New law to root out Gauteng tender fraud

Barbara Creecy (File, Beeld)
Barbara Creecy (File, Beeld)
Cape Town - Gauteng intends to make the open tender system compulsory by law to ensure that government procurement processes are free from corruption, Finance MEC Barbara Creecy said on Tuesday.


"[To] us clean government, integrity, transparency, as well as greater access and participation in government’s supply chain are vital elements to instilling greater public confidence in government in general and in public tendering in particular," Creecy said in a prepared speech during the debate on the open tender system at the Gauteng Provincial Legislature.

She said concern about corruption threatens to erode public confidence in all state institutions. Creecy noted that 82% of respondents to the Gauteng City Region Observatory’s 2016 Quality of Life Survey said that corruption is the main threat to South Africa’s democracy.

The Gauteng Provincial Government pioneered the open tender process in 2014 in a bid to tighten public procurement.

“What began in 2014 as a pilot project with the, by now, well know Cedar Road and Gauteng Banking tenders - together worth about R145m - now involves, 72 projects across all provincial departments with a collective worth of R10.419bn. Our target for the current financial year is to have 60% of our new procurement spend go through the open tender procurement process,” Creecy said.

The open tender innovation includes public scrutiny over the opening of the tender boxes and imprinting of all documents, appointing external, independent probity auditors to scrutinise every phase of the tender evaluation process to ensure total compliance with laws and regulations, and most important of all the public adjudication of the decision on the recommended service provider where bidders, the media and interested members of the public can watch the proceedings.

"Our commitment to the open public tender system has from the start been based on an understanding that the R20bn this government spends annually on procuring goods and services can have a decisive impact on improving the well being of our province’s families and households."

The MEC said this important initiative should become a long-term way of life in Gauteng.

"All departments and municipalities, regardless of which party governs, must promote open government principles.”

Creecy pointed out that she will meet with members of Mayoral Councils for Finance to discuss the open tender system.  

“I will shortly be meeting with all finance MMCs from all municipalities in Gauteng where I will offer them the support of this government to implement the open tender process and restore public confidence in public procurement in every municipality in the province,” she said.

The open tender process also promotes small businesses in line with the Gauteng government’s commitment to economic transformation and inclusion.

In the 2015/16 financial year, the provincial government spent a total of R25bn on goods and services, R19bn (77%) went to black owned companies, 20% to companies owned by women and 9.3% to youth-owned companies.

In the first six months of the current financial year, with the province-wide roll out of the open tender process, 93% of spend has been on procurement from black-owned companies. There was also an improvement in total spend on women-owned companies, which amounted to 22.7% and youth companies at 10.5%.

“Of equal significance is the fact that R3.5bn (13%) of our provincial first quarter spend was allocated on goods and services procured from township entrepreneurs. Supplier rotation is now ensuring that, on average, we are utilising almost a third of the companies on the database,” Creecy said.

The MEC believes these figures show that government’s vast buying power is a critical lever to promote economic inclusion and transformation.

“Public procurement is playing an important role in developing the basic capabilities of small companies, including township enterprises, to participate in and benefit from growth processes,” she explained.

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