Tightening the tap on Government expenditure loopholes

Tuesday, April 2, 2019

Tainted supply chain processes have for the longest time been regarded as the genesis of bleeding the fiscus of Billions of Rands in wasted expenditure.

In an effort to curb the scourge, in 2013, the National Treasury launched the Office of the Chief Procurement Officer (OCPO). This in an attempt to ensure that government received value for money; guaranteed open and effective competition as well as maintained a culture of ethics and fair dealing, accountability, reporting and equity.

SAnews recently sat down with OCPO Stakeholder and Client Management Chief Director Rakgadi Motseto, to get her thoughts about the entity and the progress made since its establishment six years ago. 

“[The OCPO] was just a build-up on top of what we used to call the Specialist Functions. The Specialist Functions had two divisions: transversal contracting as well as policy norms and standards,” she said.

“When the OCPO was established, four more chief directorates were added. The OCPO consists of six directorates: Stakeholder and Client Management; Information and Communication Technology,  Strategic Sourcing; Governance, Monitoring and Compliance; SCM Policy as well as Transversal Contracting.

For an effective value chain, she said, it was critical for every official involved in public procurement to know and understand their role, as well as the system.

Beaming with pride, Motseto pointed out that the unfolding revelations in the ongoing Judicial Commission of Inquiry into allegations of State Capture were the fruits of the OCPO’s labour.

“This is our job. What we have been doing from 2013 until 2017 has led to the (Commission of Inquiry into State Capture). If you look at Eskom now, most of the documents and arguments is what we have been saying in the OCPO,” she said.

The office also offers a public platform for aggrieved suppliers to raise concerns over procurement processes.

“A member of the public comes and says: ‘I have a problem with the way this tender was awarded,’ -then we have to request the documents so we can review them, she said.

Once the documents are reviewed by the OCPO, the accounting officer establishes how the process unfolded and seeks questions of clarity before the National Treasury decides on whether to intervene in the matter or not.

Over the years, concerns have been raised over the measures to detect and prevent corruption before it happens.

“It becomes difficult for us to detect certain things, unless a supplier comes and says: ‘I have a problem, you keep appointing this person/company and we are sitting here not getting an opportunity.’ That’s when we come in and look at a particular case.  

“You need to know what the system should look like. Look at state capture. Remember that supply chain rules and regulations flow from the Constitution, where we say there needs to be fairness and transparency and equity (etc). We say empower those who were previously disadvantaged. But because we are not using our data properly as government [that is not happening],” she said.

There were, however, deliberate acts of exclusion and sabotage of suppliers during the tender process, she said. 

Supply chain procedures, she reiterated, required processes to be followed stringently and diligently for the outcome to be without queries.

“If you start properly in the beginning, it becomes difficult to alter the process in the middle. It shows that – somewhere, somehow – something happened. So, when that happens, they will end up with their [pre-determined] favourite,” she said.

The meticulous tailoring of government processes is in such a way that, when competitor suppliers query procedures, foul play could be easily detected during investigations. When a complaint lands on the desk of the OCPO, she said, transgressions could be traced to as far back as the wording of the Request for Quotations.

“We do this every day. It’s easy to pick up and check if things took a different direction,” she said.

Another element that was proving problematic in government is the complex beast of cover quoting.

Chief among reasons for this not being detected as much as it should, she argued, was possibly due to supply chain practitioners not being as inquisitive as they should be as the relevant information is already readily available.

This can be done through the Central Supplier Database (CSD), an online compliance portal of organisations, institutions and individuals that provide goods and services to the state. The CSD was launched in 2016. The website maintains “consolidated, accurate, up-to-date, complete and verified supplier information to procuring organs of state.”

“Unfortunately, people in supply chain are not as inquisitive as they should be because the information is there. People are more reactive in supply chain than proactive,” she conceded.  “If you don’t interrogate the information that you have as a practitioner, as a Director in supply chain or the Chief Financial Officer for that matter, then you will be sitting with those problems,” she stressed. 

