How Treasury is hoping to end tender fraud

There’s an old joke about a man who kept praying to the good lord to do him the great favour of allowing him to win the lottery. Despite the fervour of his prayers, his wish was never granted.

One night, instead of pleading to win, he asked why his prayers were never answered.

To his shock, an answer came to him in a dream in which his irate deity said: “I would have let you win if you had bought a ticket.”

Whether it’s worth the effort to ‘buy the ticket’ is the conundrum businesses face.

It can take an enormous amount of time, energy and incurred costs to prepare a tender submission, and they must summon up the courage long before dropping off their tender applications in a wooden box in the foyer of some or other state institution.

They must then wait to hear the outcome.

For a business that has now become financially and emotionally invested in work they may or may not get, this can be a stressful time.

They may know in their hearts that the ‘fix’ is probably in, but if they don’t apply, there is no chance of them winning anything.

Desperate precautions

So, to improve their odds, they take some precautions. One of the clever ones is heat-binding their tender documents; this means that if a page goes missing (usually the tax clearance certificate), making the bid ineligible, there will be a noticeable tear in the application.

It also helps to number each page of the bid documents. Another precaution is to submit the bid as late as possible. Usually minutes before the deadline.

This is to prevent competitors from somehow getting their hands on their application and coming in with a lower bid.

A late submission also prevents the entire process from being halted and the criteria redrawn on less favourable terms.

Aside from submitting late, it’s also good to take a picture of the bid’s entry on the tender submissions register. Some will even wait to see who is collecting the documents and, if possible, find out who they are.

This is a lot of effort to go to ensure they get a fair shake. So why don’t state institutions do away with the tender box and introduce a system that is less prone to corruption?

Yes, I know. Silly question.

A new law

Seriously though – why does this still happen? Especially when there are company boards, internal and external audits, and about 20 laws in some or other way all intent on preventing tender fraud from happening?

The simple answer is that procurement has not been professionalised in government.

There are no national regulations, there is no controlling procurement body, and there is no unified recourse for those who feel they have been wronged.

It’s difficult to hold people to account without universal codes of conduct and regulations.

All of this means that government and state entities are spending about R800 billion a year – and National Treasury effectively has no control over it.

Treasury is now hoping that the introduction of the Public Procurement Bill will change this.

A procurement regulator

The bill not only sets out a broad legislative framework for supply chain management, it also sets up a public procurement regulator within National Treasury.

The procurement regulator will have the authority to enforce this new law, assist state institutions on the setting up of mandatory procurement units, and maintain a database of bidders.

The regulator will also have the power to “issue a directive to declare certain procurement practices as undesirable”.

Losing bidders will also have clear recourse under this law, as they will be able to take their disputes to the public procurement tribunal, which will have the power to review actions taken by a provincial treasury and even the regulator.

Clarity

The proposed law also makes it clear that any ”public office bearer” who interferes with those involved in the procurement process will be doing so illegally, unless they make their objectives in writing.

‘Public office bearer’ means any:

• Member of cabinet or deputy minister
• Member of the national assembly
• Permanent delegate to the national council of provinces
• Premier or member of an executive council
• Member of a provincial legislature
• Member of a municipal council
• Member of the national house of traditional leaders
• Member of a provincial house of traditional leaders.

This essentially means that a minister ‘thinking out loud’ in front of an official about who should get a contract could be viewed as committing a criminal act.

The bill is a positive move. It covers the legislative blind spots regarding procurement in laws such as the Public Finance Management Act, and gives National Treasury, through the establishment of the regulator, more control of SA’s purse strings.

Even though it is a move in the right direction, the real test will be whether losing bidders feel they no longer have to heat-bind their tender documents, number each page, and submit them late to get a fair shake.

This article first appeared on Moneyweb and was republished with permission.

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