Africa's Public Procurement & Entrepreneurship Research Initiative – APPERI


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South Africa cancels much-delayed private prisons tender, reviews PPP model

Engineering News

By Terence Creamer

October 27, 2011

The South African government has officially cancelled the much-delayed public-private partnership (PPP) procurement process for four new prisons, which would have added 3 000 additional bed spaces at the Paarl, East London, Nigel and Klerksdorp correctional centres.

The procurement process was initiated in October 2003 when a transaction advisory team was appointed to study the feasibility of delivering the facilities in partnership with the private sector.

The request for qualifications were released in October 2007 and the final tender on September 30, 2008. The bids were submitted in May 2009.

However, Correctional Services Minister Nosiviwe Mapisa-Nqakula, who took over the position in May 2009, instituted a policy and operational review, during which the bids were “not opened or evaluated” and were kept in a secure facility.

Mapisa-Nqakula said the review highlighted a number of financial and operational problems with the PPP model, including the fact that it conflicted with policy stipulating that security and custodial services of the State not be handed over the third parties.

She acknowledged that new prison capacity was still required, owing to ongoing overcrowding. But also insisted that South Africa needed to find new solutions to dealing with offenders beside incarceration.

The department had, thus, issued a tender for electronic tagging as one possible alternative and would be seeking to promote the solution within the Justice and Security clusters.

It was also interrogating other legislative provisions to help it deal with overcrowding, such as the better use of the parole systems and allowing for a greater portion of sentences to be served through community service programmes.

Additional facilities would also still be built, but the Minister offered no specifics save to say that it was a “myth” that construction jobs would be lost as a result of the cancellation of the PPP tender.

Bidders had been give the option to revise their offers to confine their involvement to construction and maintenance, but indicated that the PPP would only be attractive if they were also involved with the custodial services.

She also lambasted two existing PPP prison contracts, noting that, while the Kimberley facility had been built at a cost of R300-million, government would end up paying R1.5-billion for the capital cost of construction over a 15-year period.

Cabinet, which endorsed the cancellation, also indicated that there would be a review of PPP models across government.

South Africa Gives Panel Probing Arms Deal Sweeping Powers

Bloomberg Businessweek

By Mike Cohen

October 27, 2011

(Updates with comment from justice minister in third paragraph.)

Oct. 27 (Bloomberg) — South Africa’s government said a panel appointed to probe graft allegations related to its purchase of weapons in the late 1990s from companies including ThyssenKrupp AG, BAE Systems Plc and Saab AB will be given sweeping powers to do its work.

The commission, which will have a 40 million rand ($5 million) budget, will have search and seizure powers as well as the ability to subpoena witnesses and compel them to answer questions, Justice Minister Jeff Radebe said.

The investigation is “a watershed moment in the history of democratic South Africa,” he told reporters in Cape Town today. “This commission will work independently of everyone, including the executive. Its credibility remains paramount.”

The government has been fending off allegations that officials received bribes from companies that won contracts to supply it with jet fighters and trainers, warships, helicopters and submarines worth about 29 billion rand over the past 12 years. The Hawks, the investigative unit of the police, last year halted its probe into the allegations, saying it was unlikely to secure further convictions…Read more.

South Africa: Infrastructure inputs to be designated for local procurement – Davies

September 22, 2011
The initial products to be “designated” by the Department of Trade and Industry (DTI) as ones that should be procured locally by all spheres of government and State-owned enterprises in line with the amended Preferential Procurement Policy Framework Act regulations would be products used in infrastructure programmes, as well as those regularly purchased by government departments, Trade and Industry Minister Dr Rob Davies revealed on Thursday.

Speaking to the business community in Cape Town about the second iteration of the Industrial Policy Action Plan (Ipap2) at an event hosted by Wesgro and Webber Wentzel, Davies stressed that the designation of products was part of a government plan to leverage procurement in order to raise domestic production and employment.

The main vehicle would be the new preferential procurement regulations, which become effective on December 7. These amended regulations allow the DTI to designate particular parts and products that will have to be procured locally by all organs of State and Davies intends that the effect will be felt immediately.

“The 7th of December is actually when the first group of designations takes effect, not the date that we start the work,” he said.

The idea behind the designation was also to stimulate South Africa’s struggling manufacturing sector, the economic importance of which should not be “underestimated” in a developing country such as South Africa. Manufacturing, Davies averred, should not be considered to be dispensable simply if other sectors in the economy are flourishing.

“The lessons of economic history tell us that there is no case anywhere in the world, at any time, of any country that has taken itself out of being an underdeveloped economy to become a developed economy without this being led by manufacturing,” said Davies.

Acknowledging the challenges present in the manufacturing sector as a result of factors such as the 2008/9 global economic crisis, the rand’s overvaluation (which was now rebalancing) and industrial action, Davies said that Ipap2 was attempting to address some of the structural issues around manufacturing, though in an economic climate that is itself not ideal…Read more.

Stop sitting on the sidelines (South Africa)

Image by heathbrandon via Flickr


August 2011

Kim Cloete

CAPE TOWN – Gareth Ackerman comes across as something of a lone ranger in the business world.

Well, at least as far as putting his views on the line about controversial legislation and problems within government.

He raised concerns about the Protection of Information Bill a few months ago when he said it had the potential to scare off foreign investors and blunt the rights of consumers.

Now he’s come out strongly again about the legislation – as well as a range of other issues which he has warned could potentially scupper investment in South Africa, amongst them labour inflexibility, corruption and fading democratic principles.

In a speech to the Cape Town Press Club, he called on other business leaders to take more of a stand on key policy debates and issues they feel strongly about.

I’m very concerned that business people who are very dependent on government contracts, are scared of retribution from government. Government is a very large spender with very large tenders. You don’t want to fall foul of government. That’s why business falls quiet.” Read more.

South Africa: Western Cape government to slash red tape


By Adam Leach

August 5th, 2011

Procurement bureaucracy is to be stripped away to allow companies in the Western Cape of South Africa to generate more business.

Speaking at the launch of the Western Cape Government’s red tape programme yesterday, Alan Winde, who is the economic development member of region’s executive council, announced the formation of a dedicated unit to identify the most damaging areas of bureaucracy and regulation and remove them.

If red tape is not addressed, it will remain an insidious threat to Western Cape businesses,” he said. “By placing unnecessary blockages in the way, it inhibits large enterprises, as well as those smaller enterprises that are so important to our economy.”

He went on to emphasise that rules and regulations that are found to be “beneficial” to industry would remain.

The two-fold process to make things run more smoothly will see the new unit “reduce or eradicate” needless legislation governing procurement while also adapting existing regulations and processes to make them more efficient both in terms of cost and the amount of time they take up.

Describing one of the key actions he said: “As part of this initiative, we will complete Regulatory Impact Assessments on procurement and supply chain management functions that constrain business. As they are completed, we will receive options for policy changes that ease red tape.”

The plans will also see the provincial government run a series of networking events and forums to work closely with industry. These events included twice yearly supplier days where government officials will meet with current and potential suppliers. Special events will also be held with small and medium enterprises to help them overcome the specific challenges they face with red tape.

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