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THE CONTRACT STATE:

Outsourcing & Decentralisation in Contemporary South Africa

2014

Contents

Acronyms 3

CHApTER 1: Introduction 4

Background 5

Methodology 8

Structure of the Report 8

Acknowledgements 9

CHApTER 2: The History of public procurement in South Africa 10

Procurement before 1994 11

The First Period of Reform, 1994 - 2000 14

The Second Period of Reform, 2000 – c. 2010 19

CHApTER 3: The practice of public procurement in South Africa 22

Procurement Planning 23

Costing and Specification 26

Supplier Selection 29

Contract Management and Supplier Evaluation 37

Concluding Remarks 38

CHApTER 4: Uneveness and Fragmentation in the South African State 40

Explaining Unevenness in the South African State 42

Politicisation in the Contract State 45

Concluding remarks 47

CHApTER 5: CONClUSION 48

Bibliography 52

Appendix 1: Sources 54

4 5THE CONTRACT STATE: Outsourcing & Decentralisation in Contemporary South Africa — 2014THE CONTRACT STATE: Outsourcing & Decentralisation in Contemporary South Africa — 2014

CIDB ConstructionIndustryDevelopmentBoardCsIR CouncilforscientificandIndustrialResearchDPsA DepartmentofPublicserviceandAdministrationMteF MediumtermexpenditureFrameworkPFMA PublicFinanceManagementActPPPFA PreferentialProcurementPolicyFrameworkActsABs southAfricanBureauofstandardssARs southAfricanRevenueservicessCM supplyChainManagement

thisreportwasproducedbythePublicAffairsResearchInstitute(PARI).theleadauthorwasRyanBrunetteworkingwithIvorChipkin,GumanitshimomolaandsarahMeny-Gibert.ItwassupportedbyagrantfromtheFordFoundation.

May2014

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7THE CONTRACT STATE: Outsourcing & Decentralisation in Contemporary South Africa — 2014

BACkGRounD

thePublicAffairsResearchInstitute(PARI)isaresearchinstitutewhichdealswithmajorissuesfacingsouthAfrica’spublicsectororganisationstodaythroughtheoretically-informedsocialscienceresearch.Itpursuesrelevantappliedandstrategicresearchonthepublicsectorandonstate-societyrelationships,andworkstogeneratedialogueamongstscholarsofthestate,andbetweenthemandchangeagentsinthepublicsector,business,andcivilsociety.PARI’sconcernwithpublicprocurementemergesfromthisagenda.Procurementhasbeenidentifiedbypreviousresearchaskeytoservicedelivery,tocorruption,andtobroaderstate-societyrelationsinsouthAfrica.PARIwasprivilegedtopartnerwithaninterventionteamledbythenewChiefProcurementofficerworkingonLimpopoProvincialGovernmentprocurementsystems.thesestillcontinuinginvestigations,inthecontextofPARI’swiderresearchagenda,haveallowedustoconfirmanddevelopinsightsintothesignificanceofpublicprocurementasanadministrativesystemwhichisintendedtoservebroadersouthAfricanaspirations.

AswewillseelaterinthisreportprocurementpracticesinLimpoporeflectbroaderdynamicsinthesouthAfricanstatesincetheendoftheapartheidperiod.oneofthemostdramaticfeaturesofthepost-apartheidstate,thoughlargelyunnoticedinacademicandothercircles,hasbeenthecontracting-outofgovernmentservicestothird-partyproviders.Inthisregard,twoimperatives-thedesiretomodernisethestateaswellastousegovernmentagenciesasacatalystforblackeconomicempowerment–cametogetherbehindacommonagendaforpublicsectorreform.

It emphasised the following principles:

• De-bureaucratisethepublicsectorandlocalgovernment. • Reform&strengthenmanagement practicesingovernmentdepartments. • Decentralisedecision-makingto‘appropriate’levels. • outsourcegovernmentfunctionswhenappropriate.

thisnewgovernmentalspiritwasfeltacutelyinprocurement.Duringtheapartheidperiodtherewereeffectivelyahandfulofsitesforprocurement,suchasthestatetenderBoard.However,fromthelate1990sresponsibilityfortheprocurementofgoodsandserviceswasdecentralisedtogovernmentofficialsinofficesallaroundthecountry.thesouthAfricanRevenueservices(sARs)foundthatintheeasternCapealonethereweretensofthousandsofdiscreteprocurementsites.nationaltreasurystatistics,moreover,showthatapproximately42percentofthesouthAfricangovernment’sbudgetisspentinandthroughthesupplyChainManagement(sCM)system.

≤ Introduction1CHApTER


1 Sources: National Treasury, 1997, 2004, 2011, 2012 and 2013; World Bank, 2003. 2 Excluding local government own revenue. 3 Government spending through procurement occurs in two classifications i.e. (i) Goods and Services and (ii) Payment of capital assets. What this excludes is (i) Compensation of employees, (ii) Transfers and subsidies, (iii) Payment of interest on land, and (iv) Debt costs. Due to data constraints we also exclude (v) local government own revenue, and (vi) major public entities (e.g. Eskom), (vii) provincial public entities (Limpopo Road Agency) and (viii) provincial business enterprises (Free State Development Corporation). We include in our calculation Chapter 9 institutions (the Public Protector), national public entities (South African National Parks), and national government business enterprises (Rand Water). Given these parameters, in 2012/13 estimated government expenditure amounted to R876.6 billion for national, provincial and local government. Of this, R372.9 billion was spent on the procurement of goods and services, and payment for capital assets. This does not include conditional grant spending, due to issues with access to credible data. The figure reflects a minimum of government expenditure through procurement. 4 Procurement figures established from the budget allocated to Goods and Services and payments for capital assets in the revised estimates.

pROCUREmENT AllOCATION AS A pROpORTION OF TOTAl bUdgET1

In 2012/13, the budget of national, provincial and local government2 combined was R 876.6 billion; R 372.9 billion or 42 percent3 of this was allocated to procurement. Note that this does not include expenditure figures from other areas of government, such as the parastatals.

Most procurement expenditure occurs at the levels of local (52.2 percent of the total) and provincial government (29.4 percent).

Between 2009 and 2013, sending on procurement has grown by an average of 10 percent annually.4

Taken together this gives government and governance in South Africa the following features:

1. Service delivery in South Africa is decreasingly performed by government administrations and increasingly performed by private companies which tender for this role.

2. The role of public servants has changed from that of administration to that of managing contracts. That is, when they are not complying with National Treasury, Department of Public Service and Administration (DPSA) and other departmental regulations, public servants are effectively managing service-delivery contracts with private firms, other departments and parastatals. The quality of service delivery often depends on how well these contracts are negotiated and enforced.

3. The system of awarding contracts is today so decentralised and fragmented that it is difficult to coordinate activities between departments and tiers of government and/or to exercise oversight over the system as a whole. The decentralisation of procurement has produced thousands of sites across South Africa where local groups compete for resources and opportunities. This provides an important context for processes of contemporary class formation.

WewillarguelaterinthereportthatsouthAfricahasbecomea‘contractstate’.Whatwascalled‘statecapacity’isnowpredicatedupontheabilityofthestatetotapintoandmanage,throughcontractualrelations,privatesectorcapacities.Bythesametoken,corruptionandclientelismaredevelopinglargelyaroundtheweaknessesofthis‘contractstate’.

InthisreportwewillarguethataddressingtheproblemsinthepersonnelandprocurementsystemsiscentraltosouthAfrica’sdevelopmentaspirations.thealternativeisverylikelydecliningstatecapacity.Itmayalsoberisingcorruptionandclientelism,ascompetitiongrowsandgainsaredistributedandredistributed.theabilityofsouthAfricatomanageitsfuturerationallyanddemocraticallywillsufferasaresult.

Wewillsustainthisargumentinanin-depth,butstillnecessarilypreliminary,studyofthepublicprocurementsysteminsouthAfrica.throughitwewillseetheentanglednatureofpersonnelandpublicprocurementsystems.Wewillalsobegintodiscernthebroaderimplicationsofthesesystemsandtheprospectsofreform.


InChapter4weconsiderthebroaderimplicationsofthepublicprocurementsystem.ourargumentisthattheprocurementprocessisathreadthatrunsthroughcontemporarygovernance,servingtodefinetheentitywhichwerefertoasthe‘contractstate’.thenatureofthisstateiselaborated,anditsimplicationsforstatecapacity,corruptionandthequalityofourdemocracyareteasedout.

Weconcludebytentativelysuggestingthewayforward.WebrieflyconsidertheAmericanprecedenttoarguethatinsomeinstancesadministrativesolutionscanbefoundnotonlyforadministrativeproblems,butalsoforseeminglyintractablepoliticaldilemmas.yetifthepersonnelandprocurementsystemsarepotentialcure-alls,thentheAmericancasealsoshowsthattheycanonlybeactivatedbypoliticalmobilisation.

Webelievethatthisreportdemonstratesthattheconvergenceofresearchandpracticecanreaprichrewards.

ACknoWLeDGeMentsIndevelopingthisreportPARIhasenjoyedsupportfromanumberofstakeholders.WewouldespeciallyliketothanktheFordFoundation;thisresearchwouldnothavebeenpossiblewithouttheirgeneroussupport.Asinanyresearchendeavour,wehavereliedheavilyuponmanyinformantsandparticipants.Wehavedrawnuponthetimeandinsightsofanumberofpublicservantswhohavegiventheirattentiongenerouslyandopenly.Inparticular,wewouldliketorecogniseofficialsintheofficeoftheChiefProcurementofficerandofficialsinthedepartmentsoftheLimpopoprovincialadministration.Wehopethatwehavebeguntolaythefoundationsforarobustandopenengagementbetweenthestate,theacademyandcivilsociety.

MetHoDoLoGyoverthelastyear,PARIhasbeenprovidedwithunprecedentedresearchaccessbyseniorofficialstoanumberofgovernmentsiteswhereweundertookinterviewsanddocumentaryanalysis.theresearchaimedtoassistpersonneltaskedwithimprovingthesCMsysteminparticulargovernmentdepartmentsinLimpopo,andwasaimed,inaddition,atenablingbroaderreflectionontheprocurementsystem.PARIresearchersalsodrewfromtheInstitute’songoingresearchinthepublicsectorelsewhere,atnational,provincialandlocalgovernmentlevels.theresearchinvolvedin-depthinterviewswithgovernmentofficialsinanumberofdepartments,withsCMpractitioners,andwithalimitednumberofnon-governmentalorganisations.Wealsoconductedathoroughdocumentreview,coveringrelevantlegislation,regulations,policydocumentsandreviews,guidelinesandcircularsonpublicprocurement.WealsoreadrelevantsectionsfromHansard,nationalparliament’srecordofproceedings.Further,aprovincialdepartmentinLimpopoprovidedPARIwithselectedcontractsfrom2009to2012forresearchandtoassistpersonnelwithimprovingsCMinthedepartment.

Whilemoretimeisnecessarilyrequiredtotakefulladvantageofthisaccess,incombinationwiththeuseofmorewidely-availablesourceswehavebeenabletolaystrongfoundationsforfutureendeavoursinthisarea.

stRuCtuReoFtHeRePoRt

InChapter2wediscussthehistoryofpublicprocurementinsouthAfrica.Wenote,especially,thepost-1994movetoahighlydecentralisedprocurementsystem.subsequentchaptersareframedaroundtheambitiouspost-1994reformagenda,whichhasforanumberofreasonsfailedtoconsolidateintoaviableprocurementsystem.

InChapter3wedescribetheprocurementprocessundersouthAfrica’scurrentregulatoryframework.theeffectistorevealimportantweaknessesinthisprocess.theseweaknessesrepresentkeypointsforregulatoryintervention.However,theirnaturealsoindicatesthelimitsofsuchintervention.thisprovidestheempiricalbasisforthenextchapter.


≤The History of Public Procurement in South Africa

InthischapterweoutlinethehistoryofpublicprocurementinsouthAfrica.5 thefocus,especiallyasweapproachthepresent,willbeupontheformalinstitutions,policies,lawsandregulationsthathaveestablishedthemodelsgoverningpublicprocurement.thehistoryoftheseinstitutionshasfollowedinternationalintellectualandadministrativetrendsfairlyclosely.Alongestablished,centralisedprocurementsystemwasmodernisedinaccordancewithinternationalprecedentsthroughdecentralisationaccompaniedbycentralcontrolofanessentiallyregulatorynature.Reformwasdrivenbygoodintentions.Itfollowedmodelsofbestpractice.WeconsidersomeoftheunintendedconsequencesofdecentralisationandtheactualpracticeofpublicprocurementinsouthAfricainthechaptersthatfollow.

PRoCuReMentBeFoRe1994Historically,southAfricaoperatedahighlycentralisedprocurementsystem.Inthisitforthemostpartfollowedwell-establishedinternationalpractice,generallytheproductofmuchearlierattemptstoensurestrongcentralcontrolovergovernmentfinanceandinparttherebytolimitformsofcorruptioncurrentatthetime.AftertheunificationofsouthAfricain1910thistendencywasreflectedatthenationallevelintheestablishmentofauniontenderBoard,laterrenamedthestatetenderBoard.ProcurementinthefourprovinceswasvestedintheirseparatelyelectedexecutiveCommittees,allofwhichwentontopromulgateordinancesestablishingprovincialtenderboards.unliketheuniontenderBoardtheseonlyenjoyedadvisorypowers.thelargermunicipalitiesmadetheirownprocurementarrangements,generallycentredontheirowntenderboards.state-ownedenterprisesalsohadautonomousprocurementpowers.IntherailwaysforinstancethesepowerswereembodiedintheRailwaytenderBoard.Inaddition,separatetenderarrangementsheldinthesphereofdefence,andinotherrelatedconfidentialandsecretoperations.

Ifthenational-levelstatetenderBoardistakenasindicativeofthegeneralsituationthenthesystemofcentralisationwasgraduallyaccompaniedbyrecognitionoftheneedforameasureofdecentralisedflexibility.Itseemsthatthiswasgenerallyunderstoodastheneedtoreducetheprospectofthecentraltenderboardbecomingabottleneck.ProcurementthroughacentraltenderboardinalargeandvariedstatelikesouthAfricawouldbetime-consuming,andespeciallyinurgentcasesthiswouldbeproblematic.Further,inlightofthelargerangeofsuppliesandservicespurchasedbythegovernment,decentralisationwouldreducecomplexityatthecentre,facilitatingitssmoothfunctioning.nodoubttherewerealsootherconsiderations,suchasthatdecentralisationwouldensurethatprocurementdecisionswouldtakeaccountofspecificcircumstancesandspecialistknowledge,andthatitwouldprovideforquickerfeedbackregardinggoodsandservicesprocured.

