13 April 2024 | 08:40 PM

Procurement Bill Fails to Address Systemic Vulnerability to Corruption

Key Takeaways

  • Parliament has called for comments on the Public Procurement Bill, due on 11 September 2023.
  • The Bill fails to respond to the Zondo Commission’s identification of the vulnerability of the procurement system to corruption.
  • Without true transparency enshrined in law, the Bill creates a default position of procurement secrecy.

One of the earliest stories amaBhungane published – in April 2010 – was about the suspicious awarding of a tender to a company linked to the then-Minister of Communications. Last week, we published a story detailing how a businessman is benefitting handsomely from bid manipulations in Gauteng Health. In between, we have investigated hundreds of instances of tender corruption, from the #GuptaLeaks to Karpowership, EOH to toilets in Ekurhuleni, SASSA to CPS, and the looting at our state-owned entities, Transnet and Eskom.

It is clear that the tender process can be easily abused as a vehicle for patronage and corruption. Judge Zondo recognised this, dedicating an entire chapter to procurement in his State Capture Report.

Why then, if the link between corruption and procurement is so obvious, does the Public Procurement Bill introduced to Parliament not put in place clear guardrails to strengthen our tendering system? Why is the legislation not underpinned by a commitment to combating corruption in procurement and creating a culture of accountability rather than impunity – transparency rather than secrecy?

Public procurement – the process by which government contracts for goods and services through tenders – is recognised as a key driver of economic development. Done well, public procurement can create jobs, increase local production of goods and empower disadvantaged members of the economy, alongside its main objective of facilitating service delivery.

The Public Procurement Bill has been in development for a decade, reflecting a longstanding recognition that our existing system is not fit for purpose. This system is fragmented – relying upon numerous pieces of legislation, regulations and National Treasury instructions; clunky – designed for an era of manual bids; and opaque – making effective monitoring and accountability almost impossible.

In the wake of the Zondo Commission is a recognition that our procurement system needs to be resilient against corruption. We need a system that is both difficult to abuse and which creates strong oversight and accountability mechanisms. The Constitution obliges all government entities to contract for goods and services through a system which is fair, equitable, transparent, competitive and cost-effective. A system characterised more by corruption than by its ability to provide goods and services hampers the achievement of these objectives.

Transparency in procurement processes is the clearest way to increase accountability. The principles of open contracting require publicly accessible real-time publication of information from all stages of a tender. This means that public bodies must publish details of their procurement plans, the tenders they advertise, how the tender was adjudicated and awarded, the contract entered into with the supplier, and the implementation of that contract.

Public access to procurement information must be the default, allowing redaction of sensitive information only when there is a legitimate need for confidentiality. The Bill, however, makes secrecy the default. Access is managed by the Public Procurement Office (PPO), which is empowered to determine measures for the public, civil society and the media to access, scrutinise and monitor procurement. The PPO is entitled to disallow access or to limit access to certain categories of procurement or tenders within a specific monetary threshold.

At a minimum, the legislation has to make it obligatory to publish all procurement-related information, establishing the right of public access to that information.

The benefits of transparency and public access are proven.

In Ukraine, the introduction of a truly transparent procurement platform and a parallel citizen monitoring portal saved the country US$1 billion in its first two years of operation. Before the war, citizens had uncovered irregularities in 30 000 tenders, and monitoring helped fix violations in 4 215 of these, with a combined value of US$500 million.

There are also creative ways to involve citizens in monitoring. Colombia has formalised citizen oversight groups – Veedurías Ciudadanas (Citizen Oversight) – which must be informed of any tender and can choose to join as monitors. There is also a Procurement Observatory which reviews templates for bid documents and a Transparency Secretary who coordinates citizen oversight committees.

But true transparency is not sufficient.

One of the key weaknesses in our current system is a culture of noncompliance and impunity. We need to establish strong mechanisms to hold corrupt officials accountable. The Bill does not do this.

Given our history of procurement corruption, graphically illustrated in the Zondo Commission and in our media, it is inconceivable that the drafters of the Bill failed to create new and sufficient accountability mechanisms.

Instead, just as before, the Bill makes a procuring entity’s accounting officer the primary accountability mechanism. This official – internal to a procuring entity – is required to take steps to prevent noncompliance, interference and abuse; investigate allegations of corruption or improper conduct and take steps against them; and reject the award of a tender or cancel an existing contract if there has been misrepresentation or commission of a crime. This is alongside their everyday tasks of managing the entity’s financial and budgetary activities.

The PPO is in turn responsible for identifying further noncompliance with the legislation and determining appropriate action. For criminal offences, the PPO is required to refer the matter to law enforcement.

Under the Bill, however, law enforcement entities do not have automatic access to procurement data and thus cannot conduct their own monitoring or investigations without this being facilitated by the PPO.

The Bill therefore leaves us with essentially the same ineffectual structures that have failed to counter the rampant corruption in our public procurement processes. It fails to legally entrench public and law enforcement access to procurement information, hampering opportunities for any form of robust external monitoring.

To compound this problem, the Bill delegates much of the power to construct procurement systems and processes to the executive. In a politically volatile climate, placing the decision-making power of how to regulate and monitor procurement so firmly in the hands of potentially malleable officials is extremely risky.

The Bill is currently before Parliament and comments must be submitted before 11 September. You can access it here.

Although it operates in the background, procurement affects everyone and the abuse of the system wastes public money. We should all care about the type of system that emerges under this legislation. Let’s take this opportunity to call on our lawmakers to recognise the importance of the Bill and the once-in-a-generation window we have to create an effective but resilient procurement system.

In Part Two of this analysis, we will examine the structural weaknesses in the Bill and discuss the political motivations behind maintaining a weak legislative regulatory system for procurement.

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Caroline James and Jacob Mchangama

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