KZN depts irregularly spent more than R29m on PPE, blankets – premier

KwaZulu-Natal Premier Sihle Zikalala has said that government officials “linked to wrongdoing” following investigations into the procurement of personal protective equipment (PPE) and blankets will face the music.

The premier was on Tuesday briefing the media on the outcomes of the investigations into the procurement of PPE and blankets in the provincial department of social department, which found that more than R29 million was irregularly spent.

Zikalala said the provincial government would assist the department with implementing the recommendations contained in the report following the probe.

He said in implementing the recommendations of the said report, which include suspending or taking disciplinary action against implicated officials, a fair process should be followed, adding that there would be no compromise on consequence management, and where needs be, criminal cases will be opened.

The premier said the entire report would be shared with law enforcement agencies once the necessary processes have been concluded.

Officials who were found to be in the wrong will face the music, and will not be moved to other government departments, Zikalala said, adding that service providers fingered in the report would be blacklisted and banned from doing any further business with the government.

Zikalala also said that at the appropriate time legal processes will be followed to recover monies lost by the department.

The premier said the KwaZulu-Natal MEC for Social Development, Nonhlanhla Khoza, was not mentioned in the report or implicated in any way for wrongdoing linked to the procurement of the PPE and blankets.

The PPE were procured at R19 million and the were blankets worth R22 million.The investigators found “significant irregularities” caused by “inadequate and ineffective systems of internal controls” within the department, Zikalala said.

“These included the purchase orders for PPE issued to 11 service providers prior to the approval of the procurement submission by the accounting officers; some of the service providers exceeded the minimum amount of purchase as regulated under Treasury instruction notes; in some instances quotations were changed three times and on each occasion, the quantities of the items were reduced in order to reduce the total cost of procurement.

“However, most noticeably there was no reduction of the pricing per unit. As a result of the above, the investigation concluded that all payments made to the service providers are irregular to the tune of R13 630 229.50. Had the department applied the regulated prizes and processes correctly it would have saved R2 231 996.21,” Zikalala said.

The investigation found that some service providers were paid in full on 4 May, while the goods procured were only delivered on 11 May.

It also found that some service providers invoiced the department for goods not yet delivered.

It was recommended that disciplinary action should be instituted against the acting accounting officer at the time for, among others, contraventions in terms of section 38, read with sections 40 and 86 of the PFMA Act, on charges of misconduct in terms of Chapter 7, read with Annexure A of the SMS Handbook and for his failure to comply with Chapter of the Code of Conduct of the Public Service Regulations.

Zikalala said the investigation into the procurement of PPE revealed that the submissions were flawed in that approved submission for award to service providers were done ahead of the procurement process.

It found that there was an abuse of Covid-19 emergency procurement provisions and efforts to cover this up, which included attempts to backdate submissions for awards to service providers.

The investigation revealed that prices were inflated and some service providers were not compliant in respect of documents specified in the invitation to tender.

The investigation has recommended that disciplinary action be taken against the Chief Financial Officer, Acting SCM Manager, Cluster Chief Directors and SCM Officials.

“It is also very concerning that the names of most companies were given as instruction by senior management to junior officials without following proper SCM procedures,” Zikalala said.

The investigation into the procurement of blankets revealed that there was no record provided which proved that the decision to procure the blankets was informed by a needs analysis.

“The orders were issued to four service providers on 27 March 2020; but it was noted by the investigators that the cost of each blanket as quoted by the service providers varied from R350 to R559 even though all four service providers were requested to quote on the same specifications,” Zikalala said.

The investigation found that there was no evidence to suggest that the Department had:

1. Considered the difference in pricing to determine the reasonable value;

2. Negotiated any discount rates with the service providers, considering that the blankets were procured in bulk.

The investigation further established that the supplier misrepresented the specifications of the blankets and that most blankets supplied were not in accordance with the specifications of 220 x 240cm in size.

“The approximate financial loss to the department as a result of the misrepresentations amount to R15.808,000,” Ziakala said.

Out of 48,000 blankets, only 4,982 were distributed on 8 May, the investigation revealed, with over 43,018 blankets left in storage centres with uncontrolled access, and some have been damaged and unaccounted for amounting to possible fruitless and wasteful expenditure as per the PFMA.

The investigators found that department officials did not have an adequate and effective inventory management system in place to control, monitor stock levels, account for the distribution of blankets and ensure completeness of stock on hand.

“The investigators also noted that in this case as it was with the PPE, the intention to award the contract to service providers was signed on 27 March 2020. However, orders were issued when an amount to the tune of R16 million was already paid to service providers,” Zikalala said.

The investigation found that the department accepted all four service providers to procure the blankets, even though there was a vast variance in their pricing schedule and that some service providers did not deliver blankets within the stipulated period but were paid in full without any penalties being served.

The investigation found that the procurement of the blankets was not in accordance with the Constitution, supply chain management policy within the department and applicable prescripts for urgent and emergency provisions of the Covid-19 pandemic, nor all other SCM prescripts issued by National or Provincial Treasury to assist departments to respond to prevailing emergencies.

Procurement of the blankets was not done through a system that is fair, transparent, competitive and cost-effective.

“The investigation has therefore found that the submission on which the procurement of the blankets is premised is flawed and hence the entire process that emanates from this submission is irregular,” Zikalala said.

It was recommended that action should be taken against the acting accounting officer at the time.

The investigation further recommend disciplinary action against the Acting DDG and the CFO, Acting SCM Manager, Chief Directors and SCM Officials.