Institutionally,theneedforameasureofdecentralisedflexibilitywasexpressedinquitestrictlycircumscribeddelegationsofprocurementpowersfromcentraltenderboardstodepartmentsandotherorgansof

5 See Appendix One for sources for this chapter.

2CHApTER


state,withallowancesforre-delegation.From1981suchdelegatedpowerswereaccompaniedbygeneralauthorityforemergencypurchases,requiringapprovalafterthefactbythestatetenderBoard.thesedelegationsoperatedonlyoutsideabroadnetofwhattodayarecalled‘transversalterm’contracts,orcontractsoperatingforfixedperiodsrelatingtogoodsandservicesutilisedinlargequantitiesbyanumberoforgansofstate.

thesevehiclesfordecentralisedflexibility,itmustberecognised,werecomplementedinotherspheresbycertainflexibilitiesinherenttocentralisation.specifically,theextensivepoliticalandadministrativevisibilityandcontrolthatcentralisationprovidedmeantthatprocurementdecisionsatthecentrecouldbemadewithinawideambitofdiscretion.thereexistednolegalprescriptionsregardinghowoffersweretobesolicited.theycouldbemadeinanymannerdeemedappropriatebytheBoard,andwhatarenowcalled‘unsolicitedbids’,offersmadebyserviceproviderswithoutaninitialrequestfromgovernment,couldbeacceptedatdiscretion.nohardruleswerelegislatedregardinghowfinaldecisionsweretobemade.therewas,thatis,noobligationtoacceptthebidwiththelowestprice,andtherewasnolegalobligationtoacceptanyotherbidforanyparticularreasonwhatsoever.still,itwasroutinefortenderstobeadjudicatedonthebasisofcost,withnecessaryadjustmentsforlocalcontentandotherpreferences.Presumably,giventhesewidediscretionarypowers,procurementprocesseswereeasilytailoredtospecificcircumstances.negotiationwithserviceproviderswouldhavebeenallowed.soleproviderscouldreadilybeapproached.Decisionscouldeasilyandflexiblytakeaccountofarangeofotherfactorsinadditiontoprice.

theaddedvisibilityandcontrolthatcentralisationprovidedwas,itcouldbeargued,unhelpfullyhedgedaroundbythefactthatitwasonlyextendedinverylimitedwaysfrompoliticalleadership,especiallyinthepersonoftheMinisterofFinance,tocivilsociety.theMinisterofFinancewasresponsibleforappointingaminorityofnon-officialmemberstothestatetenderBoard,andthepracticeasitdevelopedwasforhimtosolicitnominationsfromthekeybusinessassociations,suchastheAssociationofChambersofCommerce,thesouthAfricanAgriculturalunion,andtheAfrikaanseHandelsinstituut.yettheproceedingsanddecisionsofthestatetenderBoardwerekeptconfidential,withdisclosureatthesolediscretionoftheBoard.Atleastinpartthiswasanattempttoprotectthetradesecretsofbidders,butitamountedtoablanketallowancenotconducivetointegrityinprocurementdecision-making.Whencombinedwiththescarcityofjusticiablelegalnormsandstandards,thisdoubtlessleftserviceproviderswithverylittleprotectionagainstunfairdecisions,anditcertainlyreducedtheabilityofsocietytoholdprocurementdecision-makerstoaccount.ontheotherhand,aserviceprovider‘black-list’,whichrestrictedpersonsfromtradingwiththestateincasesoffraud,non-performanceandotherinfringements,wasonlyestablishedinadministrativelawin1981.Itwouldbepopulatedpurelyatthediscretionofthetenderboards.

thismodelofprocurementadministration,inplacesincetheformationoftheunionofsouthAfrica,andevolvingonlyincrementallythereafter,wouldremaininoperationuntilthe2000s.Itscombinationofstronghigh-levelpoliticalcontrol,withamplepoliticalautonomy,especiallyintheformofrelativefreedomfromthescrutinyofcivilsociety,dovetailedquiteneatlywiththepolicygoalswhichtheprocurementsystemwouldbeincreasinglytaskedtopursue,especiallyafter1948.InpursuitofabroaderAfrikanereconomicadvance,procurementpreferencesforAfrikaner-ownedfirmswereinstituted.thesepreferences,however,wereneverlegislated.theywereinformalanddiscretionary,whichallowedfortheinfluenceofbiasedandpersonalconnections,andameasureofself-enrichmentthatbordereduponandprobablyquiteoftencrossedintothedomainofcorruption.still,stronghigh-levelpoliticalcontrolmeantthattheprojectofAfrikanereconomicadvancewas,atleastuntilthedyingdaysofapartheid,keptonatightleash,andwithintheconfinesoftheAfrikanernationalistproject.6

theprocurementfunctionitselfwasstaffedbygeneralistadministratorswithoutspecialisttraining.thissphereofthecivilservicewasapparentlyneveranattractiveprospectforpublicservantsandthisinasocietywhichinanycaseexhibitedamarkedpreferenceforprivatesectoremployment.Procurementexpertiseinthestatewasthereforerelativelylimited.yetthesystemwasconsidered,atleastbythepoliticalclass,tohaveoperatedwithareasonabledegreeoffacility.Forthesereasonstheprocurementmodeldoesnotappeartohavebeenseriouslyquestionedbeforethe1990s.Procurementhadaverylowlegislativeprofile,withlegislationaboutprocurementgenerallyenjoyingbipartisansupportinParliament,evenbipartisanindifference.themoreextensivechangestothesystemwerenormallypurelyadministrative,followingonfromotherchangesconsideredmorevital.thecreationoftheBantustans,forinstance,involvedthecreationofaseriesofseparateBantustantenderboards.theabolitionofProvincialCouncilsin1986meanttheimminentdemiseoftheordinancesthatgavelegalexistencetoprovincialtenderboards.By1987regionaltenderboardsattachedtothestatetenderBoardwerelegislatedintheirplace,providingtheopportunitytoensureuniformityinprocurementprocedure,documentation,conditionsofcontractanditemspecification,generallytothebenefitofbusiness.MemberofParliamentDWWattersonexpressedthegeneralmoodwhenhenotedthat‘WehavenostrongfeelingaboutthisparticularBill,buthereagainwehavethefeelingthatitischangeforthesakeofchange.theexistingtenderboardsappeartohavedoneaprettygoodjobovermanyyears’.7thestatementwasoneofconservatisminmattersofadministrativestructure.tothegenerationofavidmodernisersthatassumedpowerafter1994itwouldhaveappearedsimplyasanunreasoneddefenceofanachronism.

6 Hyslop, J. 2005. ‘Political Corruption: Before and After Apartheid’ Journal of Southern African Studies, 31 (4): 773-89.

7 Hansard 1987: 1058.


tHeFIRstPeRIoDoFReFoRM1994 - 2000theinitialtriggerforreformappearstohavebeenthedesiretoincludeemergingsmallandmediumenterpriseseffectivelyingovernmentcontracts,whichhadinthepastoverwhelminglygonetoestablishedwhitebigbusiness.ProcurementreformwasthereforecentrallypredicateduponandexplicitlyjustifiedasanattempttomergethetwosidesofsouthAfrica’s‘dualeconomy’,procurementbeingutilisedasalevertohelpincludepreviouslydisadvantagedbusiness-ownersinthemainstreameconomy.8Incontrasttoroughlysimilareffortspursuedunderapartheid,however,Africaneconomicadvancewouldinthisrespectbebothformalandopen.theConstitution(section217)haditselfrequiredthatpreferencesforpreviouslydisadvantagedserviceprovidersbeprovidedforinnationallegislation.ItisagainstthisbackgroundthatreformwasinitiatedunderthejointleadershipoftheDepartmentsofFinanceandofPublicWorks.

ByJanuary1995theseleaddepartmentshadcometogetherwithrepresentativesofanarrayofnationalandprovincialdepartmentsinaProcurementForum,createdtoframeandgenerateconsensusaroundtheshapeofimpendingreform.thestatetenderBoardwasinvolvedinprovidingsupporttothisinitiative,andadditionaltechnicalandfinancialassistancewasdrawnfromtheWorldBank.Between1995and1997thisProcurementForumwouldestablishtheshapeandthrustofprocurementreform,thoughnotitsadministrativeimplementation.

theanalysis,asittookshapeintheForum,involvedaconvergenceofprevalentinternationaltrendswithdomesticconditionsandgoals.the1990swasaperiodoflarge-scalereformofpublicprocurementsystemsinternationally.Inthe1980stheprofileofprocurementintheprivatesectorhadbeenelevatedunderthebannerof‘strategicprocurement’.theprivatesector-inspirednewPublicManagementincludedaconcernwithpublicprocurement,whichconvergedwithadonor-driven‘goodgovernance’agendahighlightingthecorruptionofandinefficienciesindevelopingcountryprocurementsystems.southAfrica’scentraltenderboardswere,inthiscontext,andtypically,viewedasout-dated,cumbersomeandunwieldy,bothbadprocurersandabottleneckplacedacrosstheeffectivedischargeofgovernmentresponsibilities.Crucially,specificallyreflectingsouthAfricanrealities,thecentraltenderboardswerealsodistancedfromlocalitiesandlocalconditions,andtheybiasedprocurementtowardslargepurchases.thesewerefactorswhichhinderedtheadvanceofemergingsmalltomediumbusiness.InreachingtheseconclusionstheworkoftheProcurementForumdovetailedneatlywith,andwasinpartinfluencedby,thebroadernewPublicManagementreformssimultaneouslyemergingfromtheDepartmentofPublicserviceandAdministrationandresonatinginnationaltreasury.9thenewPublicManagementagendastressedthetwinobjectivesofgivingstatemanagersthefreedomtomanage,andholdingthemaccountableforresults.Whatthismeantinpracticewasthatabroadrangeofmanagerial

8 Bolton, P. 2006. ‘Government procurement as a policy tool in South Africa’, Journal of Public Procurement, 6 (3): 194.

powersandfunctionsweretobedecentralised,andresponsibilityforthemalignedintheofficesofdepartmentalandagencyheads.Centraltenderboardsrancountertothislogic.Byremovingimportantpowersfromthecontrolofdepartmentalheadstheyrestrictedmanagerialfreedomandtherebycomplicatedlinesofaccountability.InthiscontextthedecentralisationofprocurementwasacceptedbytheProcurementForumasafaitaccompli,partandparcelofabroaderpolicyofdecentralisation.

thefirstinterimstrategyforreformwasembodiedinaten-PointPlanreleasedbytheDepartmentofPublicWorksin1996.thePlanwasafirstattemptatincludingemergingbusinessesintenderprocesses.Itproposed,amongstotherthings,preferencesforthepreviouslydisadvantaged,alongwitharangeofproceduralchangestoenhanceaccess,suchasthewiderdisseminationofinformation,thesimplificationofprocedureanddocumentation,andtheestablishmentoftenderAdviceCentrestosupportemergingbusiness.

9 Chipkin, I. and B. Lipietz. 2013 ‘Transforming South Africa’s Racial Bureaucracy: New Public Management and Public Sector Reform in Contemporary South Africa’ PARI Long Essays, No. 1.

TEN pOINT plAN

An interim strategy for reform was articulated in a Ten-Point Plan released by the Department of Public Works in 1996. It included the following measures:

1. The improvement of access to tendering information; 2. The development of tender advice centres; 3. The broadening of a participation base for small contracts (less than R 7 500); 4. The waiving of security/sureties on construction contracts with a value less than R 100 000; 5. The unbundling or unpacking of large projects into smaller projects; 6. The promotion of early payment cycles by government; 7. The development of a preference system for SMMEs owned by historically disadvantaged individuals;8. The simplification of tender submission requirements; 9. The appointment of a procurement ombudsman; and 10. The classification of building and engineering contracts.10

AgeneralmodelforthereformoftheprocurementsystemwaselaboratedinmoredetailintheProcurementForum’s1997GreenPaperonPublicsectorProcurementReform.Accountingofficers(i.e.chiefexecutives)acrossthestateweretobegivenpowerandresponsibilitytoestablishprocurementcentresintheirrespectivedepartmentsandagencies.Inamovecommontosucheffortsatdecentralisation,especiallyinareasoffinancialrelevance,thearchitectureandoperationsoftheseprocurementcentreswastoconformtoapolicyframeworkestablishedandadministeredbyacentralregulatoryagency.thiswastobecalledthenationalProcurementFramework,administeredbyaProcurementComplianceoffice,likelytobeastand-aloneentityclosetonationaltreasury.

10 Department of Public Works, 1995, 10-Point Plan Strategy.


theProcurementComplianceofficewastoformthelynchpinofthenewprocurementsystem.Whenthedirectivetoestablishprocurementcentreswasissued,theProcurementComplianceofficewouldbechargedwithensuring,assistingandoverseeingtheircreationandoperation.Itwouldexercisehigh-levelcontroloverthenecessaryeducationandtraining.Further,itwouldenjoyrobustpowerstomonitor,audit,investigateandsanction,andwouldfunctionasaforumthatdisappointedbidderscouldapproachtosecureadministrativereviewofallegedlyfaultydecisions.Wieldingtheseinstrumentstheofficewouldbepositionedeffectivelytodetectandsanctionnon-compliance,bettertargetitsassistanceandinterventions,andcommunicateusefulinnovationsbetweenthedifferentprocurementcentres.theofficewould,inaddition,bechargedwithmonitoringthevarioussocio-economicgoalsattachedtoprocurementpolicy,suchasthepromotionofsmallandemergingbusiness,thepromotionofnationaleconomicdevelopment,andensuringenvironmentalsustainabilityandgoodlabourpractice.thecentraladministrativeandinformation-gatheringroleoftheofficewould,additionally,giveitacentralplaceinthefurtherelaborationofpolicy.

Beyondfacilitating,sustainingandevolvingtheimplementationofthenewprocurementsystem,theProcurementComplianceofficewoulddirectlyadministerarangeoffunctionscentraltotheoperationofthesystemasawhole.ofcriticalimportance,itwouldbechargedwithestablishingandmaintaininganationaldatabaseofserviceproviders,registrationwithwhichwouldbeapre-conditionforparticipatingingovernmentcontracts.theprocessofregistrationwouldbekeytomonitoringandsupportofpreferredserviceproviders,suchasblack-ownedandlocalbusiness,andtoensuringthatserviceproviderswerebothcompliantandcapableofdeliveringoncontracts.Removalfromthelistofregisteredsupplierswouldbeanimportantmeansofpunishingserviceprovidersguiltyoffraud,sub-standarddelivery,andotherformsofmisconduct.

Beyondthedatabase,theProcurementComplianceofficewouldberesponsibleforensuringuniformityintheprocurementsystem,procedurallybutalsomorebroadly.uniformandsimplifiedprocedures,documentationandconditionswouldrenderthesystemmorelegible,allowingbusinesstoemployfewerprocurementspecialists,renderapportionmentofriskbetweengovernmentandserviceprovidermoreregularandlessopaqueand,veryimportantlyinthecontextofpost-1994goals,makethesystemmoreaccessibletosmallerserviceproviders.Greateruniformityinitemspecificationwouldallowfortheprovisionofuniformgoodsandservices,ensuringlongerproductionlinesandothereconomiesofscale.

Itwouldseemthattheseeffortscameundoneafter1994,whennineprovincescameintobeingundertheInterimConstitution.Intermsofsection187eachprovincewastoestablishacentraltenderboardintermsofitsownlegislation.theresultwasthecreationofseparateanddistinctdispensations

regardingprocedures,documentationandconditionsofcontract.toremedythesituationitwasenvisagedthattheProcurementComplianceofficebetaskedwiththeproductionofstandarddocumentation,includingaGenericCategorisationofContracts,withconditionsofcontractvaryingbetweencategoriessuchas‘goods’,‘services’and‘engineeringandconstructionworks’,andbetweensub-categoriestherein.Inregardtoitemspecification,whichhadpreviouslyreliedheavilyuponadhocprocesses,professionalassociationsandthesouthAfricanBureauofstandards(sABs),theProcurementComplianceofficewastobecentrallyinvolvedincoordinatingprocessesofspecification,andinfundinganddirectingrelatedresearch.

Finally,relativelylittlewasproposedregardingtheinternalarchitectureandoperationofthedecentralisedprocurementcentresthemselves.naturally,theseprocurementcentreswouldbeempoweredtomakeprocurementdecisions,andthesewouldhavetoaccordwiththeconstitutionalprovisions(section217)requiringthatgovernmentprocurementbe‘fair,equitable,transparent,competitiveandcost-effective’.Atransparentandcompetitivetendersystemwasthereforestronglyimplied.theProcurementForumhad,however,cometotheconclusionthat‘cost-effectiveness’didnotentailthatpricebeconsideredtheonlycriteriainmakingprocurementdecisions.Itthereforeadvocatedabroader‘valueformoney’approach,withoutspecifyinghowthismightbeputintopractice.

Inanycase,theextensiveproposalscontainedinthe1997GreenPaper,releasedforpublicdiscussion,nevergraduatedintoanauthoritativeWhitePaper.Intheyearsthatfollowed,adifferenceofopinionarosebetweennationaltreasuryandtheDepartmentofPublicWorksastowhoshoulddrivetheprocess.AsaresulttherecommendationsoftheGreenPaperwerenevercoherentlyandcomprehensivelyimplemented.Instead,nationaltreasuryandPublicWorksseemedtogotheirownways.Indeed,somethingresemblingaProcurementComplianceofficewasonlyeventuallyestablishedinthenationaltreasuryin2013.

In1999theMinisterofFinancedrovethePublicFinanceManagementAct(PFMA)throughParliament,onthebackof18monthsofextensiveconsultation,andwithoverwhelmingmulti-partysupport.thePFMAformallydecentralisedresponsibilityforestablishingconstitutionallycompliantprocurementfunctionstoaccountingofficers.thePFMA,inthisrespect,wentintheoppositedirectiontothespiritandprovisionsofthepast,whichheldthatprocurementpowersrestedwiththetenderboardsorweredelegatedbythem.In2000nationaltreasurythenpushedthroughthePreferentialProcurementPolicyFrameworkAct(PPPFA)whichestablishedapoints-basedsystemfortheadjudicationoftenders.


