Network tender firms push up costs - MEC

2012-03-09 22:01

Bloemfontein - The government was worrying about business getting more expensive because of companies linked to networks getting government tenders, Free State Finance MEC Seiso Mohai said on Friday.

He said the government tender system made it possible for companies with these connections to get tenders even if they were not specialists in the required fields.

Mohai said the attitude of these tender businesses were things could be done within the network.

"This makes business expensive for government," said Mohai.

He was addressing a gathering of the Free State Black Management Forum (BMF) on infrastructure development in the province and how it could create opportunities for black businesses.

Mohai said many reputable businesses said they did not get government work because of these network companies.

The MEC said the tendency for "necessity-tenderpreneurship" was on the increase in the Free State.

More than 50% of service providers registered on the provincial government’s database had no special area of focus.

"They are registered as generalists who can do anything from catering to construction to cleaning," said Mohai.

He said the Free State would have spent more than R19bn by 2014 on infrastructure (since 2003), while spending on goods and services would be more than R55bn.

Mohai said the government had been consistent on the issue of public infrastructure development and preferential procurement in past years.

However, there were still problems with the capacity to plan and deliver infrastructure projects.

The MEC said the good transformation-oriented intentions of the government had not always been met with honesty and integrity on the part of black owned SMMEs.

Evidence of this was poor infrastructure delivery by service providers.

Many of these businesses had also leaked opportunities to opportunistic business people who were not the intended recipients of transformation policies.

He urged local black businesses to engage the provincial government on what could be done to benefit their businesses more and specifically local based business.

BMF chairperson Norbert Nyamsi said regular talks need to take place between the provincial government and the BMF.

"The BMF wants to be a partner with government in the province to develop it."

He said there was a positive attitude between government and the BMF to help each other in achieving success in the province.

  • braamc - 2012-03-09 22:11

    Pay less bribes a good start

      Max - 2012-03-10 05:44

      Bribes is the African way of doing business. The whole concept of a Black Management Forum is so racist and wrong on so many levels, it is just sickening. Which part of economics does this government not understand, if you do not give the work to the best qualified person you will a pay a premium for giving it to the next best person. The increase in the cost of government business is the price tag of their BEE policy.

      K0BUSL - 2012-03-12 16:04

      @Leonard, this department exists and is called the Contract Management Division of the National Treasury. Unfortunately when you centralise such a service, there are many loopholes that provide both Pro's and Cons. In most cases the Cons outweight the Pro's and you end up with non-functional Tenders that become exclusive and non-friendly to both Tenderers and end-users, as the Contract Manager (mostly a procurement specialist in non-related fields) becomes a little king of his/her own domain. In the past six years we have seen a number of very questionable decision being made with little if any recourse.

  • David - 2012-03-09 22:26

    WTF???? Did this person open a newspaper for the first time in his life today?

      David - 2012-03-09 22:33

      The government is now worrying about what the government is doing. Duh. It's not like they have not repeatedly had it pointed out to them, for a long time. Clueless, incompetent idiots.

  • CorruptZA - 2012-03-09 22:40

    Preferential procurement allows the "network companies" to get tenders which they do not have the expertise or resources to fulfill. This results in the "poor infrastructure delivery by serice providers" mentioned by the MEC

      bernpm - 2012-03-09 22:51

      Have they ever heard of cartels? Happens in many parts of the world before they are found out. The predisposition to BEE before quality, price and making delivery dates seems part of the problem.

      Art - 2012-03-10 08:34

      Problem with the Tender companies is the FACT that MOST of them have been SET UP by the very Dept members, that requires the services...... and pocket MOST OF THE MONIES in their OWN bank accounts!

  • Glyn - 2012-03-09 23:03

    Black Business Forum sounds racist to me! Please explain why it is not racist....

  • Glyn - 2012-03-09 23:04

    BEE is a cartel!

  • Michelle - 2012-03-09 23:26

    you dont even have to pass woodwork to get tenders in specialist areas - all you have to be is bee, no need for any education or expertise!! The trouble with this is that the tax payer is paying dearly for it all. How it operates is you give out a tender to a buddy at say R3 million, he knows nothing about the work to be done and sub contracts to another buddy who says he can do it at R1,5 million who also knows nothing and sub contracts it out to a guy who knows something for R750,000 who hires a guy who realy knows what he is doing at R350,000......... if only the guy who really knows something got the work to start off with the taxpayers would have saved paying out an extra R2,650,000 for the nobodys. And perhaps this could have built some more houses. if each department did the RIGHT thing and the tender only went to someone who could prove they are up to the doing the job themselves instead of sub contracting then our country and taxpayers would be a whole lot better off instead of a few very fat cats.......

      graham.westcott - 2012-03-10 06:28

      Your summation really puts this in perspective! Unfortunately I do not believe that this will ever change.

      Adam - 2012-03-10 08:17

      You notice that government is in fact a very large business in itself, and any business that operates as our government does, soon fails, and the executives find themselves looking for jobs. When this government fails, and they will, I hope the DA and other parties do not take them in. Its about time the anc realises that life is not a rehearsal.

      Louis - 2012-03-10 09:27

      MIchelle and the guy that eventually does the job is a white person that cannot get employment due to AA. AA and BEE has failed throughout the world and these idiots running the circus are slowly starting to realise this.

  • Kevin - 2012-03-10 05:52

    Because of the thugs appointed to government by the anc tenders are being manipulated and in some cases cost the taxpayer 300% more.The answer is to get maximum tenders delivered and opened by Chartered Accountants firms (more then 1). Take away all BEE as this is where huge amounts of money are added as BEE firms get the tenders and in 80% of the cases the work is done by real businesses and the BEE thugs walk off with a handsome profit at the expense of the taxpayer.

  • Lucas - 2012-03-10 08:55

    Our company is a specialist in our field. We do not get government tenders because we are white, but as soon as a tender is issued we get 10 to 15 requests for quotes from BEE companies. The funny thing is we actually do not have to tender because we are almost certain to get the business from one of the the BEE companies. Government just payd more for the same product because they now have to pay a middleman a massively bloated price.

  • Adam - 2012-03-10 09:26

    Why are we protecting majority groups after nearly 2 decades? Why arent the tenders given to the best applicants? Why is the country going down the tubes? Why is the anc still in power?

  • Tim - 2012-03-12 12:47


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