The Public Procurement and Disposal of Public Assets PPDA, says that the procedures on contract awards and executions at local government levels remain weak. PPDA’s Director for Procurement Audit and investigation Benson Turamye notes that the gap needs quick redress considering the Trillions of shillings in procurements handled by both the Central and Local governments.
July 5, 2013
A new technical instrument has been introduced to support South Africa’s strategy of increasing the level of local content in the goods and services procured by government and State-owned entities and to add impetus to the country’s re-industrialisation efforts.
The tool in question is a South African Technical Specification (SATS) 1286, which will be administered by a new Local Content Verification Office housed within the South African Bureau of Standards (SABS).
Trade and Industry Minister Dr Rob Davies, who presided over the official launch on Friday, says SATS 1286 sets objective criteria for the issuance of an audited ‘Local Content Certificate’.
The verification process follows on from the initial ‘designation’ of products and services that are required to incorporate minimum thresholds of local content before they can be procured by national and provincial State departments, municipalities and State-owned companies. The requirement is supported by updated Preferential Procurement Policy Framework Act (PPPFA) regulations, issued in December 2011.
The current thresholds range from 100% for textile, clothing and footwear procured for government-issued uniforms to 30% for digital television set-top boxes. But Davies stressed that these thresholds should be regarded as a “floor rather than a ceiling”.
The initial designations announced by the Department of Trade and Industry (DTI) cover rail rolling stock, electrical pylons, textile, clothing and footwear, canned or processed vegetables, some oral solid-dose pharmaceutical products, digital television set-top boxes, furniture, solar geysers and power and telecommunications cables.
But further rounds of designations will be introduced in future, following research and consultations.
SABS CEO Boni Mehlomakulu says the infrastructure is in place for the organisation to conduct the verification process, which will be required only for entities that win government tenders.
The process involves a self-assessment by the company that is delivered to the SABS in the form of a local content-declaration. A team of auditors then conducts an analysis of the documentation to verify the declaration, which is followed but a factory visit by a separate team of auditors. A consolidated document is then sent through to an approval board, which makes a final recommendation to the CEO, who issues the verification certificate. The costs of the process will be born by the winning bidder.
Mehlomakulu believes that multi-step process, which involves separate teams of auditors, has materially reduced the potential for fraud and corruption, but stresses that the SABS also operates an ethics hotline should an individual have concerns. The objective criteria employed also reduce scope for discretion, which tends to contaminate the administration of regulations.
Davies argues that there is significant potential to increase the domestic job creation around government procurement generally and also the multibillion-rand public infrastructure programme. However, without mechanisms to verify local-content claims the impact of ‘buy local’ initiatives could be diluted.
“We now have a standard and the infrastructure in place to verify,” he says, adding that breaches could lead to penalties and even the cancellation of contracts.
By EDGAR BRANDT, 2 MAY 2013
Windhoek — Despite a significant increase in public expenditure, public procurement has not brought about the desired outcomes, such as increased employment, improvement in the distribution of economic opportunities, enterprise development and economic growth and development, the Minister of Finance, Saara Kuugongelwa-Amadhila, told a Tender Board meeting held recently in Windhoek.
According to the finance minister the desired outcomes have not been reached for the most part because of leakages out of the economy. “Many tenders are awarded to foreign companies even where local companies have the capacity to perform these tenders. Goods and services procured under these contracts are sourced from outside, and too many expatriates perform work on the projects under these contracts even where locals have the skills to do so. So resources leak out of the Namibian economy as a result of this and opportunities for learning and enterprise development are forfeited,” said Kuugongelwa-Amadhila.
She added that setting tenders aside for local companies and special target groups such as women and youth for economic empowerment could address these challenges.
Additional tools recommended by Kuugongelwa-Amadhila to address these issues include a policy that some tenders should require mandatory sole contracting of Namibian companies and SME‘s, that there should be requirements for local participation in all companies to be awarded tenders and that there should be a mandatory requirement for sourcing of supplies and labour services from within Namibia.
