The introduction of the e-Tender Publication portal and the central supplier database (CSD), launched by the Office of the Chief Procurement Officer (OCPO) in April 2015, signals a positive move towards accountability and a prospective deviation from dubious procurement practices.

All eyes will be on the tools’ effectiveness, especially as government is poised to increase expenditure by 7.9% over the next three years from R1.24 trillion in 2014/15 to R1.56 trillion in 2017/18.

“The CSD is a welcome addition to public procurement. It follows closely on government’s announcement of various measures to ensure the development of structures and processes that aim to overcome dodgy procurement practices and ensure spending is managed prudently,” says Greg Brown, Director of Governance, Risk & Compliance at LexisNexis South Africa.

“Treasury has already conducted a review of public sector supply chain management, drawing on the views and experience of government, business and civil society, and some reforms, like the e-tender portal and the CSD, are important steps to ensure policy is converted into real world action,” he adds.

Central control

Other changes include that from January 2016, all books delivered to schools will be managed through a centrally negotiated contract, and with effect from May 2015, all school building plans will be standardised and the cost of construction controlled by the Office of the Chief Procurement Officer.

As of the beginning of April, the central supplier database would interface with SARS, the Companies and Intellectual Property Commission and the payroll system. It will electronically verify a supplier’s tax and BEE status, and enable public sector officials doing business with the state to be identified.

“New B-BBEE legislation is changing the way in which a company’s vendor database will comply to BEE codes and standards. Whereas previously only vendors pertaining to 80% of procurement spend had to be BEE compliant, now 80% of the vendor database needs to be compliant and to meet the new quotas. This means more SMEs and EMEs will need to be vetted for companies to comply, says Brown.

“In addition, both the Public Finance Management Act and the Municipal Finance Management Act are driving strong ethical standards which impact supply chain management. Both encourage companies to build environments where business is conducted with integrity, respect and mutual trust amongst all those involved in the procurement process.

“Companies looking to win government business can’t afford to drop in BEE levels or to be found non-compliant with the Public Finance and Municipal Finance Management Acts.”

Protection

With procurement fraud and corruption under the spotlight, government and corporates are taking a far greater interest in protecting themselves from reputational damage. Brown advises the following interventions to help supply chain management officers comply with both the new B-BBEE legislation and the finance management acts:

• Manage B-BBEE compliance including: monitoring expiry date of your certificate, monitoring your procurement spend and supplier progress in terms of B-BBEE.
• Identify Enterprise Development/Supplier Development opportunities.
• Combat corruption by identifying potential connections and ownership of property.
• Identify possible fraudulent activity within vendors and employees with the help of South African Fraud Prevention Services and automated or online procurement management systems.
• Establish the business interests of employees within your organisation.
  Look for and recognise conflicts of interest within your organisation and potential supply chain management partners.
• Vet vendors and create a preferred vendor list.
• Monitor vendors on an ongoing basis.