Laterin2000theDepartmentofPublicWorksestablishedtheConstructionIndustryDevelopmentBoard(CIDB).thehadmanyofthepowersandresponsibilitiesoriginallyenvisagedasbelongingtotheProcurementComplianceoffice,especiallypowersofregistrationandmonitoring.thesepowersandresponsibilities,however,onlycoveredprocurementofconstructionandrelatedservices,andinvolvedrelativelylimitedauthorityovertheprocurementcentres.In1998,asamendedin2002,itwasfurtherlegislatedthatinformationtechnologywastobeprocuredcentrallythroughthenewlyestablishedstateInformationtechnologyAgency.

thecumulativeresultofthesepartialanddisjunctiveinitiativeswasameasureofconfusioninimplementation.earlyeffortsatensuringuniformityalsoflounderedoverthedifficultyofdrivingnewinitiativesthroughthetenexistingandpartlyautonomoustenderboards.Whatthelong-termconsequencesofthisinterregnumwillbearenotatpresentfullydiscernible.Atleast,theresulthasbeendelay,andthemoreextensiveambitionsoftheProcurementForumanditsGreenPaperfellbythewayside.

THE pOINTS-bASEd SySTEm FOR AdjUdICATINg TENdERS

The preferential procurement policy is implemented within a points system: Under this system the bidder scoring the highest number of points out of 100 wins the bid. Over a certain amount, prescribed by the Minister of Finance, 90 of these points are awarded on the basis of price, with the lowest bidder qualifying on the basis of specifications, conditions, and administrative compliance being given the full 90. The additional ten points are calculated on the basis of a weighting given to Black Economic Empowerment and Reconstruction and Development Plan goals. Below this amount a similar, 80/20, system applies.The Preferential Policy Framework Act specifies the allocation of points on the following basis:

A maximum of 80 or 90 points is allocated for price using the following formula:

80/20 or 90/10Ps=80{1-(Pt-Pm)/Pmin} or Ps=90{1-(Pt-Pm)/Pmin}

Where:Ps = Points allocated for price of tender under considerationPt = Price of tender under considerationPm = Price of lowest acceptable tender

A maximum of 20 or 10 is allocated for the provision of a valid B-BEE rating.11

tHeseConDPeRIoDoFReFoRM2000 – C. 2010Innovember2000anAustralianconsultant,RogerWebb,completedtheReportonopportunitiesforReformofGovernmentProcurementinsouthAfrica.thereportwasendorsedbyCabinet.In2001theWorldBankwasapproachedbyofficialsinnationaltreasurytoconductaCountryProcurementAssessmentReviewofsouthAfrica.Asecondperiodofreformwasinauguratedbythesedevelopments-aperiodthatwoulddecisivelyshapethecontemporaryprocurementsystem.WhiletheDepartmentofPublicWorkswouldoverthistimeretainitsowndistinctbutinterrelatedprocurementregimeforconstructionwork,duringthisperiodnationaltreasurywouldleadreform.

nationaltreasuryestablishedanewdivision,responsibleforsCMpolicy,forthedevelopmentofnormsandstandards,formonitoringandenforcingcompliance,andforcontractmanagement.thedivisionassumedcontroloftransversaltermcontracts,and,nominally,oftheprocurementfunctionoforgansofstatethatlackedthenecessarycapacity.Ineffectthisarrangement,remainingmuchthesameuntilthe2013adventoftheofficeoftheChiefProcurementofficer,offeredatoned-downsubstitutefortheProcurementComplianceofficeenvisagedin1997.

theprocessofdecentralisationwouldproceedinearnestonlyafter2003.InthisyearregulationstothestatetenderBoardActremovedlegalimpediments,andtheFrameworkforsupplyChainManagement,correspondingtothenationalProcurementFramework,waspromulgatedasregulationstothePFMA.theFrameworkmandatedthataccountingofficersestablishansCMfunctionconsistentwiththeConstitutionandthePPPFA,providingfordemand,acquisition,logistics,disposalandriskmanagement.CentraltothesetasksweremandatedsCMunitsestablishedwithintheofficesoftheChiefFinancialofficer.theeffectwastoconceptualiseprocurementasasubsetoffinancialmanagement,andtorenderitlargelyaprocedural,financialcontrolfunction,disconnectedfromstrategicdecision-making.

AccountingofficersweretohavebroaddiscretionindeterminingtheshapeofthesesCMunits,andtheywouldalsobeabletodelegateprocurementpowerslargelyastheysawfit.theFrameworkforsCMandrelatedpolicydocuments,however,setdowncertainbasicrequirements,mainlyinrelationtothefunctionofacquisitionmanagement.

Inthefirstplace,therelevantdocumentationandconditionsofcontractwerestandardisedbytheChiefDirectorateofnormsandstandards.thesCMunitswereobligedtoutilisethesestandarddocuments,andanyamendmentsweretobemotivatedandapprovedbyaccountingofficers.ProcurementdecisionsvaluedatoverR30000weresubjecttothepreferentialpointssystemestablishedintermsofthePPPFA.Inaddition,therandvaluesofspecificprocurementsweretodeterminetheprocurementproceduretobefollowed.Intermsoftheinstructionnotescurrentlyinforce,procurementsvaluedatbelowR2000couldbemadethroughpettycash;betweenR2000andR10000throughverbalquotationfromthreeserviceproviders,withwrittenconfirmationfromthewinningsupplier;betweenR10000andR500000

11 Preferential Procurement Policy Framework Act No: 25 of 2000, section 2.


threewrittenquoteswouldhavetobeobtained,onarotationalbasis,throughanin-houseregisterofserviceproviders;andfinally,forvaluesaboveR500000procurementwouldhavetobethroughopenandcompetitivetender.

theserequirements,oftenquiterestrictive,werelargelyintendedtoinfuseprocurementdecision-makingwithameasureofrule-boundintegrityandimpartiality.Decentralisationofpublicprocurement,then,threatenedthewidediscretionofthecentralisedsystembyrigiddecisionsinaccordancewithbureaucraticrules.theserules,inordertoreducetheburdeninvolvedsubstantially,werehoweversurroundedbyclausesallowingtheircircumvention.thePPPFAallowedforgrantinganawardtoafirmthatdidnotreceivethehighestnumberofpointsif‘objectivecriteria’otherthanthoseincludedinthepointssystemjustifiedsuchadecision.Furthermore,regulationsintermsofthePFMAprovidedthatdeviationsfromprocedurewouldbeallowedwhereinvitationofcompetitivebidsorquotationswouldprove‘impractical’.Indefence,theaccountingofficerwouldbeobligedtoapproveofandrecordthereasonsfordeviation.theseclausesprovidedratherlargegapsthroughwhichrulescouldbecircumvented,andpartialitycreepintoprocurementdecision-making.

theintegrityofthesystemwasbolsteredbyarangeofadditionalmeasures.thenationaltreasuryestablishedacodeofconductspecifictosCMpractitioners.thesepractitionerswererequiredtodiscloseconflictsofinterestandonthatbasisexcludethemselvesfromspecificdecision-makingprocesses,andmembersoftherelevantbidcommitteeswererequiredtodisclosetheirfinancialinterestsannually.sCMpractitionerswerealsoobligedtoreportanymalfeasancethatmightcometotheirattention,andaccountingofficersweremandatedtotakecorrectiveaction,includingifnecessaryinvolvingthepolice.theAuditor-General,inaddition,wastoreportuponwastefulorirregularexpenditure,workingcloselyonthiswiththerelevantdirectorateinnationaltreasury.

nominally,publicservantsfoundresponsibleforirregularexpenditurecouldintermsofwidertreasuryregulationsfacefinancialpenalties.Inrelationtoserviceprovidersthemselves,aListofRestrictedsuppliersandaseparateRegisterfortenderDefaulterswasestablishedinnationaltreasury,andsupplychainpractitionerswererequiredtocheckthedatabasepriortotheawardingofcontracts.

Bidderswithouttaxclearancecertification,orinvolvedincorruptorfraudulentpracticesinthecontextofaparticularbid,weretoberejected.Further,bidderscouldberejectedforfailuretoperforminpriorcontracts.Inreturn,procurementdecisionscouldbecontestedbyserviceprovidersonjusticiablegrounds,andreasonsfordecisionswouldhavetobegivenonrequest.Whencontractswereawardedthepublicwouldbenotifiedregardingwinningbidders.themodelhereestablishedomittedanumberofprescriptionscontainedinthe

1997GreenPaper.theroleofthesCMofficeinnationaltreasuryinmonitoringwasunderspecifiedandnotclearlydefined.IncontrasttothevisionfortheProcurementComplianceoffice,itdidnothavestrongpowersofsanction,auditandinvestigation.InthesefunctionsitwastorelylargelyupontheAuditor-General,whoseofficeexhibitedanimpressivecapacitytoaudittheprocurementsystem,butwascoupledwithtoothlessmechanisms,highlydependentuponthewillofpoliticalleaderstosanctionnon-compliance.specialpowersforadministrativereviewofprocurementsystems,incasesforinstancewhereunsuccessfulbiddersallegemisconduct,werenotestablished.thesCMoffice,furthermore,didnotreservetoitselfarobustcentralroleinfacilitatingitemspecificationandcosting,complexandskill-intensiveprocessesthatwouldbydefaultdevolveuponorgansofstateingeneral.Despitethesenotableomissions,however,themodeldidamounttoadecentralisedprocurementsystemthatapproximated,onpaper,tointernationalbestpractice.

theimplementationstrategywasconceptualisedashavingthreephases.Inthefirstphase,existingtenderboards,inliaisonwiththerelevanttreasuries,wouldbegintodelegatesignificantprocurementpowerstodepartmentsandagencies.theorgansofstatewouldintheprocessbeallowedtobuildtherelevantcapacitiesandsystems,withimplementationplansincludedintheperformanceagreementsofaccountingofficers.theywouldbesupportedinthisbythetreasuriesandthetenderboards,andguidedbya2003Policystrategyandafairlydetailed2004sCMGuideforAccountingofficers.thePolicystrategynotedthatthefocusatthispointwouldbeonestablishingclearlinesofauthorityandaccountability,improvingsourcingstrategies,andimprovingassetandinventorymanagement,essentialtoeffectivedemandmanagement.Further,accountingofficerswouldberesponsibleforensuringthetrainingofprocurementpersonnel,withtrainingservicesbeingprovidedbyprivateprovidersaccreditedbyaValidationBoardestablishedinnationaltreasury.

essentially,reformerswerehererelyinguponaprocessoflearning-by-doing.Acomprehensiveskillsandcapacityneedsassessmentwasneverconductedpriortoreform,despitetheWorldBank’sadviceinthisrespect.Itwouldseemthatimplementationofthefirstphasewasnotthoroughlymonitored,withrelianceessentiallyplaceduponreportingtonationaltreasury.Itwasnotsupportedbyacomprehensiveprogrammeofcapacity-andinstitution-building.Implementationhappenedveryquickly,andtherewerenoredlightstostallandconsolidateit,despitethevisibleemergenceofmajorproblemsinthesystem.Phase2,involvingtheabolitionofthetenderboards,andfullimplementationofthedecentralisedprocurementsystem,wasproceededwithdespiteknowledgeofmajorproblemsemergingatprocurementcentres.thestatetenderBoardwasfinallydismantledin2009.Phase3wastosucceedtheimmediatepost-tenderboardabolitionphase,andwouldinvolvecontinuoussupportandmonitoring.Itistothedifficultiesthatemergedinthisprocess,totheactualpracticeofprocurementandtheconsequencesthereof,towhichwenowturn.


≤3CHApTER The Practice of Public

Procurement in South AfricaLessonsFRoMLIMPoPoAnDeLseWHeReWehavetraced,inbroadoutline,thehistoryofpublicprocurementinsouthAfrica.Presentlyamajoroverhaulandconsolidationofthesystemisintheoffing.sincetheearly2010s,thatis,publicprocurementreformisagainatthecentreofthepolicyagenda.now,however,publicprocurementisseenmoreasaproblemthanasanopportunity.Indeed,ithasemergedasamajordeficiencyinthesystemofgovernment.theprocessofpolicydefinitionhasnotyetreachedcompletionandtheenvisagedshapeofreformisnotcurrentlyclear.InthischapterweendeavoursimplytodescribeandbegintoanalyseprominentweaknessesofpublicprocurementinsouthAfrica.theaccountwillfollow,roughly,thestagesofagenericprocurementprocess,asdescribedandgovernedbysouthAfrica’sregulatoryframeworkandinstantiatedinpractice.

ourfocusuponproblemsshouldnotleadonetobelievethattherearenositesofeffectiveprocurement.thereclearlyare.Itshouldbenoted,moreover,thattheproblemsandweaknessesthatwediscussarenotdrawnfromanysinglepublicinstitution.theyareratheranamalgamofissuesthathaveemergedinactualpracticeacrosssouthAfrica,extensivelysupplementedbyourfindingsintheLimpopoProvince.thereare,necessarily,shortcomingstosuchanapproach.Wewilldiscusstheseintheconclusion.Fornowweneedonlynotethatwhatfollowsrepresentsanattemptatfacilitatingpublicunderstanding,andprovideafoundationforfuturedebate.12

PRoCuReMentPLAnnInGtheprocurementprocessstarts,inamannerofspeaking,withplanning.strategicplanningdocumentsidentifyactivitiestobeperformed,andprocurementplanningshouldbeaprocessofidentifyingprocurementneedsonthebasisoftheseactivities.InsouthAfricathisisnormallynotthecase.strategicplanningdocumentsthemselvesareoftenofpoorquality,andfrequentlynotevidence-based.Inturn,procurementplanningisde-linkedfrombroaderstrategicplans.Ininterviewsitwassuggestedthatoften‘supplychainisreallypulledinatthetailend’oftheplanningprocess.Inthiscasetimeframesbuiltintotheregulatedprocessaredifficulttofollow,‘itistoolateandmostofthedamageisalreadydone’(RespondentsZandAA,07/03/2014).

Inpractice,procurementplanninginvolvesalargelyadhocprocessofinteractionbetweenuppermanagement,financialauthorities,sCMpractitioners,andend-userentitiesthatwillutilisethegoodsorservicesinquestion.theprocessbeginsinearnestwhenfinancialauthoritiesorsCMpractitionersissueanoticetoend-usersrequestingthattheyforwardalistofprocurementneeds.theend-userswillusuallynotdeterminetheseneedsonthebasisofstrategicplans.oftentheserequestsarereactiveresponsestoaproblemthathasunexpectedlyarisen.Intheory,havingidentifiedwhattheyneedtodo,end-userswillproceedbydiscerningwhethertheseactivitiescanbepursuedin-house,orwhethertheymustbesourcedfromelsewhere.Decisionsinthisrespectwillusuallybebasedonhistoricalpractices.Whenthedecisionisaliveone,notjusttheproductofroutine,ithassometimesbeensuggestedthatthereexistsastrongbiastowardsprocurementfromprivateserviceproviders.thereareanumberofreasonsforthis.

12 See Appendix One for sources for this chapter.


13 It should be noted in passing that similar dynamics to those just described, with the necessary changes of course, plausibly apply to decisions regarding whether to procure from other public institutions or to participate in transversal term contracts.

14 National Treasury, 2011, Estimates of National Expenditure.

The figure above outlines a fairly generic public procurement process in the South African context. It is included to give the reader a sense of the steps involved in public procurement.

