Is our government just really bad at procurement, or is there a deeper problem with the law that applies to tendering?
IT SEEMS that every other week there is a different scandal involving procurement. Most tenders seem to land up in court, with service providers squabbling over the spoils of government spending. Is our government just really bad at procurement, or is there a deeper problem with the law that applies to tendering? - Perplexed
We believe that it is a bit of both. While there is no denying that some of the bureaucrats responsible for procurement are corrupt (as are some of the private companies that bid for contracts), the law governing public procurement has become increasingly complicated.
In our view, procurement law has now become so complicated that it may be undermining service delivery. For example, many organs of state are unable to spend their budgets and infrastructure grants. The complexity of procurement law contributes to this problem by paralysing civil servants who become hyper-cautious in their desire to avoid infringing the law.
Part of the problem is that there are so many different levels of procurement law.
A well-intentioned and honest administrator will find that the following layers of law govern procurement:
Section 217 of the constitution expressly deals with government procurement. It provides that when an organ of state contracts for goods or services, it must do so “in accordance with a system which is fair, equitable, transparent, competitive and cost-effective”.
The award of a tender constitutes administrative action in terms of the constitution. As such, the award of tenders is subject to review under the Promotion of Administrative Justice Act.
Various pieces of legislation govern the budgeting process, internal controls and the requirement that people historically disadvantaged by unfair discrimination be favoured.
Each organ of state has its own supply chain management policy, which must be followed by its bureaucrats when engaging in procurement.
Any information held by an organ of state relating to the tender process is potentially affected by the Promotion of Access to Information Act, and may be the subject of requests for information by other affected parties.
The contract between the relevant organ of state and the service provider is governed by the common law of contract.
As a result, innumerable pitfalls await even the most well-intentioned administrator.
The competitive nature of tender processes and the enormous financial benefits to be gained from contracts for government procurement are a powerful incentive for unsuccessful parties to litigate, which they often do.
Their lawyers scrutinise every step in the process for compliance with the various laws and procedures, and pounce on every real or perceived irregularity. Very few administrative processes are entirely free from any misstep, and when one is found, litigation soon follows.
In addition, bureaucrats are required to account to government oversight bodies in respect of expenditure, including internal accounting officers and the Treasury. The procurement process may also be subjected to scrutiny by the auditor-general and the public protector.
Even where litigation by disgruntled parties fails, or investigations by other organs of state result in a clean bill of health, the effect of such litigation and investigation is to delay the provision of the service in question.
Procurement processes are often suspended while disputes are resolved, which can mean delays of years in service delivery.
We are therefore of the view that legal reforms to simplify and speed up procurement are justified. Any reform would have to ensure that accountability mechanisms remain in place, and that the law retains proper safeguards for detecting corruption and maladministration.
That would require careful balancing between swift, effective service provision and a functioning oversight mechanism.
* This article was first published in Sunday Times: Business Times
By Moses Michira and Paul Wafula
March 26, 2013
A review of the tendering procedure by the public procurement regulator found out the tender to supply poll books was awarded to the South African firm, which participated in the Anglo Leasing scandal, on September 29 last year, three weeks before the technical evaluation among the shortlisted bidders.
This major procurement breach ensured firms that were to later demonstrate their capabilities for the task, like America’s Avante and France’s Safran Morpho were left out.
The public procurement regulator, however, found out IEBC had actually made its decision to award the tender to Face Technology more than three weeks before the October 22 demonstration of technical capabilities.
Minutes from the Independent Electoral and Boundaries Commission (IEBC and presented by Avante to the regulator indicated that the tender was actually awarded on September 29.
“…bidder number 3 M/S Face Technology be considered for the award of the contract at a total cost of Sh1.397724925 ($16651139.13),” reads part of the official information from IEBC’s September 29 meeting.
The regulator says since a decision had been made, the exercise of proof of concept was meaningless becauseFace Technology, whose devise had failed, had been shockingly declared the winner. The revelation now provides the critical answers to the billion-dollar question, what exactly went wrong in the voter identification during the last General Election conducted by IEBC?
The public procurement regulator fell short of cancelling IEBC’s tender, only allowing it to proceed in the greater public interest considering the time left, on its December 3, last year, terse ruling. IEBC’s defence was that Face Technology had the lowest quote at Sh1.39 billion disregarding its inability to produce the required equipment, compared to Safran Morpho’s Sh1.6 billion and Avante’s Sh2.1 billion.
IEBC’s motivation in awarding the tender to Face Technology was questioned by the regulator who established an uneven playing ground in the procurement process. Face Technology had presented a prototype that never worked at the tendering stage, but the IEBC inexplicably offered the firm another chance to demonstrate its technical capability.
A meeting between IEBC and the three prequalified bidders held on October 10, last year indicated Safran Morpho declined to parade its prototype, while Face Technology’s equipment fell short of the requirements in the tender document.
“(Avante’s prototype) can satisfactorily meet the specifications provided in the tender document for voter identification device,” further reads the report. “( Face Technology) did not demonstrate a prototype that met the proof of concept requirements as stipulated in the tender document.”
