Reducing govt expenditure via procurement models

Photo; talkingbiznews

Photo; talkingbiznews

IN recent times, so many Nigerians talk about corruption and how corruption will soon kill Nigeria as a country. I have also listened with glee to the resonate voice of the ruling party on how they want to curb corruption in Nigeria. Most schools of thought believe that our ability to cut cost of recurrent expenditures would enable us focus on capital investment in the country and bridge the infrastructure gap.

Corruption generally is so humongous that it is now part of the nervous system of both public and private organisations and as such, curbing it will require that a systemic approach coupled with a reorientation of the populace is crystallised within the polity.

A critical pathway to corruption in Nigeria especially the public sector is the contracting model or what is generally known as the procurement process. What is intriguing about the procurement process is that over 85% of government expenditures is in one way or the other being classified as having gone through the procurement lifecycle, from the smallest of expenditure like office supplies in ministries to high spend expenditures such as Engineering, Procurements, Construction and Installation projects ( EPCI) and varying Building and Construction projects. To this effect, one wonders how money is being looted when the perception is that the procurement agencies are responsible for managing the contracting lifecycle of government expenditures.

This article will try to establish how the government at all levels can curb waste using effective contracting models and elucidate on check and balances of the in-situ public procurement agencies (PPAs). The Procurement Act of 2007 addresses how expenditures from the public sector should be procured and effectively managed. To curb corruption as a country, it is imperative that all federating states of the nation must establish a Public Procurement Agency (PPA) as a matter of urgency. Contract awards and Contract management should be left with professionals and not at the behest of the state executives and permanent secretaries. It is not necessarily about establishing a new agency using government friends, family and allies as compensation for political favours; however it is about utilising existing resource using current civil servant and empowering them to effectively manage the agency.

The visibility of the state procurement agencies when created should be so elaborate that the contracting process be published on a regular basis stating clearly the procurement lifecycle – the vendor selection process, technical and commercial rounds that effectively allocate winning tenders and most critical – details of work to be done. This is very important as contract values for generic work profile can be misconstrued. Tender specification and award notifications should clearly state the detailed work scope and term of delivery plus other special considerations.

The contracting process should also be transparent enough to allow active participation of Nigerian local businesses. We should not allow a few companies form various operational cartels for government expenditures. It is also critical that proper due diligence of participating vendors are done to mitigate the risks of having companies float several entities to participate in a tender process, address conflict of interest issues with civil servants and politicians alike and assess the financial records of suppliers.

It is important that State PPAs carry out yearly accreditation of prospective vendors and publish a list of accredited vendors on a yearly basis. This will ensue that shell entities of no known origin are created for the purpose of awarding contracts. Institutions like Department of State Services (DSS) and corresponding anti-corruption agencies should carry out spot and independent assessment of high spend and repetitive government contractors, using various financial checks.

Procurement professionals in the public sector should be properly trained to understand legal, compliance and ethics issues related to the job. The state PPA should be a reflection of the current Bureau for Public Procurement (BPP) in the country, whilst thinking national, individual state budgets and allocation should be reference point for establishing contracting benchmarks, approval and Authority Limit matrix for expenditures. Critical to the establishment of State PPAs is training. State governments should invest enormously in training procurement personnel within the state in a cost effective manner by establishing a train the trainer approach and subsequently cascade the training to the lower echelon of the state agencies.

State Public Procurement Agencies should be encouraged to invest in technology for their procurement process, the use of ERP and any other Government electronic tool should remain cardinal in the establishment of state PPAs. A proper audit trail of all procurement activities will be logged and be audited on a yearly basis by independent procurement auditors to establish the sanity and integrity of the PPAs

• Emeka Eboagwu is a Supply Chain Manager and writes in from Lagos eeeb oagwu@gmail.com



2 Comments
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  • emmanuel kalu

    This is a very good article and plan. however i would add this to it. each state and the federal govt need to have a procurement agencies along with a project mgmt agency. the procurement agencies handles the contract, while the project mgmt agency implement the contracts. every contract from any MDA would have to go thru this agencies. they would be audited every quarter.

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