4. In which ways is the initiative creative and innovative?
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The open tender system is one of the most important innovations and it is leading the country in ensuring that procurement decisions are taken justly and fairly.
Unique features:
Probity auditing
The GPT has committed independent auditors to a project ready for execution. It is based on a rotation mechanism that ensures the audit independence and objectivity in each project without the opportunity for familiarity to manipulate the tender outcomes.
The auditors commence at the specification stage, observe behaviour to identify any collusion or coercion and test the bid committee member scores against each bid to ensure fairness to each bidder. The audits provide assurance to the stakeholders that fair and transparent processes were followed, no maladministration and collusion and that processes comply with legislation and regulations.
Public observation in tender adjudications was implemented to provide a platform for the public to observe the outcome of the tender evaluation process on how each bidder faired in the tender, at which stage and why the bidder was eliminated or passed through to following stages, ensuring transparency.
The creativity in the process are the instances where public adjudication is done at a community based location. Gauteng Provincial Government is currently preparing for a state of the art Procurement Hub to house open tender operations in a secure, and technologically advanced facility.
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5. Who implemented the initiative and what is the size of the population affected by this initiative?
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In 2014, the Premier of Gauteng Province, David Makhura, in his State of the Province Address, gave a mandate to the Gauteng Provincial Treasury to address fraud and corruption in government’s procurement process within the Province. This resulted in the Open Tender Process initiative, which seeks to improve government’s transparency and accountability to citizens and transform public sector procurement to free it of fraud and corruption. This initiative was welcomed by all Members of the Executive Council of the province to ensure compliance to the open tender implementation within their respective departments.
The Public Finance Management Act of 1999 charges the Gauteng Treasury with the responsibility of ensuring that provincial priorities are funded and resourced through the implementation of key initiatives and priorities.
The Gauteng Treasury under the leadership of Member of the Executive Council (MEC) Barbara Creecy, has five key drivers of which two are relevant for Open Tender Process; to ensure approved financial resources are spent efficiently, effectively and economically across the province and to reduce fraud and corruption and promote accountable and transparent financial governance in the province.
The Provincial Supply Chain Management division in the Gauteng Treasury department is tasked with the implementation of the Open Tender Process. Two Provincial Supply Chain Management’s strategic objectives are important for the Open Tender Process. Firstly, Provincial Supply Chain Management must ensure compliance to Section 217 of the South African Constitution which stipulates the principles of fairness, equity, transparency, competition and value for money must be entrenched in the procurement of goods and services, and other relevant legislation. Secondly, it must reduce fraud and corruption and promote clean governance across the province.
The population affected by the implementation of open tender are the 14 provincial departments; 8 local municipalities and 15 public entities through the governance and compliance measures inherent in the open tender process. The result hereof is the improved supply chain management and financial management outcomes.
The citizens residing in various communities are also positively affected by the open tender process through the improved service delivery from the appointment of competent and credible service providers to deliver on key basic services such as schools, clinics, hospitals, care facilities for aged and orphaned as well as sport and recreational services.
The citizen population in the five Gauteng corridors (regions) in which public services are delivered totals to 12,272,264 with the population breakdown as follows: 71,5% : working age (15 – 64), 26,3& unemployed, 34,4% unemployed youth, 33,2% female headed households and 16,0& higher education aged 20 and above.
The transparent and open nature of the Open Tender Process has resulted in an increase in the number of registered township suppliers as they now trust that they stand a chance.
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6. How was the strategy implemented and what resources were mobilized?
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Elements of the approach:
Element 1: Probity audit
Probity audits refer to independent reviews of government tenders, contracting out projects (government procurements), to ascertain whether procedures followed are consistent with appropriate regulations, guidelines and best practice principles of openness and transparency. Its objectives are also to bring a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes.
The rules governing the tender process are usually documented in the request for tender and covered by probity during the audit such as scope and contend of the tenders, skills required, evaluation criteria and tender submission details
The purpose of appointing external audit companies as opposed to utilizing the internal audit resources was to mitigate the perception that internal auditors overlook the probability of internal collusion and orchestration of rigging tender outcomes.
Element 2: Public Adjudication
Reports were received from the public through the platforms such as the Corruption hotline and the Auditor General of irregularities in procurement awards, it necessitated that public have access to information on how the tender was processed and how each bidder faired in the process.
Action plan to implement the strategy:
The pilot was rolled out in 2014 with a phased approach undertaken from 2015 to roll out the open tender process in the province.
I. Phase 1: Processing of projects above R50m to be executed through open tender in 2015.
II. Phase 2: Allocation of 60% of procurement spend from each provincial department to be executed through open tender in 2016.
III. Phase 3: Allocation of 80% of procurement spend per provincial department to be executed through open tender in 2017 and 100% of procurement spend in 2018.
The open tender process involves 7 key activities which occur concurrently with the audit probity process to give assurance that fair and transparent processes were followed and that all processes comply with legislation and regulations before a tender is adjudicated. The steps are: tender design – tender specification, SCM process, bid evaluation, bid adjudication, tender awarding and monitoring and feedback.
