State of emergency required to drive real public procurement reform, say experts

The recommendations of the Zondo Commission of Inquiry for the reform of South Africa’s public procurement system will not be effective drivers of change without the declaration of a state of emergency.

Speaking at the State Capture Commission conference on Wednesday, Kenneth Brown — former chief procurement officer in the National Treasury — pointed to previous documents that have laid out recommendations for procurement reform, such as the Green Paper on Public Sector Procurement Reform in South Africa from April 1997, and the 2015 Public Sector Supply Chain Management Review.

Yet corruption and inefficiency within the system have remained.

“If we don’t declare this as a national emergency, we will continue to have potholes, we’re going to continue to have schools that are dysfunctional, we’re going to continue to have pit latrines... and on and on and on,” he said.

Brown spoke as part of a panel on “Public Procurement Reform” intended to explore the recommendations of the Zondo Commission and other prospective ways of strengthening the country’s procurement framework. 

He was joined by Allison Anthony, deputy director of the African Procurement Law Unit; Jonathan Klaaren, a professor in the School of Law at Wits University and a research associate at the Public Affairs Research Institute; and Zukiswa Kota, South African programme head at the Public Service Accountability Monitor.

Anthony echoed Brown’s concerns about the procurement crisis, saying, “I wholeheartedly agree that this needs to be a state of emergency… that we need to emphasise how serious this is.”

The procurement landscape

South Africa’s public procurement system is decentralised, with more than 1,000 procuring entities, including national departments and municipalities, according to Brown. 

The central supplier database has about 1.7 million registered companies. Of these, about 1.2 million are properly vetted and about 200,000 actually do business with the government.

Brown described the system as “archaic [and] paper-based”, with limited use of technology.

In Part 1, Volume 3 of the Zondo Report, the five major causes of the public procurement crisis were identified as:

• Extensive political interference;


• Major deficits in the capacity of public procurement functions at regulatory and operational levels;


• A complicated, fragmented and often inconsistent regulatory regime;


• Stark tradeoffs between the procedural integrity necessary for fairness and to protect public funds, and the flexibility associated with the operational substance of purchasing; and


• A mismatch between the formalistic approach to regulation and the government’s commitment to using public procurement to achieve social and developmental objectives.

According to Jonathan Klaaren, the recommendations on how to improve the situation included a national charter against corruption in public procurement; the creation of an anti-corruption agency focused on the procurement system; protection for whistle-blowers; enhancement of transparency, and the enactment of legislation for the better training of public procurement officials.

Reform and modernisation

Record-keeping in South Africa is behind the times and is something that needs to be looked at alongside the monitoring and evaluation of public procurement processes, according to Anthony.

“I was very disappointed to note that the [draft] Public Procurement Bill doesn’t deal with e-procurement at all, and that has shown around the world to be a highly successful and important tool in curbing corruption,” she said.

“I think it would be totally worth spending the money on an efficient ICT [information and communication technologies] system, and a world-class e-procurement system.”

Professionalisation within procurement, through the establishment of minimum qualification requirements for officials, should also be undertaken.

“At the end of the day, to even start to fix what is wrong in the South African procurement system… we need an entire overhaul of the system, and that is putting the right people with the right qualifications in the right positions,” said Anthony.

Regulation

While the Zondo Commission advocated for the formation of an anti-corruption agency for procurement, Anthony suggested that a procurement regulator would be better suited to driving change. An anti-corruption effort could then fall under this broader umbrella.

Klaaren agreed, stating: “A focus on delivery and the efficiency… of the system of procurement is a distinct understanding and a distinct need from that of anti-corruption. If the reform is entirely an anti-corruption driven effort, then it will miss important dimensions of this problem.”

The commission’s idea for a national charter against corruption in public procurement was a good one, said Anthony. However, a charter was not enough to keep corruption from happening.

“Corruption is not a systemic problem. Corruption is a human problem,” she said.

“At the end of the day… we need to work on the culture in South Africa — the culture in our procurement agencies, the culture within government, the culture within private businesses — because it is a culture that comes from the top and feeds down to the people who do procurement on the ground.”

Where corruption was found, there was a need for effective consequence management — something currently lacking in the country’s systems, continued Anthony.

“Even after the State Capture Commission report, there have not been significant consequences for any of the people involved… and I think that is a countrywide problem that we have in South Africa. There is an entire lack of consequence management.”

Collaboration and inclusion

Zukiswa Kota highlighted a recurring failure to involve those most affected by weak public resource management and weak accountability systems in public procurement reform.

“It’s about opening up procurement stages, all of them, and having various actors [involved]. So, not just those who are public sector professionals, not just those who know a lot about procurement, but trade unionists, civil society researchers, academics, oversight actors and so on,” she said.

“Neither the [draft Public Procurement] bill nor some of the commission findings necessarily go into… detail around designing [a] process for civic participation.”

The National Treasury should not work on the draft Public Procurement Bill in isolation, said Anthony, but ensure it was a collaborative effort. She described public procurement as a “multidisciplinary and interdisciplinary part of the economy”.

“It’s important to remember to work collaboratively and not put this on the shoulders of just National Treasury or just one body to solve,” she said.

“Just like procurement is a collaborative effort, I think solving the issues of State Capture is collaborative as well.” DM/MC