Wemightnotethepervasivepresenceofapresumption,largelyideologicalinnature,thatprivatesectorprovidersareinherentlymoreefficientandeffective.thewidespreadperceptionthatthesouthAfricanstateisrelativelydysfunctionalamplifiesthispresumption.Interviewees,moreover,notedthatstatemanagersinsouthAfricaoftendonottrusttheexpertiseandcapacitiesofthosebelowthem.thisisespeciallythecasewherethesemanagershavenotmovedupthroughtheranks,andhavethereforenotgainedextensiveexperienceintechnicaloperations.Asaresult,theorganisationsthattheymanageareopaquetothem,asituationexacerbatedbyhighlevelsofturnoveratupperlevels.Whatthismeans,inaddition,isthatmanagersstruggletomakeaninformedjudgementastotheriskofunder-performanceinvolvedinplacinganactivityin-house.Riskaversioncanthereforebeanimportantreasonforout-sourcing,becauseout-sourcingservestoshiftsomeofthisrisktotheprivatesector.

ofcourse,thebiasinfavourofprivateproviderscanexhibitamoreunder-handedlogic.Ifproductioniskeptin-house,theopportunitytobenefitfromafinancialtransfertotheprivatesectoroutsideofpublicsectorsalariesisforegone.Inotherwords,publicprocurementprovidestheopportunityforillicitenrichmentofpoliticiansandpublicservants.somerespondentshaveexpressedtheconcernthatthisopportunitydoesindeedinsomecasesinfluencethedecisionofwhethertoprocureornot.

thedecisiontoout-source,finally,isself-reinforcing.Procurementfromtheprivatesectorhindersthedevelopmentofinternalcapacities,leadstodissatisfactionandresignationsamongstcareer-mindedtechnicalstaffthatwanttogainon-the-jobexperience,andcutsoutthetaskandcareerpathsthatenablemanagerstogainexperienceofoperationsinthefirstplace.Almostinherently,thebiasinfavourofprocurementalsoproducessub-optimaldecisionsregardingqualityandcost.13In2009theDepartmentofBasiceducationplannedtoawardaR254milliontenderfordevelopmentandprintingofnumeracyandliteracyworkbooksforgrades1to6.In2010,aftercarefulconsideration,thedepartmentcancelledtheawardingofthecontract,andnewlyappointedDirector-GeneralBobbysoobryanannouncedthatthedevelopmentandprintingwouldbedonein-house.Asaresult,inthe2011MediumtermexpenditureFramework(MteF),thedepartmenthadanefficiencysavingofR125.3million.14

Inanyevent,withthoseconsiderationsinmindend-userswillgeneratealistofprocurementrequests,togetherwithcostestimates,whicharethenforwardedforconsiderationtofinancialauthoritiesandsCMpractitioners.usually,thecumulativecostsoftheserequestsexceedtheavailablebudget.todevelopaviableprocurementplantherelevantauthoritiesmustprioritise.

toprioritisetheyneedtocallupontheappropriatetechnicalandoperationalexpertise,andtheyshouldbeabletodrawuponrobustdataregardinginventoryandassets,andtheiruse.Inpractice,intervieweesadmitted,theyoftendonotcallupontherelevantexpertise.Inventoryandassetregistershavehistoricallybeenweak,theywereoftendisruptedandlostinthepost-1994processofadministrativeamalgamation,andtheyarecurrentlytheproductofpoorlyestablisheddatacollectionroutinesandrecord-keeping.theprocessofprioritisationsuffersasaresult.Decision-makersoftenfallbackuponahazydesiretobe‘fair’toend-usergroups,avoidingperceptionsoffavouritism.Moreproblematically,procurementplanssometimesendupincludingitemsnotevenrequestedbyend-users.

theoutcome,nevertheless,isaprocurementplan,evenifincompleteorweak.thiswilldetailtherelevantprocurementitems,theprocurementprocedurestobefollowed,productiontimes,andthetimeframesthattheseimpose.Procurementactivitiesshouldfollowprocurementplans,andmaterialdeviationsshouldbesupportedbywrittenreasons,authorisedonthisbasisbyaccountingofficers.Inpractice,itiscommonforprocurementplanstobecomemoribund.theymaybepartiallyorentirelyignored,withadverseconsequencesfurtherdowntheline.

Procurementplansarealsooftensubstantiallyincomplete.Frequentlythismaysimplybeaproblemofadministrativeoversightandomission.especiallyincasesofmaintenanceandreplacementsuchanomissioncanbeunderstoodfromthecontext.Problemswithassetregistersandinventoriesmakeitneartoimpossibletoplaneffectivelyformaintenanceandreplacement.If,forinstance,theageandaveragelifespanofanassetisnotknown,andiftheassethasnotbeensubjecttoroutinecheckingandmaintenance,thenitwillbedifficulttodiscernwhenitshouldcomeupforreplacement.Inextremecasesitmaynotevenbeclearthatanassetexistsatalluntilitbreaks.

procurement process Chart Flow


CostInGAnDsPeCIFICAtIon

Formally,onceaprocurementplanisestablished,theprocessofprocuringspecificitemscancommence.Beforetheprivatesectorisapproached,itemcostsandspecificationsmustbedetermined.Currentlytheprocessofcostingisoftenimprovised.Costingcouldbeonthebasisofhistoricalpurchases,orthroughrudimentarymarketresearch.Inmorecomplexprocurementssophisticatedcostingmodelsmightbeneeded.end-usersareagainprominentintheseendeavours,andthelaxityoftheregulatoryenvironmentaffordsthemsubstantialroomformanoeuvre,andopportunityforabuse.

Itisimportanttonoteattheoutsetthatitemcostingwillsubstantiallydeterminethepurchasingproceduretobefollowedinanyparticularcase.thecostingwilldeterminethevaluethresholdwithinwhichanitemfalls.Valuethresholds,inturn,prescribepurchasingprocedures.so,everypublicinstitutionwillhavedelegationsofpurchasingpowerswithvaluethresholdsattached.Whenthesethresholdsareexceededpurchasinghastoproceedthroughhigherauthorities.Inaddition,nationaltreasuryprescribesdistinctpurchasingproceduresfordifferentvaluethresholds.so,forpricesaboveR500000,acompetitivetenderisprescribed.Belowthislevelonemovesthroughvariousquotation-basedprocedurestopettycashpurchases.Asarule,thehighertheitemcost,themorerestrictivetheprocedureforpurchasing.Atthetopendofthisscale,then,sitpurchasingproceduresthatarecumbersomebutwell-protected.Atthebottomendsitproceduresthatareconvenientbutthatlackinstitutionalintegrity.

Itshouldbeobviousthatadvantagesaccruetopublicservantswhofollowthelessrestrictiveprocedures.Bydoingsotheycangetthejobdonewithaddedfacility,andincertaincasestheycancreateroomfortheirownprivateenrichment.thekeyvehicleforachievingthisendistosplitbids,reducingthecostofanysingleitembybreakingitintoanumberofdifferentitems.nationaltreasuryhasrepeatedlyandineffectuallyinstructedthatthispracticemustend.Byallaccounts,andbyourownobservation,itremainsbothpervasiveandopenlyadmittedto.thepracticemayservetogreasethemachineofstate,butitsbroadereffectistoopenopportunitiesforcorruption,andtoeraseprogressivelythebenefitsofregularpurchaseandbulk-buying,ultimatelyincreasingcostsforthestateandlegitimateserviceprovidersalike.

eachitemwillalsorequireaspecification,whichdescribestherequirementsthatagoodorservicemustmeetinordertobeacceptedbythestate.theprocessofitemspecificationisequallysubjecttoagreatdealofimprovisation.Insomecasesspecificationswillbeonfile,drawnupforthepurposeofpastprocurements.theymightbeavailablefromotherpublicinstitutionsthathavemadesimilarpurchases,orthesouthAfricanBureauofstandards(sABs)mighthavecreatedaspecificationthatcouldbeusedoradapted.evenincaseswherespecificationsarethussecured,theywilloftenbedatedandincomplete.Itwillcommonlybenecessarytoturndirectlytoprivateserviceproviders.

underthecurrentregime,thisisoftennecessary,buttherearelargerisksinvolved.Privateprovidersoftenhavelimitedknowledgeregardingtheresources,capacitiesandneedsofpublicinstitutions.Inthiscontexttheysometimessuggestmoreexpensiveoptionsthanareneededorevenmanageable.Letustakeanexamplefromourownfieldwork:AmatholeDistrictMunicipalityreliesheavilyuponconsultantstospecifyforitsinfrastructuralneeds.Inthecaseofwatersanitationtheirrequirementscouldbemetbyoxidationponds,themaintenanceofwhichwouldordinarilysimplyrequirethemowingoflawnandpreventionofbankerosion.Instead,theyoperateafairlyhigh-technologyactivatedsludgesolution.thistheyneitherhavetheneednorthecapacitytomanage,assuchsolutionsareappropriateformuchmoreurbanisedcontexts.Insomecasesthissortofover-prescriptionisdrivenbytheself-interestofconsultants,whocouldbecalledintodeliverthemoreexpensiveproduct.theycouldcolludewithotherconsultants.essentially,thereasoningis,‘Iwilldothissanitationmasterplan,youtenderfortheworkthatwillcomefromit’’(Respondento,10/2013).Inordertodothis,consultantsneedonlygiveeachotherinsideinformation,orcolludewithawidersetofconsultantsintendering.Approachingprivateprovidersforspecificationscanalsohaveanti-competitiveimplications.

EvAlUATINg TENdERS IN THE AbSENCE OF dETAIlEd SpECIFICATIONS

In 2010, the Provincial Department of Health in Limpopo wanted to procure for the supply and maintenance of devices that destroy air-borne pathogens (viruses, bacteria, or fungi that are transmitted through the air). They approached suppliers for specification. The department then invited the Council for Scientific and Industrial Research (CSIR) to be part of the technical evaluation committee. However, before the CSIR could join the evaluation committee, they raised following concerns about specifications used in the tendering process, noting that there was no clear basis for comparing one tender to another. Specifics issues related to the lack of clear definitions of technical terms provided, and limited detail provided to bidders for specifications around important issues such as the installation of the devices.15

15 Analysis of bid files.


toelaborate,aprivateprovidercanprovideaspecificationthatmatchesitsownproductquiteexactly.Itsproductwillalmostinvariablybedifferentatthemarginsfromthatofferedbyitscompetitors.Ifend-usersandothersfollowthesespecifications,intervieweesexplained,thentheeffectisover-specification.thespecificationsusedinthebiddingprocessspeaktoodirectlytotheproductofaspecificprovider,tendingtodisqualifyitscompetitorsfromtheoutset.end-userswhoapproachprivateprovidersforspecificationscanbuildrelationships.oftentheserelationshipsarebuiltinmoreexplicitways.Itwassuggestedtousininterviewthatinonedepartmenttechnicalstaffandprivateindustry:

have it all worked out, they generally work out the models together, they come for formal meetings, the bosses don’t even know what the meetings are about, they just know that these techies are meeting with these contractors… You see in the lift and you wonder where these suited people are going to: ‘No, we have got a meeting with so and so’. But more to come and present their products,.. big companies contacting them directly and they will say ‘Come in, come and have a meeting with me and da, da, da’. That is how it starts. (Respondent E, 06/09/2012)

theseareoftenhighlyexperiencedpersonnelthathaveseentheirprospectsofcareeradvancementshort-circuited.theyareofferedtheprospectofsecuringasecondincome,whichtheybelievetheydeserve.Placedabovethemareindividualswhohavecommonlynotworkedthroughtheranks,andsodonothavetheexperienceandexpertiseneededtoexerciseeffectiveoversight.

Whereprivateserviceprovidersarenotapproached,andwherethepublicinstitution’sownneedsarenotsufficientlyknownorwhereotherinterestsapply,theresultisoftenunder-specification.Inthiscasespecificationsdonotadequatelyprovidefortheminimumneedsoftheprocuringentity.

under-specificationworkstotheadvantageoffly-by-nightoperations.theseoftenpursuegovernmentcontractswithminimalexistingcapacities.theycompetewithotherssolelyonthebasisofcost,andtodosotheyareknowntoprovidesub-parservicesandtradeinsub-standard,cheaporpiratedproducts.under-specification,bykeepingthebarlow,allowsthemtotenderbelowbetter-establishedcompetitorsofferingmorerobustproducts.thereareobviousnegativeconsequencesforgovernmentservicedelivery.specificationsareanintegralcomponentofcontractsbetweenthestateandsuccessfulbidders.under-specificationthereforeadditionallyunderminestheabilitytomanageserviceprovidersandholdthemtoaccountforpoorperformance.

therisksofpoorspecificationcanbeamelioratedbybidspecificationcommitteesandothersuchentities.theseareprescribedinthecaseofcompetitivetenders,andareconstitutedonanadhocbasis.Ideally,thebidspecificationcommitteeshouldbecross-functional,includingfinancialpersonnel,technicalandoperationalpersonnelnominatedbyend-users,legalandcontractmanagementpersonnelresponsibleforthedraftingofcontracts,

andsCMpractitioners.sincenolawenforcesthis,itiscommonforthesecommitteesnottobesoconstituted.theycaneasilybepackedbypoliticalandadministrativeleadershipwithaneyetosecuringprivateadvantage.

Whenspecificationsaredrawnupthespecificationscommitteeisresponsibleforconsideringthem,ensuringthattheyareunbiasedandotherwiseappropriate,andamendingthemaccordingly.thesamefactors,however,thatleadinitiallytopoorspecificationmightsimplyberepeatedincommittee.thesecommittees,moreover,canamendspecificationsinanadhocfashion,withoutstatingreasonsorcommunicatingthesetoend-usersandotherrelevantparties.WefoundinLimpopo,forexample,thatahospitalsentspecificationstotheprovincialdepartmentforlaundryservicesrequiredatthehospital,yetthesedidnotmatchthespecificationsintheservicelevelagreementsignedwiththesuccessfulbidder.thehospitalspecificationindicatedthatdirtylinenshouldbecollectedonadailybasis,butthefinalcontractstatedthatdirtylinenshouldbecollectedthreetimesaweek.Asaresult,thehospitalexperiencedaseriousshortageofcleanlinen.thesedeficienciesinbasicservicescanhaveseriousconsequencesforthequalityofcareprovidedtopatients.thecause,asalways,canbeinadequateskill,poorcommunication,ormalfeasance.theconsequenceisforspecificationstodeviatefromthestatedandlegitimateneedsofend-users.

suPPLIeRseLeCtIononcespecificationsareprepared,theprivatesectorcanbeapproached.theprocedurefordoingsodepends,asalreadysuggested,upontheestimatedcostofthegoodsorservicesbeingprocured.Intermsofthethresholdscurrentlyinforce,itemscostedbelowR2000aresubjectonlytoaninstitution’sproceduresfordealingwithpettycash.Pettycashpurchases,thatis,falloutsideoftheregulatedprocurementsystem.essentially,withinthisthresholdcostsaretoolowtojustifyamorecumbersomeprocedure.theroomaffordedforsimplychoosingapreferredserviceprovider,inaccordancewithprivateinterests,iscorrespondinglylarge.

Quotation-based procurementsForcostsbetweenR2000andR500000procurementisquotation-based.Forallprocurementsunderthisprocedure,whereitispractical,atleastthreequotationsmustbesecured.Quotationsmustbefromserviceprovidersregisteredonanofficialdatabase,containinglistsofprospectivesuppliersarrangedaccordingtoitem.Further,inordertoavoidbiasandspreadopportunities,sCMpractitionersmustapproachserviceprovidersforquotationsonarotationalbasis,movingthroughthelistatleastthreeprovidersatatimeforthispurpose.

Quotation-basedprocurementsfallintotwodistinctcategories,accordingtothethresholdsthatapply.IfcostsfallwithintheR2000toR10000thresholdthenverbalquotationsareprescribed,withthewinningquotationprovidingwrittenconfirmationthereafter.theparticularproblemwith


thismethodisthattherelevantpublicservantcanapproachtwoserviceprovidersforquotation,andthenapproachathirdserviceproviderwiththepricesverballyquotedbytheothers,therebyensuringthatthethirdwins.

