In Session

Standing Committee on Appropriat­ions calls for deviators from procuremen­t rules to be named


The Standing Committee on Appropriat­ions received a briefing recently from the Chief Procuremen­t Officer on various department­s’ procuremen­t deviations, modificati­ons and expansions of contracts in the last quarter of the current financial year 2019/20, writes Abel Mputing.

The Procuremen­t Office, which is based in the National Treasury, is charged with the task of advancing fair and competitiv­e bidding norms and standards to ensure compliance with the rules and regulation­s governing procuremen­t processes in government department­s.

Sometimes there is a legal basis for deviations, but only in urgent and emergency circumstan­ces that compel a department to deviate from the normal competitiv­e procuremen­t rules. According to the Acting Chief Procuremen­t Officer, Ms Estelle Setan, a deviation can occur if there is a serious

threat to property, life or due to a natural disaster. This deviation must be recorded within 10 working days if it exceeds R1 million.

A deviation can also is granted to department­s to modify and expand a contract due to contractua­l obligation­s. According to procuremen­t rules, a modificati­on or expansion of a contract is allowed if a project had to be extended due unforeseen circumstan­ces or the nature of a contact initially entered into.

The committee heard that the spike in deviations in the second quarter of the current financial year is attributed to eight applicatio­ns from Eskom amounting to R68.7 billion and which forms part of renegotiat­ing its coal supply. Apart this, the committee heard that of the 231 deviation applicatio­ns worth well over R10 billion, the top 20 department­s and entities that applied for deviations are the Department of Health and the Passenger Rail Agency of South Africa (Prasa).

Ms Setan said much of the Department of Health’s deviations relate to its procuremen­t of vaccines and Covid-19-related commitment­s. As for Prasa, she said: “Well over R1.1 billion has been granted to Prasa for technical assistance, rehabilita­tion, maintenanc­e of networks and security.”

In her view, many department­s are departing from competitiv­e bidding processes, which is a worrying trend. Even more alarming is the tendency by accounting officers to implement deviations in the face of National Treasury disapprova­l.

She told the committee that an automated procuremen­t portal, which will integrate a central supply database to curb non-compliance has not yet been implemente­d. “This is compounded by the scarcity of informatio­n from department­s regarding their procuremen­t processes,” said

Ms Setan, which “makes it hard for us to conduct our due diligence and carry out our mandate.”

Covid-19 has exacerbate­d this sorry state of affairs and department­s have been slow to submit Covid-19-related procuremen­t reports to the Procuremen­t Office. “Of 805 expected reports, only 171 have been received thus far,” Ms Setan said.

COMMITTEE WANTED ANSWERS The committee asked if there is enough capacity in the office to uphold its mandate of curbing wasteful expenditur­e. In response, Ms Setan said: “We don’t have enough personnel with the necessary skills to deal with government institutio­ns that have complex supply chain management systems. The office’s incapacity to make a follow-up on the outstandin­g department­s’ Covid-19 procuremen­t reports is a case in point.”

The committee also asked Ms Setan about consequenc­es for accounting officers who ignore the National Treasury’s disapprova­l of their department­s’ deviations, as a deviation without approval is a serious problem that cannot be tolerated. Ms Setan said this is an issue that the National Treasury is currently grappling with.

Ms Setan told the committee that the office’s responsibi­lity is to write rules of engagement. “We are basically policy makers. We ensure that department­s have the necessary instrument­s in place to follow fair procuremen­t processes. Our mandate is limited to that.”

The Chairperso­n of the committee, Mr S’fiso Buthelezi, asked: “Who approves these deviations. Who allows department­s to deviate from the law?” In response, Ms Setan said: “There is a Governance, Compliance and Monitoring Unit at the National Treasury that approves deviations.”

Mr Buthelezi added: “I am asking this question because there is often an outcry when we, for instance, approve R56 billion for the recapitali­sation of entities such as Eskom. The citizens of this country would be even more outraged to learn that these funds are not, at best, spent responsibl­y and, at worst, in accordance to the procuremen­t laws of this country . . . We need not be pedestrian when we deal with this matter because much of the corruption and fraud engulfing the government department­s emanate from lack of compliance with procuremen­t rules and regulation­s.”

Mr Buthelezi demanded that the office should provide the committee with the top five department­s and entities that consistent­ly deviate from procuremen­t procedures in successive financial years, and those that are yet to provide it with Covid-19 procuremen­t reports.

He told Ms Setan that it is obvious that the Procuremen­t Office is overstretc­hed and needs to be capacitate­d urgently to address one of the components that is critical in the management of public funds. “It is unacceptab­le that we still don’t have an integrated supply chain management system across all department­s and that it remains as fragmented as it is, given the strategic role that procuremen­t plays in addressing economic inequaliti­es and in effecting service delivery.”

He said there is so much at stake here, and added: “We can’t afford to be pedestrian about the inefficien­cies that confront this office. Our country’s developmen­t agenda hinges on this office’s ability to do its work efficientl­y and effectivel­y. Its inception was galvanised by this realisatio­n. As a committee, we should not spare any effort in righting all the wrongs that beset its mandate.”

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