Cleaning up SA's R500bn tender machine

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KennethBrown.jpgPolicing South Africa's R500-billion supply chain management system was an enormous task involving more than 20 000 staff and 220 000 suppliers, Treasury chief procurement officer Kenneth Brown said.

The supply chain management system, in which tenders are often rigged by officials doing business with the state, lies at the heart of huge corruption in the country. The Treasury established the national procurement office three years ago in an attempt to get to grips with the problem and modernise the system.

Addressing an Institute for Security Studies seminar on state procurement, Brown said the supply chain system was huge as well as "archaic", putting his office in the position of having to do a trade-off between the transparency required by the Constitution and making the system more efficient. 

It was not well understood how large the system was, with about 1,050 "entities" across all three levels of government undertaking procurement to the value of R500bn each year. About R200bn of this amount was procured by the nine provinces. There were about 20,000 practitioners and 220,000 suppliers, he said.

Brown said the internet-based e-tender portal had become the main tool of procurement intelligence and from July all municipalities would be required to advertise all tenders on the portal. When tenders are finalised, winners of tenders and all competing bidders will be published on the portal.

The auditor-general had raised a red flag over the number of procurements that did not go to tender in what were known as deviations, he said. These amounted to R98bn a year in procurement, or 40% of procurement. Procurement entities were required to report deviations but these generally came after the fact "once the damage has been done".

"Now procurement entities will have to apply for permission before they deviate from tender procedures," Brown said.

About 95% of procurement officials were hard-working and efficient and it was the remaining 5% who created havoc in the supply chain management system.

A research fellow at the International Budget Partnership, Carlene van der Westhuizen, said the biggest challenge in fighting corruption was access to information, such as who the bidders were in tenders and what their bids were. She welcomed the e-tender portal as a great initiative that would go some way to providing better access to information.

Karabo Rajuili from the Amabhungane Centre for Investigative Journalism agreed, saying a major concern was the available information on procurement.

Adapted from Bday 

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