Introduction
Public service provisioning in the areas of water, sanitation and hygiene – referred to as WASH – is one of the core and statutory obligations of the state. As noted by Mackinnon et al. (2019), access to and availability of water, adequate sanitation and hygiene, WASH, refers to three principal elements that are merged, considered and discussed together due to their interconnectedness. Widespread corruption in contract management and ineffectiveness have characterised initial circular-based treasury procurement processes, and this remains a major cause of infrastructural deficit in less developed economies (Onyema, cited in Okolie and Nnamani 2016). By public procurement, we mean the acquisition or provision of public goods, services and works by the government or its agencies using public funds (UNICEF 2018).
Access to WASH facilities is a vital aspect of human welfare which supports health and livelihoods, and helps to create a healthy environment. WASH is not just a basic necessity for human survival; it is also a human right required to preserve the dignity and health of all people (Daramola and Olawuni 2019; Tsesmelis et al. 2020). It has a profound impact on key resources for development and it is prioritised within the 2030 global development agenda, the United Nations Sustainable Development Goals (SDGs) (Mackinnon et al. 2019). SDG 6 in particular seeks to ensure the availability and sustainable management of water for all.1
A total of US$1.7 trillion is required to achieve SDG Target 6.1 (achieving universal and equitable access to safe and affordable drinking water for all) and Target 6.2 (achieving access to adequate and equitable sanitation and hygiene for all and ending open defecation, paying special attention to the needs of women and girls and those in vulnerable situations) by 2030 (UNICEF and WHO 2019; WHO 2017). This suggests that a consistent annual capital expenditure of US$114 billion is needed to achieve this ambitious but laudable aspiration (United Nations 2018) over the full 15-year period of the SDGs, up to the target year of 2030. This figure excludes expenditure on recurrent items such as operation and maintenance, monitoring, institutional support, sector strengthening and human resources. WASH national expenditure reports in 57 countries, representing approximately 56% of the global population, indicate that a total of US$85 billion in annual budgets was mobilised for WASH projects between 2014 and 2017 (WHO 2017).2 Similarly, aid commitments for water and sanitation to the sub-Saharan Africa region substantially depreciated from US$3.8 billion (38%) in 2012 to US$1.7 (20%) in 2015 (WHO 2017). This wide fiscal gap and expenditure deficit have negatively impacted on the increasing demand for and access to WASH facilities in the region. The deficit has effectively denied access to potable water to about 319 million people and has resulted in 695 million people living without adequate sanitation facilities (Signé 2017). Most importantly, the scenario further represents grave global health burdens in terms of consequences linked to inadequate sanitation and poor hygiene and lack of access to drinking water (Akpabio and Udofia 2016).
Nigeria, a country with an estimated population of more than 200 million people, is a signatory to the United Nations General Assembly Resolution on the Human Right to Water and Sanitation (OHCHR 2020) as well as to the 2030 Global Development Agenda (Echendu 2020), which, among other things, prioritise improving access to WASH facilities. The WASH programme in Nigeria is a collaborative project involving the state (federal, state and local governments) and non-state actors (international development partners and non-governmental organisations [NGOs]). Under its SHAWN – sanitation, hygiene and water in Nigeria – projects, the federal government, through the Ministry of Water Resources, is responsible for the coordination and supervision of national policies and strategies relating to the WASH sector, while the state governments are expected to enact these policies through the state ministries of water resources (WaterAid 2019). Meanwhile, each state government has an implementing agency known as the Rural Water Supply and Sanitation Agency (RUWASSA). The international development partners, especially the bilateral and multilateral state agencies, provide the technical support for the implementation of WASH programmes in Nigeria. In terms of financing, funds for the execution of WASH programmes are sourced essentially from government budgetary allocations (federal and state governments) and official aid from development partners such as UNICEF, the UK’s Foreign, Commonwealth and Development Office (FCDO), the European Union (EU), and the United States Agency for International Development (USAID). Between 2014 and 2019, a total sum of US$312.7 million was invested by international development partners for the execution of WASH projects in Nigeria, while counterpart funding totalling US$34.5 million was committed to the sector by the federal and state governments within the same period (UNICEF 2020).
