From the Inside: The pain of government procurement
- Helen Zille
- 27 Nov 2017 01:15 (South Africa)
During the 11 years since becoming Mayor of Cape Town, I have learnt an enormous amount about many aspects of governance. But one thing that still eludes me is the procurement process.
Everyone knows that when you need to buy something (especially if it is a major purchase), you do some research, shop around for a good deal, and when you have found the best value for money, you buy it, right?
Not in government, where billions are spent on procurement every month. The scope for corruption is obvious. So, over the years, the National Treasury has developed such an impenetrable forest of red tape in an attempt to curtail corruption that I am amazed we can purchase anything at all. Getting a clean financial audit at the same time (which requires ticking all the boxes of the procurement process) is nothing short of miraculous.
It is almost impossible for honest officials to procure anything smoothly or quickly, while those intent on being corrupt easily find co-conspirators and ingenious ways of getting around the system. Why worry about achieving clean financial audits when there are no consequences for poor audit outcomes, nor for corruption (especially if you are linked to political power through the invisible chain of “smallanyana skeletons”)?
These thoughts crossed my mind last week in relation to a rather insignificant matter – the provincial government’s attempt to procure a new laptop computer for the Premier’s office. This week, the process will enter its 17th month. Every time I enquire about progress, I am told the process is just about to enter “the next phase” and that the laptop is likely to arrive before the end of 2017.
To be fair, the process would not have taken this long if all had run smoothly. But inevitably, in almost every procurement, something goes wrong, given all parallel and interlocking steps that must be followed, in the correct order. In the case of my laptop, one of the specifications was not met in the first round. So instead of simply correcting the error, the process had to start afresh. One cannot amend a tender process midway in order to award it to a bidder who did not comply with all the stated specifications from the start. Nor can the specifications be adjusted midway. While I can (theoretically) understand why this restriction is there (to prevent tender manipulation in favour of non-compliant bidders), it also makes it impossible to correct minor technical problems, without going back to the beginning of this interminable process.
Delays seem to be particularly acute when it comes to information technology procurement because, instead of buying directly from suppliers, we have to work through the State Information Technology Agency (SITA), which sets specifications, registers service providers, and oversees the process. Our broadband rollout was delayed for 18 months because we had to start again, after SITA omitted to publish a notice extending the contract beyond its deadline – a minor technicality in the broader scheme of things, but fatal to the process.
And our attempt to “refresh” computer equipment in laboratories in scores of schools has run into problems because the successful bidder was not, apparently, registered with SITA at the time of bidding for the tender (an omission that was subsequently rectified). This award is now being challenged in the courts, which will cause long delays, undermine our “e-learning game-changer” and negatively affect thousands of learners. It is frustrating beyond words.
So I was more than pleasantly surprised to visit the southern Cape this week to assess progress in our Garden Route Rebuild Initiative, following the devastating fires that engulfed Knysna, Sedgefield and parts of Bitou in June. Five months have passed since then and the progress is truly impressive. Across acres of fire-ravaged moonscape, I saw kilometre after kilometre of pale “sausages” running parallel to each other around the mountain slopes, in order to prevent erosion in the event of heavy rains. Thousands of square metres of “blankets” cover slopes that pose a particularly severe erosion risk. Speaking to the contractor, I learnt that the sausages and blankets are spun from the wood shavings of poplar trees, an invasive alien species that grows plentifully in Ficksburg, Free State. Poplar is the right wood to use, because it is inert, creates a strong woven blanket, and does not leech chemicals into the ground when wet.
I was even more fascinated to see the acres of indigenous grassland regrowth on some of the ravaged slopes. This was achieved through hydro-seeding, which involves spraying a slurry, with a poplar wood-and-water base, mixed with indigenous seeds, onto the burnt out slopes. This creates a hydroscopic net that prevents erosion, holds in the water, plants indigenous seeds and prevents alien re-growth. Areas of emerald-green, fresh, indigenous growth over hectares of hillside attested to the impact of this method.
For all my amazement at the scale, scope and impact of this work, I was above all curious about how the procurement process had been negotiated to get all of this happening so quickly. If it has taken (so far) 17 months to procure a laptop computer, how was it possible to procure so many goods and services, from as far away as Ficksburg, to achieve such progress in so short a time?
