The Premier of South Africa’s Western Cape province has hit out at the country’s new centrally-organised “mega contracts” for procurement, arguing they are unlawful, ineffective and won’t solve corruption.
Helen Zille (pictured) was criticising moves by the Office of the Chief Procurement Officer (OCPO) to make it compulsory for all departments and governments – national, provincial and local – to participate in large, nationally-procured contracts.
Whereas currently municipalities and provinces can directly purchase many of the goods and services they require, under the new system these will have to be purchased through OCPO.
The idea behind these mega contracts, introduced by finance minister Pravin Gordhan in his 2016 budget speech, was “to improve financial management and help combat corruption”.
Local and provincial governments will have to operate under the new system by the end of July.
But Zille claimed it was illegal for the Treasury to force local government to buy centrally.
She said the move would stop provinces and municipalities from obtaining goods and services at what may be a cheaper rate locally, may stop them purchasing to meet unique needs not serviced by a central contract, or may prevent them dealing efficiently with suppliers.
“Small businesses would certainly lose out on hundreds of millions in contracts that would go to only the big players capable of supplying the entire country,” she said.
“If we were to force these businesses to compete on a national level, with major established companies, they will lose every time.”
Zille added that there was no guarantee that centralisation would eradicate corruption.
“Some of the most corrupt procurement processes in the history of our democracy, have been run through central government,” she said.
Whereas the treasury meant well by trying to save cash by creating economies of scale, it was also trying to make up for widespread poor procurement practice, she claimed.
Zille also believes central procurement can mean the arrival of goods and services is delayed.
“A prime example is the distribution of medical supplies by the National Department of Health. It has sadly become a regular occurrence for provinces to experience ‘stock outs’ – where hospitals and other healthcare facilities run out of certain medicines in their dispensaries, affecting thousands of patients across South Africa,” she said.
Similar delays had been experienced in the sourcing of IT equipment through the State Information and Technology Agency, she added.
She argued participation in national procurement contracts ought to be voluntary but added that other treasury proposals, such as an eTenders portal, to save tender advertising costs, and a supplier database to ensure suppliers meet legal standards, could be effective.