ForvaluesofR10000toR500000amorerobustprocedureissuggested.Inthiscasewrittenquotationsmustbeforwarded,andideallythesemustbeenclosedinenvelopeswhichshouldbeopenedsimultaneouslybyateam.theideal,however,isnotformallyprescribed,anditseemsthatitisoftennotfollowed.Inconsequencetheprocedurecanbemanipulatedinmuchthesamewayasinthecaseofverbalquotations.thefirsttwoquotationscanbeviewed,andthethirdserviceproviderinformedsothatheorshecanquotejustunderthem.

thesequotation-basedprocedures,inanycase,aregenerallynotveryrobust.Wecanbeginwiththesupplierdatabases.thedatabasesaregenerallypopulatedbyinvitingserviceproviderstoregisterthroughpublicadvertisement.Duetotheneedtopromoteemergingbusiness,therequirementsforregistrationarelow.serviceproviders,thatis,mustberegisteredonthecompaniesregister,theymustbeinpossessionofanannuallyupdatedandoriginaltaxclearancecertificate,theymustbeinpossessionofabankaccount,andonlyinsomesectorsmusttheyhaveproperbusinesspremisesandthenecessaryindustryaccreditation.Beecertificationisneededtosecuretherelevantpreferences.entryontothedatabaseisnotgenerallysubjecttophysicalinspection.theproblemsthatsuchanopensystemposesareamplifiedsubstantiallybythefactthatthereiscurrentlynoprovisionforastaggereddatabase.Astaggereddatabasewouldplaceserviceprovidersindifferentgradesonthebasisofinformationregardingtheircapacity.thiswouldallowinstitutionstoapproachdifferentgradesinaccordancewiththedifficultiesimposedbyparticularprojects.

thecumulativeresultoflowentryrequirementsand‘un-staggered’lists,isthatdatabasescanbeover-populated,oftenwithserviceprovidersthatareoftennotwellpositionedtodothejob,andthedatabasesthemselvesoffernoformalmeansforseparatingthosethatcandoparticularjobsfromthosethatcannot.thedatabasesare,moreover,opentoaphenomenonthatwemightcall‘bidmultiplication’.Privateindividuals,thatis,canfairlyeasilyestablishandregistermultiplecompanies.thesewouldbe‘shelf’companies,havingnorealmaterialexistence,pulledofftheshelfenmassetoincreasetheoddsofwinningaprocurementcontract.Wewillseethatthephenomenonofbidmultiplicationsubvertstheprocurementprocessinmanyways.

Consider,inthebroadercontextoflowentryrequirementsandun-staggeredlists,theprocedureofrotation.Inthiscontexttheprocedure,whileeminentlyreasonableonpaper,becomesdeeplyproblematicinpractice.Infollowingitinstitutionsareforcedtotakequotationsfrom,andultimatelycontract,agreatmanyserviceprovidersthatsimplycannotperform.Beyondthis,bidmultiplicationcaneasilyunderminethefairnessoftheprocess.tenofthehundredcompaniesthatfindaplaceonitcouldbeshelfcompaniesbelonging

toasingleindividual.Inconsequence,heorshewouldcomeupeffectivelyonceineverytenrotations,ratherthanafaironceineveryonehundred.

Inpractice,then,itseemsthattherotationprocedureisnotalwaysfollowed.Infact,itemergedfromourinvestigationsthattherelevantpublicservantsarenotevenwidelyawareofit.theresult,then,istoopenquotation-basedprocurementstoabuse.effectively,privateserviceproviderscanbechosenfromthelists.Itmayoftenbethattheyarechosenonthebasisofpastperformance,orsomeotheracceptablecriteria.theycan,however,easilybechosenonthebasisofprivateorpersonalinterest.Inthefirstplace,thepracticeofobtainingonlyonequotation,withoutreasonsastotheimpracticalityofobtainingmore,isquitecommon.Beyondthis,bidmultiplicationwillallowthatthreecompaniesownedbyasingleindividualcouldbeapproached.Alternatively,threeindividualscontrollingseparatecompaniescouldoperatearing.

Competitive TendersQuotation-basedprocurementprocessesprovideopportunities,dependingonthecircumstances,forsmallnumbersofgovernmentofficialstoexercisehighlevelsofdiscretionregardingwhogetsgovernmentcontracts.Corruptchoices,furthermore,canfitquiteeasilywithinregulations.theAuditor-Generalwouldnotevenbeawareofthem.theprocedureforcompetitivetendering,prescribedforcostsaboveR500000,isdesignedtolimitthisroom.

AUdITOR-gENERAl FINdINgS: 2009 – 2013

Between 2009 and 2013, the Auditor-General found irregular expenditure totalling R 83 billion, and fruitless and wasteful expenditure of R 5.4 billion. Of the total irregular and wasteful expenditure, 75 percent was attributed to the contravention of SCM regulations.

Specifically, the Auditor-General found the following to be the main causes of irregular, fruitless and wasteful expenditure:• There was insufficient or no link between procurement needs, plans and the available budget.• Reporting questionnaires to the National Treasury were not completed and submitted by departments on a monthly basis.• Three written quotations were not invited by departments for tenders of the specified Rand value and deviations from prescribed norms were not reasonable, justified or approved.• Departments procured from suppliers who did not have SARS tax clearance.• Competitive bids were not invited and the preference point system was not applied.• Suppliers scoring the highest points with the lowest price quotation were not selected and no justification was provided as to why this was so. • Debriefing sessions were not held with unsuccessful bidders.

It is important to note that irregular, fruitless and wasteful expenditure is expenditure that is not incurred in the manner prescribed by legislation. Such expenditure does not necessarily mean that corruption was committed. The results are of course a good measure of compliance / non-compliance with procurement and financial regulations.16

16 Sources: Auditor-General Reports: 2009, 2010, 2011, 2012 and 2013.

Expenditure Thresholds


thecompetitivetenderprocedurecommenceswhentheprivatesectorisapproached.thisisdonethroughpublicadvertisementpublishedasaminimumintheGovernmenttenderBulletin.Prospectivesuppliersbeginbypurchasingabidpackcarryingvariousuniformprescribedforms,andnecessaryinformationregardingthenatureofthecontracttobeenteredinto,inclusiveofthespecificationsforthegoodsorservicesbeingpurchased.theyaregivenaprescribedtime-periodtorespond.

Inthecaseofitemsthatarerelativelysimpletoprovide,itisoftenthecasethatalargenumberofresponsesarereceived,asforexampletheprovisionofcoalforboilers(theDepartmentofHealthinLimpoporeceived155bidsforatenderofthiskindin2009).

sometimes,thesecanrunintothehundreds,notallofwhicharefromfunctionalserviceproviderscapableofperformingthejobathand.Inthecaseofitemsthataremoresophisticatedanddifficulttoprovide,itoftenhappensthatverysmallnumbers,oreventhatnobiddersrespond.WefoundinstancesofthisinthecaseoftheDepartmentofHealthinLimpopo.thisisindicativeofasituationwhereadvancedcompanies,nationalandinternational,arenotengagingadequatelywiththegovernmenttenderprocess.

theresultisfailuretotapintocompetitionbetweenpotentialsuppliers,orunnecessarywasteoftimeonunresponsivetenders.theregulationsdoallowforprocurementfromsoleproviders,orfortherunningoflimitedtenders,wherealistofpotentialserviceprovidersisdirectlyapproachedtosubmitbids.theseprocedures,definedas‘exceptionalprocurements’,areveryoftennotpursuedwhentheyshouldbe.

Continuingwiththecompetitivetender,completedandsealedbidpacksareusuallydeliveredintoatenderboxattheprocuringinstitution.thetenderboxisordinarilyfairlysecure,inaccessibleandsubjecttocamerasurveillance.thesealedbidpacksshouldbeopenedsimultaneouslyandinpublic.Intervieweescommentedthatwheretheseprecautionsarenotapplied,tamperingwithbidsisnotuncommon.thesenseisthatwherethetransportationandwarehousingofbidpacksisnotproperlyprotected,tamperingalsooccurs.theacceptanceoflatebids,despiterepeatedinstructiontothecontrary,isalsoaproblem.Whatthisdoesisallowlatebidderstosimplyquotebelowthenowknownlowestprice.Muchthesamethingisachievedbycancellingtendersimmediatelyafterbidsarereceived.Insiders,notedsomeofficials,canthenscopecompetingbidders,andadviseoutsidepartiestoquoteunderthemwhenthetenderisre-advertised.

Fromthispoint,bidpackswillmovepastaninstitution’ssCMpractitioners.theywillbecheckedforadministrativecompliance,ensuringthatformsareproperlycompletedandthatnecessaryadditionaldocumentationispresentandappropriate.sCMpractitionersarerepeatedlyexhortedtoensurethatbiddersattachoriginaltaxclearancecertificates.often

theydonot.sCMpractitionersarealsosupposedtocheckbiddersagainsttheRegisterfortenderDefaultersandDatabaseofRestrictedsuppliers.Bothareadministeredbynationaltreasury.theRegisterfortenderDefaultersincludesindividualsandserviceprovidersfoundguiltyofprocurementcorruptioninacourtoflaw.PerhapsreflectingwhataformerFinanceMinisteroncedescribedasthe‘constipation’ofthejusticesystem,andtheinherentdifficultyofprovingguiltincasesofcorruption,theRegisterisessentiallydead.Itincludesatthetimeofwritingonlytwoindividuals.Bothwereconvicted,apparentlyinthesamecase,in2010.theDatabaseofRestrictedsuppliersexcludesindividualsandserviceprovidersthathavefailedtoperformorareotherwiseguiltyofmisconduct.theDatabaseisinbettercondition.Itispopulatedthroughwhatisineffectthediscretionaryreportingofpublicinstitutions.Forthisreasonaloneitisincomplete.ItseemsthatsCMpractitionersdonotroutinelycheckbiddersagainstitinanycase.

dATAbASE OF RESTRICTEd SUpplIERS

On the 30th of September 2011, the National Treasury issued a circular requiring accounting officers and authorities to verify the status of recommended bidders by confirming with the Database of Restricted Suppliers that no recommended bidders or any of their directors/trustees and shareholders are listed as companies or persons prohibited from doing business with the public sector.

In 2013, of the listed 699 companies and persons in the Database of Restricted Suppliers, 73 percent failed to obtain permission to do remunerative work outside employment, 8 percent are listed for poor performance, 5 percent are listed for non-performance and 4 percent are listed due to fronting, misrepresentation, prejudice or potential prejudice, unlawful behaviour or intention to commit unlawful acts such as fraud.

sCMpractitioners,incheckingadministrativecompliance,areplacedinapositionwheretheycanexcludeserviceprovidersfromtheprocessevenbeforebidsreachevaluationandadjudicationcommittees.WhatthismeansisthatthereisroomforsCMpractitionerstoillegitimatelyfavourspecificbidders,byeliminatingtheircompetitorsonspuriousgroundsforadministrativenon-compliance.Accusationstothiseffectarecommon(e.g.thestar28/08/2012).Bidsfoundtobeadministrativelycompliant,ontheotherhand,proceedtoabidevaluationcommittee.

Bidevaluationcommittees,likebidspecificationcommittees,areconstitutedadhoc,andshouldbecross-functional,includingtechnicalandoperationalpersonnel,financialpersonnelandatleastonesCMpractitioner.Bidevaluationcommitteesandbidspecificationcommitteesshouldalsobeseparate,containingdifferentpeople.sincetheircompositionisnotlegallyprescribed,intervieweesnotedthatthisseparationoftendoesnottakeplace.

Auditor-general Findings:

2009-2013


theroleofthebidevaluationcommitteeistoassesstheabilityofthebiddersinrelationtotheworkathand.Inotherwords,theycheckforfunctionalcompliance.thebidderscanonlybeassessedoncriterialaidoutintheoriginalbidpacks,withinwhichspecificationsloomlarge.Problematically,itisnotunknownforspecificationstobechangedintheprocessofevaluation,oftenwithoutjustification.thisconstitutesthemovingofgoalposts,andcaneasilybedesignedtofavoursomebiddersoverothers.thebidevaluationcommitteecanphysicallyinspectserviceproviders.ourownobservationssuggestthatthecriteriagoverninginspectionsareoftenextremelyvague,andthereforelargelydiscretionary.Forexample,wefoundthatitwasonlyafteraLimpopohospitalCeowasfrustratedwithpoorlinencleaningservicesthatitwasdiscoveredthatthesupplierdidnothavethecapacitytodolaundryservicesatscale.However,theinspectiondidnotdisqualifytheserviceproviderbecausethecriteriafortheprovisionofservices,andthenatureofinspections,wereextremelyvague.

thebidevaluationcommittee,aftergeneratingalistoffunctionallycompliantbusinesses,willcalculatethescorebegiventothevariouscompliantbiddersoutofonehundredonthebasisofpriceandBeepreference.Atthispointwemustnoteagainthatthepracticeofbidmultiplicationmayalreadyhavedistortedtheprocurementprocess.thesubmissionofmultiplebids,involvingdifferentfunctionaloffersatdifferentprices,increasesthechancesthatanindividualorgroupwillrunthegauntletfromadministrativetofunctionalcompliance,andstillcomeinwiththebestcostandBeepreferencecombination.

therearecases,moreover,wherepublicinstitutionssplitatenderawardbetweenanumberofserviceproviders.thepracticeisentirelylegitimate.Itinvolvessplittingthetaskdescriptionintoanumberofcomponentparts,sayintotheservicingofgroupsofpublicinstitutionsorregions.thecomponentpartswillgenerallybemoremanageable,andthereforeavailabletosmallbusiness,andthroughthisvehiclethetendercanbesharedmorewidelytosupportredistribution.However,evenwherethesplittingofbidsisundertakentoeffectservicedeliverymoreefficiently,thepracticeisopentoabuse.Wehaveseen,forexample,instanceswherebusinesseswiththesamedirectorswereawardedmorethanonecomponentofthecontract.

thebidevaluationcommitteemust,afterdeterminingfunctionalcomplianceandscore,forwarditsrecommendationsregardingthetenderawardtoabidadjudicationcommittee.thebidadjudicationcommitteeought,again,tobecross-functional,andnotincludemembersfromeitherthebidspecificationcommitteeorthebidevaluationcommittee.Itsmembersgenerallyenjoyannualtenure,butagainthereistheclearpossibilitythattheycanbeappointedbypoliticalandadministrativeleadershipwithouthavingthenecessarycapacityorneutrality.thebidadjudicationcommitteeismeanttodouble-checkwhetherevaluationhasbeenproperlyconducted,and

thentomakeafinaldecision.Itmaygoagainsttherecommendationsofthebidevaluationcommittee,butinsuchacaseitwouldhavetoreportitsreasoningtotherelevanttreasuryandtotheAuditor-General.Itwillnormallysimplyfollowtherecommendationsgiventoit.

theserecommendationscan,problematically,bedrawnupbyasingleindividual,andcommunicatedbyhimorhertothebidadjudicationcommittee.suchanindividualcanexploithisorherpositionbydoctoringtherecommendationstofavourapersonallypreferredsupplier.Alternatively,amemberormembersofthebidevaluationcommitteecanbeinvitedtomakepresentationsbeforethebidadjudicationcommitteeorwritesummariesexplainingtherecommendations.Itisnotunknownforbidadjudicationmemberstorelyentirelyuponthesepresentationsorsummaries.Again,theycanbedoctoredtofavouracertainserviceprovider.

Dependingonthewayinwhichthedelegationofauthorityregardingprocurementdecisionsoperatesinaparticularinstitution,thedecisionofthebidadjudicationcommitteemay,finally,beforwardedtotheaccountingofficerforsign-off.thenameofthewinningbidder,alongwiththewinningpriceandBeescore,shouldthenbeadvertisedintheGovernmenttenderBulletin.thefinalsubstantialdefenceofthesystemistherebyactivated.Atthispointunsuccessfulprivateserviceproviderscanpreparetocontestthefinaldecision.Initially,theyattendaprescribeddebriefingsessionwheregovernmentisrequiredtodefenditsdecisions.thismightbefollowedbyaformalrequestforreasonsfortherejectionofaspecificbid.Finally,themattermightbepursuedinthecourts.Certainlythelatterpathiscumbersomeandexpensive,andthereforemostlikelyinrelationtohigh-valueitemsorservicesthatarethoroughlycompetedforbywell-resourcedfirms.Giventhatmanyserviceprovidersarenotwellresourced,andthatevenwheretheyarethereexistsagreatdealofprivatesectorcollusionandotherformsofmisconduct,recoursetothecourtsisfairlyrare.thesouthAfricanprocurementprocessissubjecttosufficientlywidespreadmanipulationthat,eventhen,thereexistsalargeriskthatserviceprovidersthatturntothecourtsmightbepunishedinsubsequentbidsfordoingso.