I learnt that the rehabilitation of the natural environment had been made possible without any tender process at all! Apparently the national Department of Environmental Affairs has a standing contract with Ficksburg’s poplar-sausage-blanket and hydro-seeding company, that enables them to be deployed anywhere they are needed in the country. They may be a sole supplier, which makes this tender process easier. But voila! Thank you to the Department of Environmental Affairs for working so closely with the provincial and local governments to achieve this level of environmental rehabilitation in such a short time.
Then there were other projects, such as the fire risk reduction initiative, which have experienced no procurement problems either. This is because they have been funded by donors who do not have to go through any of government’s processes. An example is the Fire Risk Reduction project (which involves, among other things, the removal of alien vegetation and the creation of defendable spaces around existing human settlements). This is being undertaken by the Southern Cape Fire Protection Association, a public benefit organisation (to which thousands of private property owners belong). The Association is employing hundreds of people for this work. Government cannot fund them without going out to tender, and the process of transferring funds from the municipalities to the Fire Protection Association has been slow and onerous. But a private fund has no problem.
Dr Hildegarde Fast, the senior provincial official seconded to oversee and co-ordinate the Garden Route Rebuild Initiative, said the southern Cape had been particularly fortunate in this regard.
“A fund was established, run by people who have the credibility to attract significant funding and ensure the honest disbursement of the money. This enables the trustees to release money directly to projects without going out to tender, although a rigorous assessment of the project and the grantee is conducted by the fund.”
The private fund cannot undertake projects of the scale of rehabilitating and upgrading informal settlements. This is government’s work. Yet even here, the projects are forging ahead at an impressive rate. The informal settlement most ravaged by the fire is Witlokasie, situated on a hillside with breath-taking views of the beautiful Knysna Lagoon. When I visited the area, shortly after the fire, I doubted that the charred and scarred area could ever be rehabilitated. On last week’s visit, I was amazed to see the heavy equipment working on the slopes, the retaining walls (already erected), the terracing ready for construction, and the nearby temporary houses.
When I asked what the major challenges were on the project, the answer was: “Community conflicts”. These are inevitable – and fierce – when resources arrive in areas of extreme deprivation.
What about procurement in the upgrading process? I asked.
“No problem,” I was told.
“How come?”, I asked the Minister of Human Settlements, Bonginkosi Madikizela.
Here is his explanation: “The area was declared a disaster. This enables us to speed up the procurement process. We had a framework contract previously approved by Cabinet. This contract is re-opened for bids every three years and enables us to register suppliers on our database who are able to provide certain goods and services. In an emergency we do not have to issue a tender. We only request quotations from three suppliers registered on this database, and can quickly choose the one that provides the best value for money, within the subsidy amount, according to our specifications.”
Why can’t we always work this way, for everything? I asked the Director General, Brent Gerber. He replied:
“When you go out on a request for quotations you approach three suppliers and ask them to quote. It is intended to be a rapid process, either to deal with a disaster (or in instances where the purchase price falls below a certain threshold). A full tender process opens the process up to the whole market, including suppliers that you may not know exist.
“If an official merely has to call for quotations, it is easy for him to go to the same three companies every time. And in the past, it has also occurred that all three quotes come, carefully disguised, from the same company.”
The permutations for corruption are seemingly endless. But the regulations do not seem to deter officials and politicians who are determined to be corrupt. Instead, they impede the efficient functioning of honest ones.
In the age of digital disruption, there is another major flaw with our current procurement process: it does not allow for the entry of new products, services and delivery methods to solve old problems. This is because the tender specifications usually replicate old, known ways of doing things, rather than encourage innovative, new methods.
Finding ways to deal with all of this (within the law) is a major challenge. But an even greater challenge is dealing with the curse of endemic corruption. Will we have to continue our downward spiral to the point where the International Monetary Fund has to bail us out of our self-imposed misery, and force us to comply with conditions necessary for economic revival, policing the rules to prevent a relapse?
Only time will tell.
I hope to have my new laptop before then. DM
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