The long-awaited State Capture Report revealed numerous failures in the public procurement system including fraud, corruption, irregular and/or fruitless and wasteful expenditure facilitated by weak internal audit control systems. The direct cost of this corruption and abuse of public office for private gain, is the distortion of the activities of the government and ultimately, economic growth and the quality of life for ordinary South Africans. But exactly who policies or monitors state supply chain?
Public procurement is regulated by the Constitution of the Republic of South Africa, 1996 (Constitution). Section 217 of the Constitution requires that when an organ of state contracts for goods and services, it must do so in accordance with principles of fairness, equitability, transparency, competitiveness and cost-effectiveness. The Public Finance Management Act 1 of 1999 (PFMA) echoed this principle in Section 51 of the Act. The PFMA is implemented through the National Treasury Regulations.
The Municipal Finance Management Act (MFMA) regulates the management of financial affairs of municipalities and other institutions in the local sphere of government.
There also exists the Preferential Procurement Policy Framework Act (PPPFA) and Regulations that regulate the procurement policy and framework of organs of state, the purpose of which is to enhance the participation of Historically Disadvantaged Individuals (HDIs) and small, medium and micro enterprises (SMMEs) in the public-sector procurement system. All organs of state in the national, provincial and local spheres of government or any institution identified in national legislation must comply with the procurement legislation.
With the State Capture Report being made public and the extent of the dysfunction in the public procurement system exposed, what can be done to curb abuse in the public procurement system?
All procurement entities should be required to develop a procurement risk management plan based on areas identified to be susceptible to corruption and the mitigating strategies. This can be realized by having core internal audit control and oversight control that promotes financial accountability in these entities. In addition to the audit and control oversight, monitoring and reporting must be built into the internal control systems.
All procurement entities should be required to develop a procurement risk management plan based on areas identified to be susceptible to corruption and the mitigating strategies.
There is also a need for a control environment, in particular the vetting process of service providers to reduce fraud risks from recurring. This entails ensuring that proper oversight and reasonable care is exercised in reviewing tender submissions and the supporting documents like reference letters and suppliers’ profiles to ensure the authenticity thereof.
There is an urgent need for proper and enforceable sanctions for non-compliance with national supply chain and procurement policies, regulations, instructions, and guidelines in South Africa. There seems to be no accountability for corruption in our government. The legislature should develop and implement a code of conduct governing public sector officials, including political office bearers in supply chain management and lastly, implement a dispute resolution system including dealing with reports by the public of abuse of the public procurement system.
There is an urgent need for proper and enforceable sanctions for non-compliance with national supply chain and procurement policies, regulations, instructions, and guidelines in South Africa.
Corruption, in general, has extremely damaging effects on society as a whole. A public procurement system that lacks the principles enshrined in Section 217 is the ideal breeding ground for corruption. An extreme frustration looms among the citizens of the Republic and a dire need for the implementation of measures to curb abuse in our weak public procurement system in order to discourage corruption.
Written by Vhuthuhawe Maswime
Vhuthuhawe Maswime is an attorney at Molefe Dlepu Incorporated. She holds BCom (Law) and LLB degrees from the University of Johannesburg. She practices in the areas of civil litigation, commercial law, administrative law and tax law.