CURBING CORRUPTION IN PUBLIC PROCUREMENT PROCESS IN NIGERIA

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  • Name: CURBING CORRUPTION IN PUBLIC PROCUREMENT PROCESS IN NIGERIA
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ABSTRACT

This study examines the procurement process in Nigeria with a view to assessing the
procurement act, as well as investigating the effects of corruption in public
procurement on the masses and practical suggested ways of curbing corruption in our
procurement process. The study also seeks to assess different policies and regulation
earlier adopted and used to curb corruption in the system.

A broad review of literature was carried out on procurement act, the possible ways of
achieving proper implementation of the act and other possible means of curbing
corruption in Nigeria Public Procurement.

Data were collected with the aid of well-structured questionnaires administered on
researchers/construction professionals like the Architects, Quantity Surveyors,
Builders, Engineers, Estate Surveyors and other professionals like Accountants,
Financial Managers, Bankers, Lawyers and journalists in government offices, banks,
construction companies, media houses, research institutes and consulting firms in
Enugu, Anambra, Ebonyi, Imo and Abia states of Eastern Nigeria. The data generated
were further analyzed using descriptive statistical tools such as percentages, mean
averages, frequencies and relative importance index ranking as well as comparison of
results from participants groups respectively.

In conclusion, the results and interpretation obtained formed the basis for the
conclusion drawn and recommendation given.

TABLE OF CONTENTS

Certification ———————————————————————————–ii
Dedication ———————————————————————————–iii
Acknowledgment —————————————————————————iv
Table of contents —————————————————————————–v
List of table ——————————————————————————–ix
Abstracts ————————————————————————————-x
CHAPTER ONE
1.0 Introduction —————————————————————————1
1.1 Background of the study ———————————————————–1
1.2 Statement of the research problem ———————————————-5
1.3 Need for study ————————————————————————6
1.4 Aim and objectives ——————————————————————8
1.5 Research question ——————————————————————–8
1.6 Scope of the study ——————————————————————–8
1.7 Expected contribution to knowledge ———————————————-9
1.8 Lists of abbreviations ————————————————————–10
1.10 Definition of important terms —————————————————-11
CHAPTER 2
2.0 Literature review ——————————————————————–13
2.1 Background to the problem ——————————————————-13
2.2 Due process and procurement in the Nigerian public sector —————–17
2.3 Public procurement —————————————————————–24

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2.4 Fundamental principles of public procurement ——————————–26
2.4.1 Ethics in public procurement ———————————————-28
2.5 Legal frameworks of procurement ———————————————-32
2.5.1 Essential elements for formation of a valid contract ——————32
2.5.2 Evidence of contract ——————————————————34
2.5.3 Guiding principles for assessment —————————————34
2.6 Procurement and contract strategies ———————————————35
2.6.1 Private finance initiative (PFI) ——————————————-35
2.6.2 Prime contracting ———————————————————–35
2.6.3 Design & build ————————————————————-36
2.7 Tendering process ——————————————————————36
2.7.1 Short listing/pre-qualification ————————————-36
2.7.2 Documentation —————————————————–37
2.7.3 Awarding contracts and declining tenders ———————39
2.8 Procurement electronically ——————————————————–40
2.8.1 E-commerce —————————————————————–40
2.8.2 Technology aiding e-procurement ————————————–41
2.8.3 Application models ———————————————————41
2.9 Anti-corruption activities ———————————————————43
2.9.1 Government anti-corruption initiatives ——————————–43
2.9.2 Other anti-corruption laws ————————————————43
2.9.3 The organization of public procurement ——————————45
2.10 Important elements to reduce opportunities for corruption —————–46
2.10.1 Disturbance of corrupt relationships ———————————-46
2.10.2 Competition and technological competence —————————-48
2.10.3 International competition ————————————————49
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2.10.4 Supply-chain corruption ————————————————-49
2.10.5 Tenders on the internet —————————————————50
2.10.6 Detecting corruption ——————————————————52
2.11 Ways of curbing corruption ——————————————————-53
CHAPTER THREE
3.0 Research methodology ————————————————————-69
3.1 Introduction ————————————————————————-69
3.2 Research design ———————————————————————69
3.3 Sample frame (population of study) ——————————————–70
3.4 Sample procedure ——————————————————————70
3.5 Data collection instrument ——————————————————–70
3.6 Questionnaire design and administration ————————————–71
3.6.1 Design of questionnaire —————————————————71
3.6.2 Administration of questionnaire —————————————-71
3.6.3 Reliability and validity on instrument ———————————72
3.7 Data analysis ————————————————————————72
3.8 Constraints —————————————————————————74