Element 3 Oversight, Monitoring & Evaluation
The Gauteng Provincial Treasury monitors each tender process and provide guidance and oversight responsibilities at each stage of the tender process. The typical timelines and steps to be undertaken in Open Tender Process spans over a period of 15 weeks with probity audit activities being undertaken in the review of specifications, Appointment of Bid Evaluation Committee, Administrative Evaluation, Technical Evaluation, Site Visit, Commercial Evaluation and the final draft probity report.
Resources to implement
The Provincial Supply Chain Management division in the Gauteng Treasury department was tasked with the implementation of the Open Tender Process with a budget and personnel. Firstly, Provincial Supply Chain Management must ensure compliance to Section 217 of the South African Constitution which stipulates the principles of fairness, equity, transparency, competition and value for money must be entrenched in the procurement of goods and services, and other relevant legislation. Secondly, it must reduce fraud and corruption and promote clean governance across the province.
Funding
The Gauteng Treasury is tasked with the responsibility of ensuring that provincial priorities are funded and resourced through the implementation of key initiatives and priorities. Probity audits are the only funding requirements of the open tender process funded by Gauteng Provincial Treasury on behalf of departments and institutions. The other requirements are funded by respective Supply Change Management Units of departments that have tenders to be issued.
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7. Who were the stakeholders involved in the design of the initiative and in its implementation?
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In 2014, Provincial Government Executive Leadership under the Premier of Gauteng, David Makhura, as the owner of the initiative together with the MEC of Finance, Barbara Creecy, as the champion of the initiative and the Gauteng Provincial Treasury as the implementor of the initiative. The civil servants employed in the Provincial Supply Chain Management division of the Gauteng Provincial Treasury, designed the concept and all related documents such as frameworks, guidelines and processes. The PSCM division liaised, strained and supported provincial departments’ supply chain management units and ensured that they followed and implemented these directives.
An Open Tender seminar hosted in October 2016 to publicly launch the initiative to all citizens, business sector, NGO’s and private sector included prominent members of society to participate in the seminar under the discussion topics that relate to transparency, accountability and ethical leadership. These presentations can be found on the open tender seminar website: www.opentenderseminar.org.za
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8. What were the most successful outputs and why was the initiative effective?
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Improved compliance to Supply Chain laws and regulations
To illustrate this improvement in compliance, a department issued a tender for services required at multiple sites. During the evaluation, the tender was cancelled as a result of several irregularities identified in the specification and terms of reference that could have resulted in irregularities. These errors identified by the probity auditors were corrected by the bid specification committee and the tender republished.
Reduce fraud and corruption attempts:
As an example, a department issued a tender for multiple sites. At the evaluation stage, the probity auditors detected irregularities with regard to altered bid packs as well as a revised bid receipt register. Upon the probity investigation, the security of the storage facility for bidding documents was found compromised. This tender is currently under forensic investigation. The control gaps identified in this scenario were provided to all departments to implement additional security controls for bidding documents.
In cases where material gaps, errors, non-compliance was detected in the process, the tender is recommended for cancellation and re-issued.
The degree of compliance achieved in the execution of the projects through the open tender process has seen a remarkable improvement in the audit outcomes in each institution’s risk and compliance audit conducted by the Auditor General. As a result, the 2015/2016 financial year audit has reported improved outcomes with more institutions obtaining clean audits.
Enhanced Internal Control Environment:
Controls, checks and balances are specific action steps incorporated in the tender processes to ensure the compliance to Supply Chain laws and regulations as well as ensure a good governance. Some of these controls are publication of bidder attendance registers and bid receipt registers, levels of approval of delegation, and date and number stamping of bids.
Reduced Timeframes of the Tender Process:
Delays such as non-attendance of scheduled bid committee sessions and operational challenges within department can extend a tender to almost a year before the tender can be awarded. This impacted on bidders planning and operations as well as service delivery to communities. With the oversight mechanism in this initiative through follow ups and escalating all challenges to the Accounting Officer of the department, has improved tender completion times to four months.
Increased Public Participation
This initiative enforces the publication of tender activities at certain stages of the process for the public to attend and observe the adjudication and provide bidders with information of the tender process.
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9. What were the main obstacles encountered and how were they overcome?
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The lack of buy-in from end users within departments to commit to the process and implement the criteria (probity auditing and public adjudication) was the first obstacle encountered. This resistance was evident in the excessive delays by bid committee members trying to avoid the participation of auditors in the auditing of tender activities. This was overcome by the Provincial Leadership’s (Gauteng Premier and Members of the Executive Council) enforcement of a percentage of each department’s procurement spend to be processed through open tender processes as described in the strategy. Department’s had no option but to eventually achieve the targets set out.
The lack of various skill sets such as developing specifications for publication in the tender was also a challenge which often resulted in the cancellation of a tender due to unmatched bids received. To overcome this Gauteng Provincial Treasury widened the scope of probity auditing and included probity advising which required the tender specification review by probity advisors before publication. The specification review was also overseen by Gauteng Provincial Treasury in its oversight and monitoring role.
The probable fraud and corruption risks in the tendering system without tangible evidence to assertively address and resolve was one of the key problems the open tender intends to overcome. Through the auditing and publication of tender information minimal opportunity exists for collusion or manipulation of bidder documents and information therefore the open tender has and will continue to identify any incident or perpetrator intending to enrich themselves through ill-gotten gains at the expense of deserving citizens.
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