Costs

SA’s chief pro­cure­ment of­fi­cer has a plan to

CityPress - - News -

For some­one who in­ad­ver­tently made waves for news­pa­pers with a de­ci­sion an­nounced this week for govern­ment to cut its ad spend, he is sur­pris­ingly nice when chat­ting to a jour­nal­ist. Ken­neth Brown, the state’s chief pro­cure­ment of­fi­cer, is a bear of a man; he tow­ers over most of the peo­ple as­sem­bled at the tabling of the 2016 bud­get.

The govern­ment’s Im­bizo Me­dia Cen­tre in Cape Town, the cen­tre of bud­get affairs on Wed­nes­day, is buzzing with politi­cians, of­fi­cials and staff car­ry­ing bulky doc­u­ments deal­ing with South Africa’s fi­nances. Jour­nal­ists are cor­ralled and locked into the cen­tre from 6am so that they can trawl the de­tails and present them to the pub­lic.

The break­fasts have in the past been scrump­tious – de­li­cious Cape Malay samoosas, pies and del­i­cate sand­wiches. This year, it’s Ri­coffy and Ouma rusks. Times are clearly tough.

Brown is Fi­nance Min­is­ter Pravin Gord­han’s se­cret sav­ings weapon. Govern­ment spends R550 bil­lion a year buy­ing goods and ser­vices. Next year, it will spend R800 bil­lion on big-ticket in­fra­struc­ture, in­clud­ing roads, dams and schools, as well as var­i­ous mu­nic­i­pal ser­vices. But as Au­di­tor-Gen­eral Kimi Mak­wetu of­ten painstak­ingly points out, it is spent very badly.

En­ter Brown. And his team. I want to pro­file him alone, but he brings along his band of three and al­lows them to do the talk­ing.

With him is Rak­gadi Mot­seto, his right-hand woman, who is work­ing hard to en­sure sup­pli­ers are paid within 30 days. Re­cently, she had to com­fort a con­struc­tion com­pany owner who was owed R100 mil­lion by the state. He was paid, but Mot­seto es­ti­mates R120 bil­lion is still owed to sup­pli­ers and it will be her task to en­sure the sys­tem is ironed out.

When­ever you at­tend small-busi­ness meet­ings, the slow rate at which govern­ment pays is a com­plaint. Pres­i­dent Ja­cob Zuma has promised in sev­eral state of the na­tion ad­dresses to get the pay­ment pe­riod down to 30 days.

Be­cause of our sys­tem of sep­a­rate cap­i­tals and the three-tier sys­tem of govern­ment, the state’s travel and ac­com­mo­da­tion bud­get is a whop­ping R10 bil­lion a year.

Estelle Setan, an­other mem­ber of the cen­tral pro­cure­ment of­fice’s man­age­ment team, is hard at work to make sav­ings here by ne­go­ti­at­ing di­rectly with air­lines, ho­tels, car rental and travel man­age­ment com­pa­nies for bet­ter deals. She says this can re­sult in huge sav­ings, cut­ting back on the state spend­ing R900 mil­lion in com­mis­sion to travel agents – three agents alone earn R550 mil­lion. “We can eas­ily bring this down to R200 mil­lion a year,” she says.

That Brown in­sists on an in­ter­view with his top team tells you about the kind of leader he is. I am not meant to like him or his mes­sage (be­cause of the po­ten­tial im­pact on news­pa­pers), but I do. Tech­nol­ogy is dis­rupt­ing many in­dus­tries and print is only one of them.

Brown’s se­cret weapon, in turn, is Schalk Hu­man, a ca­reer bu­reau­crat who ex­udes ef­fi­ciency. He is able to tally fig­ures in sec­onds, reel­ing off the sav­ings to be made by us­ing the new cen­tralised pro­cure­ment sys­tem that has been in place for sev­eral months, but which will be made com­pul­sory for use by na­tional and pro­vin­cial govern­ment de­part­ments from April 1.

