REQUEST FOR THE INVESTIGATION OF ALLEGED BY- PASSING OF PROCUREMENT LAWS BY NIGERIAN PORTS AUTHORITY ON CONTRACTS WORTH OF N717 BILLION.

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Civil Society Network Against Corruption (CSNAC) is a coalition of over hundred and fifty Anti-corruption organisations whose primary aim is to constructively combat corruption vigorously and to ensure the effective monitoring of the various Anti-graft agencies in the fight against corruption and contribute towards the enthronement of transparency, accountability, probity and total commitment in the fight to eradicate corruption in Nigeria.

In the publication of 29th November, 2016 by PremiumTimes newspaper, it was revealedhow officials of Nigerian Ports Authority (NPA) allegedly by-passed procurement laws to corner N717 billion worth of contracts. In a month-long investigation by the newspaper, NPA’s officials were allegedly found to have brazenly and fraudulently by-passed Nigeria’s public procurement law in awarding multi-billion Naira contracts to handpicked contractors.

It was discovered, according to the Newspaper, that at least N717 billion in juicy contracts have so far been illegally awarded to a single contractor, violating the provision of the Nigerian Public Procurement Law (PPA) that says contracts of such magnitude should go through open competitive bidding.The PPA Act, enacted in 2007, prescribes principles by which public procurement entities within the various Federal Government Ministries, Departments and Agencies should conduct their affairs. These include honesty, integrity, transparency, accountability, fair competition, economy and efficiency and value for money in all transactions, large or small, and also prescribed the expected behaviour of every public officer in the conduct of public procurement.

The spirit of the Act is to offer all interested contractors, suppliers and consultants a level-playing field for competition and to expand the purchaser’s options and opportunities as well as serving as a key deterrent to collusion and corruption, submission of inflated or deflated tenders, followed by delayed or defective performance.The law also frowns at procurement officials betraying and abusing public trust for personal gain. Thus, to avoid these pitfalls, the Procurement Act stipulates that bids shall be invited only from qualified/approved contractors/suppliers competent to do the work or provide the services to the nominated standards.It also says that contracts shall be awarded to the lowest evaluated responsive bidder, who shall meet all technical requirements and standards on the basis of competitive tendering unless overriding technical grounds exist to justify any other course of action.

Despite the PPA Act, PremiumTimes disclosed how NPA officials carried out unparalleled impunity by ingeniously creating a way of circumventing Nigeria’s procurement regulations through carefully engineering what appears to be a fraudulent process of disguising contracts as Joint Venture projects between the authority and companies of their choosing. Whereby, the processes of choosing the joint venture partners are never thrown open as well as the procedures for awarding contracts to them.

PremiumTimes further disclosed that the one company featuring prominently in the so-called joint venture arrangement was  Bonny Channel Company Limited. In its own official document, Bonny Channel Company Limited (BCC) describes itself as a Public Private Partnership (PPP) arrangement between the NPA and The Channel Management Company, through a joint venture agreement signed on June 23, 2014.While the Channel Management Company, TCMC, is described as a technical consortium made of Dredging International, Vinci and IPEM, the share structure arrangement gives 60 per cent to NPA and 40 per cent to TCMC.

It was revealed that BCC is to “create and maintain a safe navigational passage for all marine users to and in the eastern ports of Bonny Island, Onne, Okrika and Port Harcourt”. It isalleged that for the past ten years, beginning from 2006, BCC carried out two major contracts a year; one in Rivers Port and the other in Onne Port. In 2006, the contract sum allegedly awarded without passing through the standard procurement process was 127 million dollars.Total contract figure were 163.2 million dollars,195.4 million dollars, 143.4 million dollars, 192.1 million dollars in 2007,2008,2009,2010 respectively. And in year 2011,the sum of contracts awarded to BCC for projects in Rivers and Onne ports was 327 million dollars. Total contract sum was 300.2 million dollars in 2012; 296.3 million in 2013; 328.6 million dollars in 2014 and 286.2 million in 2015.

Surprisingly, it was also discovered that the same contract of “Capital and Maintenance Dredging” is awarded to the BCC Joint Venture year after year, leading to BBC being awarded a total of $2.4 billion (or N717.3 billion) contracts over the past 10 years, in disregard for the nation’s procurement law.