Exceptional procurementsItremainstoconsiderexceptionalprocurements.Allprocurementprocedureshaveexceptionclausesattached.theseallowofficialstocircumventprescribedproceduresandrequirementsincasesofemergencyorurgency,wheresoleprovidersareneeded,orwheretofollowrequirementswouldbeotherwiseimpractical.theexistenceoftheseclausesisabsolutelyessentialtothesmoothworkingofthegovernmentmachine.InsouthAfrica,however,theyseemoftentooperateinwaysunintendedbytheregulations.

theprocedureforinvokinganexceptionisrelativelystraightforward.WhentheneedarisessCMpractitionersprepareawrittenjustificationtobeforwardedforauthorisationtotheaccountingofficer.onceauthorised,theexceptionalprocurementcanproceed.Incaseswhere


theprocurementisvaluedatR1millionandoverareportmustbepreparedandsenttothenationalorProvincialtreasuryandtheAuditor-Generalwithintenworkingdaysofpurchase.thesereportsaretoincludeadescriptionoftheitem,thenameofitssupplier,theamountsinvolved,andreasonsfordispensingwiththeprescribedprocedure.thereportsareconsidered,andactiontakenifnecessary.

Itoftenoccursthatexceptionsarenotinvokedevenwhentheyareneeded.Wesuggestedearlierthatthisoccursespeciallywhereprocurementthroughsoleprovidersorlimitedtenderisnecessary.Commonly,suchaneedwillinitiallybeidentifiedbytechnicalend-users.eveninthesecircumstancessCMpractitionersareknowntorefusethem.theremaybeanumberofreasonsforthis.sCMpractitionerswouldbewellawareoftheprospectofmanipulationbyend-users,andwouldoftenbeill-equippedtoinvestigatetheirjustifications.Asimilarlogicappliesforaccountingofficers,whoarerequiredtoexerciseoversightthroughauthorisation,butoftenconfrontorganisationsthataretothemexceptionallyopaqueandtreacherous.theresultisthatevenhonestdecision-makersmayexerciseexcessivecautioninproceedingbyexception.

However,thereisalsotherealitythatexceptionsareofteninvokedforreasonsofincompetenceandmaliciousintent.exceptionalprocurementdoesindeedofferobviousadvantagestothedishonest,becausethroughitdecision-makersareplacedinapositionwheretheycandecideapurchaseonthebasisoftheirownpreferences.

themoredifficultproblemisthatevenwithoutmaliciousintentpublicservantsmayfindthemselvesinthepositionofneedingtouseexceptionalprocurement.Itisobviousandnecessarythatthishappensincasesofgenuineemergency,andindeedinternationallycorruptionisawell-knownconsequenceofthelooseningofproceduresthatemergenciesprovoke.InsouthAfricanpublicprocurement,however,thedefinitionofemergencyisgreatlyinflated,andisoftenexpandedtoincludesituationsthatarepreventableandforeseeable,theproductofadministrativedysfunctionatearlystagesoftheprocurementprocess.

Wesawabovethatprocurementplansareoftenincomplete.Itisnotunknownforthemtoomitkeypurchases,andwiththepassingoftimethesepurchasescanbecomequiteurgent.Moreintractably,properplanningforactivitiessuchasmaintenanceandreplacementgenerallyrequiresqualityinventoriesandassetregisters.Wehaveseenthattheseoftendonotexist.Inconsequence,whenkeyequipmentorinfrastructurebreaksdownthiscanoftenbeunexpectedandlegitimatelytakeonthedimensionsofanemergency.

Wealsosuggestedabovethatprocurementplansareoftenneglected.Additionally,thetimetablesincludedinplansareveryoftennotmet,pushingunspentmoneytothetail-endofthebudgetcycle.theresultisamostprominentformofemergency,theendof

thefinancialyear.Whenpublicinstitutionsdonotspendbudgetallocations,theybothlosethesurplusandriskhavingtheirbudgetreviseddownwardsinthenextfinancialyear.Aturntoexceptionalprocurement,underthepretextofemergency,hasbeenapersistentandimportantmeansforensuringthatthisdoesnothappen.

throughthemanyprocessesjustdescribedapreferredserviceproviderwillbeselected.Whatfollowsisacontractbetweenstateandfirm,andthemanagementoftherelationshipthatthisinvolves.

ContRACtMAnAGeMentAnDsuPPLIeReVALuAtIonthepracticeofcontractinghasbeensubstantiallyconstrainedbythispointintheprocurementprocess.specifically,officialsareformallydiscouragedfromdevelopingcontractsthatdivergemateriallyfrominformationcontainedintheoriginalrequestsforbids.Biddersholdlegitimateexpectationsformedonthebasisofsuchinitialrequests,andrenegotiatingcontractswithselectedserviceproviderscarriesalargeriskofcorruption.theeffectofthiseminentlyjustifiablepractice,however,isthatthestateistiedtospecificationsandotherconditionspreparedmuchearlierintheprocurementprocess.theproblem,aswehaveseen,isthatspecificationsandotherconditionsareoftentoothin.Wecalledthisunder-specification.essentially,governmenthasnoteffectivelycommunicateditsownexpectations,andallsortsofproblemsfollow.

ofcourse,toavoidcontractualdifficulties,somesystemisneededtomonitorandreportuponsupplierperformance.Whateversystemthereis,ishoweverlargelyunregulatedandadhoc.normallytheresponsibilityforcheckingserviceprovisionfallstoend-users,andtheeffectivedischargeofthisresponsibilitywilldependentirelyuponwhethertheappropriateofficialsareinvolved,andwhethertheyhavetheappropriateexperiencewiththegoodorserviceinquestion.

Ifthelevelofserviceisaccepted,receiptwillbereportedandpaymentwillfollow.Proceduresforcheckingpaymentsagainstreceiptsandcontractsarenotalwaysfollowed.thisallowsfortheinflationofinvoices,doublepayments,andsoforth.Paymentshouldbemadewithinthirtydaysofreceipt.Veryoftenitisnot,puttingseverestrainonemergingserviceproviders,anddiscouragingtheinvolvementofestablishedbusinessingovernmentprocurement.

Ifissuesemergeindelivery,end-userswillhavetoreportthesetosCMpractitionersforfollow-up.Communicationandcooperationbetweenend-usersandsCMpractitionerscanoftenbedeficientandacrimonious,aswefoundinourfieldwork.end-usershavecomplainedthatfollow-upisoftentardyornon-existent.Atthispointwemightreferbacktothefactthatcontractsoftendonotprovideabasisforeffectivefollow-up.end-


usersmightviewgoodsorservicesassub-standard,butspecificationsareoftennotrobustenoughtoenablecontractmanagerstoholdserviceproviderstohigherquality.AsecondoptionopentosCMpractitionersistoplacenon-performingserviceprovidersontheListofRestrictedsuppliers,nominallyexcludingthemfromfuturegovernmentbusiness.theeasewithwhichcompaniescanbeestablished,andthepracticeoffarmingdirectorshipsouttofamilyandfriends,meansthatthisisaweakinstrument.Itiseasilycircumvented.theListisalsoabluntinstrument.Itisanall-or-nothingaffairthat,particularly,doesnotprovideforthegradationandaccumulationofinstancesofmisconduct.Robustguidelinesforitsusehavenotbeenprepared,meaningthatthisisleftentirelytothediscretionofpublicofficials,subjecttoreviewbythecourts.

Ifweaddtothesemanyissuesthefactofpoliticisationofthepublicprocurementsystem,andthepartlyrelatedexistenceofpoliticalandadministrativecorruptionandotherformsofbias,theconclusionisjustifiedthatsouthAfricadoesnothaveasystemforreliablyandimpartiallypunishingpoorperformersandrewardingeffectiveones.

ConCLuDInGReMARks

Inconcluding,itmustbenotedthatthingsareoftenbetter,andsometimesworsethaneventhissurveysuggests.Withregardtothelatter,wehavefoundcaseswhereprocurementpowershavebeendelegatedtoalmosteverylevelofanorganisation.Ithasbeensuggestedtousthatinsomeplacesevenbasicregulatorystructures,suchasbidevaluationcommittees,arenotinplace.Herewereachtheextremesofnon-compliance.

Wewillclose,however,bynotingamethodologicalpoint.WementionedattheoutsetthatoursurveyamountstoanamalgamationofandgeneralisationsaboutweaknessesthathaveemergedintheactualpracticeofpublicprocurementinsouthAfrica.Wewillclosebyfirstconsideringthelimitationsofthissurvey,andthenbysuggestingwaysinwhichtheresearchagendamightmoveforward.

Generalisationisalwayshazardous.Itnecessarilyelidesdiversityandcomplexity.Alongtheselines,itmustbenotedthatprocurementprocessesinsouthAfricaaresubjecttoagreatdealofvariation.somedepartments,orunitswithindepartments,procureeffectivelyandefficiently.theprocurementsystemhasbeenimplementedinpublicinstitutionswhichexhibitdifferentpractices,structuresandcapacities.theregulatoryframeworkislooseenoughtoallowforagreatdealof

play,eveninformalarrangements,acrossthestate.entirelydistinctregulatoryregimesandsystems,moreover,havebeenestablishedtodealwithtransversaltermscontracts,informationtechnology,construction,andstate-ownedenterprises.evenspecificitemsrequiresometimessubtlydifferentprocesses,andeachbringswithituniqueissuesandproblems.Finally,ourfocusupon‘problems’itselfobscuresstrengthsandagreatdealofunevennessinimplementation.

theseissuesrepresentlayersofcomplexitythatwecouldnotpossiblydepictinthisinitialwork.Whatwehavedone,rather,istoabstractwhatweconsidertobebothprominentandimportant.WedosoinordertogivetotheuninitiatedapreliminarysenseofthenatureofpublicprocurementinsouthAfrica.Wedosoalsotoprovidesomefoundationforfurtherdebate.Wedonotsupposethatthisearlyworkisthelastword.Indeed,giventhatwehopethatitisnot,howmightthoseinterestedinsucharesearchprogrammeproceed?

First,weshouldnotethateachstageoftheprocurementprocessdiscussedaboveprovidesampleroomforelaboration.Amoredetailedanalysisofweaknessesateachstageintheprocesswouldbeausefultoolforinformingregulatoryreform.second,weneedtodevelopamorecomprehensivedescriptionofunevennessinpublicprocurement.Wehavealreadysuggestedthatthereareanumberofdimensionstothisunevenness.thereisdifferenceacrossplace,itemandregulatoryregime.Wecould,moreover,focusuponunevennessinperformanceorotheraspectsofpractice.throughtheaccumulationofdatawecanbegintodevelopthecomparativebasisneededfortheelaborationoftheoryandtheemergenceoffullerunderstanding.third,wemightconsidervarioussystemsthatsupporttheprocurementfunction,includingtraining,thejusticesystem,monitoringandpolicy-makinghousedatnationaltreasury,andtechnicalsupportsystemsadministeredbyentitiessuchasthesABsandtheCsIR.WemightincludeinthiscategorythephenomenonofPurchasingManagementunits,oftenentailingtheprocurementofthemanagementofprocurement.

Inthenextchapter,however,wepursueafourthlineofinquirywhichismoregeneralinscope.Abstractly,weconsiderthepracticeofpublicprocurementasconsequenceandcauseofthebroaderstateandsociety:inshort,theirreciprocalrelationship.Inpursuingthislinewecanbegintounderstandtheimportanceofpublicprocurementanditsreform.Wecanalsostarttodiscernthelimitsofapublicprocurementreformagendathatnarrowlyfocusesupontheregulatoryframeworkalone.


≤Unevenness and Fragmentation in the South African State17

oneofthemajorproblemsofcurrentanalysesofgovernmentandgovernanceinsouthAfricaisthattheysimultaneouslysaytoomuchandtoolittle.MoeletsiMbeki,forexample,hasdiscussedsouthAfricaasa‘failedstate’,aconceptionthathasbeenpickedupbyothersaswell.18AlexBoraine’snewbook,What’sgonewrong? 19 ,suggeststhatthesouthAfricanstatehasnotfailed,butisonthebrinkoffailure.essentiallytheyclaimthatsouthAfricandepartmentsarefailingin‘servicedelivery’becausetheAfricannationalCongresstriestoexercisetoomuchcontroloverthemandendsuppoliticisinggovernmentinawaythatunderminesgovernance.theproblemwithsuchargumentsisthattheyfailtocapturetheoverwhelmingexperienceofgovernmenttoday.therearecertainlydepartmentsfailingtoperformeventheirbasictasks,likekeepingthelightsonandthewaterflowingintaps.yetthereareotherssucceedingunderequallydifficultcircumstances.evenwithinthesamedepartment,differentofficesperformdifferently.ApplyingforanidentitydocumentatHomeAffairstoday,forexample,hasbecomerelativelyeasyandtheprocessismostlyefficient.Fornon-southAfricans,anecdotalandotherevidencesuggeststhatdealingwithHomeAffairscanbetortuousandfickle.theHomeAffairscaseisinstructivebecauseitalertsustothetemporalcharacterofthephenomenonthatwearedealingwith.Departmentsperformdifferentlyacrosstheirdifferentofficesbutalsointime.somehavedegeneratedintheirabilitytoperformmandatedtasks.othershaveimproved.Itistheunevennessofgovernmentperformanceandofgovernancegenerally,notsimplyacrossthetiersofgovernmentbutbetweendepartmentsandevenbetweenofficesinthesamedepartmentthatremainstobeexplainedanddealtwith.

thevalueofthisresearchisthatitgoessomewaytowardsenablingustounderstandwhythisisthecaseand,tosomeextent,towardssuggestinghowtodealwithit.

theprocurementsystemdiscussedinthisreport,bothatthelevelofdesignandatthelevelofpractice,allowsustomakesomegeneralstatementsaboutgovernanceinsouthAfricaandevenaboutthecharacterofthesouthAfricanstate.twofeatures,inparticular,areespeciallynoteworthy.

• In the first place, procurement has become one of the largest tasks, arguably the single largest function, of government departments. The burden of compliance with National Treasury and DPSA regulations consumes a good part of the daily work of many public officials. In terms of their mandated core function, however, whatever it might be (maintaining an asset register in a department, providing clean laundry for a hospital, developing an Integrated Development Plan in a district), departments are outsourcing these roles to third-party service providers instead of doing it themselves. As we have seen, this does not reflect the indolence of South African public servants, but rather the effects of local and international trends to improve government efficiency and reduce wastefulness.

17 This chapter draws heavily upon empirical material laid out in Chapter 3. It is influenced broadly by literature on state formation, especially Weber (1968), Skowronek (1982), Ertman (1997), and Lange and Rueschemeyer (2004). It draws upon the new institutionalism in sociology and political science, with special reference to March and Olsen (1989). The notion of the ‘contract state’ derives roughly from the ‘Anglo-governance’ tradition (see Rhodes 1997).

18 Mbeki, Moeletsi. 2009. Architects of Poverty. Why African Capitalism Needs Changing. Johannesburg: Picador Africa.

19 Boraine, Alex. 2014. What’s gone wrong? On the brink of a failed state. Johannesburg and Cape Town: Jonathan Ball.

4CHApTER


• In the second place, as we have seen, the procurement of goods and services takes place through a system that is highly fragmented and decentralised. In some cases, the very outsourcing function is itself outsourced. In other words, in South Africa today there are literally tens of thousands of sites and locations where tenders are issued and awarded and where contracts are managed for the performance of all manner of services and functions. In the Eastern Cape Department of Education, for example, the procurement of certain goods for schools takes place from one of more than 4 000 places.

thissituation,weargue,correspondstoa‘contractstate’.thecontractstateisahighlydecentralisedgovernmentsystemwherethecorebusinessofdepartmentsandagenciesisfrequentlyout-sourcedtothirdparties,usuallyprivatesectorcompanies.theunevencharacterofgovernanceinsouthAfricatodayarisespartlyfromthissituation.servicedeliveryandtheperformanceofgovernmenttasksvaries,dependingontheinstitutionalcapacityofpublicofficialstoplanstrategicallyforthegoodsandservicestheywillneed,tounderstandthedetails(specifications)ofwhattheyrequire,toappointthebestsuitedserviceproviderand/ortobuythemostappropriateitemsfortheirneeds.therearemanyindividualofficesacrossthegovernmentsystemthataregettingthisrightand,morebroadly,departmentstoo.therearemany,however,thatarenot.thecumulativeeffectisakindofunpredictabilityinthewaygovernmentasawholeworks.