Despite these financial commitments, Nigeria is currently ranked among the top three countries in the world where a substantial number of citizens are living without access to safe water, sanitation and hygiene facilities. A UNICEF (2020) evaluation report spanning 2014 to 2017 indicated that only 68% of the Nigerian population have access to a basic water supply and 19% use improved sanitation facilities, while 47 million people practise open defecation. Poor and lack of access to safe water and poor sanitation and hygiene constitute some of the major causes of the high mortality and morbidity rates among children under five (Echendu 2020) and increase people’s vulnerability to water-related diseases such as cholera, typhoid and diarrhoea. According to UN Human Rights (2019), the number of deaths linked to water-borne diseases is rising, and current estimates show that, annually, diarrhoea alone kills more than 70,000 children under five in Nigeria. Indeed, the incidence of diarrhoea recorded in Nigeria nationally has grown from 10.2% of the population in 2013 to 12.8% in 2018 (National Population Commission and ICF International 2019). In the same vein, the Nigeria Centre for Disease Control (2021) shows that the number of cholera-related deaths in Nigeria from 1 January to 3 October 2021 was 3208, while the overall death toll due to Covid-19 from 28 February 2020 to 3 October 2021 was 2838. These bleak statistics are startling and constitute severe threats to wellbeing, livelihoods and people’s health, thereby exacerbating fears within policy and intellectual circles regarding the country’s slim chances of realising the WASH components of the SDGs.
The continued deficit of WASH facilities in Nigeria is associated with weak project execution, paucity of funds, limited government capacity, corruption, overvaluation of prices of WASH projects, and favouritism in the award of government contracts. Attempts to prevent these challenges from militating against the development of WASH infrastructure in Nigeria provided the basis for public procurement reforms and legislation in 2007. In particular, the Public Procurement Act (PPA) of 2007 introduced provisions that seek to regulate open abuse of known rules, processes and standards in the award and delivery of public-sector contracts (Federal Republic of Nigeria 2007; Okolie and Nnamani 2016). At the core of this legislation is the belief that it supports probity, accountability, fairness, competitiveness, value for money, standards, transparency and cost-effectiveness.
Despite these provisions, eliminating or reducing the massive deficits in the WASH sector through competitive, transparent, accountable and cost-effective procurement processes has become increasingly difficult, if not impossible. The public procurement process represents a series of procedures through which government and state-owned enterprises purchase goods, works and services. Corruption in this area has proved extremely resistant to any strategy to contain or expunge it. Large-scale deficits in the WASH sector abound in Nigeria – an indication that efforts at regulating the procurement processes through legislation are yet to produce the desired outcome. The dominant explanations for this failure are: lack of capacity and political will to enforce the Act (Williams-Elegbe 2012; Zadawa and Hussin 2015); dearth of procurement experts (Ekung, Lashinde and Amuda 2015); institutionalised corruption (Appolloni and Nshombo 2014); weak procurement systems (Aigheyisi and Edore 2015); and political interference (Oyebamiji 2018).
While these explanations are relevant in their own right, they neglect to consider how the lowest responsive bidding practice undermines the delivery of WASH projects in Nigeria.3 This article provides insights into the procurement patterns of the Nigerian state and how they impact on government policies and actions, including the quality of deliverables. From a political economy perspective, it explores the tripartite relations between the law, class and accumulation, with a view to understanding how the interest of the dominant social forces and power relations between social actors influence, support and resist reforms of development projects and ideas (Akpabio and Udofia 2016). This approach focuses on the dispositions of critical actors whose actions and inactions impinge on the implementation of WASH programmes in Nigeria. Utilising this analytical framework as well as secondary data, policy appraisal and field observation by the authors as UNICEF procurement consultants, this study challenges the conventional narratives. The study establishes how the dominant social forces weaken the regulations governing the procurement of works and services in the WASH sector in order to further their primitive accumulation, which reinforces the use of state institutions for advancing their personal interests.
The article is divided into five sections. After this introduction, the second section presents a discussion of the organic link between the evolution of the Nigerian state, public provisioning and primitive capital accumulation. The third section interrogates how public procurement laws have legitimised primitive capital accumulation in the WASH sector, while the penultimate section analyses the area of lowest responsive bidding and the development of the WASH sector in Nigeria by using a political economy approach. Lastly, more general conclusions are drawn in relation to the implications of lowest responsive bidding for the participation of credible, tested and trusted firms known for delivery of high-quality work, goods and services.
The Nigerian state, public provisioning and primitive capital accumulation
Relying on the political economy methodological approach, with specific focus on the postcolonial state thesis, this section analyses how the practice of lowest responsive bidding is undermining the development of WASH infrastructure in Nigeria. Postcolonial state theory has a Marxist bent and counters the liberal theory of the state, which believes that the state is an independent force and an unbiased umpire which caters for the welfare and good of its citizens. On the contrary, in the view of Marxist theory, the state is nothing but a product and manifestation of the irreconcilability of class dissension and hostilities, rather than a neutral, benevolent power standing above society, aggregating interests, mediating and moderating inter- and intra-group social relations (Engels 1962 [1884]). Contrary to the liberal theory which posits that the state exists to ensure that these conflicting parties are kept within the bounds of law and not consumed in fruitless struggles and dissensions, Marx and Engels (1848) argue that the state is a fundamentally biased entity which always defaults to a role of managing the interests of the bourgeoisie. The state’s natural inclination to further the interests of the ruling class is expressed through the enactment, execution and adjudication of laws that intensify the exploitation and oppression of the subjugated class(es). From a Marxist perspective, this remains the scenario across generations and political climes.
