Tighten procurement, PSC tells depts

Thursday, November 19, 2009

Pretoria - The Public Service Commission (PSC) has recommended that government departments tighten their Supply Chain Management (SCM) processes in order to minimise and manage the risk of fraud, corruption and other irregularities in the procurement process.

This comes after a PSC investigation found that some departments were not adhering to the relevant rules governing procurement in the public sector.

The PSC said on Thursday that the investigation, which took place from September 2007 to October 2008 and covered the period 1 April 2005 to 31 March 2007, had identified areas of weaknesses in the supply chain management cycle that made the procurement process susceptible to fraud and corruption.

The probe focused on the national and provincial Departments of Public Works and Human Settlements.

The commission reviewed a total of 1679 transactions across both departments and found that the average rate of compliance to the requirement that evidence of invitation of quotations to service providers must be recorded was 71 percent.

Only 55 percent of transactions had evidence that the required number of quotations was obtained or had authorisation for deviation from the required number of quotations.

Low levels of compliance were particularly evident in the Department of Human Settlements: National (40 percent), Gauteng (19 percent), KwaZulu-Natal (53 percent), Northern Cape (41 percent) and Western Cape (42 percent).

"In 54 percent of the transactions evidence could be found that the quotations were evaluated and where the lowest quotation was not considered, motivation for such decisions was recorded," the PSC said.

The investigation also revealed that only 69 percent of all the transactions the PSC evaluated complied with the requirement that requests to service providers for the rendering of a specific service must be done in writing and recorded.

"The PSC is of the view that failure to issue specific instructions and/or orders to service providers exposes the departments to, amongst other irregularities, the risk of incorrect deliveries and inferior quality of goods/services.

A total of 94 percent of transactions evaluated complied with the requirements attached to the payment process. Payments were generally effected on original invoices, in line with the quoted amounts and were authorized by appropriate delegated authority.

"This level of compliance indicates that diligence is exercised over the payment process," said the commission.

It has called on departments to continuously be supported by ongoing training, education and communication of the due process.

It said audits of SCM process should be aimed at identifying weaknesses which contribute to fraud, corruption and other irregularities.

Such audits should also specifically address each step of the SCM process and not only be in the form of generic internal audits reviews which management is inclined to place limited priority on and in respect of which remedial action is in many instances delayed.