INVESTIGATION: FG Agencies Violated Procurement Act by Awarding Contracts Worth Over N544m to Unqualified Companies

A number of Federal Government agencies and institutions have awarded contracts worth 544,272,148.68 million naira cumulatively to companies in contravention to the Public Procurement Act (PPA) 2007.

The awarding institutions include the Federal College of Agricultural Produce Technology, (FCAPT) Kano; the Federal College of Horticulture (FCH) Dadin Kowa; the Universal Basic Education Commission (UBEC) and the Small and Medium Enterprise Development Agency (SMEDAN).

At different times, between 2021 and 2023, these institutions awarded contracts to companies that violated the extant PPA 2007 and their own set criteria.

A shot of FCAPT, Kano
A shot gate of Federal College of Horticulture, Dadin Kowa
A picture of SMEDAN HQ, Abuja

According to the data obtained and analysed from the opensource online platform, GovSpend, powered by the Budgit Foundation, a contractor, Pancio Limited, cumulatively received the sum of 182,546,383.56 from SMEDAN and the Federal College of Horticulture in 2021 and 2022 for various projects in the country.

Screen shots of payments to Pancio

Another contractor, Kabo Citadel Company Limited, received a total sum of 119, 207,714.18 from the Federal College of Horticulture in 2021 and 2022; BG & Y Nigeria Limited got the sum of 52,106,493 from the same College in 2021 and 2022 for various projects across Nigeria.

In 2022, SMEDAN awarded contracts worth the sum of 45,068,784 to BG & Y Nigeria limited in Kano State.

Screen shots of payments made to contractors taken from govspend.ng

Similarly, XYLEX Consult Limited received a total of 74,756,034.8 from the Federal College of Horticulture and the Federal College of Agricultural Produce Technology in 2021 and 2022 for different projects in Kano, Jigawa and Bauchi.

Other contractors, CYFA Energy Limited and Nudeen Enterprise Nigeria Limited, received sums of 22,964,443.85 and 15,421,378.5 respectively from the Federal College of Agricultural Produce Technology for projects in 2022. CJ Royals Nigeria Limited received a sum of 18,633,082 from UBEC in 2022 for classroom constructions and furniture supply.

The Procurements

Findings by WikkiTimes reveal that the Federal College of Horticulture, Dadin Kowa in Gombe State, Federal of Agricultural Produce Technology, UBEC and SMEDAN awarded the contracts at different times between 2021 and 2023.

According to the contract payment details, Federal College of Horticulture awarded contracts for the supply of security vehicle in Dala Federal Constituency, provision and installation of solar street light in Tarauni Federal Constituency in Kano state to Pancio Limited in 2021.

The college awarded the provision and installation of solar street light at Laringo and other towns and villages in Laringo, Wuro Bagga Bagwai, in the Local Government Area of Kano State, to the same contractor in 2021.

It has also awarded a contract for the purchase of practical materials, equipment, postharvest technology and other accessories for accreditation of courses and programs in the college.

In 2021 and 2022, the college also contracted Kabo Citadel Company Ltd for “[p]rocurements of Item, equipment and other accessories for accreditation of courses and programs post-harvest tech”.

In 2022, the institution contracted XYLEX Consult Limited to construct Tsamawa semi-bridge in Tsamawa farming community in Kano State. Similarly, the College awarded contract to BG & Y Nigeria Limited in 2021 and 2022 for provision of block of classroom/furniture and provision of solar street lights in various locations in Kumbotso Fed Constitution.

The Federal College of Agricultural Produce Technology, (FCAPT) Kano, in 2021 and 2022, awarded contracts of Training and Capacity Building, Procurement of Laboratory and Agricultural Equipment, Supply of Motorcycle to Farmers in Jigawa, Capacity building and Empowerment of Irrigation Farmers in Katagum Bauchi State to XYLEX Consult Limited.

