Rethinking procurement to fight corruptionTuesday, 09/10/2012 - 11:43
To combat corruption, the government and private industry have to change their models of supply change management, according to procurement experts. They were in Johannesburg on 4 October to inaugurate the government’s recognition of the Chartered Institute of Purchasing and Supply (CIPS).
Procurement, the buying of a good or service, is a contentious issue in South Africa. More than R25-billion of the government’s procurement budget is lost to corruption, incompetence, and negligence each year, according to the Special Investigating Unit.
CIPS chairperson Douglas Boateng told Corruption Watch at the launch that the biggest problem with procurement procedures was that the government was stuck on a model instead of trying something different. “We have to look at the current procurement procedures and ask ourselves, is this working? We keep on adding on top of the problem instead of dealing with it,” he said. “Is a procurement policy of reporting to the Treasury the right system? With the Treasury, procurement problems can only be queried after [the procurement is] done.”
This was not only a problem in South Africa, though, and was common across the continent. Boateng also stressed that chief procurement officers still had to answer to and report to chief financial officers. In his experience this delayed or even stopped corrupt activities from being exposed.
Procurement rot rife in construction sector, small towns
Corruption Watch’s statistics underline the magnitude of the problem: more than 20% of all reports sent to the organisation are concerned with procurement irregularities. The reports also show that half of the corruption in procurement reported to Corruption Watch occurs in small towns, with issues at local municipalities constituting nearly a third of these reports.
Of the reports it received that mentioned an industry associated with corruption in procurement, the construction sector – where construction company services were procured by government departments – had the highest occurrence of corruption.
Local municipalities by law have a three-tier structure in an attempt to ensure that procurement is kept above board. This includes having a committee to assess the acquisition, another to gather bids and finally a group to determine which of the bids is the best. However, the final committee can only recommend a supplier; the municipal manager has the final say on who gets the project.
CIPS has recently been recognised by the government as a professional body for the procurement and supply industry. The society was lobbying for higher standards in the field of procurement and required all its members to sign a code of ethics, which would hopefully reduce corruption, said the managing director, Andre Coetzee. “We expect our members to adhere to a code of conduct,” he said. “If there is something suspicious, we will investigate.”
He also intended to work with government groups to protect whistle-blowers, who uncover corruption and try to expose it.
Coetzee favoured the idea of Trade and Industry Minister Rob Davies to introduce a department to deal specifically with procurement. CIPS members say this model has worked well in other countries, giving Ghana as an example, and it could be modelled by South Africa.
Earlier this year, the lack of procurement of textbooks in Limpopo resulted in tens of thousands of pupils spending much of the academic year without learning materials. It led to a major lawsuit by Section27 against the government, and ongoing investigations.