By July 1, all lo­cal govern­ment en­ti­ties will have to buy ser­vices us­ing this sys­tem too. This is where it gets tough for news­pa­pers. Be­fore Hu­man’s sys­tem, de­part­ments would ad­ver­tise. “It costs – we spend half a bil­lion rand on ten­der ad­ver­tis­ing,” says Hu­man, who worked for years as the Ac­coun­tant-Gen­eral. Add in the gazetted ad­ver­tis­ing mea­sures the state had to un­der­take to en­sure fair ad­ver­tis­ing and no­ti­fi­ca­tion to its sup­pli­ers, and the fis­cus’ bill was about R1 bil­lion a year. That is go­ing to be saved now as the cen­tral data­base be­gins to work at scale. I ask if de­part­ments can dodge the sys­tem, but Hu­man has sealed up that prob­lem too. De­part­ments will not be able to pay us­ing the state pay­ment sys­tem un­less the ten­der has been ad­ver­tised cen­trally with them. The sav­ings are huge – for busi­nesses, which no longer have to ap­ply to dozens of de­part­ments; and for govern­ment, which no longer has to fork out for print­ing and ad­ver­tis­ing bills – and the costs are small.

Tech­nol­ogy can be cheap. Hu­man puts the web host­ing bill of the sys­tem at R16 000 a month, al­though he is get­ting big­ger servers to cope with the de­mand for ten­der up­loads once the sys­tem is made com­pul­sory.

For sup­pli­ers, the sys­tem is free and al­ways on. It lists ten­ders by prov­ince, sec­tor and com­mod­ity type. And it works, says Hu­man, be­cause it has been sig­nif­i­cantly used in its test phase. Al­ready, 2 800 ten­ders, worth R40 bil­lion, have been is­sued via the sys­tem. It is vis­ited 2 757 times a day and 1 000 ten­der doc­u­ments are down­loaded daily.

Where do ten­der en­trepreneurs come from? Gaut­eng is the most ac­tive, says Hu­man, fol­lowed by KwaZulu-Na­tal and the Western Cape. About 12% of the hits on the site come from Kenya, the Nether­lands,

by Fe­rial Haf­fa­jee

the US and other coun­tries, in­di­cat­ing that in­ter­na­tional busi­nesses are ex­plor­ing trade with govern­ment.

“Our prime pur­pose is to make it easy for mul­ti­ple busi­nesses to have ac­cess to op­por­tu­nity,” says Hu­man. “And the site cuts op­por­tu­nity costs.”

While it has been lauded as a cor­rup­tion-bust­ing in­no­va­tion – be­cause the ten­der sys­tem is of­ten where graft hap­pens – Brown’s phi­los­o­phy is that there will al­ways be some leak­age – but if the pro­cure­ment sys­tem is driven by tech­nol­ogy and is ef­fi­cient and trans­par­ent, this will limit the risk.

This is be­cause it makes the en­tire sys­tem trans­par­ent – you can see who has won and who their clos­est com­peti­tors were. It should speed up the sys­tem, too, as own­ers who want to do busi­ness with the state now sub­mit a sin­gle set of doc­u­ments that are ver­i­fied elec­tron­i­cally. In South Africa, this means sup­ply­ing a tax cer­tifi­cate, a BEE cer­tifi­cate and con­fir­ma­tion of com­pany reg­is­tra­tion.

Brown says in­ter­na­tional bench­marks show that rank­ing ef­fi­ciency higher than anti-cor­rup­tion mea­sures as an out­come is best in­ter­na­tional prac­tice. And it is eas­ier to man­age a sin­gle sup­plier data­base rather than the 3 000 dif­fer­ent ones that pre­vi­ously lit­tered the state pro­cure­ment sys­tem.

“If you are a ten­der de­faulter, thou shalt not use the sys­tem,” says Hu­man. I sense he is only half-jok­ing.

Ken­neth Brown

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