Nigeria, as a postcolonial state, is a product of the struggle for capitalist expansionism and conquest. Immediately after independence, the emergent petty bourgeoisie who took over the reins of power in Nigeria inherited a weak economic base which focused largely on the use of state power for capital accumulation (Mbah, Nwangwu and Edeh 2017; Nwangwu et al. 2020). An aggregation of military interregna, the outbreak of civil war in 1966 and the petroleum boom of the 1970s displaced the early post-independence, pre-capitalist social formation and enthroned a new unproductive class in Nigeria that depends solely on primitive capital accumulation. While the military rulers strengthened their grip on state power through coercion and material inducement, the oil boom generated a brand of politics based on prebendalism and rentierism (Lewis 1996; Nwangwu 2021). Thus, the emergent state exists primarily for two purposes: as a tool for capital accumulation and as an instrument for class domination. It became the base of economic power as well as an instrument of it.
Like its colonial counterpart, the postcolonial state prioritised spatial inequalities in infrastructural development. Thus, it concentrated public goods such as water and sanitation facilities in urban settlements where the ruling class resides. Where facilities were situated in the rural areas, it was mainly to facilitate the exploitation of resources. This explains the presence of public infrastructure in Lagos, Kaduna, Warri, Bonny Island and other crude-oil-bearing areas. Although the post-independence Nigerian state has allocated a substantial portion of its annual budget to service delivery, most of these allocations have been embezzled, diverted or expropriated. Through their firms or proxy firms, the ruling elite intensifies its accumulation by using influence or access to state power to divert vital and lucrative contracts to itself in order to increase its material base. Instead of executing projects, it diverts funds and remits paltry sums to senior bureaucrats in exchange for completion certificates (Brimah, Bolaji and Ibikunle 2013; Page 2018; Abioro 2021). The failed US$16-billion power project under former president Olusegun Obasanjo is a classic example. A report published six years ago by the Socio-Economic Rights Accountability Project (2017) indicates that the tenures of Olusegun Agagu (2000–2002) and Liyel Imoke (2003–2007) as ministers of power were characterised by several cases of diversion of public funds under the guise of contract awards for the upgrade and rehabilitation of power plants. As surmised by Albert, Abada and Adibe (2021), the power project was designed by President Obasanjo’s government to favour the governing party’s major campaign financiers, for example through the awarding of state contracts. These corrupt practices have undermined the development of public infrastructure in all developmental sectors in Nigeria.
However, persistent pressures from international development partners and from trade unions (such as the Amalgamated Union of Public Corporations and the Civil Service Technical and Recreational Services Employees) as well as NGOs (such as the Society for Water and Sanitation, and Water Initiatives Nigeria), compelled the Nigerian government to reform the public procurement mechanism and procedures around its projects in the WASH sector, and indeed in other sectors, in the early 2000s. The reforms included the enactment of procurement laws as well as codification of harmonised procurement guidelines by the international development partners. Among other things, these rules sought to address bad practices in the service delivery sector, and broadly to specify and regulate the modalities for the acquisition of public goods, works and services. Pressures for the regulation of procurement procedures in Nigeria from the international development partners were largely motivated by the urgency to rid the public service delivery mechanism of its inherent corrupt tendencies (Chimia 2013). In 2007, for instance, it was on record that the USAID and the World Bank, as part of their commitments towards strengthening the capacity of public sectors in developing countries, supervised and funded the public procurement reform in Nigeria which resulted in the PPA of 2007 (Adam, Barrett and Fazekas 2020). However, our field experience as procurement consultants suggests that the pressures from these partners were essentially designed to promote the expansion and consolidation of capitalist penetration in Nigeria. Indeed, the hidden motive was to facilitate the mobilisation of Nigeria’s resources for the development and advancement of Western capitalism. At the surface level, laws in postcolonial states are promulgated to regulate human conduct and social relationships; however, the actual intent of the law is to enhance and deepen the tendency for primitive capital accumulation by powerful individuals (Ake 1981; Nwangwu and Ononogbu 2016).
Although the extant procurement law covers offences relating to public procurement in Nigeria, the enforceability of these provisions has been weakened by inherent narrowness, loopholes and ambiguities. For instance, Section 24(3) of the 2007 PPA provides that a contract shall be awarded to the bidder whose bid has been deemed to be the lowest evaluated responsive bid. Contractors or contracting firms leverage this provision in order to satisfy their unquenchable thirst for appropriation. For instance, it was reported by the Benue State commissioner for science and technology in 2013 that
Top government officials in Benue State and prominent indigenes of the state collected over N640 million from the state government for construction and provision of facilities in schools. They then abandoned the projects. …
[The commissioner] explained that contracts worth over N800 million were given to the prominent citizens for science and technical schools … . He said over 80 per cent of the contract sum had been paid to the contractors before they abandoned the projects.
