BPP Rejects PenCom’s Move to Cancel PAS Project

Tobi Soniyi in Lagos
The Bureau of Public Procurement (BPP)  has rejected the plan by the National Pension Commission (PenCom) to cancel the procurement process for the building of a Pension Administration System (PAS) estimated to cost N3.9 billion.
BPP has also warned the commission to be prepared to bear the consequences of further delaying the commencement of the PAS project.

PenCom under the leadership of Mrs. Chinelo Anohu-Amazu had selected a United States company, Dell, after BPP had issued a certificate of no objection, to handle the project.
However, the acting Director General of the commission, Mrs. Aisha Dahir-Umar, appeared uncomfortable with the contract and has therefore written to the BPP seeking to cancel the contract citing lack of funds and national interest.

However, BPP faulted the commission’s excuses, saying t there was enough budgetary allocation for the project.
The delay in carrying out the project has implication for the growth of the pension industry as projects such as micro pension and transfer window critical to the development of the industry would remain stalled.
For instance, 14 years after the Pension Reforms Act came into effect, aggrieved pension contributors are unable to change their Pension Fund Administrators even when the contributors feel that they are being unfairly treated.

The Pension Reforms Act of 2014 (as amended) states that a contributor would be allowed to move his or her Retirement Savings Accounts from one PFA to another in not more than one in a year. However, contributors having been denied the advantage of this provision because the necessary infrastructure that would enable this to happen has not been put in place.
While many industry watchers expected the new leadership of PenCom to take a memo to the Federal Executive Council for approval of the contract, they were shocked to see the commission raising baseless and flimsy excuses to truncate the project.

In a letter to the BPP, the commission said: “The National Pension Commission (the commission) refers to your letter referenced BPP/S.1/SP/17/Vol. I/636 of November 2, 2017 on the above subject matter.
“The commission has noted your reference to its earlier correspondence and concerns on the viability of the PAS project. Indeed, it is the concerns of viability and affordability that necessitated the commission’s most recent request to cancel the PAS procurement process in the public interest.

“The BPP may wish to know that before the request for cancellation was submitted, the current management of the commission was compelled to re-evaluate the viability of the PAS project, demanded for a confirmation of the adequacy of budgetary provision for the project and whether the commission’s revenue profile would be sufficient to meet the current and future obligations of the project as approved. The response from the Accounts Department of the commission indicated that although there was an initial effort to provide for the project in the budget, the inability of the commission to meet its proposed revenue target made it impossible to provide for the sum required in the 2017 budget. Indeed, it was further explained that the sum of N3.9 billion required for the PAS project constitutes about 30 per cent of the total internally-generated revenue (IGR) of the commission and its inclusion would cripple the other core activities of the commission. This information informed our letter of October 17, 2017 to the BPP.

“The commission would, therefore, like to confirm to the BPP that although there is a provision for IT software in the commission’s budget, the amount cannot fund the PAS project, which is contrary to the requirements of Section 16(1)(b) of the Public Procurement Act 2007. Accordingly, we attach herewith a copy of the commission’s 2017 budget for your review and confirmation of this position.

“The commission, therefore reiterates its request that the BPP kindly approves the cancellation of the procurement process for the commission’s PAS project due to lack of funds and in the public interest, pursuant to the provision of Section 28 of the Public Procurement Act 2017.”
But in its response dated December 6, 2017, the BPP said the provisions of the PPP Act relied upon by the commission in seeking a cancellation of the project did not support the commission’s case.

BPP said since there was a provision of N2.7 billion for IT software and communication in the 2017 budget of  the commission, “that is an indication that there is no reason for the cancellation as doing so will delay the utilisation of the appropriated fund and subsequently adversely affect budget performance.”
The bureau also stated: “It is important at this juncture to correct the commission’s understanding on the provision of Section 16(1)(b) of PPA 2007.

For the avoidance of doubt, Section 16(1)(b) of the PPA states interalia that; ‘no procurement proceedings shall be formalised until the procuring entity has ensured that funds are available to meet the obligations’. This is further explained by the Procurement Procedure Manual precisely section 62.1, which states that; ‘In addition to any other regulations as may be prescribed by the Bureau, a mobilisation fee of no more than 15 per cent may be paid to a supplier or contractor supported by the following: •In the case of national competitive bidding -an unconditional bank guarantee issued by an institution acceptable to the procuring entity; •In the case of international competitive bidding- an unconditional bank guarantee issued by a banking institution acceptable to the procuring entity.’

“This means that the commission must not have the complete funds to embark on the project but rather, the availability of 15 per cent  of the contract sum (mobilisation fee) is the minimum fund required to embark on this project.
“It should be noted that 15 per cent mobilisation  fee is neither mandatory nor compulsory, hence a contractor may decide to commence the works without requesting to collect any mobilisation fees- therefore, claims of insufficient funds are eroded, and hence, reasons for cancellation of this completed procurement process can not be justified.

“In view of the foregoing, the bureau regrets to decline the commission’s request; the BPP’s earlier position is hereby sustained.”
BPP also accused PenCom of causing avoidable delays in the implementation of the procurement, and reminded it that it “will account for any negative adverse implication that may arise as a result of this delay.”