CHAPTER FOUR
4.0 Data analysis and results ———————————————————–75
4.1 Introduction ————————————————————————-75
4.2 Presentation and analysis of data ————————————————-75
4.3 Background information ———————————————————–75
4.4 Information on construction industry and public procurement
process in Nigeria ——————————————————————78
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4.5 Information on special usefulness of the public procurement act 2007 —-80
4.6 Information on the level of involvement of professionals
on public procurement in Nigeria ———————————————–84
4.7 Information on the level of corruption in public procurement
process in Nigeria ——————————————————————88
4.8 Information on factors contributing to corruption in public
procurement process in Nigeria ————————————————-93
4.9 Information on ways of curbing corruption in public procurement
process in Nigeria —————————————————————–97
CHAPTER FIVE
5.0 Conclusion and recommendations ———————————————-100
5.1 Conclusions ———————————————————————–100
5.2 Recommendations —————————————————————-102
REFERENCE —————————————————————————-105
APPENDIX

CHAPTER ONE

INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Construction Contracts are no more awarded because of the need of the society but
motivated by greed and shameful intention to perpetrate fraud.
We know that fraud and corruption are international problems. They happen daily all
over the world and it is not peculiar to Nigeria. In 2001 the United Kingdom
government (National Audit Office) found that not less than 10% of the Euro 65 billion
spent in the construction industry annually is lost to fraud.
In Nigeria fraud and corruption have reached epidemic state and Construction contracts
carry a lion share of it. While the proceeds of corruption in developed nations remains
in their countries those of Nigeria are taken out of the economic activities of the Nation
and deposited in foreign accounts thereby dealing a ‘double blow – double tragedy’ on
the country. Why are construction contracts so prone to fraud and corruption?
Spirited efforts are being made from different quarters to ensure that Nigeria is purged
of corruption. In a bid to rid the country of corruption, stringent measures, laws and
agencies have been set up to ensure that the system is sanitized. This gave rise to the
Public Procurement Act, which was signed into law by President Umaru Musa
Yar’Adua in 2007.
The Act became imperative because public procurement is one of the biggest sources
of government expenditure, and is easily prone to abuse and accompanying corruption,
as past experience has shown. The procurement Act 2007 is to provide the legal and
institutional framework for the enthronement of transparency, accountability, value for
money and efficiency in the procurement of works, goods and services in Nigeria.
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The overall impact of public procurement in governance, government perception and
national development cannot be overemphasized, because if mishandled, it can impact
negatively on the lives of ordinary Nigerians. On the other hand, if it is properly spent,
the results would be long lasting as it would tinkle down to positively affect the
welfare state of all Nigerians, especially at the grassroots.
Construction is an easy target because of the ways contracts are administered by
Governments. It is no secret that road construction costs more to build in Nigeria than
any other African country.
The point of call is the process involved in the contract award, procurement and
the contract administration. In all these, no element of cost control is observed nor due
process followed. It is this anomaly that made the former Minister for works Senator
Ogunlewe to cry out during the public hearing on the Procurement bill. He said ‘“We
are talking of Due Process, shouting Due Process. What is Due Process? In the Federal
Ministry of Works where I preside as the Minister, I don’t believe there is anything that
is Due Process. How can there be Due Process when the Engineer designs the roads,
estimates the costs of the roads, selects the contractor, constructs the roads, supervises
the construction, recommends payment for works done, approves the payment, certifies
the quality and quantity of work! All these by one person! Haba! This cannot be Due
Process. Not until roles are assigned to relevant professionals like the Quantity
Surveyors, Architects, and Builders and so on to be in charge of cost control and
management of public buildings, roads and highways, and the procurement of the
necessary goods and materials in their field can there be any Due Process in Nigeria
construction industry. Fraud in Construction contracts revolves around three major
issues; namely:-
1. Payment methods
2. Quantity verification
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3. Quality specification and execution
It is only on construction contracts that businesses are set up and funded for the
proprietors through advance and mobilization payments. Without any track record, a
contractor can be given more than 70% of the contract sum even before he is shown the