‘The government has paid all the contractors in this ministry, so it is the fault of the contractors.’ … The commissioner said all the contractors handling projects were people in government or of high profile status in the state. (Premium Times 2013)
As shall be seen later, the unwillingness of relevant state authorities to punish some offenders who have grossly abused the PPA’s practice of lowest responsive bidding suggest that the practice was inserted basically to create a semblance of accountability. The narrowness of the procurement law provides an impetus for the consolidation of corrupt and sharp practices related to acquisition in the WASH sector. It has further undermined the provision of WASH services in Nigeria.
In the next section, we will demonstrate how the ambiguities in the procurement law have legitimised and emboldened primitive capital accumulation in the delivery of WASH facilities in Nigeria.
Public procurement laws and legitimisation of primitive capital accumulation in the WASH sector
Regulating public procurement processes is complex and problematic (Appolloni and Nshombo 2014). It becomes even more challenging in African states where the vestiges of colonialism have weakened the regulatory mechanisms of governance and intensified corrupt practices. The processes of acquiring public goods and services are largely uncoordinated, lacking transparency and accountability, and usually provide conduits for siphoning off government funds. In the same vein, the processes leading to the award and execution of government contracts are prone to manipulation and abuse, including repeated delays, cost overruns and even the collapse of buildings (Oyewobi, Ija and Jimoh 2017). For instance, the World Bank Country Procurement Assessment Report of 2000 found that an average sum of US$10 billion was lost yearly before 1999 to unwholesome practices in the award and execution of government contracts in Nigeria (World Bank 2000). Indeed, the need to standardise and harmonise public procurement practices, to minimise mistakes, incompetence and corruption in the service delivery sector, to prudently manage limited government resources and to promote economic development serve as the key drivers of public procurement reforms in Nigeria (Lennerfors 2007; European Commission 2016).
In the last decade and a half, Nigeria has implemented a wide range of strategies, including institutional and legislative measures to hold back the increasing rate of corruption, which is severely restricting the provision of WASH facilities in the country (Hope 2018).4 Nigeria’s grand framework for regulating the acquisition of WASH facilities is the Public Procurement Act (PPA) of 2007. The Act, among other things, established the Bureau of Public Procurement, which has the responsibility to provide legislative and institutional mechanisms and professional capacity for public procurement in Nigeria. It lays out the modalities for acquiring public goods and services and, most importantly, criminalises bribery, fraud and other procurement-related offences (Mubangizi and Sewpersadh 2017). The legislation was designed to engender transparency and a competitive bidding atmosphere, to ensure that budget proposals were tailored to the needs of the people, and to enhance effective service delivery. Nevertheless, the dominant class that owns most of the contracting firms and relies on WASH projects execution for capital accumulation substantially determines the direction of the procurement processes. As observed in our engagements as procurement consultants, highly placed individuals and their collaborators influence the membership of the procurement and evaluation committees by enlisting and inducing subservient public officials who work purposely to serve the common interests of the dominant class.
As such, the 15-member Procurement and Evaluation Committee, which is usually drawn from relevant ministries and government agencies, serves as the eyes and surrogates of the key state actors. This committee is not under the aegis of a ministry or government department. It is an independent committee created under the Procurement Act expressly to evaluate bids. However, highly placed government officials often interfere with the committee appointment processes.
Members of the committee equally accumulate capital in the procurement process through daily food and attendance allowances paid by the implementing or tendering agency. The total cost of the allowances of the evaluation committee members in most cases is a very substantial proportion of the total funds awarded for the execution of the contract. For instance, a public procuring entity5 in Benue State incurred an estimated sum of N1.6 million (about US$4500) just for the payment of honorariums to the evaluation committee members who participated in evaluations of the bids in 2019.6 Meanwhile, the project in question was subsequently awarded a total budget of N2.7 million. We also witnessed similar cases in Bayelsa, Anambra, Akwa Ibom, Kaduna, Rivers and Bauchi States. This implies that the evaluation cost adds substantially to the cost of executing WASH projects, and fundamentally negates the original intent of the procurement laws which, among other things, promised to reduce waste and the cost of service delivery.
