SA public procurement – poor value for money

Pravin Gordhan.jpgTaxpayers are simply not getting value for money from South Africa’s public procurement services – that’s in over 250 municipalities, 9 provincial governments and over 40 central government departments, Finance Minister Pravin Gordhan said in his budget speech last week.

He said that the government is losing billions of Rands through maladministration and inefficient purchasing.

Fighting corruption and fraud in the country’s public sector procurement is, therefore, a high priority on the government’s agenda, he said during his address to Parliament.

“Public procurement plays a significant part in the economy and is central to government service delivery. However, citizens and taxpayers do not get full value for money, because this is an area vulnerable to waste and corruption.”

He said there are currently 53 investigations involving irregular procurement in the public sector, relating to contracts worth R3-billion. The Department of Justice has reportedly brought 65 people before the courts for these investigations and more than R250-million has been seized.

The Minister said the South African Revenue Service (SARS) is also investigating another nine cases of tender fraud, with an approximate value of R1.7-billion.

He outlined government’s plans in its fight against rampant graft:

– In future government departments will be required to establish rigorous demand management procedures, including the submission of advance tender programmes for the next financial year to the relevant treasury authority (which plays the oversight role).

– There will also be restrictions on making changes to procurement orders to bring South Africa’s procurement system in line with international standards.

– Companies bidding for tenders will be required to disclose the identity of all directors, to determine whether any of the directors are government officials are not obeying tax rules.

By the end of January 2011, SARS had identified some 13 000 vendors who had won government contracts, but owed taxes amounting to more than R1-billion. By implication, not having a clean tax slate will become an impediment to winning tenders.

Government and private sector policies and procedures for fighting fraud and corruption will once again fall under the spotlight at SmartProcurement World, which last year, “was attended by hundreds of procurement professionals…” Business Day 17/11/2010.

The 3rd Annual Public Sector Supply Chain Summit (“Very well organized, everything to the point, keep it up,” – Khanyisile Bhengu, Umgeni Water Procurement);

and the 5th SmartSourcing Conference (“the positive elements of this event were the passion and conviction of the speakers, the scope and relevancy of the topics covered,” – Thomas Smith, Mercedes-Benz South Africa Procurement);

will run concurrently at SmartProcurement World & Expo 2011 at Gallagher Convention Centre, Midrand, Gauteng from October 11-13, 2011.

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