BasedonfieldworkinLimpopoandalsodrawingfromPARIresearchinotherlocations,thisreporthasgonesomewaytoidentifyingwhyinsomeplacestheperformanceoftheprocurementfunctionispoorand,consequently,theabilityofgovernmentdepartmentsandagenciestoactaccordingtotheirofficialmandatesisunreliableorworse.Wehaveseenthattheproblemisnotsimplyoneofincompetenceorindolence,corruptionandpoliticalinterference.somethingmoresignificantishappeningintheselocations,ofwhichcorruptionisasymptomratherthanacause.Intheseplaces,alreadyweakinstitutionsarestrugglingtocontrolandregularisewhatwecallthe‘contractstate’.

exPLAInInGuneVennessIntHesoutHAFRICAnstAte

LouisPicardhasbroughttotheanalysisofthesouthAfricanscenetheterm‘disjointedinstitutionalism’20.Heusesittodescribeastateofaffairswherethebehaviourofpublicservantsisdelinkedfromformalinstitutionssuchasrules,proceduresandofficialvalues,andcomestobedrivenbynarrowerpersonalandsectionalinterests.Picardemphasisesagencyintheemergenceofdisjointedinstitutionalism.IvorChipkin,however,offersastructuralcorrectivewhenarguingthatcorruptioninsouthAfricaisoftendrivenby‘weakinstitutions’,where‘socialrelationsinadepartmentoragencydonotcrystalliseintopredictableconventionsandroutines[andso]collectionsofindividuals,equipmentandresourcesbehaveand

combineincapriciousandunpredictableways’21.onthisreadingbehaviourbecomesdisassociatedfromtheostensiblepurposesofformalinstitutionsnotsolelyasanexerciseofagency,butalsosometimesasafunctionoftheinstitutionsthemselves.elaboratinguponthissuggestion,wecansuggestthatifformalrulesandnormsdonotexist,iftheyarenotdenseandpreciseenoughtorenderunambiguousandoccludeinappropriatepoliticalandpersonalbehaviour,oriftheyareincapableofbeingconsistentlyfollowed,thentheintersticesthusrevealedmustbenegotiatedbymovingbeyondthem.essentially,thisisaproblemoflooseorweakinstitutions.

Chapter3revealsthatprocurementprocessesarecomplexandlong-winded.oftentheactivitiesinvolvedarehighlyspecialised,meaningthatthenecessaryskillsarescarce,labourisdividedamongstanumberofactors,andoversightbygeneralistmanagersisdifficult.specificationsandcontractsarenotoriouslydifficulttodefine,andoftenneedtobefittedtospecificcircumstances.Beyondthis,largecostsareincurredininhibitingdiscretioninpurchasingdecisionsbyrigidrules.sometimes,forinstance,suppliershavespecialqualitiesthatmustbeactivelyselected,suchasuniqueproductsorinstitutionalmemoryrelatingtoaspecificproblem.Rigidselectionprocedures,suchasopencompetitivetenderswheredecisionsarebasedlargelyoncostcriteria,willoftenleadthestatetoforegothesespecialqualities.

thatsaid,southAfricanprocurementproceduresareloose.WeelaborateuponexamplesofthisinChapter3.exceptionstoprocurementrules,designedtotakeaccountofspecialsituations,wherefollowingprocedureisdeemed‘impractical’,arenotthoroughlydefined.Justificationsforrecoursetoexceptionshaveincludedpoorplanningandtheendofthefinancialyear.exceptionsgivepublicservantsampleroomforexercisingdiscretioninprocurementdecisions,whichtheyexerciseforgoodorill,subjectonlytothesign-offofoftendistantandpotentiallycomplicitadministrativeheads.theextremitiesoftheprocurementprocess–includingplanning,specificationandcosting,contractmanagementandsupplierevaluation–arealmostcompletelyunregulated.Adhocimprovisationiscommonwhenitcomestospecificationandtheestimationofcosts.Whatthismeansisthatspecificationscanbewritten,andcostsinflated,tothebenefitofspecificprivatesuppliers.Proceduresfortransportingandutilisingdocuments,especiallyinandbetweenrelevantdecision-makingcommittees,arenotrule-based.thuswell-placedindividualsareknowntomanipulateinformationflowstobiasprocurementprocesses.

Muchofthislooseregulationisnotaseriousproblemwherebackgroundroutinesandethicalnormsofpublicservicearestrong.ButinmanyofficesanddepartmentsinsouthAfricatheyarenot.thesouthAfricanpublicadministrationwasneveradequatelyinsulatedfrompoliticalandpersonalconsiderations.Branchesoftheapartheidstatehadalonghistoryofcorruption.Centralentitiesinvolvedintheregulationofrightlessblackcitizens,orinsecretactivitiessuchasdefenceandsanctions-busting,bredcorruption.ownaffairsdepartments,blacklocalauthoritiesandBantustansfunctionedasconduitsforclientelisticco-optationbythewhitestateof

20 Picard, L. 2005. The State of the State: Institutional Transformation, Capacity and Political Change in South Africa. Johannesburg: Wits University Press.

21 Chipkin, I. 2013. ‘Whither the state? Corruption, Institutions and State-Building in South Africa’. Politikon, 40 (2): 211-31.


selectedblackmiddleclasselements22.Inreferencetosuchcontexts,ChipkinandMeny-GiberthavearguedthatnewPublicManagement-inspiredreforms‘mayhaveexacerbatedcorruptionandpoorservicedeliverybygivingincreasingautonomytoleadersimplicatedinpatrimonialnetworks’.23InthistheymirrorAllenschick’sfamouswarningtotheeffectthat‘nocountryshouldmovedirectlyfromaninformalpublicsectortooneinwhichmanagersareaccordedenormousdiscretiontohireandspendastheyseefit’.24

similarproblemsaremanifestwhenprocedure,whilenotnecessarilyloose,becomesimpossibleordifficulttofollowduetoitsinsertioninincoherentandotherwisedysfunctionalorganisationalcontexts.evidencemarshalledinChapter3isagaininstructive,procurementplanningbeingaprominentexample.If,forinstance,procurementisonlybroughtinatthetail-endofbroaderplanningprocessesthentheeffectistoleaveinsufficienttimetofollowsometimescumbersomeprocedures.non-complianceisanecessaryresult.especiallywheremaintenanceandreplacementisconcerned,planningprocessesquitecommonlyfounderuponanabsenceofreliableandcompleteassetregistersandinventories.Historicallythesehavebeenweak,theywereoftenfurtherdisruptedandlostinthepost-1994processofadministrativeamalgamation,andtheyarecurrentlytheproductofinadequatelyestablisheddatacollectionroutinesandpoorrecord-keeping.Withoutthem,infrastructureandequipmentbreaksdown,andstoresrunout,unannounced.Inthesecircumstancesexceptions,withtheirattendantproblems,becomenecessary.

theseproblemsoflooseandincoherentinstitutionsaremanifestedunevenlyacrossthestate,buttheyremainapressingproblem.Itseemsthattheycannot,however,fullyexplainmanyofthemoretroublingweaknessesthathaveemergedaroundthecontractstate.Chapter3offersmanyexamplesofsimple,preciseandconsistentprocurementrulesbeingvisiblybroken.evenwhentimeouslyprepared,procurementplansareoftennotfollowed.Despiterepeatedprotestsfromnationaltreasury,bidsarecommonlyandopenlysplit,bringingthemundervaluethresholds,allowingforlessrestrictiveprocurementprocedures.singleprovidersareoftenapproachedwithoutfollowingprocedure.theAuditor-Generalhasrepeatedlyraisedtheconcernthatsinglequotationsaretakenincontraventionoftriple-quoteprocedures.Insomeplacesprivateprovidersareinformedofcompetingbids,apracticemadepossiblebyacceptinglatebids,orcancellingandthenrepeatingtenders.sometimesbiddersaredisqualifiedonspuriousadministrativeortechnicalgrounds.

specificationsareoccasionallychangedduringtheadjudicationprocessapparentlytofavourcertainsuppliers.onceatenderiswon,proceduresforcheckingpaymentsagainstreceiptsareoftennotfollowed,sodouble-invoicingandothermethodsofprice-inflationarecommon.theseandmanyotherexamplesarevisibleevidenceofthebreakingofsomeofthesimplestrules.thesepracticesrequirefurtherexplanation.

PoLItICIsAtIonIntHeContRACtstAteInstitutionalisationdoesnotrestsolelyuponpreciserulesandnormsanduponorganisationsthatarerationallyandcoherentlystructured.Beyondthesebasicconditions,classicaladministrativethoughtandmodernsociologiesofstateformationsharewidespread,ifnotalwaysfullyacknowledged,viewsregardingwhatfurtherisneeded.First,institutionalisationrequiresasocialframeworkorcontextwhereconformingbehaviourisrewardedandnon-compliancepunished.second,institutionsmustbeinternalisedinthesensethatcomplianceisaccompaniedbyfeelingsofself-validationanddeviancebyfeelingsofguilt.third,therulesmustbebolsteredbydisciplinaryandmoralweight.

southAfrica,inthiscontext,facestheproblemofbeingan‘open’bureaucracy.25openbureaucraciesarethosewherepoliticiansretainsubstantiallawfuldiscretionovertheappointment,promotionand,inextremecasesdismissal,ofpublicservants.thiscanenablepoliticianstogobeyondformalandimpartialrulesinimposingtheirwilluponpublicadministrations.Politicianswithpoweroverappointmentsandpromotioncanplacecloseassociatesintokeypositionsandcolludewiththeminnon-compliantbehaviour.Bythreatening,evenimplicitly,lossofcareer-progressionorevendismissaltheycancoercepublicservantsintobreakingtherules.Politiciansmay,ofcourse,havegoodorbadreasonsfordoingthis.However,byblurringlinesofaccountabilityandimpairingcorrectlinesofcontrol,politicalandpersonalappointmentscannegativelyaffectdisciplineatalllevelsoftheorganisation.High-levelpoliticalandpersonalisedappointeesgenerallydonotfollowthecareerpathsnecessarytogivethemknowledgeoftheiradministrations.theyalsotendnottoremainintheirpositionsforlong.Furthermore,ifaprincipalrequirespoliticalorpersonalsupportfromherappointee,shelosescontrolcorrespondingly.Ifshemakestheappointmentwithreferencetoathirdparty–afriendorapoliticalallyorpoliticalparty–shemayfindherselfconstrainedwhileherappointeemaybeenabledbyasecondlineofaccountability.Bysuchdynamics,Weberianbureaucracy,whichisinpartasocialframeworkdesignedtodisciplineindividualsintofollowingrules,isbreached.

DynamicssuchasthesecanbeseeninsouthAfrica’sprocurementsystem,andrule-breakingoftencorrelateswithpoliticalappointmentstosCMunitsandprocurementcommittees.oneprominentpublicservantdescribedwhatappearstobeafairlycommonexperience:

You get in as a minister, and you are not happy. That board doesn’t look kosher because they are not going to be flexible. So you suddenly write letters to them and you tell them that you are changing the board and, of course, as a bureaucrat, because you are representing the state, you can’t argue because he is entitled to appoint, so he can appoint inside and outside. So he goes and gets his friends, and they are there, and everybody has got businesses… and there is very little questioning because the books are fine, the Auditor-General wouldn’t come to question… (Respondent E, 06/09/2012).

23 Chipkin, I. and S. Meny-Gibert. 2011. ‘Why the Past Matters: Histories of the Public Service in South Africa’ PARI Short Essays, No. 1.

25 See for example, Skowronek, S. 1982. Building a New American State: The Expansion of National Administrative Capacities, 1877-1920. Cambridge: Cambridge University Press.

24 Schick, A. 1998. ‘Why most developing countries should not try New Zealand’s reforms’ The World Bank Research Observer, 13 (1): 123-31.

22 Lodge, T. 1998. ‘Political Corruption in South Africa’ African Affairs, 97: 157-87; Hyslop, J. 2005. ‘Political Corruption: Before and After Apartheid’ Journal of Southern African Studies, 31 (4): 773-89.


Itisalsonotunknownforpublicservantstobecajoledintobreakingtherules.Politiciansmaydothisforreasonsthatdonotappeartothemtobeillicit.thus,asoneintervieweenotes,aroundelectiontime,‘suddenlythereisthisurgencytospendmillions,tensofmillionsbeforetheelection,itmustbedonenow,itmustbedonequickly,youknow,don’tworryaboutprocedures,don’tworry’(Respondenty,04/02/2014).Interviewshavealsosuggestedthathierarchicalcontrolisattenuatedfurtherdown.Inoneinstance,theintervieweenotedthatinordertocontrolprocurementsystemseffectively,‘youhavegottohaveyourfingeronthepulse,youhavegottoknowwhoyouarecontrolling’andthatthisisnotordinarilythecasewithpoliticalappointees(Respondente,06/09/2012).InonesCMunit,arespondentnotes,politicalappointeesarenotincentivisedtoperform:

There is no commitment; you know people do as they wish. Someone can just come to work at nine o’clock, half past nine, twelve o’clock … This change of political heads. The political head comes and says ‘Oh the structure is not enough for this, lets add’. Then they advertise posts, you understand? And how they fill those posts, I don’t want to talk too much about that … this is the result of those posts … there is no discipline, we are not going anywhere.

structures,andrelateddynamics,thusoperateunevenlyacrossthestate,withopenbureaucracyaninstitutionalframeworkwithinwhichpoliticiansretainsubstantiallawfuldiscretionoverpersonneldecisions.Howtheyexercisethisdiscretiondependsupontheiridealsandinterestsandonthepoliticalpressuresbroughttobearuponthem.Asaresult,openbureaucraciestendtobeexhibitsignificantunevenness.26

InsouthAfrica,thisunevennessistheproductofahistoryandofapresentofstateformationwithastrongcentre-peripherypattern.Atthenationallevel,andespeciallyatregulatorycentressuchasthenationaltreasury,bureaucraciesarerelativelywell-established,meritocraticandclean.theseorganisationstendtoprovideadministrativesupportforkeypolicychoices;andarecloselymonitored,supportedanddisciplinedbythemedia,civilsociety,marketsandinternationalinstitutions.theirsocialmilieuisgenerallyrelativelywealthy,endowedwithaccumulatedresourcesofpropertyandeducationthatrenderindividualsindependentofstatelargesse.Attheprovincialandlocallevels,however,andatthemargins,thereareweakerbureaucracieswhichareoftensubjecttothepressuresdescribedabove.thiscentre-peripherypatterncomesaboutforhistorical,policyandotherreasons,includingvariationsinthedegreeofsecrecyprotectingorganisationalactivitiesandcuttingthemofffromscrutinybysocietalandmarketactors.Procurementcentresarenotimmunefromthis‘disjointed’pattern.

unevennesspersists,however,notonlybecauseoftheunevensocialenvironmentthatproducesit,butalsobecausethesouthAfricanstateishighlydecentralisedandfragmented.theconstitutionalcompromisecreatedaquasi-federalsystemwherethenationalsphereretainednominalregulatorypowers.Lowerspheresweregrantedsubstantialoperationalautonomy,limitedonlybythestate’ssection100righttointerveneinprovincialmattersandbythefinancialpowerofthenationaltreasury.Muchthesameappliesbetweentheprovincialandlocallevels.Ineachsphere,moreover,thepersonnelfunctionsofappointmentandpromotionhavebeendecentralisedtothepoliticalheadsofdepartments,thuslimitingcentralcontrolandfurtherunderminingtheformalinstitutionalbasisforinsulationbetweenpoliticiansandpublicservants.evenwithinlinefunctions,theevolutionofstate-connectedagencieshasproducednumerouspublicentitiesformallyautonomousfromdepartmentalprincipals.theinstitutionalarchitectureofdisciplinetyingthestatetogetheriscorrespondinglyweakened,withthecentrefindingitdifficulttobringorganisationsatthemarginstoorder.

theprocurementsystemoffersspecialdifficultiesinthisrespect.Decentralisedintheearly-2000s,itnowconsistsofasprawlofseparateprocurementcentresenteringintothousandsofcontractsperannum.DespitelaudablecapacityatnationaltreasuryandintheofficeoftheAuditor-General,thisisbeyondtheircontrol;and,whentheydodetectnon-compliance,theneedtooperatethroughthepoliticalheadsofnon-compliantentitiesstiflestheirabilitytoexertdiscipline.