Also, given the high stakes usually associated with the bidding process, there is often intense lobbying with subtle attempts to induce the procurement consultants to skew the process to the advantage of some vested interests. The procurement consultant is charged with the responsibility of mediating and moderating the pre-bid and bid processes in line with the extant laws and harmonised procurement guidelines. Indeed, the consultant is usually drawn into altercations with some members of the committee who are discomfited and disadvantaged by the strict application of procurement rules. We also observed, in a number of cases, that some committee members attempted to override the provisions of the guidelines by agreeing to adopt emergency rules suiting their own interests. Rejection of bribes by consultants is usually accompanied by threats (overt or covert), intimidation (psychological or physical) and blackmail by the committee members or their proxies. Unfortunately, the procurement law did not make provision for the protection of consultants against the blackmail, threats or intimidation that they might face while performing their duties.
Beyond this, highly influential individuals also leverage the lowest responsive bidding technique as an effective and potent tool to consolidate their quest for primitive capital accumulation. While there exist other forms of procurement specified under Sections 39 to 43 of the PPA, Section 24 of the same law recognises open competitive bidding as the preferred method of procurement to be employed by all procuring entities in Nigeria. Subject to the provision of Section 25 of the PPA, as well as Paragraph 42.1 of the Procurement Procedure Manuals for Public Procurement in Nigeria, solicitation for an open competitive bid can be through either national or international competitive bidding. In addition to navigating the prequalification stage, the evaluation of bids and the minimum criteria enshrined in the bids solicitation, a contracting firm is deemed to have won an open competitive bid process if the bid is adjudged to be the lowest evaluated responsive bid, otherwise known as the most economically advantageous tender. A lowest responsive evaluated bid is one which has been thoroughly scrutinised and found to be responsive to prescribed qualification criteria; evaluated in detail; found to align with the predefined evaluation criteria; and found to have the lowest price, after price valuation and comparison. Notably, Section 24(3) of the PPA of 2007 declared that the winning bid shall be the lowest evaluated bid which has been responsive to the bid as regards the work specification and standard. Similarly, the UNICEF Harmonised Procurement Guidelines of 2018 aver that the Procurement Committee shall, in line with the evaluation templates provided, determine and select the responsive bidder with the lowest evaluated cost for the award of contracts. It notes that the bid(der) that meets the minimum technical standard, and with the lowest evaluated cost, shall be recommended for the procurement of works and goods. This procedure of awarding contracts was instituted primarily to promote competitive, fair, transparent and cost-effective bidding and procurement processes. However, this contrasts with awarding contracts to the best-performing firms who will deliver the highest-quality goods and works in the WASH sector.
Because contracts are awarded to firms with the lowest evaluated cost, the key state actors who own most of the participating firms rely on this provision to drastically reduce the bid prices with regard to the prevailing market value. This significant reduction of the bid price predisposes a bid to abnormally low tenders (Bedford 2009). An abnormally low tender is a bid whose contract price appears significantly lower than all of, or the average of, the overall bids in the same tendering procedure. The low evaluated price mechanism has two significant implications for the procurement processes. First, the system is prone to the subletting of contracts (subcontracting) to unknown third-party firms. Contractors after emerging successful usually transfer contract execution to a third-party firm at a price lower than the contract sum awarded. Given that the third-party firm equally sees project execution as a source of real capital accumulation, it uses substandard materials, thereby substantially deviating from the specifications provided in the bill of quantity (BOQ). As also observed during our fieldwork, in order to successfully navigate the hurdle of project monitoring and evaluation the main contractors offer heavy inducements to the appointed supervisors, who thereafter award the completion certificates necessary for final payment. This practice was witnessed in the 2019 WASH procurement exercise sponsored by international development partners in collaboration with some subnational states in Nigeria. For instance, at the end of the bidding exercise in Benue State, six firms, as shown in Table 1, were successful and subsequently shortlisted for the procurement of water in some selected local governments of the state.
Details of shortlisted firms for the construction of the hand-pump borehole (HPBH) component of WASH facilities in Benue State.
| Name of firm | No. of HPBHs | Local government location | Unit cost (N) | Total or evaluated cost (N) | |
|---|---|---|---|---|---|
| 1 | Williamson Worldwide & Co. Ltd | 5 | Obi | 720,485 | 3,662,425 |
| 2 | Williamson Worldwide & Co. Ltd | 10 | Guma | 715,485 | 7,209,850 |
| 3 | Addmore Nigeria Ltd | 10 | Konshisha | 697,000 | 7,000,000 |
| 4 | Greenfield Nigeria Ltd | 10 | Konshisha | 697,993 | 6,999,930 |
| 5 | James & Sons Co. Ltd | 10 | Oju | 705,800 | 7,083,000 |
| 6 | Cabino Nigeria Ltd | 10 | Oju | 645,950 | 6,474,500 |
Source: Fieldwork from the 2019 Public Procurement Exercise in Benue State.