The CSD provides practitioners with the details of the directors and their linkages to other companies.

The procurement system, Motseto said, is susceptible to elements that did not comprehend how supply chain functioned.

“Many people who are affected by public procurement…have no clue about what we are doing. That is why when they see that your company has been given a tender they don’t understand, they always run [to claim] corruption. Sometimes it’s not corruption. It’s allowable in supply chain to just approach companies [in emergencies],” she said.

“You can go to the CSD and say you’re looking for suppliers who can repair the window (for instance) and there are merchants who can do that, who are within this radius who happen to be youth or black. You pull those ones, you sign the request to the Treasury prior and say ‘we have an emergency and we want to deviate from the normal procurement process. This has always been the case, even before the OCPO came to life but it was not monitored and people would create emergencies for the sake of it due to poor planning.”

However, she pointed out that some government departments, municipalities and state entities were prone to abusing this regulation.

The office, she elaborates, then grants the request under strict conditions. These include the soliciting of as much quotations as possible within the 21 day window period.  

Despite the office having made significant inroads in tackling supply chain corruption, she is confident that the centralising of information of government departments would further whittle the scourge. 

“We don’t use data intelligently across government. Even if it’s there, we don’t know what to do with it. If we could use the data we have, trust me we’d do some ground-breaking work,” she emphatically indicates.

“Person X earns this much [but] all of a sudden she’s gone to Porsche and processed a purchase. Next thing she’s going to the municipality and a building plan was passed. Government needs to pull that information together, check with SARS and see what is happening. So, those things need to be available to check how the lifestyles are funded. Those systems are not there and that is why people can drive expensive cars and nobody questions them,” she said.

She said some supply chain cases were not resolved due to a lack in capacity and skills to investigate complaints. These headaches were compounded by officials in supply chain who know how to manipulate the system.

During the fifth administration, the OCPO had undertaken efforts to educate the parliamentary portfolio committees on how to hold departments and other state organs accountable. 

“[That’s] because they now know how to interpret information. If they say to you: ‘give us your procurement plans,’ you give it to them.... why did you deviate? ‘No it was an emergency.’ It can’t be an emergency because you planned for it. They now know how to interrogate information, and engage the institutions because the information makes sense,” she said.

Over the years, the OCPO has undertaken interventions that have sought to reduce excessive expenditure in consultancy and quotations below R500 000 in which government had been “ripped off”.

“We’ve managed to sort out [ICT]. We have managed to negotiate with suppliers of software to get government discounts and not go through the middlemen. Dealing directly with suppliers simply kicks out the middle person,” Motseto said.  

Interventions in the construction cartel by the Competition Commission assisted in the reduction of expenditure in the sector.

“[The] quotation part of it is also problematic. You have practitioners who will split the R500 000 because they don’t want to go through a tender process and suppliers who are in cohorts with practitioners to make sure they get awarded quotations. The other thing is suppliers are like the practitioners, they don’t want to read,” she said. “We need to curb consultancy fees because they are way out of range. We still need other sectors of government the - security cluster, health - to really get to a point where they do what needs to be done.

With supply chain processes “evolving everyday’, she said demands were also increasing.

“Now that we are playing in the global space, there are certain requirements as a country we need to meet in terms of governance. The rule of law needs to apply, especially where it relates to corruption. It doesn’t help to have these inquiries and at the end of the day, nobody goes to jail. 

Motseto said it was important for government to be seen to be combating corruption by prosecuting and punishing those implicated.

Since taking office last year, President Cyril Ramaphosa has undertaken several measures to combat the scourge. Key amongst these are the Commission of Inquiry into State Capture, chaired by Deputy Chief Justice Raymond Zondo, This Commission has to date been given evidence of wide-spread looting of state funds and has been privy to different sorts of measures that were in place for years to hide crime in the country.

Other related commissions are the Mokgoro Commission; another dealing with misdemeanours in the Public Investment Corporation (PIC) and yet another to deal with restoring credibility at the South African Revenue Service (SARS). – SAnews.gov.za

 

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