PremiumTimes reported that there are nine essentials steps in public procurement in Nigeria. They include (1) efficient procurement plan driven by needs assessment; (2) adequate appropriation; (3) advertisement: (4) transparent pre-qualification /tender; (5) bid submission /opening; (6) bid evaluation – technical and financial; (7) tender board /FEC approval; (8) contract award /execution; (9) project implementation(details of this process are captured in sections 17 and 24 of the Public Procurement Act). The transparency steps for procuring goods, works and services must begin with the public posting of procurement notices and solicitations on a Notice Board located in a public area while Requests for Proposals (RFPs) must also be advertised in at least two national newspapers of general circulation – and the Federal Tender’s Journal. And the same announcement must be made in the government official gazette by placement on the procuring entities’ website.Therein, the name of the procuring entity must be stated, the name or nature of the contract; items to be procured; contact information for obtaining tendering documents,cost of the tendering documents, place and deadline for tender submission; Required Bid security amount and format; the place, date and time of tender opening; and the minimum qualifications bidders must meet.

Other requirements includes transparent pre-qualification of bidders; submission/receipt of tenders; evaluation of tenders; comparison of tenders; recommendation of the winning bid to Tenders Board /FEC; issuance of Certification of ‘No Objection’ to Contract Award by the Bureau of Public Procurement (BPP); debrief the bid losers on request; resolve complaints and disputes, if any; obtain and confirm the validity of any performance guarantee; announce and publicize contract awards; and execute all contract agreements. Hence, to forestall cases of sweetheart deals and protect the integrity of the process, formulators of the Procurement Act found it pertinent to include a provision forbidding communication with bidders. It says: “At no stage shall the composition, names or any other details of any of the above committee members (the Technical and Financial Evaluation sub-committees) be divulged to the bidders. Other than when direct negotiations are required with the bidders, members of the above named committees shall not communicate directly with the bidders. All such communications shall be done through the procuring entity.In the contrary, it was disclosed that the NPA has ‘superior’ ideas to the Procurement Law (which spelt out statutory procurement guidelines for all Federal Ministries, Departments and Agencies) by seeing the Act as a clog in the wheel which should be avoided as much as possible.

It was further revealed that BCC (NPA top managers and TCMC Consortium)justified the joint venture with six reasons (one of which is “the need for an uninterrupted project”that may arise from frequent bidding and due processes which are common in one-off government contracts).The second reason being to “provide the additional technical capacity, mainly with regards to capital and maintenance dredging, bathymetric survey, buoys maintenance and surveillance, continuous monitoring of the access channel, wreck removal, training, planning and management”. Though, these are the statutory duties of the NPA but routinely contracted out under a joint venture. The NPA has cleverly resisted transparency by resorting to what is called restricted tendering method or in some cases single bid method, none of which subjects the procurement process to any form of competition. And the only competition that exists is among the different companies or consortium begging to give an arm just to be NPA’s joint venture partner. Although, the Procurement Act makes provision for direct contracting, it is expected that it would only apply to exceptional cases(when the contractor is needed for early delivery of essential goods in emergency operations; or when an equipment required is proprietary and there is only one source and no alternative equipment or products with equivalent performance characteristics are available). The Act also recommends direct contracting when there are only a few known suppliers or exceptional reasons such as emergency actions related to a major natural disaster which may justify the waiving of advertising of competitive bids.

PremiumTimes further allegedly gathered that this ‘deal’ of joint venture partnership is not limited to BCC in NPA’s circumvention of the nation’s procurement laws. Investigations by this newspaper showed that the agency arbitrarily awards N750million worth of contracts annually to SeaView Properties Ltd, another so-called joint venture, to provide various categories of environmental services.The company in turn awards these contracts in batches of N2million to sub-contractors. And the contract award by the sub-contractor is done through an internal advert process that is not subjected to the public procurement law. Premium Times reported that a top official of the authority  disclosed that the threshold is maintained at N2million to retain the award threshold to domicile with the MD of the company and below what is required for public tender. These small lots of N2million are found to be inefficient and cumbersome as  the scope does not seek to maximize value for money but just to ensure that the contract award is not subjected to public tender.”