Similarly, the college contracted CJ Royals Nigeria Limited in 2022 for Provision of solar street Lights along Jombo Ofor street Ibom Baraka Arochukwu Abia State, while Nudeen Enterprise Nigeria Limited was contracted for provision of solar street lights in Tarauni/Kano Municipal federal constituencies. Construction of electrification scheme in Jugga Community to Jauro-Bakare of Gombe State was awarded to CYFA Energy Limited in 2022. Yardang Global Concept was awarded provision and installation of transformer in Kumbotso LGA of Kano State.  

In the same vein, SMEDAN awarded different contracts to Pancio Limited, BG & Y Nigeria Limited.

A shot of BG & Y Nigeria Limited Status from CAC Website

In 2021, Pancio Limited was awarded the supply of tricycles and motorcycles in Dala Federal Constituency of Kano State.

In 2021 and 2022, SMEDAN also contracted Pancio Limited for entrepreneurship development training for beneficiaries of conditional grant scheme for micro enterprises in Mikang/Quanpan/Shendam in Plateau State and Katsina Central Senatorial district in Katsina state.

In 2022, SMEDAN engaged BG & Y Nigeria limited for strategic empowerment programme for youth in Tsanyawa/Kunci federal constituency of Kano state.

Three Years Tax Clearance

According to the invitation for submission of an expression of interest, prequalification and tender document, the agencies (Federal College of Agricultural Produce, Federal College of Horticulture, SMEDAN, and UBEC) specifically requested all interested contractors to provide evidence of income tax clearance certificates for the last three consecutive years as a prerequisite for the prequalification and award of the contract to enable them fulfil part of the requirement.

The contractor must provide “[e]vidence of company income’s tax clearance certificate (or personal income tax clearance certificates of all the partners where applicable) for the last three years”.

However, WikkiTimes learnt that the contractors did not meet up with this essential requirement. For instance, CYFA Energy Limited was registered in 2021, yet it was awarded contract in 2022. Nudeen Enterprise Nig. Ltd was registered in 2021, got contract in 2022. CJ Royals, registered in October 2020, got awarded in February 2022, while XYLEX Consult Limited, incorporated in December 2019, got an award in February 2021.

A shot of CYFA Energy Limited Status f& Date of registration from CAC Website

Therefore, the awarding entities have disregarded the provision of the Public Procurement Act (2007) in the process.

For instance, the Federal College of Agricultural Produce Technology that awarded contract to the above-named contractors did not comply with its own criteria as well as section 23 (1) of the PPA 2007 which states that “[w]here a procuring entity has made a decision with respect to the minimum qualifications of suppliers, contractors or service providers by requesting interested persons to submit applications, to pre-qualify, it shall set out precise criteria upon which it seeks to give consideration to the applications and in reaching a decision as to which supplier, contractor or service provider qualifies, shall apply only the criteria set out in the prequalification documents and no more”.

Meanwhile, the college requested that “[e]vidence of company income’s tax clearance certificate (or personal income tax clearance certificates of all the partners where applicable) for the last three years” be provided.

In the same vein, the Federal College of Horticulture contravened Section 23 of the PPA 2007 by awarding contracts to the companies that are not qualified.

For example, Pancio Limited registered in August 2019 but was awarded contract in 2021; Kabo Citadel Company Ltd, registered in September 2020, got contract in 2021. BG & Y Nigeria Limited, registered in December 2019, got award in June 2021; and XYLEX Consult Limited, incorporated in December 2019, got an award in February 2021.

All of them did not possess the required tax clearance certification for the three years needed.

Screen shots of some contractors depicting their names,
addresses and dates of their registration.

Despite the obvious short of the tax clearance requirement, SMEDAN awareded contract in November 2021 to Pancio Limited, a company registered in August 2019. BG & Y NIGERA LIMITED, also registered in 2019, got a contract in 2022, thus violating the extant law.

BG & Y NIGERIA Limited was registered in December 2019, yet it was awarded a contract in March 2022 by UBEC. CJ Royals, registered in October 2020, got an award in February 2022.

