We’ll Probe MDAs Over Withheld Contractors’ Funds, Reps Vow

House of Reps

The House of Representatives has concluded plans to probe the Ministries, Departments and Agencies (MDAs) over failure to release retention funds to contractors at the end of their work.
According to Yalleman, the MDAs had in the last 10 years held unto retention funds running into billions of naira meant despite issuing Certificates of Completion to the contractors.

The House of Representatives has concluded plans to probe the Ministries, Departments and Agencies (MDAs) over failure to release retention funds to contractors at the end of their work.

The investigation followed the adoption of a motion by Abubakar Yalleman at the plenary on Tuesday.

According to Yalleman, the MDAs had in the last 10 years held unto retention funds running into billions of naira meant despite issuing Certificates of Completion to the contractors.

The lawmaker stated that the practice is inimical to the growth of Small and Medium Scale Enterprises (SMEs) as it denies contractors the needed capital to stay afloat.

“The global best practice in Retention Fund is to release half of the fund after the issuance of the certificate of completion while the balance is released upon the attainment of the defect liability period which is usually 12 months after completion and handover of the projects.

“The withheld funds are never captured by MDAs as generated revenues, accounted for, or appropriated in a subsequent budget while beneficiaries are made to go cap in hand begging and lobbying for the release of the funds which rightfully belong to them.

“With the harsh economic climate in the country, low–profit margins, runaway inflation, high lending rates and difficulty in accessing funds by MSMEs, the 5 to 10 per cent retention fees oftentimes constitute a significant portion of the contractors’ profit, especially as the payment schedule is skewed in favour of the MDAs.

“Concerned that the actions of MDAs amount to gross infraction of Section 37(1–4) of the Public Procurement Act, 2007 and its overall objective of harmonising existing government policies and practices to engender probity, accountability and transparency in the procurement process,” Yalleman said.

The Speaker of the House, Femi Gbajabiamila, therefore, directed the House Committee on Public Procurement to submit its report within six weeks for further legislative action.