Senate probes NPA over clandestine dealings in award of N7.5bn Contract

***contractor gets N344m overpayment than work executed

Senate has commenced an investigation into some surreptitious dealings in award of contract for shore erosion control work at Akipelai, Ayakoro and Otuoke in Bayelsa state.

The Senate Public Account’s panel chaired by Senator Matthew Urhoghide based the investigation on a 2017 Auditor General’s report submitted to the committee for consideration.

The Contract was awarded in March 2012 with 14 months completion period .

But, as at November N4.2bn has been paid which represents 56.61 percent of the contract sum to the contractor.
However, review of quantities (BOGs) under No- 1 attachment revealed that mobilization fee of N1.1bn paid to the contractor, was supported by conditional bank guarantee from Zenith Bank Plc with validity for 365 days which expired on the 2nd March, 2013.
This Contrary to the Provision of section 35 ‘1’ of procurement Act 2007 and Financial Regulations 2933 “1” (2009) which only provide for submission of an unconditional bank guarantee or insurance bond.

But, NPA in a written response to the allegation claimed that enbloc recovery of mobilization fee may create a financial strain to the project hence the need to recover the fee on instalmental bases.

Also, it was uncorvered that the sum of N19.5 million was paid for Toyota Hilux Double cabin petrol engine however, there was no evidence to confirm that these vehicles were purchased .

In the NPA response to the allegation, the agency claimed that the Toyota Hilux was purchased.
In another observation by the Auditor General, N128 million provided for insurance against damages to persons and properties, was certified and paid through certificate No-3 with no evidence that any insurance was undertaken.

But, NPA in its response said, “Noted for future compliance. Payment for insurance of the works was carried by the contractor as required to the tune of the approved amount.
“The particulars of the insurance are usually retained by the contractor.”
In addition, in the interim valuation certificate No 4 dated November 11, 2015, it was discorvered that the value of works executed at the period was N3.9bn representing 52.07 percent.

But, the total amount paid to the contractor was N4.2 billion representing 56.61 percent of the contract sum which implies that the contractor was paid more than the work executed by N344 million.

The query reads, “A contract for Shore Erosion Control Works at Akipelai, Ayakoro and Otuoke towns in Bayelsa State was awarded at a contract sum of ₦7,503,344,599.00 (Seven billion, five hundred and three million, three hundred and forty-four thousand, five hundred and ninety-nine naira), vide award letter Ref. No.: HQ/GME/CP/CON/R.16/067 dated 22nd March, 2012, with 14 months’ completion period.

“As at 11th November, 2015, four (4) payment certificates and an advance payment totalling ₦4,247,938,353.26 (Four billion, two hundred and forty-seven million, nine hundred and thirty-eight thousand, three hundred and fifty-three naira, twenty-six kobo) representing 56.61% of the contract sum, had been paid to the contractor.

“Review of documents and the Bill of Quantities (BOQs) under Bill No. 1 (General) attached to these payments revealed that: • Mobilization fee of ₦1,125,501,659.85 (One billion, one hundred and twenty-five million, five hundred and one thousand, six hundred and fifty-nine naira, eighty-five kobo), paid to the contractor, was supported by a conditional bank guarantee from Zenith Bank Plc. with a validity period of 365 (three hundred and sixty-five) days which expired on the 2nd March, 2013, contrary to the provisions of Section 35 ‘1’ ’a’ of the Public Procurement Act, 2007 and Financial Regulations 2933 ’i’ (2009) which only provide for submission of an unconditional bank guarantee or Insurance bond.

“More than 4 (four) years after expiration of the bank guarantee, the contractor fails to renew it and the balance of unrecovered advance payment stood at ₦539,452,959.95 (Five hundred and thirty-nine million, four hundred and fifty-two thousand, nine hundred and fifty-nine naira, ninety-five kobo).

“The sum of ₦19,500,000.00 (Nineteen million, five hundred thousand naira) was paid for the purchase of 3 (three) Toyota Hilux double cabin petrol engine vehicles; however, there was no evidence to confirm that these vehicles were purchased.
“The sum of ₦13,500,000.00 was made for annual running cost of the project vehicles, in which ₦6,750,000.00 (Six million, seven hundred and fifty thousand naira) was certified and paid to the contractor, but there was no evidence to show what the amount was used for.

“The sum of ₦11,250,000.00 certified for compensation of properties to be affected by the project and paid in Certificate No. 3, had no records on how the money was utilized nor the beneficiaries involved. • ₦12,500,000.00 provided for Community Relations, was certified and paid vide Certificate No. 3 with No supporting documents to validate the payment.

“₦128,000,000.00 provided for insurance of the works and insurance against damages to persons and properties, was certified and paid through Certificate No. 3 with No evidence that any insurance policy(s) was undertaken.
“The Principal Manager’s (QS) report on Interim Valuation Certificate No. 4 dated 11th November, 2015 showed that the value of works executed as at the period was ₦3,903,668,868.75 representing 52.07% of contract sum.

“However, the total payment made to the contractor was ₦4,247,938,353.26 representing 56.61% of contract sum. This implies that the contractor was paid more than the work executed by ₦344,269,484.51.

“During inspection of the project, it was revealed that the contractor had since abandoned the project site; and the duration of the project had since lapsed without approval for its extension.”

NPA is expected to appear before the Committee to make oral presentation of its response to the query .