site just because he has procured an Advance Payment or Performance Bond that is
more than the share capital of the issuing company and for which the receiving
administrator has no respect or intention of enforcing.
The identified five major weaknesses in the existing procurement systems in Nigeria
namely:
That Nigeria lacks a modern law on Public Procurement and permanent oversight body
to provide guidance and monitor purchasing entities.
i) that the Finance (Control and Management) Act, 1958, together with
the Financial Regulations which set basic rules for managing public
expenditure have gaps, deficiencies and faulty implementation of existing
regulations on procurement (e.g. lack of permanent arrangements for
control and surveillance) which create opportunities for bribery and
corruption;
ii) that due to inflation and lack of regular adjustments on the thresholds
of the approving limits of the Tender Boards, their authorization were
constantly being eroded resulting in abuses, prominent among which is
splitting of contracts;
iii) That there was proliferation of tender boards which were perceived by
the private sector as sources of delays and non transparency. In addition,
these tender boards appeared to have limited mandates with powers to
decide contracts de facto resting with the Permanent Secretary and the
Minister/ Commissioner;
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iv) that Customs systems and procedures were cumbersome and major
causes of delay in clearing goods, and hence a source of corruption; and
v) That Procurement is often carried out by staff that substantially lacks
relevant training.
Just as rightly put by R.F Kennedy that ‘because we cannot see clearly the end of the
road, that is no reason for not setting out on the essential journey. On the contrary,
great change dominates the world, and unless we move with change we will become its
victims’. This assertion gives rise to the study which is carried out as a contribution to
the curbing of corruption, a menace in Nigeria’s public procurement system in order
not to be complete victim of it. The topic is widely discussed having Nigeria as a
country in mind. The report provides an introduction to the international debate and
experiences with procurement-related corruption, as well as recommendations on
anticorruption measures to be implemented in procurement procedures.
There are several ways to explain this persistence of corruption. The time it takes to
curb the problem may have been underestimated. There may also be a failure in the
adjustment of anticorruption strategies to local conditions. And finally, the incentives
to implement the necessary measures may be poor among politicians benefiting from
the current system. However, in countries where corruption is a common problem it
tends to disturb the market mechanisms and impede economic development.
Corruption in public procurement makes the officials or the politicians in charge
purchase goods or services from the best briber, instead of choosing the best price
quality combination. The result may be construction projects several times as costly as
necessary, or the acquisition of goods not actually needed.
Also the efforts of public officials to get into position for obtaining bribes may
represent a significant cost. Gifted youth often prefer jobs in the bureaucracy instead of
more scientific professions, the allocation of public funds may be biased in favour of
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capital intensive sectors at the expense of health and education, and laws and
regulations may be introduced just in order to obtain bribes. Even worse, public sector
corruption has a pervasive impact on the poor since it reduces the funding available for
social services and distorts public choices in favour of the wealthy and powerful,
resulting in larger income differences between rich and poor. These are meant to be
corrected with the amended and Act in place. It will help to fight corruption to a
standstill, promote issue based politics, and prevent the subversion of the legal system
with financial laws and regulations respected. This will affirms societal ethics that
links the cardinal virtues of honesty, patience and hard work coupled with innovation
and real contributions to the society and financial success.

1.3 STATEMENT OF THE RESEARCH PROBLEM
The mischief in the law and practice led to the enactment of the public procurement
Act 2007 was the lack of value for money-economy, as efficient and effectiveness of
public procurements were poor. Government is seen as the easiest source of wealth
through inordinate contracting, and government was not accountable to Nigerians.

The following are seen as the problems that necessitated this study.
i. That the financial outlay on public procurement is higher than the value of
the projects and /or goods supplied.
ii. That there is transparent corruption in Nigeria public procurement process.
iii. The acts of corruption have negative effects on the entire polity.
iv. It is essential for reintroduction of new value into the system.

