Public procurement in South Africa: a wish to develop the country economy and the necessity to develop further digitisation

On the 26th of January 2022, I had the pleasure to meet with Courtney de Jongh, who is working at the City of Cape Town as a senior buyer. For an hour, we spoke about public procurement and the opportunities and challenges of this area in South Africa.

South Africa’s public procurement activities are regulated by the Constitution[1], where section 217 states the following: “When an organ of state in the national, provincial or local sphere of government, or any other institution identified in national legislation, contracts for goods or services, it must do so in accordance with a system which is fair, equitable, transparent, competitive and cost-effective.[2]” Created during Nelson Mandela’s presidency, the supreme text is set after the end of the Apartheid system (in 1994).

To enable more diversity in the south African economy, Courtney told me about different examples to tackle these challenges. One of them is the Broad-based black economic empowerment (BEE) policy. Created in 2003 (Broad-Based Black Economic Empowerment Act), the policy aims to encourage and enhance Black people’s involvement in the economy. It means that, when evaluating a bid, more points can be given to a company where there are black people, particularly in a managerial position. If this company doesn’t achieve the minimum targets, then, it will be excluded from the tendering process or gained less points.

During Covid time (the South African government announced a hard lockdown on the 23rd of March 2020 - effective 3 days later), not every governmental employee had a work laptop or 3G card for their computer and thus, half of them were able to work from home. Like other countries, the country faced shortages of sanitizer, PPE, etc. The public procurement professionals had to rely on their network to find the right items. And even if they did so, they still had to comply with the public procurement process which was a disadvantage at that time as it was considered a lengthy process. Similarly, when a company was ranked the highest total adjudication points, a due diligence checklist has to be carried out: which would check and verify inter alia; company registration information, control of their background, etc. Thus, companies were selected carefully, and this process would minimize the risk of overspending of public funds on companies trying to exploit the opportunity to inflate prices on critical items such as PPE, sanitizers etc. which would speak to unethical behaviour, coupled with fraud and corruption.

In a more “normal” time, the South African public organisations aim to redistribute governmental funds to the local suppliers by sourcing locally. The tendering process, in South Africa, is still based on a paper system. The tender can be published on the internet but only until recently, in 2017 (E-tenders - https://www.etenders.gov.za/). However, suppliers are still required to submit their bids manually. This is, partially, due to encouraging every supplier to apply and not being limited for not having access to the internet. Thus, when the bids are received and opened, a supplier can be present in the opening room, which creates a system of transparency. They would then be able to hear the price of their competitors, as read out by the tender opening official and be able to adapt the next time if unsuccessful.

Sustainability is also considered during a tendering process. For instance, on certain goods, such as cleaning equipment, oil, or medical facilities, there is a focus on waste management. To do so, the public procurement team inserted a specific clause into the contract. Then, the supplier has to answer it and explain how it will dispose of it once the product has been used – in an attempt to look after the environment. An effort is also made for green procurement and energy savings goods. On the future of procurement, Courtney told me that, for him, the digitalisation of procurement is inevitable in the long run (with autonomous software, or Artificial Intelligence), particularly in regard to data as it will help to improve the service delivery to citizens and speed up processes to real-time. But, and like other countries, private procurement professionals are far beyond public procurement in this area.

Last but not least, Courtney shared with me some good practices:

-?????????The first one would be to manage efficiently the procurement team. Courtney broke down into two key elements:

o??Specialisation: to enable workers to be specialists in their area and, thus, becoming the reference,

o??Proper team management: to define roles accordingly as well as developing responsibilities. This organisation should develop more transparency and communication between stakeholders.

-?????????The second one is the necessity, for a public department, to have/rely on a P2P system in order to have a deep understanding of their procurement practices: to know the purchasing pattern, the spend, which supplier they are contracting with and at which rate (and, thus, knowing the rotation), etc.

As usual, it has been a really interesting discussion on public procurement in a different country and continent. As usual, I did learn a lot and I hope you will too.

Thanks for reading,

* If you would like more information, or want to share your experience, please feel free to send me a private message.

[1] The Constitution of the Republic of South Africa, 1996

[2] The text can be found on the following website: https://www.gov.za/documents/constitution-republic-south-africa-1996-chapter-13-finance#217.