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CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND TO THE STUDY

It is a paradox that Nigeria is a rich country inhabited by the poor. Her poverty profile in statistical figures according to a recent study indicates that Nigeria is poverty endemic. Poverty incidence increased between 1980 and 1985 and between 1992 and 1996. The trend also shows that there has been appreciable decrease in poverty rates between 1985 and 1992 and 1996 and 2004. In 2004, growth in population almost equals growth in poverty since 1980. Poverty has predominated in the rural area than in the urban area by 63.3% and 43.2% respectively. The trends in poverty levels by zones show that in the northern part of the country, the North-East zone has a higher incidence of poverty followed by North-West and North-Central. Out of over 160 million population at 3.2% population growth rate, 5.3% unemployment rate, real GDP growth rate of 5.7%, oil sector growth rate of 4.31%, non-oil sector growth rate of 8.93%, inflation rate of 8.50%, about half of the total population (68.7million) live below poverty line (Ladan, 2002).

Corruption in the management of public procurement and finance is a veritable area for corrupt practices. Every state must at various times procure goods and services. This calls for request for contract practices, is that public officials disclose to those with interest in the bid, the position of things, this unfairness leads to a situation in which honest bidders are outmaneuvered by smart allies. The bidding process favors those who lest disposed to perform and the end-product suffers from mediocre handling. Very often, the favored bidders later ask for contract price adjustment upwards. The eventual consequence is that the buildings cost more and are often poorly executed. Transparency and objective criteria should guide government procurements, contract awards and other financial management of public finance. All information about a tender or contract must be widely disseminate for all those who have an interest to prepare their tenders, consults with their tenders, consults with their financiers, architects, structural engineers and other consultants in order to enable them make informed bids.

Time, being of essence, must be adequate. Many prospective bidders have been cut by shortage of the time allowed for preparations and have been stampeded into hasty evaluations leading to their inability to perform the contracts or evaluations leading to their inability to perform the contracts or poor performance or even abandonment of work on site. This is very common in developing states. The terrain is littered with uncompleted projects resulting from the initial rush to bid. This is full disclosure of all material facts in order to facilitate the contracts award process, which would eliminate insider informants, insider trading and other malignant practices.  

1.2  STATEMENT OF THE PROBLEM

Corruption in public procurement of goods and services and management of government contracts have marred every efforts put by the federal government in establishing the procurement act 2007. This problem of corruption starts right from the invitation for contractors to summit tenders for government contracts (Eziokwu , 2008). Legal assessment (through the ministerial tender board units) of contracts which is a mandatory process every contractor biding for a government contract must pass through is not as effective as it ought to be. Despite the legal assessment on contractors and contracts, we still have cases of abandoned projects, elephant projects and poorly delivered projects. All these problems indicate a loophole hole in our legal systems and high rate of nepotism and favoritism in our procurement systems.  

1.3  OBJECTIVES OF THE STUDY

The main aim of this study is to examine the role legal assessment has played with respect to contract and tenders for contracts in Nigeria. Specific objective of the study are:

1.  To examine challenges militating against the effective assessment of contracts and tender for contracts in Nigeria.

2.  To identify the role the ministerial tender board unit (MTB) has played in promoting transparent and efficient contract tender system for contracts in Nigeria.

3.  To evaluate the impact of legal assessment on contracts and tenders for contracts in Nigeria.  

1.4    RESEARCH QUESTIONS

In-order to achieve the above objectives, the researcher formulated the following research questions:

1.  What are the challenges faced by the ministerial tender board in the assessment of contracts and tenders for contracts in Nigeria?

2.  What specific roles have the ministerial tender board (MTB) played in promoting transparent and efficient tender system in Nigeria?

3.  What impact has legal assessment on contracts and tenders on the outcome of the project.

1.5  RESEARCH HYPOTHESIS

The following null and alternate hypotheses were formulated for the study:

1.  Ho: The Ministerial Tender board (MTB) has not effectively carried out their task due to government interference and favoritism.

