EXCLUSIVE: How Works Ministry Abused Procurement Law To Award N9.3bn Contract- Audit Report

…Paid N2.5bn To Contractors Without FEC Approval

…Engaged Staff As Contractor For In-House Engineering Design

Facts have emerged as to how the Federal Ministry of Works and Housing circumvented the Public Procurement Act of 2007 to award various contracts worth N9.32bn.

The discovery was made by the Office of the Auditor-General of the Federation in its Audit Report for the Ministry of Works.

The Audit Report which was obtained by THE WHISTLER showed that the Ministry committed a total of 15 infractions that led to the N9.3bn contract abuse.

The infractions are the award of a N343.83m contract for the purchase of project monitoring vehicles without due process; failure by the Ministry to comply with Treasury circular TRY/A2&B2/2009OAGF/CAD/26/V in the award of a N139.9bn contract for services and direct purchase of vehicles spare parts, Computer Accessories, Photocopying Machines parts and for designing of Nigerian Roads and Bridges; and irregularities in the production and airing of special video documentary for N210.68m.

The Ministry, according to the Audit Report, also violated the Public Procurement Act, 2007 where it used members of staff as contractors for in-house engineering design without due approval of the Bureau of Public Procurement Act 2007. Also, the sum of N1.2bn was paid to contractors without proper revalidation, while the Ministry used staff as contractor for in-house design without approval of the Bureau of Public Enterprises.
The Audit also discovered that store items were purchased by the Ministry in the sum of N63.11m without charging them in the store ledger; N1.02bn was circumvented through contract splitting; N2.2bn was spent without budgetary provisions; while N38.3m initially set aside for recurrent expenditures was paid from capital votes by the management of the Ministry in contravention of Financial Regulations 417 and 316.

Further analysis of the Audit Report revealed that the sum of N20.14m was not deducted and remitted to the Federal Inland Revenue Service as one per cent Stamp Duty from 198 contracts.

This anomaly was caused by the failure of management to enforce the provisions of government operational circulars as stated in Treasury circular TRY/A2&B2/2009OAGF/CAD/26/V.

This failure of the management to ensure the compliance of the provisions of this Circular, according to the Auditor-General could lead to loss of government’s revenue.
The Auditor-General lamented in the Report that despite Audit queries raised by his office, “No response was received from management at the time of our report.”

It added, “The Permanent secretary is required to review all contracts and ensure that the one per cent stamp duty is deducted and remitted.

“He is also to recover the sum of N20,149,300.41 identified as a shortfall in revenue. All affected officials should be sanctioned in line with Financial Regulation 3112.”

The Report also stated that the Ministry violated the Public Procurement Act when it awarded the contract for emergency repairs of Talabu Bridge in Niger State for N2.5bn.

It said, “The audit observed that N2,500,000,000 contract was awarded by the Ministry in violation of Bureau of public procurements revised threshold for service wide application which requires approval from the Federal Executive Council, after a Due process ‘Certificate of no Objection’ has been obtained for contracts for works above N1bn.

“The Ministry awarded the contract without Federal Executive Council approval in violation of chapter 16 (I) of the public procurement act 2007. The Ministry also out of the total contract sum, made the part payment of engineering certificate number one amounting to N289,461,035.44 in violation of section 16(2) of the public procurement act.”

The Public Procurement Act 2007 Section 16(2) of the act states “Where the Bureau has set prior review thresholds in the procurement regulations, no funds shall be disbursed from the Treasury or Federation Account or any bank account of any procuring entity for any procurement falling above the set thresholds unless the cheque, payments or other form of request for payment is accompanied by a certificate of “No Objection” to an award of contract duly issued by the Bureau.”

The Audit Report stated that the Failure of the Ministry of Works to comply with procurement rules and laws could lead to poor performance, abandonment of works or loss of public funds.