Government advisory body proposes creation of public procurement authority

The constitutional body which advises government on the fiscal framework and intergovernmental relations has recommended that the presidency establish a public procurement authority to help combat “vast and deep-seated” corruption. 

The body would be responsible for organising and managing the public procurement process and laying down the rules, regulations, guidelines and policies, enabling greater transparency and standardisation in awarding government contracts, the Financial and Fiscal Commission (FFC) says in a submission on the 2023/2024 Division of Revenue Bill which allocates the budget to the three spheres of government.

The government spends more than R800bn a year on goods and services, some of which has been beset by graft and fraud, as exposed by the Zondo commission of inquiry into state capture. 

The FFC submission deals with various matters, including combating corruption, youth unemployment, debt reduction, public sector wage trends, social grants, the provincial equitable share formula, provincial conditional grants, basic education and district municipalities.

“Although SA has put together a range of laws, strategies and institutions to combat corruption the challenge is severe and exacerbating,” the report says. It also recommends that the presidency review the governance structure of anti-corruption agencies to address duplication.

The FFC recommendation on the creation of a public procurement authority comes as the National Treasury prepares to release of a final version of the Public Procurement Bill, which will introduce a comprehensive and uniform framework for procurement by organs of state to overcome fragmentation in the current system.

The bill, which consolidates numerous laws and supply chain management instructions from the Treasury, is government’s response to deal with procurement irregularities and poor compliance. It seeks to create a strong oversight mechanism to deter corruption and fraud associated with procurement.

Finance minister Enoch Godongwana said in May that the bill could be tabled in parliament this year. It has been delayed due to findings by the Zondo Commission on the limits of the existing public procurement system and by the Constitutional Court judgment on preferential procurement. The minister said the Treasury has had to process about 4,000 submissions received on the draft bill which was released in 2020 for public comment.

In terms of the draft bill, a Public Procurement Regulator would be established in the Treasury to ensure compliance with legislation, provide advice and guidance, and develop and implement measures to ensure transparency in the procurement process. The regulator would take over the functions currently performed by the office of the chief procurement officer in the Treasury.

The draft bill also provides for the establishment of a Public Procurement Tribunal to review decisions made by the regulator and provincial treasuries. It also contains a framework for preferential procurement to address the problems arising from the Constitutional Court’s declaration that the preferential procurement regulations released by the minister of finance in 2017 were unlawful.

The court ruled  that the minister wasn’t authorised by the Preferential Procurement Policy Framework Act to make these regulations because the act gave organs of state the power to determine their own preferential procurement systems.

ensorl@businesslive.co.za