17 Febuary 2010
Announcing measures to cut down on tender fraud during his Budget speech on Wednesday, Finance Minister Pravin Gordhan said a ministerial task team would help the government save R6.5-billion this year and a total of R23-billion over the next three years.
Gordhan told Parliament in Cape Town that the savings exercise being conducted by the task team should be seen as a “first step to getting better value for money”.
“Too often, the culture in the public service and in state-owned enterprises is to ratchet up salaries, spend on frills, travel in luxury, and spend more on marketing the agency than in fixing the service,” he said.
He added that the task team was also looking at the possibility of rationalising some government entities and agencies.
“The resources that we have at our disposal belong to the people. If we do not use these wisely and sensibly, our contract with the people is eroded,” he said.
Task team members
The task team comprises Gordhan, Minister in the Presidency for Performance Monitoring and Evaluation Collins Chabane, and Public Service and Administration Minister Richard Baloyi.
The task team releases a preliminary report during the tabling of the Medium Term Budget Policy Statement in October.
After making initial savings of R14.5-million over three years at national level, the task team announced on Wednesday that it had identified further savings, bringing the total savings over three years to R23-billion.
This included R6.5 billion in the coming financial year, R8.6-billion in 2011/12, and R7.9-billion in 2012/13. The provinces would be able to save R12.6-billion over this period.
‘Fraud-proofing’ state procurement processes
The task team is also preparing a set of recommendations to strengthen and “fraud-proof” the state’s procurement processes. The recommendations will require a review of supply chain policies, and include streamlining the approval of major government contracts, as well as training officials in best practices.
Measures to be introduced will include blacklisting companies and individuals involved in corrupt practices, as well as improving investigating and prosecuting capabilities.
A supply chain compliance unit has also been set up in the National Treasury, which will work with the police’s Special Investigating Unit (SIU) to investigate tenders where there is suspicion of corruption.
An inter-ministerial task team has also been established to co-ordinate anti-corruption initiatives.
Supply chain compliance unit
In a media briefing before the Budget Speech, Gordhan said the supply chain compliance unit had outlined five trends around fraud in the procurement system.
These included tender procedures not being followed, goods or services procured to government at inflated prices, government officials benefiting from tenders, government agencies and departments ordering unnecessary goods and services, and payments not being made to service providers.
Citing a recent example, Gordhan said the government had paid R16-million to a service provider who had not even rendered the necessary services. The team was also currently working with the SIU on four investigations involving contracts worth R2-billion in total.
He said the team had already helped two provinces save R500-million by looking at current contracts, and had also uncovered 1 200 government employees that had participated in tax and tender fraud.