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Simplify tenders to boost economy, CEO urges

Mon, 5 Nov 2012

Charlene Smith

Government must take urgent measures to simplify the tender process to boost a sagging economy, the head of a major training organization has said.

The complexity of South African tenders is slowing infrastructural development, and enabling corruption, she added.

Liza van Wyk, CEO of AstroTech Training in Johannesburg was responding to Finance Minister Pravin Gordhan's statement in the Medium Term Policy document that lagging infrastructural development was partly to blame for poor economic projections.

Gordhan disclosed that the country's budget deficit is expected to widen from 4.2% of GDP in 2011/12 to 4.8% in 2012/13.Van Wyk said, "It is disappointing that Minister Gordhan did not look at what is delaying infrastructure aside from strikes.

Very complex tender requirements have enabled touts and the corrupt to find pathways to riches, while many honest businesspeople battle with the bureaucracy involved and cannot afford the lawyers and consultants often needed for an effective tender submission."

She said that one of the most successful new courses her national organization ran was one on how to issue and evaluate tenders. "We have a course this month and five already taking bookings for next year.

Our government has had some significant infrastructural projects over the years, and more are planned, but it is disappointing that the same few names repeatedly come up as awardees.

Government needs to ensure that tenders are simplified and accessible to businesses at all levels of the economy."Earlier this year after KwaZulu-Natal law-enforcement agencies arrested more than 500 people for fraud involving R90 million of government contracts Premier Zweli Mkhize complained of widespread corruption.

He said corruption was a "cancer." In recent news there have been a slew of corruption allegations around public sector tenders:

  • Johannesburg's Pikitup, where Ernst & Young has found several high-ranking officials had unlawfully influenced the awarding of tenders and contracts.
  • Public Protector Thuli Madonsela has questioned a R51 million tender awarded to On-Point Engineering by the Department of Roads and Transport in Limpopo Province, a fake company linked to Julius Malema.
  • A recent probe by Corruption Watch into an R13.6-million Department of Transport communication tender also revealed serious irregularities.

Van Wyk said: "Ignorance of the law and government regulations can make companies vulnerable to repeated tender rejection, or being listed as a restricted supplier by the National Treasury.

Government is also entitled to recover any costs relating to a tender found not to comply with its requirements, claim damages or take the matter forward for criminal prosecution.

"Many companies fear falling foul of the law and so don't take advantage of the benefits of tenders, and this limits the pool of applicants and price competition, as well as the excellence of services or products."

She said coupled with this was flagging corporate governance and failures in ethics, "we run successful courses on these topics, but a culture of ethics and sound corporate governance has to be introduced nationally.

It has to be rewarded not just in the workplace, but within the community of business and government."Van Wyk said there were five reasons for companies being blacklisted as government tender awardees:

  • Misrepresenting the facts or fronting
  • breach of contract
  • poor performance
  • paying bribes to officials
  • not obtaining permission to conduct business with the state"

But this is not enough," Van Wyk said, "because sometimes corruption comes from government sources who demand bribes and take action against companies that refuse to be part of an unlawful process."

There are also failures from government departments. The auditor-general's General Report of National Audit Outcomes for 2010-2011 found that 31% of departments and 22% of public entities failed to obtain three quotes, and 74% of departments engaged in non-competitive or unfair procurement.

In terms of Treasury regulation 164.9.1 (c), an accounting officer or organ of state is required by Treasury to investigate alleged corruption in a tender process and to take appropriate steps.

"This is not always open to public debate or appeal, and so the list itself may not be accurate," Van Wyk said.

"There needs to be far more transparency and simplicity around tenders to open up the system, encourage efficiencies, and the real competitive practices our economy needs to move forward.

Companies also need to improve corporate governance and publically reward ethical business practice among their employees and suppliers."

 

SOURCES:
Simplify tenders to boost economy, CEO urges - Skills Portal