7 crucial ways SA must re-learn procurement if it wants to recover | Fin24
 
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7 crucial ways SA must re-learn procurement if it wants to recover

Apr 01 2019 19:00
Peter Volmink

South Africa is on a long and painful road to recovery from the years that were wasted on looting and rent-seeking. While there are many hard lessons to be learned, it is important that we learn the right ones.

Solutions based on a superficial analysis of our problems are bound to fail. So, too, are "quick fixes" that are designed simply to make politicians look good.

Public procurement, the main instrument in the hands of those who have looted the state, must be cleaned up. But we must guard against replacing one dysfunctional procurement system with another. New procurement "pathologies" could emerge if the path to recovery is not properly managed.

Here are some of the new pathologies that must be avoided.

A climate of fear

We need to question the practice of charging officials with disciplinary offences for every deviation from the myriad badly-drafted rules that apply to public procurement.

Procurement rules must drive sound governance and good decision-making, but they should not be used as weapons in terrorem against public officials trying to do an honest day’s work under very difficult conditions.

Unquestionably, we need a stronger compliance culture amongst SCM officials, but we cannot terrorise people into good governance! Instead of creating an atmosphere based on fear and punishment, we need to place far greater emphasis on growing competencies among SCM staff, providing support and accreditation and incentivising compliant behaviour. Strong sanctions must be reserved for officials who make themselves guilty of acts of honesty, willful disregard of procurement rules or gross negligence.

This requires us to re-think the concept of "irregular expenditure", as defined in the Public Finance Management Act.

The spectre of irregular expenditure hangs over SCM practitioners like a "Sword of Damocles"! Every misstep from the plethora of opaque rules issued by the National Treasury could potentially result in charges of "financial misconduct". No distinction is made between officials who act in good faith and in the best interests of the organisation and officials who act dishonestly. Both groups could face dismissal for incurring expenditure "not in accordance with" legislative requirements or the internal policies of the organisation.

We must find a more sensible way to deal with innocent mistakes that are made during the course of a procurement event.

A culture of indecision

The climate of fear has spawned a culture of indecision. Officials are increasingly reluctant to sign off documents, lest their decisions come back to haunt them later! Nowadays, the favourite course of action is to kick the can further down the road for someone else to deal with.

I say this to whoever cares to listen: Public-sector procurement is being strangled, slowly but surely, by a growing culture of indecision and avoidance behavior that is driven primarily by the climate of fear.

New bullies

There are new sheriffs in town! They have been assigned to the boards of SOCs and government institutions to root out whatever remnants of the state-capture cabal that remain - and rightly so!

However, the problem is that this new junta, eager to please their political masters, have been pouring out retribution on the innocent and the guilty alike. In some instances, supply-chain staff face have been charged with disciplinary offences for insisting that the new boards follow proper procurement procedures.

The culture of bullying SCM staff into compliance with unlawful instructions must be confronted head-on. Simply put, it would be a travesty if we were to allow one bunch of bullies to be replaced with another.

Over-control and under-governance

The current approach to SCM is based on a policing/control model of governance. Perhaps this is unavoidable give the rampant lawlessness that exists.

This model is based on the premise that corruption is best tackled by taking away all discretion from SCM officials. But the weakness of this model, is that it places far too much emphasis on fault-finding and nit-picking. It is the easiest thing in the world to find fault with a tender process.

But, apart from creating a feeding frenzy for auditors and lawyers, this approach does little to enhance the quality of governance in SCM. Good governance places the emphasis on accountability, transparency, personal integrity, competence, efficiency and good-quality decision making.

Though the procurement process must be properly controlled, we must not end up with a procurement system based on over-control but under-governance.

Talent flight

The toxic atmosphere within the public-procurement environment has caused many supply-chain professionals to run for the hills.

Seemingly, no-one in their sound and sober senses wants to continue working in this space! Public-sector supply chain is hemorrhaging talent at an alarming rate — this, at a time when we need a strong cadre of talented officials to rebuild the credibility of the procurement system.

If we want to professionalise supply chain, we must create an atmosphere that attracts, rather than repels talent.

Supplier skepticism

There are many good suppliers in the market who do not bother to respond to tender invitations. They have lost faith in the system, in the belief that most tender processes are rigged. Others are concerned that doing business with the state (a notoriously bad payer) may put them out of business.

Yet others worry that their association with government tenders might end up hurting their brand. For the procurement system to work we must ensure that meritorious bidders (those who offer best price and quality) continue to participate in tender opportunities.

We cannot afford to lose them. The only way to draw skeptical bidders back is by rebuilding the integrity, transparency and efficiency of the process.

Inefficient compliance

Both compliance and efficiency are critical values in supply chain management.

A system that places operational needs (efficiency) above regulatory compliance will undoubtedly lead to widespread abuse.

Equally, a system that places all the emphasis on compliance at the expense of operational efficiency is bound to destroy value. In our efforts to increase the levels of compliance we cannot afford to lose sight of achieving the best procurement outcomes, based on price, quality, security of supply, etc.

If we manage this opportunity well, we can create the conditions that could see a truly great procurement system growing out of the ravages of the recent pass. Let’s not waste this moment.

Peter Volmink is a procurement lawyer, currently employed by a major public entity. He is also a PhD candidate at Wits Law School. He writes in his personal capacity and views expressed are his own.

soe  |  state capture  |  procurement
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