IEBC invited Face Technology and Safran Morpho in a subsequent demonstration, leaving out Avante, which had demonstrated its technical capacity, in a meeting held on October 22. Minutes of the meeting show Face Technology presented a different device from that submitted during the close of the tender, a major procurement breach, which the IEBC turned a blind eye to.
During the evaluation,Face Technologyprovided a prototype device, which lacked a spare power back-up of 12 hours that was marked as critical. It also did not have an original battery attached to the laptops that would last for 12 hours.
The device it supplied at this stage did not meet the requirement that its start-up and recovery time would last less than 30 seconds. This means the prototype ofFace Technology was taking longer to start than required. None of the companies that qualified for the second round of evaluation also provided gadgets that had unique identification numbers assigned by the manufacturers. Lack of this detail exposes the gadgets to difficulties in tracing the user and location in case they are used to hack into the system. The Board accuses the IEBC of being cosy with Face Technologyand finding small excuses with the other companies to disqualify them.
“It (IEBC) appears to have adopted in the processing of this tender, a scheme of nit-picking, when it came to the tenders of the bidders it did not favour, and one of cosiness when it came with the successful bidder (Face Technologies),” a report, critical of the process, reads in part.
The revelations come at a time when it emerged the electronic voting and transmission system could have been attacked at least twice before it finally crashed at 8pm on Election Day.
By Nnasaretha Kgamanyane
The Public Procurement and Asset Disposal Board (PPADB) executive chairperson, Bridget John has urged government to hire qualified people to provide procurement services for good delivery to clients.
Speaking at the PPADB media brief at Gaborone Sun recently, John said that procurement job is not a minor task as it needs people who have been trained and have a good background in the job. She said that this will not only benefit the institution but will upgrade the quality of services government gives to Batswana. She added that PPADB is an institution that was primarily established to adjudicate and award tenders, register contractors wishing to do business with the government and provide advise on public procurement and asset disposal.
John said the organisation uses more than two people to independently evaluate tender proposals. She said that this avoids situations where two evaluators can influence each other on who to give the tender. It promotes transparency because after the evaluations, all the information is compiled and a recommendation is made which makes it easier to spot any signs of corruption.”The evaluation can clearly point to the company that must be awarded the tender but if the recommendation says something else, we then review the proposals to ensure that the right bidder gets the tender. When making such evaluations, PPADB spot-checks the projects,” she pointed out.She said that PPADB checks if companies they have given tenders before had performed well. This is meant to make sure those that performed badly will not be given tenders.
19 March 2013
“Some 12 months ago, none of the taxis on our roads were assembled in South Africa. Today about 50 percent of all taxis that are purchased are made or assembled here in South Africa, and we’re moving towards the target of localizing two-thirds of assembly in the taxi industry by 2015.”
The government is leading a campaign to promote the local procurement of supplies across all industries in order to boost the economy’s capacity to create jobs.
He said the labour-absorbing capacity of local manufacturing industries had to be boosted to stimulate job creation and economic growth, adding that a strong local manufacturing sector would have a positive impact on South Africa’s balance of payments.
“We are working in partnership with a major manufacturer, Toyota, who has expanded the factory in eThekwini, as well as a partnership with the IDC and a Chinese manufacturer called the Beijing Automotive Works that has started a factory in Gauteng.
These companies had already employed 220 people to assemble taxis locally, with the number set to increase significantly by 2015, Patel said.
In October 2011, the government, business, labour and community-based organisations signed a Local Procurement Accord committing the parties to work together to increase local procurement as part of South Africa’s plans to create five- million jobs over the next decade.
And in December, the government put the buying power of the state firmly behind local manufacturers, with new amendments to the the Preferential Procurement Policy Framework Act allowing the government to name sectors and products that require a minimum level of local content to qualify for state procurement.
Bus manufacturing was among the first batch of sectors designated for local procurement under the amended law, resulting in the local sourcing of 80 percent of all inputs and supplies in the manufacturing of bus bodies for the rapid public transport systems in Pretoria, Cape Town and Johannesburg.
Other products designated in the first batch included power pylons, rolling stock, TV set-top boxes, clothing, canned vegetables, footwear and leather products.
In January, the Department of Trade and Industry announced a second batch of designated products, namely electrical valves, manual and pneumatic actuators, electrical and telecommunication cables, and components of solar water heaters.
Arms Procurement Commission : Media Statement
The Commission has noted with concern the perception raised in a number of newspaper articles of the weekend of the 9th to 10th March 2013 and the immediately following days that this Commission does not intend, or seems to avoid, interrogating the allegations of corruption, fraud and other wrongdoing against the African National Congress (ANC), its officials, members and other people associated with it.
The perception or assertion arises from a letter dated 26 February 2013 that the Commission’s Chairperson had addressed to attorneys Abrahams Kiewits Incorporated of Cape Town in response to a demand that they made on behalf of their client, Mr Terry Crawford Browne, that we should summons the ANC and its officials to appear before the Commission to answer allegations against them and to produce certain documents (see below).
