Clear signs of overpricing, unfair processes, potential fraud in PPE tenders - AG report reveals

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President Cyril Ramaphosa receiving on behalf of government a R1 billion consignment of critical personal protective equipment (PPE) and other medical supplies.
President Cyril Ramaphosa receiving on behalf of government a R1 billion consignment of critical personal protective equipment (PPE) and other medical supplies.
  • The Auditor-General has released shocking findings about Covid-19 PPE government contracts.
  • Kimi Makwetu says there are clear signs of overpricing, unfair processes and potential fraud.
  • He says he will "converge" his report with that of the Special Investigating Unit (SIU) so that those implicated are held accountable.

Auditor-General Kimi Makwetu has released damning findings on Covid-19 relief funding which details the extent of the rot surrounding personal protective equipment (PPE) tender procurement processes. 

Makwetu briefed the media on Wednesday and detailed how contracts in the R22.4 billion PPE budget has been misappropriated. 

His office found clear signs of overpricing, unfair processes and potential fraud in government procurement.

Makwetu said pre-existing deficiencies in the supply chain processes of government were amplified by the introduction of emergency procurement processes allowed for PPE.

READ | SIU probes PPE contracts worth R5bn - Eastern Cape tops alleged irregular cases

"Based on what was audited to date, there are clear signs of overpricing, unfair processes, potential fraud and supply chain management legislation being sidestepped. In addition, delays in the delivery of personal protective equipment and quality concerns could have been avoided through better planning and management of suppliers."

Through his investigation, he identified that unreliable methods were used to determine the number of employees and pupils at schools and the need for PPE for support staff in schools was not always considered.

READ HERE | No mercy for corrupt Gauteng govt officials, vows Makhura

He added that some schools did not receive enough masks and face shields for pupils and teachers and some health facilities experienced shortages of certain PPE items during the pandemic due to significant delays in delivery by suppliers.

He said:

Orders placed by health departments included items that exceeded the maximum prices prescribed by the National Treasury and some items were priced at more than double, or even five times, the prescribed price.

Makwetu said various issues across both the health and education sectors require further investigation. These include:

  • Suppliers not having valid tax clearance certificates;
  • Quotation and competitive bidding processes not being correctly applied;
  • Inadequate or inaccurate specifications and evaluation criteria, and the incorrect application thereof;
  • Conflicts of interest.

"In addition, in the health sector, awarding of contracts to suppliers with no previous history of supplying or delivering PPE," he said.

READ HERE | Covid-19 graft: Gauteng to use open tender system, asks SIU to probe all procurement - Makhura

The report also stated that there were insufficient controls to ensure receipt of and payment for PPE at the level of quality and price ordered.

He also found poor quality of PPE purchased was most evident in a few schools his team visited, where masks provided were not to specification and often one-size-fits-all.

ALSO READ | Covid-19 PPE money stolen from the state will be recovered - Jackson Mthembu

The AG also reported that specified PPE items ordered by a health department were substituted by the supplier with items of a lower specification, which the department accepted and even paid for at the higher price than the originally ordered item.

Makwetu said of the budgeted R22.4 billion, only R6.7 billion was actual expenditure. He said he suspected the Special Investigating Unit's (SIU) investigation into PPE corruption would be comparable to his findings.

"We think that there [is] some level of convergence between the full extent of the amount that SIU is chasing versus the things we have seen as we were doing our analysis."

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