Litigation And Arbitration Newsletter Dec08-1

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The Nigerian Public Procurement Act 2007 and Debarment of Multinational Corporations from Participating in Government Contracts: Unanswered Questions on Debarment and Exclusion Rules (Part 1) December 2008 Vol. 21: Issue 12

The legal regulation of public procurement in Nigeria is a recent development. Hitherto, no specific or general legislation governed the processes by which business entities are debarred from participating in government contracts. With the enactment of the Public Procurement Act of 2007, PPA, the legal landscape has changed. The new regime on “blacklisting” or “debarment” of corrupt business entities from participating in government contracts or bids in Nigeria raises several important issues. Interestingly, the word “blacklist” is not used in the PPA itself. However, it cannot be doubted that the impact is the same regardless of whether the word ‘debarment’ is preferred to “blacklist”. Under the newly enacted legislation, a Bureau of Public Procurements (bureau) is established. This new governmental agency is vested with the authority to debar or blacklist entities from participating in public procurement. Section 6(1)(e) of the PPA empowers the bureau to “debar any

supplier, contractor or service provider that contravenes any provision of this Act and regulations made pursuant to the provisions of this Act”. A significant development under the new regime is that a clear procedure is laid down under section 53 of the Public Procurement Act (PPA) regulating the process of blacklisting or debarring business entities found to have deployed corrupt practices in pursuit of their business interests in Nigeria. The PPA distinguishes company liability from individual liability. Part xii, section 58(1) of the PPA states that “any natural person not being a public officer who contravenes any provision of this Act commits an offence and is liable on conviction to a term of imprisonment not less than 5 calendar years but not exceeding 10 calendar years without an option of fine.” In respect of companies, section 58 (6) of the PPA states that: “any legal person than contravenes any provision of this Act commits an offence and is liable on conviction to a cumulative penalty of : Debarment from all public procurements for a period not less than 5 calendar years; and A fine equivalent to 25% of the value of the procurement in issue. Section 53(4) of the PPA lays down the procedure for debarring business

©Blackfriars LLP 2008. All rights reserved. This document is for general guidance only. Definitive advice should be sought from counsel if required. Blackfriars LLP is a Nigerian law firm with a representative office in Toronto, Canada.

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entities from public procurement. The provision states as follows: “The Bureau shall, if satisfied that there has been a contravention of this Act or any regulations in relation to procurement proceedings or procurement contracts, take action to rectify the contravention which shall include: Nullification of the procurement proceedings; Cancellation of the procurement contract; Ratification of anything done in relation to the proceedings; or A declaration consistent with any relevant provisions of this Act.

omission in the PPA is that it makes no provision for a process by which business entities that are debarred or blacklisted could overturn their debarment through an administrative process. In the next volume of this newsletter, we will further examine other innovations introduced by the Public Procurement Act of 2007.

Section 53 (5) of the PPA requires the bureau to inform the bidder or contractor of the outcome of the investigation. Section 53(5) provides: “on completion of the investigation, the relevant authority shall if an offence is disclosed, take all necessary steps to commence prosecution and inform the Bureau and the procurement entity accordingly, but where no offence is disclosed, the file shall be closed and the Bureau and procuring entity shall be duly informed”. By virtue of Section 60 PPA “procurement entity” means any public body engaged in procurement and includes a Ministry, Extra-ministerial office, government agency, parastatals, and corporations. A problematic

Dr. Pius Okoronkwo Tel: +647 831 7487 Email: [email protected] Fax: +234 1 2694781

For further information, please contact: Ms. Nkeiru Onyeaso Tel: +234 808 718 0833 Email: [email protected] Fax: +234 1 2694781

Dr. Chidi Oguamanam Email: [email protected] Phone: +234 1 739 0397 (Lagos) Phone: +1 902 494 7125 (Halifax) Fax: + 234 12694781 This newsletter has been sent to you by BLACKFRIARS LLP, a full-service law firm, in the genuine belief that its contents would be of interest to you. If you have received this newsletter incorrectly, or if you do not want to receive further information about legal developments in Nigeria and West Africa, please accept our apologies. To unsubscribe from future newsletters from BLACKFRIARS LLP please send an email to [email protected] with "unsubscribe" in the subject line.

©Blackfriars LLP 2008. All rights reserved. This document is for general guidance only. Definitive advice should be sought from counsel if required. Blackfriars LLP is a Nigerian law firm with a representative office in Toronto, Canada.