These firms were shortlisted on the basis of lowest evaluated cost. Meanwhile, our independent market inquiry based on the specifications provided in the advertised BOQ suggests that the contract sum was based on prices that were grossly lower than actual market values, and thus inadequate for completion of the project. According to our market survey, the actual unit cost of procuring a durable and potable hand-pump borehole water facility ranges from N1 million to N1.2 million. Due to the lowest responsive bidding method employed in determining successful contracting firms, contract sums were very substantially brought down by the state actors through their proxy bidding firms, in order to tactically drive off competent and reputable firms.7 However, the post-bid evaluation meeting revealed that all participating firms failed to conclude their jobs within the 90-day deadline and in line with the specifications provided in the BOQ: during the evaluation meeting, each of the firms presented a verbal report of the progress made. Because they could not complete the project within the contracted timeline, the procuring entity revoked the contracts, in line with the harmonised procurement guidelines.
Our field observation also indicates that while some firms mobilised operations to the sites and only performed the preliminary aspects of the job, others delivered incomplete, poorly executed jobs with inferior equipment. For instance, our field observations of the contract management of the 2019 procurement revealed that four firms were indicted for subcontracting their commitments to other third-party firms at prices lower than the sums in the contract. Although termination letters were issued to these firms, stringent actions were not taken to penalise them for breaching some aspects of the contract agreements. The reason is discernible – Section 58 of the 2007 PPA on the punishment of offenders is grossly inadequate. Among other things, it fails to recognise and make provisions for a penalty against subcontracting. This obvious vacuum in the procurement law has conspicuously reinforced poor delivery of public goods and services. Lowering the contract sum paid to a third party executing the project entails undermining the quality and durability of the project, since the contractor will definitely maximise profit. Our field observations clearly show that most UNICEF/RUWASSA-funded water facility projects in the last five years in Konshisha, Ogbadibo, Obi, Guma and Tarka Local Government of Benue State are either in a deplorable state or non-existent.
The second implication of using the lowest responsive bidding method is that it further leads to upward renegotiation of contracts in favour of the contracting firms. Ideally, in an open competitive bidding situation, a contracting firm is expected to submit a bid containing the price, the BOQ and the timeline for the completion of the project on a specified date; once submitted, these elements cannot be altered. Ultimately, price negotiation between contractors and procuring entities is forbidden once a bid has been submitted. This is mostly not the case in contract management in Nigeria. The key state actors perceive the lowest responsive bidding mechanism as both an entry pricing strategy and as a means of getting the procuring entities to renegotiate the contract later. Contracting firms usually lower the overall contract sum in order to win bids, so that they can sign the contract agreements, mobilise to site, get to an advanced stage (sometimes with inferior materials), halt the project and then apply for price renegotiation. Although most procuring entities would initially object to price renegotiation, external pressures from the highly placed influential individuals (who own these firms and extract rent from the project), as well as from the relevant community-based associations (who are the end-users of the projects), would always facilitate a renegotiation of the budget. This trend has persisted mainly due to the absence of any provision in Nigeria’s procurement law prescribing a penalty for requesting a renegotiation of budgeted costs. Although the time-lag between bid submission and the award of a contract might account for price differential in the cost of project execution due to inflationary pressures, it has become somewhat customary for powerful individuals in Nigeria to leverage the loophole in Section 58 of the PPA of 2007 in order to advance their economic interests.
This exploitation of the lowest responsive bidding mechanism was experienced during the 2018 procurement of WASH facilities sponsored by UNICEF in collaboration with a procuring entity in Jigawa State. At the end of the bidding, which was determined by the lowest evaluated cost clause, successful contractors implemented the first phase of the project. However, at the critical stage of the procurement, the contractors abandoned the projects and demanded an upward review of their contract sums, insisting that the agreed prices could not sustain the projects. The controversy generated by this development halted the progress of the procurement. Consequently, the procuring entity revoked the contract, since completion of the work had failed to meet the 90-day timeline agreed by the parties. As we observed, the termination of the contract was accompanied by intense lobbying and pressure from the highly placed individuals who considered this action to be an interference in their economic interests. Instead of penalising the contractors for breaching the terms of contract agreement, a meeting involving the procuring entities, the third-party supervisor and the procurement consultant was convened to explore ways of resolving the challenge. The outcome of the meeting was that the major parties involved yielded to the demands of the contractors on the grounds that the procurement had advanced to a critical stage. This outcome possibly explains why bidding has continued to favour the same group of a few contracting firms in the last few decades. These contracting firms deploy the lowest responsive bidding technique to perpetuate their own business interests while at the same time deterring reputable firms that have a track record of delivering high-quality projects from participating in the procurement of goods and works. The lowest evaluated cost criterion not only limits broader participation in the procurement process; it also discourages reliable, renowned and efficient firms from tendering bids, thereby trading off the delivery of high-quality work and goods against sustaining infrastructure deficits in Nigeria’s WASH sector. The latter is interrogated in the next section.
