"The punitive changes being introduced to the procurement system by National Treasury’s chief procurement officer, (CPO), will meet stiff resistance," says Corruption Watch executive director David Lewis.
The changes, outlined in a new Public Procurement Bill drafted to simplify the state tender system, will disqualify errant and non-performing contractors.
The regime includes a 10-year trading ban for businesses and a clause that allows the state to hold company directors liable for any losses incurred by government because of corruption or non-performance.
“Treasury is going to need vigorous public support if it is to take on the predatory business and political interests that have clustered around the thousands of public procurement nodes.”
Lewis welcomed the move as one that will introduce the “critical missing ingredient” in efforts to combat corruption — consequences.
“If robustly enforced, the sanctions contemplated against companies and directors who engage in corrupt conduct will go a long way towards rectifying this,” says Lewis.
“The absence of consequences for those who flout tender rules and who win tenders without being able to meet the requirements is largely owed to the instability that plagues the National Prosecuting Authority and the Hawks crime-fighting unit” explained Lewis.
His remarks come in response to the progress report that Brown’s office has released on the work that has been done to insulate state tenders from graft over the two years since the 2014 public sector supply chain management review was released.
“[Disqualified] companies will be deregistered from the Companies & Intellectual Property Commission (CIPC), meaning the company will not be able to trade. Directors of [disqualified] companies will be blacklisted on the CIPC to ensure that they are in no position to register any company and they will be held severally and jointly liable for any losses incurred by government through their actions,” says the update.
Brown will issue an instruction this year which will set up a register for reporting any tender abuse or irregularities.
“Investigations into all allegations of abuse must be initiated within 30 days of receipt of the complaint,” says the SCM update. “The relevant treasury must be informed of the outcome of the investigation report, or draft investigation report, together with proposed actions within 14 days of receiving such report.” It is hoped that such actions will save the state R25-billion a year through the changes being made to insulate state tenders from graft.
The changes have been influenced by interactions and surveys that treasury has run with suppliers, business and unions.
There are changes in the pipeline for the state’s smaller purchases — less than R500,000 for national and provincial government and less than R200,000 for local government. Government spends about R78-billion a year through this paper-based system, which requires three quotes and which treasury describes as “archaic, inefficient and the single largest source of corruption”.
The plan is to introduce a uniform online procurement platform for quotations during 2016/2017. This intervention is being billed as one that will achieve greater transparency and visibility on purchases, stabilise prices and generate a reliable price-referencing system.
Like Corruption Watch, organised business and trade unions have welcomed the progress that Brown and his team are making. But they agree that the real test will be in how well the new regime and related legislation can be implemented in the face of strong resistance from businesses that are benefiting from current weaknesses in the system.
Adapted from an article in BusinessDay