To give taxpayers value for money and to root out tender fraud, Finance Minister Pravin Gordhan has roped in ‘Big Brother’ to give government an eagle’s view to ensure that the public purse is spared from abuse.
He appointed Kenneth Brown, a long-serving official at the National Treasury, as a chief procurement officer and charged him with looking at the existing Public Finance Management Act (PFMA) to see how he can monitor procurement transactions in all spheres of government, including state-owned entities and municipalities.
In an interview from his tenth floor office in the Pretoria CBD, Brown asserts that ever since work started in March last year, a lot has been done to move towards a professionalised public service.
“The mandate of the office is drawn from section 217 of the Constitution, where the Constitution is clear that we need to have a procurement system that is efficient, effective, equitable, transparent and cost effective. And that’s where the big chunk of the work that I do [emanates from],” he says.
What stood out during the interview was Brown’s attention to detail. When he paused to pour himself a glass of water, he paid attention to the volume level in the glass, seemingly to ensure that he did not pour more than he needed to.
When asked a question about the progress his office had made, he smiles and asks: “For a minute I thought you were going to ask me what keeps me up at night as I see that is supposed to be your next question,” he said, sparking laughter in his boardroom.
Brown had - from his chair - managed to scout on a list of questions that we had compiled for the interview. This, coupled with his attention to detail, are some of the many personal qualities that he will hope will work in his favour when he rolls up his sleeves even higher as the year progresses.
To date, his office has made progress in the standardisation of infrastructure procurement processes and documentation as well as the creation of an inspectorate to monitor procurement processes and audit tender documents.
Progress also included enhanced processing of vendors’ tax clearance certificates to ensure compliance; centralised procurement of health equipment, drugs and medicines to effect savings, and analysis of the business interests of government employees.
Additionally, tougher measures have been implemented while more are being considered to enforce the rule that small businesses in particular must be paid within 30 days.
Brown said in the past, the National Treasury did have the powers to monitor and manage procurement processes like big brother, and said the appointment of the chief procurement officer last year bolstered the department’s capacity to enforce the PFMA robustly.
“Then you have got section 6 of the PFMA, which gives certain powers to the National Treasury. Part of those powers is to make sure that we have got effective management of the finances of the country,” he says.
His office has, since being assigned to these powers, organised into a winning formation that he is confident will produce results.
“What is the extent of government procurement?
“You have got plus or minus 650 government entities, you have got 278 municipalities, roughly 116 or so provincial departments, 44 national departments… that is the extent of government and all of them are involved in procurement.
“So part of the mandate of the office is to make sure that we put rules in place that governs procurement, but we also ensure the rules we put in place are actually adhered to. So they complied with.
“Over and above that, given the size and the scope of procurement environment, we need to build the capability of government in order to manage its procurement. So that in the main would be the key three pillars to be able to do that.
“Out of that, you hope to have positive externality where the goods and service that we buy would be cost effective, the service that we buy would be of high quality, service delivery is accelerated in is of high quality. Those would be the primary outcomes that you would basically hope to achieve,” Brown says.
Should these measures of interventions be implemented and enforced properly, government would be able to avoid leakages – monies lost due to corrupt activities or poor quality service delivery.
Value for money
Key to some of the thorn branches that Brown says needed trimming is inflated prices on goods.
His office is working towards introducing a system of reference pricing on procured goods and services for all departments across all spheres of government.
He says another challenge that National Treasury was working towards simplifying was a complicated procurement environment, where buying goods often took as long as six months.
“Some people will say but the item that you are buying, you are buying at double the price. I can buy the same item at Makro at half the price. You know the inefficiencies of the system but it does not mean that the system is not working.
“Whether the system that is in place is suitable for South Africa today becomes quite a question”.
Bias towards previously disadvantaged businesses
Brown adds that his office would, as part of cleaning up the tender system, look at current policies and see if more can be done to use the process as an economic transformation tool.
This would, if given the thumbs up through policy reforms, lead to policies being implemented by his office to have the tendering system showing more bias towards previously disadvantaged businesses than it did before.
To this end, the National Treasury would, through the office of the chief procurement officer, look at how the Preferential Procurement Policy Framework Act (PPPFA), which was first gazetted in 2000, could be considered.
“There is a big push to use government procurement as a tool of economic transformation and how to use government procurement to empower. It is done by this unit in terms of policies.
“Currently for example, we are looking at the PPPFA. We are engaging with stakeholders to check whether the PPPFA is as un-transformational, if there is such a word,” he said.
Taking advantage of bulk-buying for common goods
Brown says National Treasury has already negotiated prices for goods that are commonly used by all government departments.
“So what we do, for example, we negotiate the prices with all of the car dealers.
“If we can give you a list of all the cars, and what all the prices are of all the cars, if us as government will buy them and they are discounted … and whatever car that we will need, we have a catalogue and we have a direct relationship with the suppliers.
“Take the SA Police Service for example, all they need to do if they need BMW X5s for the President’s protection unit for example, they just look at the catalogue.”
Value for money
To save money and to avoid spending too much on goods that are not required, Treasury was looking at ways of requesting goods that do not come with unnecessary extras.
For example, says Brown, a company that supplies laptops to government departments should be told of the specifics of the product that is required.
“If you take a laptop, what is it that we don’t use in a laptop? So if we buy it, we can prescribe to the people who will sell it to us that we only want a laptop with the following things in it. And if we do that, we will reduce the price of laptops from R16000 to just under R4000 or R5000.”
Ensuring invoices are paid within 30 days
While government has often been criticised for failing to pay invoices from service providers within 30 days – with the matter reaching President Jacob Zuma’s state of the nation address two years ago – Brown said his office was already giving the matter close attention.
To monitor compliance, ‘Big Brother’ had already created a system of constantly interacting with departmental officials to ensure they pay providers on time.
Brown has already benchmarked government’s system against the private sector to look at how they manage to pay service provider invoices within days.
“We are creating an avenue for service providers to interact with us directly. We then direct the query directly to the accounting officer and ask ‘what is going on here, please provide a response’.”
He says to monitor compliance from departments, his department has already created a system where providers are able to complain to his office directly in an event of delayed payments. He said his department was currently finalising a website that will enable providers to log in complaints and queries for urgent attention.
Central tender board
In his State of the Nation Address 2014 in February, President Jacob Zuma said that in order to prevent corruption in the supply chain system in government, a central tender board to adjudicate tenders in all spheres of government, was being established.
“What we will be doing is to look at contract management and see how we scale it up to ensure that we have got a better system to manage to procure high value goods across government.
“To add to the conversation around the central tender board, currently you have got 3800 facilities in the country, of which roughly 400 are hospitals. We are moving towards a point where we will be able to say we can buy all the equipment for these hospitals. So it is taking the contract management function and reconfiguring it completely different.
“Currently this unit is looking at that, and we don’t call it the central tender board, we call it a national supply chain management system that is going to look at ways of procuring some of the things completely different.
He said another unit of his department would look at compliance at the national sphere.
“We [also] need to strengthen the provincial treasuries in all respects to make sure that people adhere to supply chain policies.
“So we will be placing our own people in provincial treasury to oversee provincial transactions as well. Then we have got delegated and non-delegated municipalities”. –SAnews.gov.za
