Departments, SOEs ‘cheat’ tender steps

The Department of Defence and major state-owned entities, including Eskom, have asked not to follow proper tendering procedures for contracts valued at more than R15bn. /

The Department of Defence and major state-owned entities (SOEs), including Eskom, have asked for exemption from tendering procedures for contracts of more than R15bn.

This disclosure, contained in a Treasury report on deviations and expansions prepared for Parliament’s standing committee on public accounts, led to calls by MPs for stricter oversight on the issue.

Deviations and expansions are invoked when departments and entities ask to be exempted from following due tendering process, citing emergencies or a single-capable provider.

In the third and fourth quarters of 2017-18, the Treasury’s report showed that the Department of Defence (R734m), Eskom (R553m), the State Information Technology Agency (R288m), Eskom (R11.3bn), the South African Revenue Service (R917m) and the South African Post Office (R313m) requested the most deviations and expansions for contracts.

There are mechanisms in place for entities and departments to procure goods outside of the Public Finance Management Act and state procurement guidelines. These are for emergency procurement or to expedite the process where one supplier is used and there is no competitive bidding.

However, an increased number of entities and departments are invoking emergency procurement conditions to avoid a bidding process, thereby leaving the state vulnerable to wasteful expenditure.

Parliament’s standing committee on public accounts chairman Themba Godi said the committee had noticed that corruption was rampant in departments, municipalities and entities because of the abuse of deviations and expansions.

The committee was aware that departments and entities were not required to report on deviations under the 15% threshold, compromising the system.

“The committee wants the government to start instituting charges against officials who try to find ways of cheating the system,” said Godi.

“[The committee] wants the ... Treasury to request reports on all deviations from departments, municipalities and entities because it has often been found that ... is where a lot of corruption takes place. It is important for the ... Treasury to have detailed reports on all deviations and expansions, irrespective of the amount,” he said.

The committee heard on Wednesday from a Treasury delegation that the review process for the management of deviations and contract expansions to prevent abuse was expected to be finalised in the second quarter of 2018-19.

Treasury director-general Dondo Mogajane established a task team to review procedures and processes for managing deviations and expansions.

“Some accounting officers and authorities think the role of ... Treasury is to approve the appointment of a supplier, whereas the role of ... Treasury is to allow an institution not to advertise a bid but invite as many suppliers as possible, and assess proposals or quotations through bid committees,” Mogajane said.

“Some accounting officers and authorities procure through deviation even though ... Treasury has said no to such a deviation,” he said.