Another step towards effective govt tendering

Anyone wishing to do business with government in future will have to register on the newly-launched central supplier database (CSD) and read up on requirements of tenders for which they wish to compete. In Corruption Watch’s experience, some small businesses will get their fingers burned before the database is a well-oiled machine, but Finance Minister Nhlanhla Nene is adamant that the CSD is the system of the future and will restore the masses’ trust.

Nene this week launched the CSD at the East London Industrial Development Zone in the Eastern Cape, citing the need for government to simplify its procurement process. “In my 2014/15 budget speech, I committed to improving transparency, efficiency and effectiveness of supply chain management (SCM) by simplifying the process of doing business with government in the SCM environment.”

Earlier in the year, government’s eTenders portal went live with the aim of displaying all tenders to be advertised along with the details that go with them. “This means that all suppliers are no longer travelling across the country looking for tender information,” said Nene. “In addition to the competitive bids on eTenders, the public and suppliers can monitor government through the published procurement plans contained on the same page.”

With the supplier database, Nene’s department – particularly the office of the chief procurement officer – hopes to show transparency in the awarding of government contracts.

A statement from the National Treasury further describes the project as such: “the CSD will be the source of all supplier information for all organs of state as it will reduce the exchange of compliance documents in paper form, eliminate multiple registrations with different organs of state, and ultimately reduce the cost for both business and government by enabling electronic registration and verification processes.”

Duped

The establishment of a national database may be a good idea for exhibiting transparent procurement processes, but it will be a while still before the small business owner on the street is guaranteed security.

In a report sent to Corruption Watch in April this year, the owners of a small Gauteng-based business claim to have been duped into participating in what they thought was a legitimate procurement process with one of the provincial departments. “We recently submitted a supplier database application to the department. We then received a request for [a] quotation via fax from an official [name provided] and responded to it via fax.”

This effort was followed by a phone call confirming that their business had won the contract as well as a purchase order from the ‘department’. “One of our suppliers then picked up that this was a fraudulent purchase order and we then also phoned the department and they confirmed this.”

We have been made aware that the same scam is still circulating. A member of the Consulting Engineers of South Africa (Cesa) association received documentation supposedly from the Department of Energy. A request for quotation for solar panels was received, which the Cesa member presumably responded to, and a few days later the ‘department’ sent a written confirmation that the supplier had won the tender. The amount in question was almost half a million rands.

The real Department of Energy has confirmed with Cesa that this is a scam, and that it is not involved in such a tender. Fortunately the member was suspicious and lodged a query with Cesa before any loss was suffered, but the lesson here is that the CSD will be a resource for small suppliers to check up on which tenders are real and which are fake, as it will carry information on all genuine government tenders currently in progress.

Another business owner who was not so lucky lost out on money that they were scammed into paying to ensure that they get a tender. “We received a call from a lady claiming that she is from the [national department] and if we would be interested in a tender,” reads the report. “We were certain that we were registered on their suppliers’ database so this did not seem odd.”

What was odd was that after having searched for a supplier for the product required, they had to pay a 60% “deposit”. It was only after the required goods had been delivered to the department, and a final “settlement” was paid by the business that the owner realised that the documentation that had been sent from the department had been forged. The department contact, however, was able to confirm that the business is legitimate and that it is registered on the database as per requirement. It is possible that the scam is the work of a department employee(s) preying on unsuspecting suppliers.

Centralising for better control

According to Nene, the database would now be the source of all supplier information for all organs of state, and would reduce duplication of effort and cost for both business and government. At the same time it would facilitate electronic procurement processes, as suppliers would only be required to register once when doing business with the state.

A verification process for every application will involve checking in with the register for tender defaulters and database of restricted suppliers, to eliminate the bad apples of the supplier world. For South African suppliers, identity records will be verified through the Department of Home Affairs.

“Modern procurement is first and foremost established on the principle of buying the right commodity, at the right time, at the right price from the right supplier,” said Nene. “Suppliers are therefore, very important strategic partners of government in creating a great South Africa and making the vision described in the National Development Plan a reality step-by-step. Trust is built when suppliers deliver the correct commodity of the right quality, in the correct quantities and to the exact correct delivery point.”