The political economy of the lowest responsive bidding and the development of the WASH sector in Nigeria
The legitimisation of the lowest responsive bidding system in the procurement processes is relevant in understanding the attendant deficit in WASH facilities, particularly in the country’s rural areas. Even programmes that seem to favour the people can be a tactical means of using the state’s institutions and resources to advance the political and economic ends of major state actors. As noted by Iyayi (1986), the dominant class capitalises on its influence in the state and its institutions to corner major government contracts in order to deepen its primitive capital accumulation. This accounts for the persistence of corrupt practices in the procurement processes too. Highly placed individuals and their collaborators abuse the procurement process by inserting clauses, creating loopholes or manipulating relevant provisions of the law to give them undue leverage to personalise and amass substantial public funds. Consequently, while the exploitation of the lowest responsive bidding system facilitates the get-rich-quick craving of the privileged class, it broadens the extent of the infrastructural deficit in the WASH sector, particularly in the rural areas.
The preference for the lowest responsive awarding system possibly explains why bidding has continuously favoured the same group of a few contracting firms in the last decade. These firms leverage the system to perpetuate themselves in the business of capital accumulation while at the same time deterring some reputable firms with a track-record of delivering high-quality projects from participating in the bidding process. By institutionalising the lowest evaluated cost criteria, the ruling class not only limits broader participation in the procurement process but also discourages the involvement of reliable, renowned and efficient firms from tendering bids. Despite the clamour for review of the procurement regulation for the adoption of a more inclusive, results-oriented and credible bidding mechanism, the ruling class which profits from the status quo has continued to resist change.
Regrettably, reliable and efficient firms lack access to powerful state actors and are structurally incapable of breaking into the cycle of the procurement process; this is due to the class character of the Nigerian state which sustains the domination of the economically disadvantaged class by the ruling class. These firms are usually edged out of the procurement power contestations because they are not adequately integrated into the elite circuit of power in the country. This is not surprising, because the Marxist tradition views the law as an instrument of class oppression and subordination. In this respect, Nwangwu and Ononogbu (2014) conclude that the African petty bourgeoisie who constitute the ruling elite usually mask their economic interests within the existing legal frameworks.
The economically dominant, privileged class in Nigeria relies on the prevailing gaps in the WASH infrastructure to adopt and institutionalise the practice of lowest evaluated cost purposely to foster its tendency for capital accumulation. Under this arrangement, contractors offer prices or contract sums lower than the market price. Although the lowest responsive bidding system is seen to promote competition and transparency, there is a growing concern that it compels contracting firms to focus on substantially minimising bid prices, even when a higher cost would be in the procuring entity’s best interest, which invariably makes it almost difficult for contracts to be awarded to reputable firms who will deliver the highest-quality projects (Khan and Khan 2015). As a corollary, the arrangement may not produce the best value for the funds expended or the desired performance during and after construction. The purpose is to tactically drive out competent and reputable firms that are renowned for not compromising quality works and goods. Lowest responsive bidding as the only criterion for awarding a contract allows unqualified firms with a poor reputation to dominate contract execution in the public sector. However, it turns out to be a disguised and institutionalised form of capital accumulation; contractors, acting under the pretext of lowest evaluated cost, drastically reduce the realistic price of delivering public goods and works. Indeed, they emerge winners – they receive and divert mobilisation funds, and they subcontract to third-party firms who finally bequeath uncompleted, inferior or substandard works or goods.
This practice has thrived in Nigeria’s public procurement space in the last decades, largely due to the lack of stringent penalties or loopholes in the existing procurement law. Reforms and amendments of some sections of the procurement law are yet to restrain the irregularities and sharp practices inherent in the procurement process. Laws in postcolonial states are the creations of a few powerful individuals with exploitative orientation and parasitic disposition and are not intended to advance the collective goals of the society. Among others, such laws are enacted for economic interests of the ruling class, while perpetuating the exploitation of the oppressed class.
The practice of lowest responsive bidding further accounts for why the huge annual budgetary allocations for capital expenditure and the intervention programmes of the development partners have yielded meagre returns. Years of oil boom and the concomitant rise in government revenue had positive effects on government allocations to capital projects. As seen in Table 2, spending on capital projects, according to the Central Bank of Nigeria’s public finance statistics, has maintained a steady increase from N552.39 billion in 2007 to N1.682.10 trillion in 2018 (Central Bank of Nigeria 2019).
