Contract Awards & Procurement Thresholds

Contract Awards & Procurement Thresholds

Quick Answer: Contracts are awarded under the Public Procurement Act 2007 within monetary thresholds set by the Bureau of Public Procurement (BPP). Under the current BPP thresholds (May 2025), Goods/Consultancy of ₦5bn and above and Works of ₦10bn and above require a BPP Certificate of No Objection and Federal Executive Council approval, while lower values are cleared by the Ministerial Tenders Board, Parastatal Tenders Board, or the Accounting Officer.

The legal framework

The Public Procurement Act 2007 (PPA) established the National Council on Public Procurement (NCPP) — the policy body — and the Bureau of Public Procurement (BPP) — the regulator. Section 2(a) empowers the Council to "consider, approve and amend the monetary and prior review thresholds," so the naira figures are not fixed in the Act — they are revised by BPP circular. The most recent revision was announced by BPP on 15 May 2025 and applies to the Executive, Legislature, Judiciary, Defence/Intelligence communities, and to internally generated revenue, donations, and gifts — not just appropriated funds.

Approval thresholds (current BPP thresholds, May 2025)

The approving authority depends on contract value. The figures below are the current BPP thresholds; because they change by circular, always verify the latest BPP circular before exam day.

Procurement method thresholds

Open competitive bidding is the default (PPA §24); restricted tendering, direct procurement, direct labour, and emergency procurement are exceptions strictly defined by the Act. The BPP also enforces the "Nigeria First" policy, giving preference to locally manufactured goods and local companies within NCB thresholds.

Mobilisation fee, performance bond and retention

• Mobilisation (advance) fee — advance payment on contract commencement is commonly capped at around 15% of the contract sum for works under BPP practice. The exact cap moves by circular, so state the current BPP figure on exam day. It must be backed by an advance payment guarantee from a recognised bank and is recoverable through interim certificates.
• Performance bond — a performance guarantee (typically 10% of contract sum) from a recognised bank or insurance company, required before the contract is signed.
• Retention money — typically 5% of each interim certificate is retained by the MDA and released after the defects/liability period (commonly 12 months for works).
• Contract agreement — drawn on the BPP Standard Bidding Document / form of contract; signed by both parties, stamped, and registered where required.

Certificates

• Interim certificate — issued by the Project Consultant/Engineer for work done; the basis for progress payment.
• Completion (practical completion) certificate — issued at substantial completion; triggers release of retention and final account.
• Taking-over certificate — formal handover of the works to the MDA, starting the defects/liability period.

The combination of these instruments — advance payment guarantee, performance bond, retention, and staged certificates — is what protects the public purse during contract execution: the contractor is paid only for verified work, and a guaranteed sum remains at risk until the MDA is satisfied.

Variation orders and contract changes

Once a contract is signed, changes are controlled through variation orders (also called change orders). Under BPP practice, cumulative variations must not exceed 25% of the original contract sum for works; above that, re-tendering or a fresh procurement is generally required. Each variation must be justified, costed by the Project Consultant, and approved by the same authority that approved the original contract (or the Accounting Officer for minor variations within delegated limits). Variations are recorded against the contract and reflected in the final account.

Final account and audit

At the end of the defects/liability period, the Project Consultant prepares a final account reconciling all interim certificates, variations, retention, and recoveries. The final account is vetted by the MDA's Internal Audit and, for FEC-approved contracts, by the Auditor-General. Only after the final account is accepted is the retention released and the performance bond discharged. This closeout step is frequently examined alongside the completion certificate.

Common threshold exam pitfalls

• Quoting thresholds as if fixed in the Act. They are not — PPA §2(a) delegates them to the NCPP/BPP and they are revised by circular (the latest in May 2025). Always answer with "under the current BPP thresholds."
• Confusing FEC and MTB boundaries. FEC is the highest tier (₦5bn+ Goods/Consultancy, ₦10bn+ Works); the MTB handles the band just below, and the Accounting Officer handles the lowest band.
• Forgetting the 10% performance bond and 5% retention. These are the standard safeguards, not optional extras.