MDA

Niger Delta Development Commission (NDDC)

Project Location/State

Rivers State State

Award Year

2010

Contract Sum

₦16.2b

Amount Paid

₦16.2b

Unaccounted

₦999.2m

Context/Observation

(a) It was observed that the contract for the construction of the NDDC Headquarters Office building had been on for the past twenty years without any completion date at sight. The contract had been reviewed several times and re awarded to various contractors. The project was re-awarded to Messrs Marchland Construction ltd in the year 2010 and the site was handed over to them on 10th June, 2010. This company was on the project till the year 2017 when they called for a review of the contract price from the initial sum of ₦3.5 billion to ₦8 billion. This made the management of NDDC to determine the contract and re-awarded it to a new contractor, Messrs Rodnab construction Limited vide Reference Number. NDDC/HQ/EDP/UIDW/RV/WAT/PR/17/083 at a new contract sum of N16,222,492,843.76. The Commission could not provide the audit team with records of payments on the construction of the Headquarters building from inception to date.
(b) From the documents made available to the audit, there was no evidence of authorization and approval like minutes of appropriate tender Board meeting to back up this upward review. Also, there was no evidence of ratification/adoption of these actions by the NDDC Board or other appropriate authority. It was also noted on the letter of award to Messrs RODNAB Construction Ltd that reference was made to the NDDC Management as the approving authority for the contract, However, these approval could not be produced for audit verification.
(c) The contract file was not made available to the team, therefore the letter and date of award could not be ascertained as the source of the information was the contract valuation certificate No.2 dated 18/10/2018. It was also noted that additional works with different values were added to the contract sum from time to time that finally jerked up the worth to ₦16,222,492,843,76
(d) No Priced Bill of Quantities (BOQ) was presented for audit review in respect of the above revised contract valued at N16,222,492,843.76. The absence of Priced Bill of Quantities (BOQ), made it difficult for audit review of works executed.
(e) Examination of valuation certificate No.04 dated 17th October, 2018 revealed that the sum of ₦978,877,500.00 was added as preliminaries and paid to the contractor despite the fact that the project is an ongoing one that does not need any preliminary work of such magnitude. A perusal of the valuation report revealed that out of the ₦978,877,500 paid under preliminary an amount of ₦107,875,000.00 was part payment for insurance policy. However, necessary insurance policy documentations such as the property insured, persons covered by the policy, premium paid etc were not stated, nor any documentary evidence to back it up.
(f) A provision of N230,000,000.00 was certified paid in the valuation 004 report for the provision of supervision vehicle, maintenance, driver, license and insurance. Both the vehicle and evidence of its purchase were not made available for confirmation.
(g) The sums of N65,000,000.00 was provided for factory visit and the documents examined revealed that no factory visit was carried out. The amount was observed to have been irregularly paid, as there was no approval and evidence of factory visit to manufacturer of various item to be used in the building were undertook by staff of the commission.
For the records, provisional sums in the BEME are accountable and should be treated as such by supporting their expenditures with valid proofs comprising of,invoices, receipts and, approvals, as required by regulations. Anything to the contrary negates accountability and remains unacceptable.
(i) The contract was abandoned by the previous contractor due to lack of equipment and manpower before the new contractor (Messrs RODNAB CONSTRUCTION LTD) was engaged and most of the works certified to have been done were not executed. Only Some containers locked with keys claimed to be materials on/off site totalling ₦587,693,421.14 and minor works in the Auxiliary building were seen to have been executed, an indication that the financial commitment far outweighs actual work done. It was further discovered that the sum of N12,000,000.00 was embedded in the valuation report as provision for community relation without a breakdown of the amount. It should be noted that provisions are only paid based on request, upon presentation of needs. This amount had since been paid without any justification despite the fact that the previous contractor was paid for community relation by the commission.
Meanwhile, the sum of N135,557,500.00 was paid as professional fees on the contract for completion of Niger Delta Development Commission (NDDC) Headquarter Building as commission. However, 10% WHT and VAT amounting to N20,333,625.00 were not deducted on the service. This action resulted in overpayment to the consultant, loss of government revenue and violation of relevant Tax laws, including Financial Regulation 234(iii). The IPC No1&2 of this project was certified by Assistant Director PMS without input from the Consultants. The payment on the two interim payment certificates were effected without relevant valuation report to justify the payments. The examined contract document did not contain the revised Bill of Quantities that gave rise to new approved contract sum of N16,222,492,843.76.
Other Contract Awarded In Respect of the Headquarters Building:
Provision of Email, Internet and Information security improvement awarded to Messrs Austinbi Road & Empee Nig Ltd at a contract price of ₦715,000,000.00.
Construction of external civil works at NDDC Headquarters building awarded to Messrs Imbekoru & Sons Nig Ltd at a contract price of ₦987,015,656.33.
Sand filling of NDDC permanent site at Eastern By pass, awarded to Messrs Casdor Construction Ltd at a contract price of ₦241,618,000.00
Construction of Ancilliary Building Lot 1 awarded to Messrs Marshland Projects Nig Ltd at a contract price of ₦994,424,652.66
All these other contracts are already included in the main contract, re awarding them separately amounted to duplication of contract and aimed at short changing the Commission.
The award of contract for provision of Email and Internet facilities and payment for them in a building under construction amounted to wastage of public fund. The fact that this project was not executed, the total payment should be recovered from the Officers that certified it for payment.

Risks
Absence of due process may lead to poor job execution/performance, project delay, related party transactions, poor job delivery, project abandonment, non-execution of jobs and loss of public funds.
Inflation of contract sum.
Payment for services not rendered.
Waste of public fund

Recommendations
The Managing Director should be sanctioned for variation of contract without compliance with due process.
Evidence of approval for the variation from appropriate body should be furnished.
The preliminaries sum of ₦978,877,500.00 added to the contract sum should be deducted from the contract since the project was not new. Outcome should be forwarded to the Office of the Auditor-General for Federation for verification.
Please cause the Contractor to produce the insurance policy obtained in respect of this project; otherwise recover the sum of N107,875,000 from him and forward the recovery particulars to the Office of the Auditor-General for Federation for verification.
The Management of NDDC to comment on this obvious flaw in award of contract and to forward a well-documented BOQ to the Office of the Auditor-General for Federation for proper evaluation;
The Management should furnish to the Office of the Auditor-General for Federation with the back-up valuation in respect of the Interim Payment Certificate aforementioned for audit scrutiny and comment; and
The Management should explain and comment on the reasonableness of the provision of the sum of ₦978,877,500.00 for Bill 01 without evidence of utilization.

Contractor

N/A

Beneficial Ownership Information

N/A

Legislative Recommendation

N/A

Executive Action

N/A

Progress Report

N/A

Data Source

2013-2018 Audit Report on NDDC

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