Dear Corruption Watch, in his budget speech, Finance Minister Nhlanhla Nene announced that the Treasury is launching a central supplier database and e-tender portal in a bid to fight corruption and make government procurement more efficient and cost-effective.
I am a supplier to the state, and I’m confused about how such a move could benefit my business and how it will reduce corruption. Won’t it add to the administrative burdens on small businesses such as mine?
The review, which was conducted by the chief procurement officer in the Treasury, proposed a number of reforms. It identified that there are “constant allegations of corruption and inefficiency” against public sector supply chain management.
There are massive amounts of money involved. In 2013-14, for example, the public sector spent R500-billion on goods, services and construction. At least R30-billion of this was lost to corruption particularly related to tenders.
Rather than add hassle, the idea of e-tendering is intended to reduce the administrative burden, especially for small- and medium-sized enterprises.
The Treasury appears to have appreciated that businesses have to jump through hoops with every tender.
The minister has said suppliers will only be required to register once when they intend to supply goods or services to the state. Moreover, the centralised suppliers’ database will interface with the South African Revenue Service and the Companies and Intellectual Property Commission and will electronically verify a supplier’s tax and BEE status.
But what does this proposal mean for the corrupt? The new system is intended to integrate supply chain management in the public sector. There are currently 36 different government supply chain systems. Internal controls are not applied consistently across them, which contributes to non-compliance and opens the door to corruption. The Treasury plans to replace these systems with one integrated financial management system.
This will make data mining possible. The system will assist the government to identify trends, and improve planning and costing when compiling the budgets of departments, municipalities and parastatals. And it will be able to identify if any public sector official is trying to win a tender.
The review also found that many tender processes lack transparency.
Ideally, bid documents, evaluation committee minutes, bidders and their prices should be made public, as this contributes to the elimination of underhand practices.
The plan is to “institutionalise disclosure” by making such information available on the e-tender portal. Moreover, public officers will have to report on procurement plans, tenders awarded, the value of each award and progress in implementing tenders.
Finally, the e-tendering system permits the centralisation of government contracts. This will enable the government to buy goods and services from a central list of approved suppliers that have been vetted for cost and quality.
Such plans, once implemented, will reduce the discretionary element in procurement, especially for the myriad of smaller contracts, reducing space for corruption.
The Treasury’s attempts to put the screws on corruption while making it simpler to do business are to be welcomed.
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• This article was first published in Sunday Times: Business Times