With specific regard to procurement, the finance minister noted there is a significant increase in expectations from the public for the system to help the country overcome the challenges of unemployment and inequities and to support sustainable economic growth. With public expenditure having increased significantly in the recent past, the government’s role in the economy has grown much bigger. “We should also put in place monitoring and evaluation systems to ensure that compliance with bidding commitments are enforced and that the impact of the procurement programmes is evaluated. Companies that fail to honour their bidding commitments should be held to account,” said Kuugongelwa-Amadhila, adding that the current allegations of corruption and court challenges against the decisions of the board do not augur well for the public image of the board.
Also, she encouraged the Tender Board to look at ways to delegate the adjudication of some tenders to state-owned enterprises, local authorities and regional authorities.
She also revealed that a dedicated procurement reform project office has been set up and recruitment of staff is in progress. “The office will help drive the reform process including assisting with the drafting of the regulations for the new (tender) law once passed, and operational guidelines, as well as the setting up of the procurement advisory office and the new secretariat. I encourage the board to ponder on all the challenges and ways and means of overcoming them,” concluded Kuugongelwa-Amadhila.
April 11, 2013
THE Bureau of Public Procurement (BPP) has advised state governors to set up a public procurement system as a way of ensuring further transparency and accountability in government.
Director-General of the BPP, Mr Emeka Ezeh made this call while speaking at a high level interactive session with a delegation of the Lagos State public procurement agency at the state house office in Abuja.
Mr Ezeh praised Lagos State for their procurement reform initiative, adding, however, that the nation would benefit as a whole if more states joined Lagos, even as few other states that have already introduced the reform.
The BPP boss emphasised the fact that there was no alternative to ensuring accountability, transparency and value for money in the public expenditure and contractive process if national development is to be guaranteed.
According to him, due process is the cardinal focus in the implementation of President Goodluck Ebele Jonathan’s Transformation Agenda, and it is also a common mantra in the international economics system and development.
Mr Akin Onimole, the General Manager and CEO of the Lagos State Public Procurement Agency, who led the delegation on the familiarisation visit to the Bureau, emphasised the fact that the Bureau of Public Procurement has set a standard through its public procurement reform that should be emulated in all the states. He stated that the Lagos State Public Procurement Agency has, in the last few years, watched with keen interest the giant strides of the Bureau and as such is most willing to follow in the same path.
19 March 2013
“Some 12 months ago, none of the taxis on our roads were assembled in South Africa. Today about 50 percent of all taxis that are purchased are made or assembled here in South Africa, and we’re moving towards the target of localizing two-thirds of assembly in the taxi industry by 2015.”
The government is leading a campaign to promote the local procurement of supplies across all industries in order to boost the economy’s capacity to create jobs.
He said the labour-absorbing capacity of local manufacturing industries had to be boosted to stimulate job creation and economic growth, adding that a strong local manufacturing sector would have a positive impact on South Africa’s balance of payments.
“We are working in partnership with a major manufacturer, Toyota, who has expanded the factory in eThekwini, as well as a partnership with the IDC and a Chinese manufacturer called the Beijing Automotive Works that has started a factory in Gauteng.
These companies had already employed 220 people to assemble taxis locally, with the number set to increase significantly by 2015, Patel said.
In October 2011, the government, business, labour and community-based organisations signed a Local Procurement Accord committing the parties to work together to increase local procurement as part of South Africa’s plans to create five- million jobs over the next decade.
And in December, the government put the buying power of the state firmly behind local manufacturers, with new amendments to the the Preferential Procurement Policy Framework Act allowing the government to name sectors and products that require a minimum level of local content to qualify for state procurement.
Bus manufacturing was among the first batch of sectors designated for local procurement under the amended law, resulting in the local sourcing of 80 percent of all inputs and supplies in the manufacturing of bus bodies for the rapid public transport systems in Pretoria, Cape Town and Johannesburg.
Other products designated in the first batch included power pylons, rolling stock, TV set-top boxes, clothing, canned vegetables, footwear and leather products.
In January, the Department of Trade and Industry announced a second batch of designated products, namely electrical valves, manual and pneumatic actuators, electrical and telecommunication cables, and components of solar water heaters.