ConCLuDInGReMARksChapter3showedthat,insomepartsofthestate,thepracticeofpublicprocurementinsouthAfricahasfailedtocoalescearoundtheformalinstitutionsandrules,andtheofficialnorms,meanttogovernit.thischapterhassuggestedsomereasonsforthis.

theregulatoryframeworkthatgovernspublicprocurementinsouthAfricaisloose,andthisprovidesroomfortheproliferationofinformalpractices.organisationswithinwhichprocurementcentresarelocatedareoftenweakandinsomecasesevendysfunctional.Planningprocessescanbeproblematic,andsupportfunctionssuchasrecord-keepingandasset-registrationnotproperlyestablished.Furthermore,thecombinationofout-sourcing,decentralisationandfragmentation(makingupwhatcanbecalledacontractstate)isamajorcontributoryfactor.thissituationexpandsopportunitiesforpoliticalinterferenceandmuchnon-compliancearoundprocurementisdrivenbythisfact.Finally,thedecentralisedandfragmentedinstitutionalarchitectureofthestateofferslimitedmeansthroughwhichdisciplinedorgansofstatecanbringtheill-disciplinedintoline.thisdisjointednessisacomplexphenomenonandhasmultiplecauses;thesehavesurfacedprominentlyinresearchintotheprocurementsystem.thissuggeststhatsuccessfulprocurementreformmayrequirebroaderinterventionsintotheinstitutionalarchitectureofthestate.

26 See, for instance, Carpenter, D.P. 2001. The Forging of Bureaucratic Autonomy: Reputation, Networks, and Policy Innovation in Executive Agencies, 1862-1928. Princeton: Princeton University Press.


≤ ConclusionsouthAfricaisnotafailedstate,norisittendingtowardsfailure.However,theperformanceofgovernmentdepartmentsandagenciesishighlyunevenand,takenasawhole,isunpredictable.thisreportgoessomewaytoexplainingwhythisisthecase.

thereporthasarguedthattherehavebeentwomajorinnovationsingovernanceinsouthAfricainthepost-apartheidperiod.Inthefirstplace,toasubstantialextentgovernmentdepartmentsandagenciesdotheirworkbycontractingouttheircorefunctions,withover42percentofgovernment’sbudgetcurrentlyspentonprocurementofgoodsandservices.secondly,theintroductionofthesCMsystemintheearly2000smassivelydecentralisedandfragmentedtheprocurementfunctiontomanythousandsofofficesandlocationsacrossthestateandthecountry.

onthebasisofthesefindings,thereportdescribesthesouthAfricanstateasa‘contractstate’.thisisastatewhichcoordinatesitsoperationslessthroughbureaucratichierarchiesthanthroughmarketexchanges.27However,twopointsneedtobemade.First,thecontractstatestillinvolvesabureaucracy,albeitonewhichislargelyinvolvedinmakingpolicyandinfacilitatingdeliverybycoordinatingmainlyprivatesectorentities.second,thecontractstateisjustonefacetofthesouthAfricanstateasawhole;however,itsimportancederivesfromthefactthatithasbecomearatherdominatingfacet.

Asearlierchaptersindicate,thistendencybeganinthe1980sandwasoriginallydrivenbyfactorsfamiliartheworldover.28startingwiththeglobaleconomicslowdowninthe1970s,andintensifiedbythereluctantdeclineofapartheidinthe1980s,afiscalcrisisofthestateinitiatedasearchforefficienciesinpublicadministration.thissearchdrewuponnewideasemergingfromtheeconomics,managementandpublicadministrationliteraturesbroadlymakingupthenewPublicManagementparadigm.29theseadvocatedcontracting-outinordertosubjectpublicadministrationstoprivatesectorcompetition,allowthemtomoreflexiblyaccumulateanddisposeofresources,andinsomeinstancestobereplacedentirelybywhatwereviewedasinherentlymoreefficientprivatesectorfirms.Initsimplementation,theriseofthecontractstatewasself-reinforcing.Manygovernmentadministrationswererestructuredandreorganisedeitherasbusinessentitieswheremajorityshareholdinglaywiththeformerparentdepartment(corporatisation),ordepartmentsthattraditionallyfunctionedaccordingtointernalruleswerecleanedof‘redtape’andreorganisedonmanagerialprincipleswheretheroleofseniorofficialswasdefinedprimarilyintermsofpolicy-makingandstrategydevelopment.Inotherinstances,traditionaladministrationsremainedbutwerenowexpectedtofunctiononacost-recoverybasis.Inyetothers,aspectsofthesevariousmodelswerefusedintostrangehybrids.thecumulativeeffectoftheseeffortsto‘modernise’thepublicservicehasbeenthatmoreandmoreofwhathadtraditionallybeendonebygovernmentdepartmentshasbeenoutsourcedtothird-partyproviders,withoperationalfunctionstransferredoutofthestate.

27 Rhodes, R.A.W. 1996. ‘The New Governance: Governing without Government’ Political Studies, 44 (4): 652-67.

28 For example, see Kirkpatrick, I. and Lucio, M.M. 1996. ‘Introduction: The Contract State and the Future of Public Management’ Public Administration, 74 (1): 1-8.

29 Chipkin, I. and Lipietz, B. 2013 ‘Transforming South Africa’s Racial Bureaucracy: New Public Management and Public Sector Reform in Contemporary South Africa’ PARI Long Essays, No. 1.

5CHApTER


thisreporthasarguedthattheunevenperformanceofgovernmentdepartmentsandagenciesisstronglyrelatedtotheabilityoftheseinstitutionstoplan,specify,manageandmaintaincontractswiththird-partyproviders.Wheredepartmentsmanageinthisrole,servicedeliverymaybeadequatetogood.Wheretheydonot,servicedeliverytendstobepoorornegligible.

InsouthAfricathereislegitimateconcernthattherisingcontractstatehasbeengivenimpetusbydynamicsofcorruptionandpatronagepolitics.Contracting-outprovidesarelativelystraightforwardmeansofmovingpublicfundsintoprivatepockets.Intervieweesforthisstudyexpressedconcernsaboutthis,feelingthatself-interestedandpatronage-politicalmotivesmayhaveaddedtothefiscalandideologicaldriversoftheriseofthecontractstate.

Whatsolutionsexistforthissituation?Itneedsfirsttobeaskedwhethera‘contractstate’isdesirableinsouthAfricaatall.secondly,theunevennessandunpredictabilityinthecurrentsituationneedtobereduced.

southAfricaisnotuniqueinfacingthesesortsofchallenges.Inthelastquarterofthenineteenthcentury,Americanpoliticswascentreduponthespoilssystem.thishaditsbasisintheRepublicanandDemocratparty-machines,whichaimedforsuccessatthepollslessthroughprogrammaticappealsandthemobilisationofhighidealsthanthroughtactical,personalisedandpartialdistributionsofgovernmentjobsandpublicworks,andthejobsandcontractsthatthelatterprovided.theseparty-machinescametogetherpre-eminentlyatlocalandstatelevelandthenagglomeratedtocapturethegrowingfederaladministrationandtheresourcesthatitprovided.theresultwasafundamentalentwiningofpartyandstateintotheAmericanparty-state,orinthecontextoffierceelectoralcompetition,astateofparties.

Inthisimportantlate-nineteenthcenturyperiodinAmericanhistory,thestateofitspoliticalpartieswasemergingasafundamentalproblem.societywasindustrialisingandthemanagementofindustrialisationanditsoftennegativesocialeffectswascausingthestatetointervenemoreextensivelyinthelivesofitscitizens.Itwasthereforegrowingincomplexity,andinvolvingitselfincreasinglyinsophisticatedadministrativeoperations.However,constitutedasitwasbythespoilssystemandaccumulatinghumanandotherresourcesonpartialandpoliticalcriteriaratherthanupongroundsofefficacyandimpartiality,itwasprovingvisiblyunequaltothetask.

theAmericanpoliticalsystemwascaughtupinafundamentalcontradiction.Inthenewindustrialsituation,themodethroughwhichinterestswererepresentedinthestatewasatoddswiththedemandsthattheseinterestswereincreasinglyliabletomake.Inordertofacilitateindustrialisationandsmoothitsharshedges,thespoilssystemwouldhavetogo.

Importantly,aswasthecaseinnineteenth-centuryeuropeanthought,thesereformersdidnotperceivetheproblemprimarilyasoneofimmoralorotherwisedeficientindividuals.Rather,suchindividualswereprovidedwithopportunities,andwereinmanycasesformedby,theadministrativesituationsandstructureswithinwhichtheywereembedded.theendeavoursofreformersinAmericawerethereforefocusedupontheexpansionofwhattheycalledthe‘meritcivilservice’.establishingcompetitiveexaminationsasthebasisforadmissionintothecivilservicewould,itwasfelt,providethestatewiththenecessaryexpertise,independence,andhierarchicalaccountabilitytocarryoutitswork.Moreambitiously,bytransformingdecisionsaboutappointmententirelyintoadministrativeproceduresgovernedbytestscores,themeritcivilservicewoulddecisivelyundercutthespoilssystem.strikingatitsmainspring,patronagejobsinthestate,wouldrequirepoliticianstoshifttheireffortsatpoliticalmobilisationfromclientelisticdistributiontotheelaborationofgeneralprogrammes,rootedinhighidealsandclaimsaboutthe‘commoninterest’.

thiswasnot,however,simplyanAmericanroutetoreform.Rather,theAmericanswerefollowinginnovationswhichhadstartedinGermanyinthelate19thcentury,inJapanaftertheMeijiRestorationof1868andinGreatBritainafterthenorthcote-trevelyanreforms.Alltooktheircue,directlyandindirectly,fromtheinnovationsintheorganisationofgovernmentthathadstarted2000yearsagoinChinaundertheinfluenceofConfucianphilosophy

InawaythatisreminiscentoftheAmericansituation,itmaywellbethatovercomingthechallengesofgovernanceinsouthAfricadoesnotliewithgreatercentralisationandincreasingbureaucratisationbutwiththeprofessionalizationofpublicservantsbyrecruitingthemthroughanopenandcompetitiveexaminationandbymakingpromotiondependentonprofessionaladvancementandexaminations.


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policy, legislation and RegulationsexchequerandAuditActno.23of1956.

statetenderBoardandstateProcurementBoardActno.86of1968.

RegulationstothestatetenderBoardandstateProcurementBoardActno.R.1733of1968.

FinanceActno.102of1969.

statetenderBoardandstateProcurementBoardAmendmentActno.74of1971.


FinanceActno102of1976.

RegulationstothestatetenderBoardActno.R.139of1981.


statetenderBoardAmendmentActno.18of1987.


RegulationstothestatetenderBoardActn.o.R.1237of1988.

GeneralLawAmendmentActno.49of1996.

statetenderBoard.1994.GeneralConditionsandProcedures(st36).

MinistryofFinanceandtheMinistryofPublicWorks.1997.GreenPaperonPublicsectorProcurementReforminsouthAfrica.southAfricanGovernmentWebsite.< www.gov.za/documents/download.php?f=187736>[Accessed12/05/2014].

statetenderBoard.1998.userManual:DirectivestotheDepartmentsinRespectofProcurement.

PublicFinanceManagementActno.1of1999.

PreferentialProcurementPolicyFrameworkActno.5of2000.

RegulationstothestatetenderBoardAct2003.

nationaltreasury.2003.PolicystrategytoGuideuniformityinProcurementReformProcessesinGovernment.nationaltreasuryWebsite.<http://www.treasury.gov.za/divisions/ocpo/sc/Guidelines/default.aspx>[Accessed12/05/2014].

RegulationstothePublicFinanceManagementAct:FrameworkforsupplyChainManagement.

nationaltreasury.2004.sCMGuideforAccountingofficers.nationaltreasuryWebsite.<http://www.treasury.gov.za/divisions/ocpo/sc/Guidelines/default.aspx>[Accessed12/05/2014].


APPenDIx1:souRCes

Sources Chapter 2—GovernmentDocuments

exchequerandAuditActno.23of1956.

statetenderBoardandstateProcurementBoardActno.86of1968.

RegulationstothestatetenderBoardandstateProcurementBoardActno.R.1733of1968.


statetenderBoardandstateProcurementBoardAmendmentActno.74of1971.


FinanceActno102of1976.



statetenderBoardAmendmentActno.18of1987.



GeneralLawAmendmentActno.49of1996.

statetenderBoard.1994.GeneralConditionsandProcedures(st36).

MinistryofFinanceandtheMinistryofPublicWorks.1997.GreenPaperonPublicsectorProcurementReforminsouthAfrica.

statetenderBoard.1998.userManual:DirectivestotheDepartmentsinRespectofProcurement.

PublicFinanceManagementActno.1of1999.

PreferentialProcurementPolicyFrameworkActno.5of2000.

RegulationstothestatetenderBoardAct2003.

nationaltreasury.2003.PolicystrategytoGuideuniformityinProcurementReformProcessesinGovernment.

WorldBank.2003.CountryProcurementAssessmentReport:southAfrica.

RegulationstothePublicFinanceManagementAct:FrameworkforsupplyChainManagement.

nationaltreasury.2004.sCMGuideforAccountingofficers.

—nationalAssemblyDebates

Hansard18June1968.

Hansard26May1971.

Hansard4July1984.

Hansard10-20February1987.

Hansard26February1999.

Hansard3March1999.

Sources for chapter 3—Interviews(orderedbydate):

InteractionwithmembersoftheofficeoftheChiefProcurementofficer,septembertoDecember2013.

RespondentAA,GIZ,07/03/2014.

RespondentZ,sCMspecialist,07/03/2014.

Respondenty,nationalDepartmentofHealth,04/02/2014.

Respondentx,BloemfonteinWater,02/2014.

RespondentW,BloemfonteinWater,02/2014.

RespondentV,LimpopoDepartmentofHealth,12/2013.

Respondentu,tenderAdviceCentre,Limpopo,11/12/2013.

Respondentt,ekurhuleniLocalMunicipality03/12/2013and11/2013.

Respondents,GovanMbekiLocalMunicipality,12/2013.

RespondentR,GovanMbekiLocalMunicipality,12/2013.

RespondentQ,GovanMbekiLocalMunicipality,04/11/2013.

RespondentP,DepartmentofWaterAffairs,10/2013.

Respondento,DepartmentofPerformanceMonitoringandevaluation,10/2013.

Respondentn,LocalGovernmentsetA,09/2013.

RespondentM,Mvulatrust,09/2013.

RespondentL,LimpopoDepartmentofHealth,27/07/2013.

Respondentk,LimpopoDepartmentofHealth,27/07/2013.

RespondentH,I,J,southAfricanRevenueservices,septembertoDecember2013.

RespondentG,FinancialIntelligenceCentre,12/09/2012.

RespondentF,PublicserviceCommission,10/09/2012.

Respondente,institutionalaffiliationwithheldatrequestofrespondent,06/09/2012.

RespondentD,institutionalaffiliationwithheldatrequestofrespondent,05/09/2012.

RespondentC,retiredpublicservant,formerlynationaltreasury,30/08/2012.

RespondentB,GIZ,27/08/2012.

RespondentA,southAfricanRevenueservices,24/08/2012.

—Documents(orderedbydate):

selectedcontractsfrom2009to2012providedbyaprovincialdepartmentinLimpopoforthepurposesofresearchandassistingpersonneltaskedwithimprovingsupplychainmanagementsystemsinthedepartment.

Auditor-GeneralReports(2010-2013).

CIPCCompanyRegister.

nationaltreasury.DatabaseofRestrictedsuppliers.<http://www.treasury.gov.za/publications/other/Database%20of%20Restricted%20suppliers.pdf>[Accessed05/03/2014].

nationaltreasury.RegisterfortenderDefaulters.<http://www.treasury.gov.za/publications/other/Register%20for%20tender%20Defaulters.pdf>[Accessed05/03/2014].

nationaltreasurysCMInstructionnotes(2003-2014).

nationaltreasurysCMCirculars(2004-2012).

PreferentialProcurementPolicyFrameworkAct5of2000.

nationaltreasury.2003.PolicystrategytoGuideuniformityinProcurementReform.ProcessesinGovernment.

nationaltreasury.2003.FrameworkforsupplyChainManagement:RegulationsintermsofthePublicFinanceManagementAct,1999.

GovernmentoftheRepublicofsouthAfrica.2004.GeneralProcurementGuidelines.

nationaltreasury.2004.supplyChainManagement:AGuideforAccountingofficers/Authorities.

RsA.2012.DiagnosticReportofFiveLimpopoProvincialDepartmentsunderAdministration.

nationaltreasury,Presentation:ReviewofthestateProcurementsystemtoensureValueforMoney.

nationaltreasury.2013.ForensicInvestigation:electoralCommission,RiversideofficePark.

PublicProtector.2014.secureinComfort.Reportno.25of2013/14.

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