It was further revealed that the NPA also set up joint venture structures that gave birth to companies such as Lagos Channel Management (LCM) and Calabar Channel Management Limited (CCM). PremiumTimes investigation allegedly discovered that the same CCM has a working relationship with another company called Nigeria West Minister Dredging Marine Limited. It is these handpicked companies, some of them amorphous, that NPA parades to give a semblance of compliance with the Procurement Act under its restrictive tendering. Other times it is just single bid process involving only one company. The Lagos Channel Management Company manages the Lagos Pilotage District(incorporated in August, 2005 by NPA with an equity shareholding of 60 percent and 40 percent equity to the Joint Venture partner, Depasa Marine International).

Further revealed is another NPA’s joint venture called Continental Shipyard Limited. This is described by NPA as a joint venture partnership between the Nigerian Ports Authority and Dockyard Engineering Service Limited of Geneva Switzerland.“The primary purpose for the establishment of the Joint Ventures is to turn around the Dockyard as a lucrative commercial enterprise through operating, up-grading and modernizing the facility to provide essential support forconstruction, repair, manufacturing and maintenance of vessels, crafts, rigs etc”as stated on NPA website.

The Calabar Channel Management Company Limited; a newly established Joint Venture arrangement between Niger Global Engineering and Technical Company Limited with the Nigerian Ports Authority for what is described as Management Contract on Dredging of Calabar Channel. The NPA holds 60 percent equity while the consortium led by Messrs Global Engineering and Technical Company Limited has 40 per cent shareholdings.Yet another of NPA’s joint venture, although incongruous with the organization’s core competence, is Agura Hotels Limited in Abuja which is listed as the agency’s joint venture in the hospitality industry. PremiumTimes affirmed that there are no available information on how much contracts the NPA has so far awarded to the Calabar Channel Management Company Limited under the joint venture arrangement. None too for Continental Shipyard Limited and the Lagos Channel Management Company. As the N717 billion naira is the value of contracts awarded to just one joint venture partner, Bonny Channel Company (BCC) over the last  ten years.

PremiumTimes reported that explaining its joint venture arrangement with the NPA, BCC (NPA and TCMC) says the works it undertook were “carried out at a cost effective way based on the fact that competitive rates charged to NPA are more or less within the same range with that for third-party jobs carried out by BCC”.

According to Premiumtimes, Industry watchers queries NPA’s claim to competitive rates saying it is the statutory duty of the Bureau of Public Procurement (BPP), not that of NPA or BCC to determine what is a good price for a contract. And BPP itself, alarmed by the manipulations and total lack of transparency at NPA stepped forward to say that the NPA joint venture agreements “contained terms that were skewed and disadvantageous to the financial interest of the Nigerian Ports Authority”.

PremiumTimes also disclosed that in August 2016, the new Managing Director of NPA, Hadiza Bala Usman, was quoted by the News Agency of Nigeria (NAN) as saying there was need to look at some of the funds expended on capital and maintenance dredging.She said the funds used for such dredging projects in the past “should not be that high’’.“She stated that it’s good time for NPA to compare capital dredging and maintenance dredging’’. When Ms. Bala Usman was contacted, she said she had been taking stock of affairs at the NPA since she assumed duties in July, and that one of the areas her team was scrutinising was theprocurement system in the agency.She further stated that the procurement system will surely be overhauled to ensure it complies with the PPA and Bureau of Public Procurement’s regulations,” “For instance, at the second board meeting of Seaview Properties last week, it was directed that henceforth, contracts will be classified into lots that are efficient and the authority will advertise them in line with BPP and if the subsidiary or joint venture wants to bid, they can, alongside other companies”.“NPA will commence the process of the new lot sizes and scope and will have a public tender process of awarding the contracts. She also mentioned that by 1st quarter of 2017, the process will be completed and new contractors that have gone through a public tender process will emerge and take over and this will also apply to other joint ventures and subsidiaries as a way forward.”

CSNAC ishereby demanding an urgent investigation into this crucial matter in order to entrench corruption free MDAs in Nigeria. We thank you for your usual understanding and cooperation.

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