Procurement is Critical in Realisation of Broad-Based Black Economic Empowerment

During the briefing by the Office of the Chief Procurement Officer (OCPO), the Chairperson of the Standing Committee on Appropriations, Ms Yvonne Phosa, could not overemphasise the significance of procurement in the realisation of government's Broad-Based Black Economic Empowerment (BBBEE) Policy. As such, we have invited the OCPO to find out first-hand how it intends to leverage our procurement systems to achieve its objectives. Our vision is to turn the situation around and to conduct intense oversight to deal with issues of ineffectiveness, exorbitant pricing, poor quality and unreliable services. And we hope the Bill that is currently under way will address these deficiencies, she said

She went on to emphasise that this office should be contextualised broadly in relation to its role and contribution to our country's developmental state agenda. This office must deal with all spending and pricing irregularities because it is an important partner that should ensure that there is value for money in government-procurement systems and they yield positive value to our country's developmental agenda.

The National Treasury appeared before the Standing Committee on Appropriations yesterday to brief the committee on the progress made in terms of the major work underway by the Office of the Chief Procurement Officer

The committee was briefed by Chief Directors responsible for different chief directorates. Briefing the committee the Chief Director of ICT in the National Treasury, Mr Schalk Human said to improve the effectiveness of the OCPO, whose chief operation officer's position is currently vacant, a Public Procurement Bill has been initiated to accelerate a fair, transparent, equitable and competitive model of procurement. He said the turnaround strategy sought to bring about modernised mechanism of procurement. This is meant to standardise and automate procurement activities across all spheres of government. To also modernise the Supply Chain Management (SCM) technology and upscale the intelligent use thereof and to develop the SCM capacity of government.

There are reforms currently under way that inform the legal framework to address the fragmentation caused by a number of legislations that are currently governing procurement in the public sector, said the Chief Director of Policy in the National Treasury, Ms Mpho Nxumalo. This Bill aims to, among other things, deal with the elimination or standardisation of fragmentation in the procurement legislative environment. The Bill is currently with the Office of the Chief State Law Advisor.

Afoot is the development of a Contract Management Framework to improve the contract management within the sphere of government to address irregular, as well as wasteful expenditure, she said. This guide will provide how a contract should look like and be a template for institutions to use. Its draft is being finalised.

One of the innovations that have now been introduced to make government procurement transparent is the e-Tender portal which will, among others things, ensure that there is a single point of procurement access. Currently, there are currently 626 organs of state that utilise the e-Tender portal, said Ms Nxumalo. What is significant about this portal is that all departments will be required to advise in it. It is free of charge, before suppliers had to pay R200 000 to get tender documents and this created barriers for entry for small businesses. Now they can freely access them online.

Also briefing the committee, the Chief Director of Governance and Compliance, National Treasury, Mr Solly Tshitangano, stated major deviations by state-owned enterprises such as Eskom, SABC, and Prasa, to name but three. He painted a sorry picture of persistent deviations and flaunting of procurement procedures that bordered on corrupt and financial maladministration.

Some of the contracts entered into by these companies started off as red contracts because we never approved of them because they were granted without competitive bids. But when entered into their colours change from red to green, which meant that their scope would be broadened and increased in value from short- to medium- and long-term contracts.

He painfully cited examples of such. The Moloto Rail Project, which we never approved of, was initially budgeted for R60 billion. We had a problem on how do we procure these services. We were advised to separate funding and different processes of procurement to competitive bidding. They wanted a bank to fund and appoint service providers. This defeated the intent of government procurement policies to bring about Broad-Based Black Economic Empowerment.

Mr Tshitangano appealed to Parliament to assist through its oversight. When we publish deviation, we thought they will decrease. Parliament must look for accrual and ensure that departments don't get budgets against existing accruals. And we don't deduct accrual from the budget allocated to certain departments. This is what Parliament must look into.

What is most painful is that departments get budgets approvals from Parliament even if they have not produced their procurement plans. Departments don't submit their procurement plans to us, but submit their annual performance plans to Parliament, that do not speak to any procurement plans. That is irregular, no budget allocation should be approved without procurement plans, he said.

The resolution to have the Procurement Bill was taken in 2014, why it has taken so long for it to be implemented? asked a member of the committee, Mr Alan McLaughlin.

Mr Ndabakayise Gcwabaza reiterated Mr McLaughlin's question. It is quite some time we have been made aware that there is such a Bill coming and a resolution taken in 2014, and we are in 2018 now, do you have a view when it will be coming to Parliament for processing? The more we delay it, we cause problem for ourselves. Cabinet has been guilty of delaying Bills. They will bring it through and Parliament will be asked to process it without being given enough time, he said.

Responding to this question, Ms Nxumalo said: The delay was caused by the legislative landscape assessment to determine what kind of intervention will be needed. The next phase was the determination of international best practices. In 2016, we drafted the first Bill and consulted with national, provincial and local government.

She added: We then submitted it at the end of 2016 to draft it in legal terms. In 2017 we submitted it to the Chief Law Adviser. In October 2017 it was sent back to us with inputs, we looked at them, and at the end of March we submitted it back.

It seems this Bill will take care of other pieces of legislative that govern government procurement. As such, it is a very important Bill because what is going on in its absence is sheer corruption and we cannot tolerate that.

Members of the committee told officials of the National Treasury that National Treasury has never been frank with the committee. You have ben diplomatic. Now we hear this very frank and open reporting today, and we are asking ourselves why these were not said to other financial and economic committees. But a painful damage has already been done stressed committee member Mr Ndabakayise Gcwabaza

Mr Tshitangano, responded: We have reports on all departments on accrual and other related reports that can give a clear picture of departments' financial or procurement performances in various financial years. That information is available and can be provided to the committee.

Source: Parliament of the Republic of South Africa