Hi: The ministerial Tender Board (MTB) has effectively carried out their task without government interference and favoritism.

2.  Ho: Shortfall in the legal assessment process of contract tenders is responsible for low quality construction projects in Nigeria.

Hi: Shortfall in the legal assessment process of contract tenders is responsible for low quality construction projects in Nigeria.  

1.6 SIGNIFICANCE OF THE STUDY

The study will give insights into the various challenges faced by contractors in the tendering/bidding process for government contracts. These heighted challenges will enable the government and other stakeholders to help develop a leveled playground that will enable both small and medium scale contractors to be able to bid for contracts effectively without fear. The study will also go a long way in recommending some policies that will enable the government to implement policies that will make our contract tendering process more transparent and effective.  

1.7 SCOPE OF THE STUDY

The study will cover the role of legal assessment in contract tenders for companies in Nigeria, using the Ministerial Tender Board (MTB) unit of the Federal Ministry of Interior, Abuja as a case study.  

1.8 LIMITATION OF THE STUDY

Some of the people felt reluctant to answer the questionnaire also few who answered did not comprehend how to answer the questionnaire properly. Certain vital questions relating improvement have being massively ignored. The researcher was not able to see all the teachers, non-academic staff and students to share thoughts on the topic, due to busy schedules of the populations      

1.9 DEFINITION OF TERMS

1. Legal: Allowable or enforceable by being in conformity with the law of the land and the public policy; not condemned as illegal. See also lawful and legitimate.

2. Law: Law is a term which does not have a universally accepted definition, but one definition is that law is a system of rules and guidelines which are enforced through social institutions to govern behavior. Laws are made by governments, specifically by their legislatures.

3. Finance: This is the study of how people allocate their assets over time under conditions of certainty and uncertainty. A key point in finance, which affects decisions, is the time value of money, which states that a unit of currency today is worth more than the same unit of currency tomorrow. Finance aims to price assets based on their risk level, and expected rate of return. Finance can be broken into three different sub categories: public finance, corporate finance and personal finance.

4. Tender: A tender is a formal, structured invitation to suppliers to bid to supply products or services. In the public sector, such a process may be required and determined in detail by law to ensure that such competition for the use of public money is open, fair and free from bribery and nepotism.

5. Project management is the discipline of planning, organizing, motivating, and controlling resources to achieve specific goals. A project is a temporary endeavour with a defined beginning and end (usually time-constrained, and often constrained by funding or deliverables), undertaken to meet unique goals and objectives, typically to bring about beneficial change or added value. The temporary nature of projects stands in contrast with business as usual (or operations), which are repetitive, permanent, or semi-permanent functional activities to produce products or services. In practice, the management of these two systems is often quite different, and as such requires the development of distinct technical skills and management strategies.

6. Contract:  Erikson (2002) defined Contract as an agreement that creates an obligation binding upon the parties thereto. The essentials of a contract are as follows:

i mutual assent;

ii a legal consideration, which in most instances need not be pecuniary;

iii parties who have legal capacity to make a contract;

iv absence of fraud or duress; and

v a subject matter that is not illegal or against public policy.

7. Contract Planning: According to Simmons (2007), Contract planning is the process of systematically and efficiently managing contract creation, execution and analysis for maximising operational and financial performance and minimising risk.  

vii Cost: Hudson (1999) defined cost as the value of money that has been used up to produce something, and hence is not available for use anymore. 
In business, the cost may be one of acquisition, in which case the amount of money expended to acquire it is counted as cost. In this case, money is the input that is gone in order to acquire the thing. This acquisition cost may be the sum of the cost of production as incurred by the original producer, and further costs of transaction as incurred by the acquirer over and above the price paid to the producer. Usually, the price also includes a mark-up for profit over the cost of production.  

8. General contractor, organization or individual that contracts with another organization or individual (the owner) for the construction of a building, road or other facility.