Businesses can expect transparent tender processes and faster turnaround times with the new rules issued by National Treasury on Tuesday.
Business chambers welcomed National Treasury’s instruction note aimed at combating tender fraud and reducing turnaround times for settling payments to business in 30 days. Previously the process of settling invoices could take up to three months, potentially destroying small businesses.
To stomp out tender corruption and fraud, government now requires details of directors and key officials bidding for tenders published on the relevant department’s website.
This, National Treasury said, was “to ensure the integrity of the public procurement system and give effect to the commitments made (by finance minister Pravin Gordhan) in the budget speech to combat fraud and corruption.”
Public procurement has been mired in scandal over the past few years, with revelations of senior government officials and their families benefiting from lucrative government business.
An East London entrepreneur and printing company director says there is a link between tender fraud and delayed payments.
“In some departments, there’s an undercurrent of corruption which leads to procurement being suspended and payments can be delayed for up to 90 days,” says the entrepreneur who declined to be named for fear of victimisation.
He emphasised that some departments are efficient and process payments within a few weeks. But bad experiences with some departments have caused cash flow problems and missed opportunities before.
“As a small business, we rely a lot on being paid on time so that we can buy stock and material and pay staff salaries and other overheads.
“We’ve had instances where we declined business with prospective clients because we had no cash flow,” says the entrepreneur.
Nelson Mandela Bay Business Chamber (NMBBC) chief executive Kevin Hustler welcomed the instruction as a positive step from government.
Payment delays for completed work have been a thorn in the side of small business. Hustler said the 30-day payment system is a welcome boost for the survival of small business.
“Many of our members have expressed concern over payment (delays) from government. Non-payment affects SMMEs the hardest, as they often have very narrow margins within which to manage cash flow.”
“The Nelson Mandela Bay Business Chamber applauds any steps taken to improve transparency and accountability in government procurement and tender processes,” said Hustler.
National African Federated Chamber of Commerce (Nafcoc) Eastern Cape president Phumzile Ndendela said tender related corruption cost the public billions which could be used for service delivery.
According to Ndendela, tender fraud involves collusion to inflate prices and shoddy workmanship which needs to be corrected at additional public expense.
“When people defraud the government, they are depriving the poor. Money is wasted through irregular tenders and often the work has to be rectified because the winning bidders are not necessarily competent,” Ndendela said.
“We fully support anything that deals with corruption. Competing with government officials opens up bidding procedures to fraud.”
The business community including Nafcoc Eastern Cape has previously spoken out against participation of government officials doing business with the state.
Ndendela added that the new regulations would level the playing fields for business people.
“As Nafcoc, we have always said that we would be happy if tender process was open and transparent and stressed that our members must not collude with government officials in defrauding the state,” Ndendela said.
The instruction note can be found on the National Treasury website in the Office of the Accountant General section http://bit.ly/m4H1ZR
The note covers national and provincial departments, constitutional institutions, and Schedule 3A and 3C public entities. Some of the issues addressed include:
- Departments are required to submit advance tender programmes to the relevant Treasury for tenders exceeding R500, 000.
- In the interests of transparency, the names of all bidders that submitted bids are to be published on the relevant department’s website.
- Bidders are required to disclose particulars of all directors and key officials. This enables departments to verify whether any directors or officials are in the service of the state, and whether they had been previously restricted from doing business with the state, or are linked to previously restricted suppliers.
- The existing stipulation that awards are published will be strengthened by requiring that specific information of successful bids must be published. Information will include the contract numbers and description, name of successful bidder(s), preferences claimed, contract prices, and so on.
- There is a limit to variations of the original contract, or aspects thereof.