However, the Nigeria Startup Act 2022 provides that startups can be “exempted from payment of income tax for a maximum period of 5 years, three years initially and renewable for an additional two years and as well as other taxes chargeable on their income or revenues”.

The Startup Act did not clearly negate PPA 2007 that requires contractors or anyone seeking any contract bidder to fulfill all its obligations to pay taxes, pensions and social security contributions.

Audited Reports for Three Years

After the tax requirement is the submission of the contractors’ audited accounts for the last three consecutive years. 

According to the published invitation for the expression of interest and prequalification, the agencies asked the contractors to submit “[c]ompany’s audited accounts for the last three (3) years…” as a precondition for the contract.

A shot of Kabo Citadel Company Ltd with its date of registration

However, findings showed that none of the contractors had satisfied the condition because they had not been in the existence for three consecutive years prior to the award of the contracts.

Thus, the agencies also contravened the same section 23 alongside their set out criteria as supported by PPA 2007.

Projects Executed in the Last 5 Years

In the same vein, the awarding agencies set out plainly that the contractors must provide evidence of projects execution in certain years for them to qualify for the contracts.

Screenshot of a contractor depicting name, address and date of registration.

According to the tender invitations from the institutions/organisations, all the contractors shall provide “[v]erifiable documentary evidence of at least three (3) similar jobs executed in the last five years, including letters of awards, valuation certificates, job completion certificates and photographs of the projects”.

However, this criterion was also not adhered to in the award of the contracts because, while the contractors were all less than three years of existence which makes it impossible to fulfil the requirement, others had no prior experience in similar projects as required. Instead, some executed projects for the first time in the contracts they had been awarded.

Professional Mismatch

According to the invitation advertised, the “[c]ompany’s profile with the curriculum vitae of key staff to be deployed for the projects, including copies of their professional/academic qualifications,” was required.

Aside from awarding contracts by agencies outside their areas of mandate, such as agric-related institutions awarding projects for electrification, some contractors also got contracts outside their areas of expertise. For instance, CJ Royals Nigeria Limited was awarded contract to provide furniture and classrooms by UBEC which clearly contravened the defined criteria outlined by the same SUBEB for contract bidders.

Agencies/Institutions React

When contacted on the phone why the Federal College of Agricultural Produce Technology awarded contracts to such contractors that did meet the basic requirement set by the institution, the Provost of the College, Dr Muhammad Gwaram argued that his institution executed projects across the country and it complied with the procurement act.

He alleged that the reporter was being sponsored to smear the college and the provost.

“Journalism is being taught right in my house. My wife is a journalism teacher. I know you are being sponsored. Go and write whatever you want to write and I will seek redress if you defame me,” Dr. Gwaram told WikkiTimes.

“If it is a member or senator that sponsors you, he should petition EFCC or ICPC. You are reaching out to me not for good. I swear by Allah, this is a witch-hunt.”

When asked about awarding projects outside the core mandate of his institution, he said, “BPP knows about it. If, for example, we are asked to install a transformer in Bauchi, we don’t have a stake in transformer but a company that has will be given the work and we have our consultants that ensure everything is done right. The same thing with road construction or health intervention.”

Dr Gwaram furiously told the reporter that “if you like write to the president and ask him to shut down the school. And the person sponsoring you asked for a contract but we refused to give him”.

He added that nowhere does the Public Procurement Act ban his institution from carrying out such projects.

“Mr. President and Ministers are wiser than you, they know of it. My school is a training institution but if a project is assigned to it by a lawmaker to which funds are allocated for work in his constituency, I cannot stop it. I can’t write to the President and say I cannot do these,” he said.

He continued: “I swear I am not a soothsayer but I swear by Allah I can tell who is instigating you. We know everything you are doing. We have journalists at our disposal. All these things you are doing, you are being used to smear people’s names. This thing you’re doing originated from somewhere. I know.” 

When contacted, the head of corporate communications at SMEDAN, Mr. Moshood Lawan, explained that the request ought to come in form of a petition to the organisation.

