In the bustling landscape of Nigeria’s construction industry, contractors play a pivotal role in shaping the nation’s infrastructure and development.
When it comes to construction and contracting in Nigeria, a thorough understanding of the legal framework is crucial for both contractors and clients.
Nigerian contractor laws aim to ensure fair and transparent business practices, protect the interests of all parties involved, and maintain the quality and safety of construction projects.
In this article, The Jurist Newspaper brings you some of the key legal aspects that contractors in Nigeria need to be aware of.
Who is a contractor
A contractor is an individual group or entity that has the technical ability and legal capacity to perform certain obligations towards achieving or implementing a certain project.
According to Section 16(5) of the Public Procurement Act 2007, as amended, “A supplier, contractor or service provider may be a natural person, a legal person or a combination of the two. suppliers, contractors or service providers acting jointly are jointly and severally liable for all obligations and or responsibilities arising from this Act and the non-performance or improper performance of any contract awarded under this Act.
In the past, despite multi-billion naira budget invested in infrastructural development, Nigeria still counts as one of the countries in Africa with poor infrastructure.
This is largely due to corrupt practices by the procuring entities which includes the contractor.
The use of fake, unregistered or non-existent contractors to siphon money that is meant for government projects undermined the procuring process in Nigeria.
This is a breach of the procurement law that negates the procedure of proper accountability and transparency.
There are disadvantages to this, and it includes poor work done, abandonment of the project, no value for money or fitness for its purpose, and embezzlement of public funds.
These are evident qualities around Nigeria’s development, in almost every sector, health, education, commerce and more.
In order to determine what constitutes an ideal contractor in the procurement system, The Jurist Newspaper has summarized the rules and regulations backing the selection of a perfect contractor for project implementation in Nigeria.
Contractor eligibility and status
Must be registered
According to the Bureau of Public Procurement Act 2007, “ A contractor or an entity willing to accept a procuring obligation must be approved and completely registered for 10 years under the federal government approval, which is the Corporate Affairs Commission,”
This ideally constitutes the process of legal entries in any procurement activities in the country.
Section 16 subsection 6 (b) states that a bidder must possess the legal capacity to enter into the procurement contract ;
This means, the entity must have fulfilled the necessary registration requirements which includes tax payment and others.
Section 16(d) stipulates that a contractor must “have fulfilled all its obligations to pay taxes, pensions and social security contributions.”
8 (d) also buttresses that “if the bidder is in arrears regarding payment of due taxes, charges, pensions or social insurance contributions, unless such bidders have obtained a lawful permit with respect to allowance, deference of such outstanding payments or payment thereof in instalments”.
Professional and technical qualification
According to section 16 (6) (a) of the Act, the contractor must also have the potential skill, techniques and capacities to deliver the kind of job or work given to her, in order to ensure quality work done and timeliness of delivery.
This includes a well-structured administration system which dictates that a bidder must be professionally inclined, having in possession adequate personnel and administrative department to take up obligations in the company.
The section reads; (6) All bidders in addition to requirements contained in any solicitation documents shall :
(a) possess the necessary :
(i) professional and technical qualifications to carry out particular procurements ;
(ii) financial capability ;
(iii) equipment and other relevant infrastructure ;
(iv) shall have adequate personnel to perform the obligations of the procurement contracts”
All these comprise the fundamental principles for procurement in the Nigerian system.
Bidder’s profile
The Procurement Act also frowns at a convicted profile of any bidder or their administrators.
Especially a crime connected to procurement procedures or regulations, money laundry and any money-associated crime.
It was vividly stated under the same section 16 (6) That a supplier or contractor must “(e) not have any director who has been convicted in any country for any criminal offence relating to fraud or financial impropriety or criminal misrepresentation or falsification of facts relating to any matter”
Furthermore, (8) of the same section states that a bidder who had been sentenced for a criminal offense must be rejected.
8 (e) reads “The bidder has been validly sentenced for a crime committed in connection with a procurement proceeding, or any other crime committed to gain financial profit.”
(f ) The bidder has in its management or is in any portion owned by any person that has been validly sentenced for a crime committed in connection with a procurement proceeding, or other crime committed to gain financial profit.
Additionally, the bidder must not be associated with or politically influenced by any means of engaging in politics.
Not debarred
A contractor that has been debarred or sanctioned by the federal government must not take up procurement obligations.
Not be in receivership
The financial capacity of a contractor also means a lot in the procurement process. This includes receivership.
“Receivership is a court-appointed remedy that may be used to assist creditors in recovering funds due them when a company is unable to make payments on a loan. It can keep a company out of bankruptcy as it restructures due to financial hardship”
The law also disagrees with a component of the financial instability of a contractor in section 16 (6)
(c) Not be in receivership, the subject of any form of insolvency or bankruptcy proceedings or the subject of any form of winding up petition or proceedings ;
Section 8 also states that “(c) The bidder is in receivership or is the subject of any type of insolvency proceedings or if being a private company under the Companies and Allied Matters Act is controlled by a person or persons who are subject to any bankruptcy proceedings or who have been declared bankrupt and or have made any compromises with the creditors within two calendar years prior to the initiation of the procurement proceeding.
This means that the director or any administrative controller of the company must be clear of money-related crimes which include bankruptcy.
Not in a relationship with the procuring entity
Nepotism, favouritism or bribery is totally discouraged in procurement processes.
A contractor that has a relationship with the providing entity must not be given a procurement obligation.
Here is what the law says; Whenever it is established by a procuring entity or the Bureau that any or a combination of the situations set out exist, a bidder may have its bid or tender excluded from any particular procurement proceeding if :
16(8) (a)”There is verifiable evidence that any supplier, contractor or consultant has given or promised a gift of money or any tangible item, or has promised, offered or given employment or any other benefit, item or a service that can be quantified in monetary terms to a current or former employee of a procuring entity or the Bureau, in an attempt to influence any action, or decision making of any procurement activity.”
This simply means that no contract should be issued to the contractor who by any means has performed bribery or is subject to favouritism or nepotism or bound by any monetary value to engage in the procuring processes.
Enter competitive bidding
The proper process of entering a contract deal must be through competitive bidding and not favouritism. This starts with submitting or tendering required documents to be verified.
(7) explains that “The procuring entity may require a bidder to provide documentary evidence or other information it considers necessary as proof that the bidder is qualified in accordance with this Act and the solicitation documents and for this purpose any such requirements shall apply equally to all bidders.”
Experience
The Act also says three years prior knowledge of whatever contract a bidder aspires for.
The bidder must at least, have taken up work that is related or have participated in such a development project or practice within three years before taking up another contract with clear evidence.
It reads (b) a supplier, contractor or consultant during the last three years prior to the commencement of the procurement proceedings in issue failed to perform or to provide due care in performance of any public procurement.
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What you should know
- Having fulfilled all these requirements, the entity would proceed to another verification process, the issuance of the “Certificate of no Objection”. Which is the legal approval before awarding a contract to a contractor.
- These are what constitute an Ideal contractor in the Nigeria Procurement Act.
- Contractors in Nigeria operate within a legal framework designed to promote transparency, fairness, and quality in the construction industry.
- Adherence to registration requirements, compliance with regulatory bodies, and an understanding of contract laws are all vital for successful and legally sound operations.
- Staying informed about these legal aspects is not only a legal requirement but also a way to build trust and confidence with clients and stakeholders in the Nigerian construction industry.
- As the Nigerian construction industry continues to grow, it is essential for contractors to keep abreast of any updates or changes in the legal landscape to ensure they remain in full compliance with the law.