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1.3 NEED FOR STUDY
As Construction Cost Management professionals, it is a believe onus to contribute to
the reform agenda going on in the Nation by targeting the root of corruption in Nigeria
public procurement process. It is of belief that most frauds are perpetrated through
contracts. The EFCC report has shown that most of the public contracts are awarded
without any intention of seeing to the project materializing. Some are awarded for
political patronage or to pay for electioneering cost, while others are awarded just to
pay ‘god fathers’ and ‘oil their palms’. None could be oblivious of the determination of
the present administration in its zero tolerance level for corruption and this claim is
being demonstrated in the way some past decisions are being looked into.
Hence, sound public procurement policies and practices are one of the essentials
elements of good governance. Good practices reduce costs and produce timely results;
poor practices lead to waste and delays and are often the cause of allegations of
corruption and government inefficiency.
The principal hallmarks of proficient public procurement are:  Economy
 Efficiency
 Fairness
 Reliability
 Transparency and
 Accountability and ethical standards.
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Economy: Procurement is a purchasing activity whose purpose is to give the purchaser
best value for money. For complex purchases, value may imply more than just price,
for example, since quality issues also need to be addressed. Moreover, lowest initial
price may not equate to lowest cost over the operating life of the item procured. But the
basic point is the same: the ultimate purpose of sound procurement is to obtain
maximum value for money.
Efficiency: The best public procurement is simple and swift, producing positive results
without protracted delays. In addition, efficiency implies practicality, especially in
terms of compatibility with the administrative resources and professional capabilities
of the purchasing entity and its procurement personnel.
Fairness: Good public procurement is impartial, consistent, and therefore reliable. It
offers all interested contractors, suppliers and consultants a level playing field on
which to compete and thereby, directly expands the purchaser’s options and
opportunities.
Transparency: Good public procurement establishes and then maintains rules and
procedures that are accessible and unambiguous. It is not only fair, but it seen to be
fair. Accountability and Ethical Standards: Good public procurement holds its
practitioners responsible for enforcing and obeying the rules. It makes them subject to
challenge and to sanction, if appropriate, for neglecting or bending those rules.
Accountability is at once a key inducement to individual and institutional probity, a
key deterrent to collusion and corruption, and a key prerequisite for procurement
credibility. A sound procurement system is one that combines all the above elements.
The desired impact is to inspire the confidence and willingness-to-compete of well
qualified vendors. This directly and concretely benefits the purchasing entity and its
constituents, responsive contractor and suppliers, and donor agencies providing project
finance. Conversely, a procurement system that fails to take the above elements
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stimulates hesitation to compete, submission of inflated tenders containing a risk
premium, or submission of deflated tenders followed by delayed or defective
performance. Other direct results include collusion in bribery by frustrated or
unscrupulous vendors and purchasing entities, bad value for those entities and their
constituents, betrayal and abuse of the public trust for personal gain.
In summary, proficient public procurement is not difficult to describe in principle or to
distinguish from its antitheses in practice. But it does require varied professional and
technical know-how to establish, as well as discipline and determination to administer.

1.4 AIM AND OBJECTIVES
The aim of the study is to appraise corruption in Nigeria Public Procurement
The following objectives form the pivot of the research work;
(1) To investigate the Public Procurement Process in place in Nigeria.
(2) To study efforts made so far in curbing corruption in procurement process.
(3) To proffer solution by suggesting ways of curbing corruption in Public
Procurement Process.

1.5 RESEARCH QUESTION
a. Is there any form of corruption in Nigeria Public Procurement Process?
b. What are the factors contributing to corruption in Nigeria Public Procurement
Process?
c. What are the effects of corruption on Nigeria Public Procurement Process?
d. What are the ways of curbing corruption in public procurement?

1.6 SCOPE OF THE STUDY
This study explores the problem of corruption in public acquisitions of goods and
services. While mainly concentrating on the bureaucratic administration, the discussion
often includes the political level. Three aspects of procurement-related corruption have
been examined. First, problems that often arise if this type of corruption is common.
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Secondly, the mechanisms: How is this illegal activity actually carried out? And
finally, a major concern of the study is the practical strategies to combat the problem.
This research work will focus on Public Procurement Process in Nigeria. The research
will be limited to the Public Procurement Process in Nigeria construction Industry with
a general overview of the state of corruption in the nation. Necessary contacts and
research work will focus on the South-East zone – the commercial heart beat of
Nigeria. The parties involved in procurement would be reached for fact finding.

