobilization fee from 15% as provided under Section 35 of the Act, to 35% for suppliers or contractors

ANY SIMILAR EXISTING BILL

There are several Public Procurement Act (amendment) Bills before the National Assembly namely - Public Procurement Act 2007 (Amend.) Bill, 2016 sponsored by Hon Oluwole Oke (HB 475); Public Procurement Act (Amend) Bill, 2016 sponsored by Sen. Sam Egwu (SB 232); and Public Procurement Act 2004 (Amend.) Bill sponsored by Hon. Abbas Tajudeen (HB 541). Two other Bills on PPA amendment before the National Assembly are Public Procurement Act 2004 (Amendment) Bill 2016 (SB 238) sponsored by Sen. Enyinnaya Abaribe and Public Procurement Act (Amendment) Bill, 2016 (HB 815).

Each Bill is amending a different section of the Principal Act are at different stages. While SB 232 and HB 475 (see full names above) have been passed at the Senate and House of Representatives respectively, HB 541 sponsored by Hon. Abbas Tajudeen has not yet passed at the House of Reps. The other two (SB 238 & HB 815) are still at first reading stage at the time of this analysis.

CONCLUDING ISSUES

Section 35 of the Act requires that a 15% mobilization fee be paid to the contractor or supplier, while the amendment seeks to increase to 35%, which is a substantial percentage. Though a substantial amount could assist the contractor or supplier start work and implement the project to a reasonable level, it may likely lead to corruption and demand for kick-backs from contractors. This figure needs to be reviewed downwards to match international procurement best practices and standards.

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