As is now the standard modus operandi of Mr Terry Crawford-Browne and his attorneys, correspondence exchanged between them and the Commission is routinely released to the media. No wonder that the letter in question is now in the public domain.
The demand to summons the ANC is a typical example of another unfortunate experience that the Commission has had in its interaction with Mr Terry Crawford-Browne and his attorneys, namely, the persistent attempt to prescribe to the Commission how to conduct its work, in particular, whom to call to appear before it and at what stage. We shall revert to the latter aspect in due course.
We are of the view that the statement that the Commission was not aware of the “evidence implicating the ANC” has been read out of context and blown out of proportion. Evidence and allegations are not the same thing. The Commission is fully aware of the various allegations levelled against some officials and the members of the ANC and other people associated with it.
These allegations form part of the on-going investigations that the Commission is busy with. In this regard, there is a tendency for some people, including, unfortunately, some media practitioners and commentators to elevate allegations to the status of evidence even before they have been tested in an appropriate forum. The fact is that even if there is evidence in the public domain implicating some people it still has to be tested for veracity and credibility before conclusions can be drawn.
We point out that the Commission is in possession of massive documentation containing information implicating many people and entities in the subject matter of our investigations. The public must understand that before the information is properly interrogated in the upcoming public hearings the Commission cannot be party to any exercise to canvass it in the public domain and bandy around the names of those implicated.
We have a duty to safeguard the information placed at our disposal and not to divulge it prematurely. Nor can we disclose the identities of the people implicated before they are given the opportunity to answer for themselves.
The principles of natural justice demand that we be fair to both the complainants and the suspects. For this reason, the witnesses who are given access to the documents in our possession cannot be allowed to divulge the information gained before the issues are ventilated in the public hearings.
The media statement that we issued on the 24th November 2012 wherein we announced the intention to commence with the public hearings on the 4th March 2013 was accompanied by a list of the witnesses to be called in the first phase of the public hearings.
We explained that most of these witnesses were selected based on their roles in exposing the allegations of fraud, corruption, impropriety or irregularity in the Strategic Defence Procurement Package. It may be recalled that the list include people who have written extensively on the subject and seem to have extensive knowledge of what transpired. It was imperative to fully canvass their evidence to lay the ground work for the subsequent hearings.
We made it clear then that it is in the subsequent phases that key people who were involved in the acquisition process as well as those who are implicated in allegations of wrongdoing will be called. This is how we planned to conduct the public hearings and that programme has not changed.
It is, however, not cast in stone and may be altered if circumstances demand it. But the decision as to whom to summons at what stage and which documents to call for falls within the exclusive discretion of the Commission and we will not be dictated to in this regard.
It is apposite at this stage to refer to paragraph 1.5. of the Terms of Reference:
“Whether any person/s, within and/or outside the Government of South Africa, improperly influenced the award or conclusion of any of the contracts awarded and concluded in the SDPP procurement process and, if so:
1.5.1 whether legal proceedings should be instituted against such persons, and the nature of such legal proceedings ….”
This is clearly one of the issues we must probe and to suggest that we will not investigate people involved in the government of South Africa is rather mischievous.
Finally, we have released a media statement explaining why the public hearings that were to start on the 4th March 2013 had to be postponed to the 5thAugust 2013 to run until the end of November 2013.
A revised programme of action and a schedule of witnesses to be called, the dates on which each will appear as well as the venue of the hearings will be released to the public timeously before the 5th August 2013. We trust that everybody, including the media, will give this Commission the space to focus on the preparations for those upcoming hearings and complete its investigations.
Statement issued by Mr William Baloyi, Spokesperson: Arms Procurement Commission, March 15 2013
Text of Judge Willie Seriti’s letter to Abrahams Kiewitz Attorneys:
Arms Procurement Commission
Private Bag X02
Tel: 012 358 3999
Fax: 012 358 3969
Abrahams Kiewitz Incorporated
For attention: Mr Charles Abrahams
Dear Mr Abrahams
1. Your letter dated 25 February 2013 has reference.
2. Currently, no evidence implicating the African National Congress has been brought to the attention of the Commission. Should such evidence come to light, the Commission will deal with the matter as it deems appropriate.
3. The Commission wishes to express its irritation with the persistent allegation by your client and yourselves that evidence leaders are kept in silos, implying that certain information is withheld from some ofthem. No evidence leader is kept in the dark about the activities of the Commission. We hope that this allegation will not be repeated. The incessant attempts to tell the Commission what to do should come to an end.
ARMS PROCUREMENT COMMISSION
Seriti JA JUDGE LW SERITI
Chairperson of the Commission
By Ekow Quandzie
Themed “The strategic role of professional procurement in the development of Africa”, the event is expected to bring together corporate executives, financial controllers and directors, public sector decision makers as well as supply chain, logistics and procurement practitioners from all sectors of African economies
The region wide multi-sectorial conference is expected to give the continent’s public and private sector executives and decision makers an opportunity to gain insights into professional procurement and its strategic link to long term economic development.