“Bribery and corruption has been the fastest growing economic crime category in South Africa since 2011 … South African organisations suffer significantly more procurement fraud, human resources fraud, bribery and financial statement fraud than organisations globally”. In the South African edition of the Global Economic Crime Survey conducted and presented by PriceWaterhouse Coopers (“PWC”) in 2014 (“PWC Study”), the 24 month period which the PWC Study focussed on showed that procurement fraud came in as the second most prevalent category followed closely by bribery and corruption in third place.
In 2012 the Ministry of Finance announced its intention to introduce the Office of the Chief Procurement Officer (“OCPO”) to monitor procurement across government. Again, in the State of the Nation Address earlier this year, President Zuma communicated government’s intention to improve supply chain management processes “to prevent fruitless and futile expenditure, [and] corruption”. It is important for the government to manage these processes as hundreds of billions of Rands are spent in the procurement of goods, services and infrastructure annually by government and it is largely in this sector that corruption and allegations of corruption are rife.
The OCPO became operational on the 1st of April 2015. The OCPO is intended to absorb the previous Specialists Functions division’s functional areas of supply chain policy; norms & standards; and contract management, with the aim of facilitating accountability, governance and oversight by promoting transparent, economic, efficient and effective management in respect of revenue, expenditure, assets and liabilities in the public sector.
The intention of the OCPO is not to extend its reach over all national and provincial departments and municipalities in the near future. The provincial departments and municipalities are required to run their own procurement processes as mandated by their respective legislation. They are required however to utilise suppliers listed on the Central Supplier Database (“CSD”) managed by the OCPO. The CSD has been established for purposes of collating a single database of all suppliers’ information; its purpose being the reduction of duplication and costs for government and businesses alike and promoting the electronic procurement process. This centralisation should also result in a quick and effective mechanism to verify supplier information. Additionally, the CSD will be working together with the South African Revenue Service (SARS) and the Companies and Intellectual Property Commission (CIPC) to make it possible to obtain swift tax clearance status verification of suppliers and to vet business registration and business ownership respectively. The intention is that current suppliers to government will be automatically registered on the CSD by 31 March 2016. New suppliers will be able to register from 1 September 2015 on a self-service portal of the CSD, still to be communicated by the OCPO. A standardised process to registration will provide the private sector with much needed clarity on compliance requirements and significantly lessen administrative burdens.
It is unclear at this stage whether any form of feedback on any particular supplier will be available on the CSD, although this would be a useful tool to track supplier performance and inform future decisions when appointing preferred suppliers.
In order to compliment the workings of the OCPO, on 8 April 2015 National Treasury issued Annexure 1 and Annexure 2, both “Factsheets[s] on [the] e-Tender Publication Portal for Government”. These Annexures provide information on the e-Tender Publication Portal which is the first initiative of the OCPO. The aim is that National and provincial departments will publish their tenders (documents and awards) on the e-Tender Publication Portal and its intention is to simplify, automate and standardise the public procurement process. It is hoped that this initiative will reduce duplication and other inefficiencies of the previous procurement process and result in cost reductions and improve transparency and efficiency.
It is encouraging to note that even at the municipality level plans are afoot for centralised procurement. The City of Joburg has launched its first centralised legal tender database. Once suppliers are on this database, the intention is that their services will be accessed by the City of Joburg as well as its 10 municipal owned entities.
Accessibility (especially in remote areas) of an online portal for the publication of tenders is an issue that may need to be explored further, as well as the costs and practicalities involved in redeploying and upskilling public sector employees who may become redundant as a result of the technological and streamlined procurement process. The intention is that this process will ultimately result in the emergence of commodity specialists within the various government departments, who are not only knowledgeable in the legislative prescripts of supply chain management, but also specialists in the subject matter of the goods and services being procured. The outcome of this process is a move away from a tick-box-approach to procurement and a focus on planning, value for money, lifecycle costing and competitive procurement.
The regulatory requirements put in place to regulate procurement through preferential procurement and supply chain management as required by the relevant constitutional and legislative imperatives often involve complex requirements which are difficult to follow, impose slow and arduous processes and are extremely expensive to implement. The consequence of this has not only been time delays and cost implications, but also a lack of confidence in the public sector procurement process.
Although much remains to be seen, the OCPO may well be a step in the right direction. A centralised and streamlined approach focussing on the procurement of goods and services will allow national and provincial departments to focus time and resources on their legislative mandates/infrastructure tenders instead of being bogged down with menial and mundane procurement of goods and services. A clear procurement practice, such as the one envisioned by the introduction and implementation of the polices of the OCPO, which actively underpins the values envisaged in the Constitution will inevitably be an effective mechanism to rooting out corruption and encouraging efficiency in the public sector.