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State of procurement disaster – woefully inadequate oversight is a licence to plunder

State of procurement disaster – woefully inadequate oversight is a licence to plunder
Residents protest in Mofolo North, Soweto, over the lack of electricity supply on 25 May 2022. (Photo: Gallo Images / Fani Mahuntsi) | An electrical substation at Eskom's Medupi power station in Lephalale. (Photo: Waldo Swiegers / Bloomberg via Getty Images) | An employee lights candles before a scheduled rolling blackout at a restaurant in Cape Town on 20 April 2022. (Photo: Dwayne Senior / Bloomberg via Getty Images)

Wide powers and vague rules for emergency procurement under the State of Disaster open the door to looting.

When President Cyril Ramaphosa announced the State of Disaster on the energy crisis in his Sona speech, he lauded the benefits of the declaration. He explained that it would “enable us to accelerate energy projects and limit regulatory requirements while maintaining rigorous environmental protections, procurement principles and technical standards”. 

He also attempted to reassure the nation that “the Auditor-General will be brought in to ensure continuous monitoring of expenditure, in order to guard against any abuses of the funds needed to attend to this disaster”.

Now that the regulations under the Disaster Management Act have been gazetted, we can see how woefully inadequate they are in giving effect to those promises.

A statement issued by members of the civil society Procurement Reform Working Group (PRWG) – of which amaBhungane is a member – notes: “It appears from the regulations that all state institutions are now freed to pursue emergency procurement in an astonishing variety of open-ended situations. They can do so to increase electricity generation capacity, to maintain critical infrastructure, to keep specific essential services running, but also to minimise the impact of load shedding on livelihoods, and effectively anything else. In such expansive terms, any reasonable relation between emergency conditions and procurement procedures is lost. This is a licence to plunder. It can be a cover for every imaginable scheme.”  

The regulations allow for emergency procurement, but neither go far enough to truly enable a rapid and effective response nor provide for sufficient accountability mechanisms.

It is unquestionable that we need provisions for emergency procurement. In times of crisis, officials need to be able to react with urgency, and to use procurement processes to respond to the crisis. However, there are two fundamental elements that should be present in emergency procurement processes: that the process actually facilitates speedy procurement of necessary goods and services; and that, because of a departure from regular process, there is enhanced monitoring of that procurement to avoid abuse. 

All we have is the President’s platitudes that the Auditor-General will ‘guard against any abuses’.

The goals of the energy crisis regulations are to minimise the impact of load shedding, enable the connection of new generation of electricity and to improve Eskom’s plant performance. A variety of ministers are given broad powers to take action to achieve these goals, and procuring goods and services will be a vital component of that action. However, there is no explanation of how that emergency procurement must be conducted; that is left to National Treasury to address in instruction notes.

In fact, as the PRWG statement highlights, the regulations appear to provide unlimited discretion to the executive, via section 5 (1) of the regulations which provides that any Cabinet minister can issue “directions” – effectively ad hoc instructions – within his or her portfolio mandate. 

The PRWG statement notes: “This is a flaw we have seen result in misuse of procurement processes by ministers in the recent past. It involves an extremely broad expansion of executive authority, which rubs against the checks and balances of our constitutional framework.”  

Necessary trade-off

Emergency procurement is usually characterised by less reliance on competitive bidding processes and by greater discretion given to procurement officials. However, the trade-off for these relaxations in procurement rules has to be a regime of increased oversight and accountability. 

The discretion granted to officials is necessary to enable the type of flexible emergency procurement that is required by a state of disaster, but that discretion must be fettered through measures to increase oversight and guidelines on how decisions should be made. 

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Although the regulations do require that the Auditor-General conduct “real-time audits” and report on the financial management of emergency procurement, they do not provide any detail on how this is to be done. It is particularly glaring that nothing is said about Eskom – at the centre of this crisis – which is not audited by the Auditor-General. 

The regulations oblige procuring entities to publish and report all emergency procurement to Parliament monthly. However, there is no indication that the publication will be to a greater audience. It is imperative that this emergency procurement be fully transparent. 

The data – tender adverts (if used), suppliers, value of contracts and implementation – needs to be published on a publicly accessible portal and at least every week. 

The level of corruption that occurred during the Covid-19 State of Disaster demonstrated that the oversight of that emergency procurement was clearly inadequate. Nothing in the President’s statements or these regulations indicate that the oversight system has been strengthened. All we have is the President’s platitudes that the Auditor-General will “guard against any abuses”. 

Read in Daily Maverick: 

State of Disaster statutes allow for emergency power acquisition but at expense of environment protections

State of Disaster must be clearly defined and subject to transparent parliamentary oversight, say political parties

In an emergency – necessarily an atypical event – we cannot expect a business-as-usual approach to procurement to do the job. 

The State of Disaster provides an opportunity for South Africa to hone its emergency procurement processes in a way that enables a swift and effective response to crises but protects against the mass looting we have seen in the past. 

We must ensure that the country takes this opportunity. DM

Read the full Procurement Reform Working Group statement here.

Caroline James is amaBhungane advocacy coordinator.


Comments - Please in order to comment.

  • Michael Schaefer says:

    Well no prizes to see how this goes and ends, they can’t help themselves.

  • harrypoortman001 says:

    You create a disaster, than you declare a state of disaster, acknowledging that you are the creator of the disaster, and on top of that you create another disaster…a looting disaster. So why not declare a state of looting disaster as well! Or just a “general state of disaster in SA”.
    As Einstein stated: “He who creates a problem can never be the one who solves that problem”.
    What is left for us, is a spiral of creating problems upon problems upon…..
    The essential question is how to stop this spiral.
    We need all the intellectual, moral and ethical power to come up with solutions to fix the disastrous state our country is in. A broad collective movement to create our own renaissance, in order to prevent the ultimate social unrest or the ultimate dictatorship.
    Loads of thinking to do, where time is limited, and the pressure is on all of us.
    Looking away and accepting all thats happening in front of our eyes and ears is not an option. We are in a totally unacceptable political state of disaster.

  • Geoff Woodruff says:

    “The only thing necessary for evil to triumph is for good men to do nothing” Edmund Burke.
    I think that resonates with a lot of South Africans right now.

  • William Kelly says:

    How can we help to expose this? An anonymous tip line to DM?

  • harrypoortman001 says:

    A collective, active tax payer movement.
    “He who contributes to the input, can demand to have oversight on the output”
    As simple as that.
    Enough brain power within the tax payers to come up with a constructive, positive, fair and workable structure. Anyone?

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