What Pravin’s budget speech means for Procurement

Minister of Finance Pravin Gordhan outlined in his October budget speech some of government’s plans to amended poor procurement practices and combat fraud and corruption.Here follow the extracts from his speech as it relates to Public Sector procurement:

1) “We will be increasing the monitoring capability of government, aimed at early detection of fraud. Departments and government agencies will be required to provide specific information to the Treasuries on their procurement practices. Where necessary, the cash disbursements process of government agencies will be temporarily assumed by Treasuries, thereby ensuring that only valid contracts are honoured and government is charged a fair price.”

2) “In line with international best practice, transparent public disclosure will be required at each stage of the supply process, in all spheres of government, including reasons for award decisions.”

3) “Government will look holistically at identifying procurement requirements that could be better managed centrally, such as the use of transversal contracts for the acquisition of high value and complex goods and services.”

4) “Stiff penalties are proposed, of up to double the contract value, for service providers who obtain government contracts fraudulently. Public officials who assist in tender fraud will also be liable for resultant losses incurred by government. Measures are required to ensure that officials who have breached the buying rules should not remain under suspension, drawing full benefits, while investigations drag on for years.”

5) “Tax compliance measures associated with government procurement will be strengthened. The introduction of a withholding tax on payments made to businesses in respect of government tenders is under consideration. It is also proposed that the procedures for issue of tax clearance certificates should be revised, to provide for direct checking by SARS of the tax compliance of winning bidders rather than pre-clearance of all bidders.”