“The petition can be forwarded and treated officially…because it has been awarded and things have already gone ahead.  The procurement unit cannot open up just like that,” he said

On why SMEDAN awards contracts that go outside its mandates of supporting SMEs in Nigeria, he stated that execution of some projects such as supply of tricycles and motorcycles for constituency projects falls under SMEDAN’s mandate.

“Yes,” he said, “it is in our mandate.” “You know the national assembly are in better position to know the law more than anybody because they make the laws. So, this kind of project if it’s against the law, they would have said it. I am sure that is why the national assembly is part of it.”

Musa Abdullahi, who spoke for the Federal College of Horticulture, explained that “all the contracts, projects or supply that passes through this College are done legally in total compliance of the relevant laws or acts. We are an institution that not just train but instill character. So we uphold such things in our affairs”.

When asked about companies that did not meet the criteria the institution set, he insisted that they “obey the laws and follow everything accordingly”.

It is evident that the agencies/institutions are avoiding to respond to the key allegations by making generic statements and even threatening in the case of Dr Gwaram of FCAPT.   

Contractors React

Ahmad Zakari, a director at Pancio Limited, told WikkiTimes that SMEDAN and the Federal College of Horticulture fulfilled the requirement as provided in the PPA 2007. He said the company satisfied the tax clearance certificate for three years to qualify for the contract award.

“If you check the section of the act carefully, it stated that tax clearance of the company or personal tax clearance certificate of partners. And we provided that,” he explained, adding, “our company doesn’t play with taxes at all”.

However, when asked to explain if they submitted audited reports for the three years as required, he remarked that “all the requirements[have been satisfied]. I just explained this to you. All the requirements have been duly satisfied. Go to the MDAs that we work with to confirm. I can’t tell you beyond this”.

Another contractor, Kabo Citadel Company, that executed projects on behalf of the Federal College of Horticulture, maintained that they are working with MDAs that know and abide by the laws. A staff member of the company, Peter John, told WikkiTimes that the company he works with “doesn’t engage in illegalities and always comply with the laws and instructions signed in contract documents for execution”.

When pressed on how they fulfil issues of a three-year tax clearance certificate, three years audited reports and projects sample, considering the fact that their company was incorporated in 2020 and got contract in 2021, he repeatedly argued that “we pay taxes and we are a law-abiding entity. This is our priority. We did not breach any law as we always abide by the laid down rules, regulations and criteria set by the organisations, or ministries or agencies, and above all the Nigerian constitution”.

A representative of XYLEX Consult Limited, Jamil Yusuf, whose company executed a number of projects for the Federal College of Agricultural Produce Technology, when contacted explained that “indeed we did quite a number of projects for the College and many others across the country. There isn’t doubt about that. What I find quite wrong is the issues you raised. I can tell you clearly that we did everything according to relevant laws. And don’t forget the MDAs and our company are quite aware of procurement act and we comply with its provision.”

When asked further to make response to the specific issues raised, he said, hanging up the call, “We have satisfied all the requirements and we executed the projects correctly as required”.

Other contractors that were engaged to execute projects in different parts of the country by SMEDAN, UBEC, Federal College of Horticulture and Federal College of Agricultural Produce Technology are BG & Y Nigeria Limited, Nudeen Enterprise and CYFA Energy could not be reached.

Available records obtained from CAC and NG-check showed that Nudeen Enterprise was located at Block H, Federal Housing, Lugbe, Abuja. On checking this address, it was a residential area that has no office in the vicinity. Searches online for its website or any digital footprint did not yield any positive outcome.

For CYFA Energy Limited supposedly located at No. 3b Sirasso Close Wuse Zone 7, Abuja, after three attempts to meet with the officials or a representative of the company, it could not be reached as the offices that were open for business did not identify with the contractor when asked. Similarly, there was no phone number of anyone in the company’s status report obtained from the CAC. CYFA has no website or any digital presence as multiple searches of the name returned negative.

