The complexities of government tenders

2018-03-15 06:01

A TENDER is a method utilised to contract for the purchase of goods or services. In the public sector it essentially involves a competitive and public bidding process, wherein competitors in a specific market are given an opportunity to bid for work.

The rationale is that this system will produce healthy competition, will ensure that government receives value for money, and will unlock economic opportunities for small and emerging businesses.

In order for a government tender to achieve this rational, it needs to be executed in a manner that is fair, transparent and equitable. Hence section 217 of the Constitution demands that when an organ of state, whether in national, provincial or local sphere of government contracts for goods and services it must do so in accordance with a system that is fair, equitable, transparent, competitive and cost-effective.

In an attempt to comply with the constitutional directives, a number of procurement laws were enacted. The inadvertent consequence is that the government tender process in South Africa is regulated by a labyrinth of laws and regulations which more often than not, undermine the very constitutional imperatives they were intended to advance.

Further to this, each government department or municipality is accountable and responsible for procurement decisions it takes. Rules and policies of various procuring entities may therefore differ. Government departments find themselves embroiled in a process that demands adherence to such a number of laws, that formalities are designed to ensure strict compliance. Anyone who has tendered for a government contract will attest to the number of forms, documents and other technicalities which need to be submitted or met in order for a bid to be deemed to be“qualified”.

Unfortunately the process undertaken to assess whether a bid is disqualified or not, is a highly formalistic one reliant mainly on the submission of information by the tenderer. This formalistic approach coupled with a bid committee system that operates largely outside the eyes of independent observers makes the tender system in South Africa fertile ground for litigation and corruption due to inconsistencies, ambiguities, and selective application of rules.

However the converse is also true of an approach that places undue emphasis on formal procedures. A cursory study of tender appeal matters reveal that in many instances legitimate and lawful decisions are difficult to defend due to imprecise adherence to a system that demands perfection in process above all else.

Fortunately procuring entities are empowered to design their individual supply chain management policies. While such policies must adhere to national regulations, there is sufficient scope for procuring entities to implement their procurement practices in a manner that complies more with international best practices in the avoidance of corruption and irregular practices. Fortunately also for South Africa, we appear to have a judiciary which favours substance over form. Effective interpretation of procurement laws and regulations will therefore almost always ensure that the veil of formalism is lifted to reveal substantively wrongful or corrupt decisions.

Article written by Dr Prenisha Sewpersadh, from Dr Sugudhav-Sewpersadh Attorneys.


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