1.7 EXPECTED CONTRIBUTION TO KNOWLEDGE
Knowledge is power and this can be brought into reality through enlightenment. This
project work is expected to:
(1) Create more awareness of the importance of Public Procurement to National
Economic development.
(2) Encourage more attention to be paid to Procurement Process and legislations in
Nigeria.
(3) Establish also the need for practicing professionals to improve on and bring their
services closer to the people.
(4) Educate the masses on the ills of corruption to the Nation’s growth.
(5) Furnish the policy makers the suggested practical ways of curbing Corruption in
the procurement process.

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1.8 LIST OF ABBREVIATIONS

AAL Air wing Aerospace Limited
AAS Audit Alarm System
AD Alliance for Democracy
AIT African Independence Television
ANEEJ African Network for Environmental and Economic Justice
ANNP All Nigerian Peoples Party
APGA All Progressive Group Alliance
ASUU Academic Staff Union of Universities
BASA Bilateral Air Services Agreement
BPE Bureau for Public Enterprises
BMPIU Budget Monitoring and Price Intelligence Unit
CCB Code of Conduct Bureau
CD Campaign for Democracy
CDD Centre for Democracy and Development
CDHR Committee for the Defense of Human Rights
NAFDAC National Agency for food, drug administration and control
CJN Chief Justice of Nigeria
PFI Private Finance Initiative
NIQS Nigerian Institute of Quantity Surveyors
CLO Civil Liberties Organization
CPI Corruption Perception Index
EFCC Economic and Financial Crimes Commission
FUMTA Federal Urban Mass Transit Agency
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ICPC Independent Corrupt Practices and Other Related Offences
Commission
IMF International Monetary Fund
INEC Independent National Electoral Commission
JSC Justice of the Supreme Court
NAMA National Airport Management Authority
NCP National Conscience Party
NJC National Judicial Commission
NNPC Nigerian National Petroleum Corporation
NTA Nigerian Television Authority
PDP Peoples Democratic Party
RMAFC Revenue Mobilization, Allocation and Fiscal Commission
SAP Structural Adjustment Programme
SIE State Independent Electoral Commission
TIN Transparency in Nigeria
WAI War against Indiscipline
ZCC Zero Corruption Coalition

1.10 DEFINITION OF IMPORTANT TERMS
Procurement applies to all kinds of acquisition of public goods and services. Rose
Ackerman (1999) divides procurement into four categories:
(i) Purchases that require specialized research and development, such as newly
designed military aircraft.
(ii) Purchases of complex, special purpose projects, such as dams or port
facilities that do not involve advances in technology but require managerial
and organizational skills.
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(iii) Purchases of standard products sold in open markets, such as motor vehicles
or medical supplies (off-the shelf purchase).
(iv) Customized versions of products otherwise available in open markets, such as
special purpose computer systems or fleets of police cars.
Public Procurement means the acquisition by any means of goods, works, or services
by the government.
Goods means objects of every kind and description including raw materials, products
and equipment and object in solid, liquid or gaseous form and electricity as well as
service incidental to the supply of the goods.
Contractor or supplier stands for any potential party to a procurement contract with
procuring entity and includes any corporation, partnership, individual, sole proprietor,
joint stock Company, joint venture or any other legal entity through which business is
conducted.
Corruption, Brooks (1910) defined corruption as the international performance or
negligent of a recognized duty, or unwarranted exercise of power, with the motive of
gaining some advantage more or less directly personal.
It is an illegal activity, is difficult to define exactly as different attitudes and customs
prevail, for instance when it comes to gift-giving and bureaucratic integrity.
Fraud-This was clearly asserted by Kpundeh (1997) as a violation of civil statute, and
involves intentional misrepresentation of purpose obtaining unauthorized benefits from
a Programme. The misrepresentation may involve either the provision of incorrect facts
or the failure to provide correct facts.
Responsibility- This is defined as a state or act of being reliable or capable of trusted.
In the similar vein is ethics seen as the moral principles that govern or influence a
person’s behaviour. There is link between responsibility, ethics and corruption because
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absence of ethical and responsibility in people give birth to a system permeated by
corruption.

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