Federal government of Nigeria’s capital expenditure from 2007 to 2018.
| Year | Capital expenditure (N) | |
|---|---|---|
| 1 | 2007 | 552.39 billion |
| 2 | 2008 | 785 billion |
| 3 | 2009 | 890.136 billion |
| 4 | 2010 | 1.370 trillion |
| 5 | 2011 | 883.87 billion |
| 6 | 2012 | 918.55 billion |
| 7 | 2013 | 1.62 trillion |
| 8 | 2014 | 1108.39 trillion |
| 9 | 2015 | 690.58bn |
| 10 | 2016 | 1.59 trillion |
| 11 | 2017 | 1242.30 trillion |
| 12 | 2018 | 1682.10 trillion |
Source: Central Bank of Nigeria 2019.
In the WASH sector, international development partners have stepped up their intervention programmes on public infrastructure financing in Nigeria. Accordingly, USAID, under its four-year Effective Water, Sanitation and Hygiene (E-WASH) programme, mapped out US$60.4 million to provide improved water and sanitation facilities to Abia, Taraba, Sokoto, Delta, Imo and Niger States (USAID 2018). In the same vein, an impact assessment of the Federal Government of Nigeria/UNICEF WASH programme revealed that donors including the EU, the FCDO and some state governments, expended the sum of US$312.7 million between 2014 and 2017 to enhance people’s access to water and sanitation facilities.
Despite this huge level of spending, Nigeria is yet to achieve the global transformative agenda of universal access to safe and potable drinking water. As noted earlier, highly placed but compromised individuals habitually resort to granting approvals to proxy firms for project execution and subsequently appropriate funds while infrastructure continues to decay. Thus, uncompleted and substandard projects are commonplace, especially in rural and suburban communities in Nigeria. Our field inspection of various UNICEF-funded WASH projects in the last five years shows that most of the contractors delivered substandard works that are currently lying comatose in four local government areas (LGAs) in Benue State; five LGAs in Katsina State; four LGAs in Bauchi State; and three LGAs in Anambra State. The same scenario is witnessed in other partnering states such as Akwa Ibom, Bayelsa, Jigawa, Rivers and Yobe.
The dearth of WASH facilities or the deplorable condition of those few facilities that exist serves three major functions to the powerful individuals. First, this deficit is a conduit for siphoning off public funds through the awarding and re-awarding of contracts. According to our field observation, many WASH projects were awarded and re-awarded in two LGAs in Bauchi State, two LGAs in Benue State, and one in Katsina State within the past six years. Second, these awarded but undelivered projects usually constitute part of the campaign manifesto for the elite during electoral contests. In many elections since Nigeria’s return to civil rule in 1999, politicians have pledged to boost the WASH sector in the country, a pledge which remains largely unfulfilled after the elections.
Conclusion
This study argues that the deplorable state or dearth of WASH facilities in Nigeria is a reflection of the unending practice of the lowest responsive bidding system. The procurement law fashioned to limit the growing tide of corruption is riddled with fundamental defects which end up perpetuating sharp practices. Unfortunately, even the effective application of the existing rules might not be the solution, since the flaws are not the result of enforcement capacity deficit per se – they are intrinsically embedded in the legislation. Nevertheless, reviewing the existing procurement law or drafting new ones to tackle the intrinsic pitfalls may also be futile because the key elements sustaining capital accumulation in the service delivery sector are largely economic rather than legal. Thus, it is erroneous to presume that rule-making and the application of rules alone can generate a positive outcome.
In fashioning legislation for procurement in Nigeria, the privileged class carefully incorporated the so-called lowest evaluated cost criterion, which allows the funds intended for the delivery of WASH facilities to be diverted for personal gain. Contrary to the claim that the procurement legislation promotes broader and equal participation in contract management (Arrowsmith et al. 2010; Hoekman and Taş 2022), this study found that the lowest responsive bidding clause was integrated into Nigeria’s PPA of 2007 in order to limit the involvement of credible, trusted and tested firms known for the delivery of quality works, goods and services. Through the principle of lowest evaluated cost, influential individuals deliberately under-quoted contract sums to keep a continuous hold on procurement processes, win contracts, and divert contract sums or subcontract to amorphous third-party firms who deliver substandard works to the masses.
Given the high stakes associated with bidding, this article has found that the procurement law was manipulated to ensure that the economic interests of the privileged class are unhindered. Because highly placed individuals exert control on the institutions of the state, the lowest responsive bidding clause has created gaps or ambiguities in the procurement law, thereby rendering its application ineffective. It will be meaningless to rely on the state apparatus, which is controlled by the ruling class, to regulate the procurement processes. An appropriate reform for the service delivery sector should rather prioritise broadening the scope of the procurement processes in a way that enhances active participation of civil society organisations, the media, the benefiting communities and relevant professional bodies. Such practices that sustain wide inequality in Nigeria need to be overhauled in order to bridge the increasing gap between the poor and the rich. Most importantly, ensuring that the sum awarded in the contract is in line with the existing realities is critical in engaging tested and trusted contracting firms to manage the procurement of works and services in the WASH sector.