CJ Royals Nigeria Limited was located at No. 119, Gumbi Street, Jedo Estate, Lugbe, Off Airport Road, Abuja. However, a visit to the location showed that it was a residential area and the occupant reached explained that he had no association with the said contractor.

Legal Luminaries Explain

A legal expert Bala Mukhtar explained that it was necessary for a company to get three years of tax clearance before they could be awarded a contract by the government or its MDAs. He, however, noted that “there could be an exception where a company is given special consideration for specific expertise that other companies don’t possess”.

Mukhtar further added that “based on the documents you presented and the kind of contract or procurement executed, there was nothing special that other qualified contractors or bidders cannot handle”.

He explained that the law did not exempt audited reports and project samples to be provided by the contractors. “It is a requirement that every contractor must provide audited reports for three years before the contract award. That is nonnegotiable”.

According to the legal expert, while it is not explicitly legally wrong for an MDA to award contracts outside its mandate, it is illegal for a company to be engaged in a contract that is outside its area of expertise or specialisation.

“That is why a contractor is required, for instance, to provide company’s profile with the curriculum vitae of key staff to be deployed for the projects, including copies of their professional qualifications,” he explained.

Another legal expert, Barrister S.G. Idris, explained that the essence of the PPA is to ensure that any contractor that submitted tender must satisfy the requirements before the contract will be awarded to them.

“The essence of the PPA is to protect so that companies that are not capable of executing contracts are not awarded such contracts,” he said.

“Secondly, it should guard away from fraud. Because there are those companies that are established purposely for a particular contract which is the case in many instances where someone sees an opportunity of a contract through his office or cronies to influence getting the contract or even form the company to award contracts to themselves.”

The lawyer emphasised that MDAs can re-advertise or re-invite bidders where all submissions do not meet the set requirements.

“You cannot award a contract to a company that hasn’t met the requirement just because there is no any other company or applicant that meet up with the requirements. If there is no qualified contractor among the bidders, you can disqualify that tender, readvertise to have contractors that meet all the requirements. This is necessary because by not meeting the criteria, the company is deemed not competent,” Idris added.

He revealed that a contractor that bade a contract can institute legal action if the company qualifies but the contract awarded to a company that is not qualified.

“So, if it is given to a contractor with less qualification like the issues of tax you raised for instance, it can be challenged by other contractors that bade for the contract in a court of law.

He continued: “In fact, we are mulling the possibility of taking legal action against a Federal University on behalf of my client for awarding the contract to a contractor that didn’t have the requirement while turning down the bidding of my client who is more qualified.

“There is an exception that a company may be considered but it has to be an area where no any other company has expertise except that company. But in the issues, you raised, there is nothing unique or spectacular that other contractors cannot handle. Thus, certain criteria such as issues of taxes and audited reports are statutory criteria that a company must satisfy.”

On issues of professional mismatch, where a company’s area of expertise is different from where they execute project, Idris said such contractor is not qualified to execute projects outside their areas of expertise.

He added, “Sometimes, we the lawyers, create a clause that says for instance, agriculture and general contracting… We create this kind of clauses to give them chance to do some other things that are not specifically mentioned. But if the issues are not covered in the memorandum of association, then it is not their area and they aren’t qualified for such things.”

Meanwhile, Barrister Kabir Isah Sani said that while tax clearance certification and audited reports are mandatory in such contracts, it is entirely permissible where there is a dearth of experts to give concessions to a contractor.

“In rare, exceptional cases, there are instances that such consideration can be waived. For instance, a contractor is to be deployed to train staff on Generative Artificial Intelligence which is a new emerging area which has a handful of experts, a contractor with a less than three years of existence can be engaged to provide the service. That is an example of exception. But if you look at the issues of all these contracts you discussed, none of them is qualified for exception, they are issues that many other contractors handle effortlessly,” he explained.

This story was published under the GovSpend Media Fellowship, supported by BudgIT, ICIR and MacArthur Foundation

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