Securing public procurement and resources now beyond…

Much has been said about this “moment” in the socio-political environment of South Africa. And while much of it has rightly focused on efforts to recover from Covid-related corruption and state capture theft, more needs to be said – and done – to achieve the longer term changes. term necessary for such a recovery.

Open government reform is key to fighting corruption and capture.

The clandestine nature of corruption makes it nearly impossible to accurately quantify the losses incurred by the state. However, according to an estimate 27 billion rand per yearthe cost of corruption is around 10% of the country’s total budget for health in 2022. With procurement considered a government’s greatest corruption risk, health contracts are particularly vulnerable.

In the case of South Africa, this poses a direct threat to closing the gaping chasm in universal health care and equity. With approximately 87.7% of children and 84.7% of the total population having no private medical help coverage and dependent on a failing public health system, the risk is serious.

The potential of “clean” purchasing to contribute to the achievement of universal health care is seriously undermined in multiple ways (including less obvious ones, such as the abuse of the preferential purchasing policy). While problems such as drug shortages can result from a wide range of factors such as delayed tenders, late payments to suppliers and poor contract management by health services, this creates gaps in people’s access to vital care. Recurring drug stock-outs in public health facilities highlight the need to ensure an open and transparent supply system.

The same can be said for Covid-19 vaccine contracts.

Various organizations have called on the government to introduce open contracting to combat malfeasance and derailment in public procurement processes. the Health Justice Initiativefor example, went to court to compel government departments to publish Covid-19 vaccine contracts.

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Beyond the emergency

Clearly, reform related to securing public procurement and resources is now more than urgent. Since 2018, there have been some significant interventions, including key appointments to the boards of state-owned companies (SOEs) and the National Prosecuting Authority (NPA). Interventions to strengthen criminal justice institutions and prosecuting authorities must also be accompanied by measures to prosecute those involved in corrupt activities.

Recommendations from the Judicial Commission of Inquiry into State Capture, Corruption and Fraud in the Public Sector, which make explicit reference to public procurement, are currently gaining public attention. Another is the release for public comment (in 2020) of the Public Procurement Bill by the National Treasury. A third is the tabling of the National Health Insurance (NHI) Bill. Many public submissions on the NHI Bill have exposed the disastrous consequences and risks of corruption in healthcare procurement. Finally, the open government and clean governance commitments made by the presidency through the African Peer Review Mechanism and the Open Government Partnership deserve some attention.

An imperative of social and environmental justice

Effective public procurement is squarely a social and environmental justice imperative which, in South Africa, also carries constitutional obligations to address the consequences of discriminatory policies of the apartheid era.

On March 14, President Cyril Ramaphosa spoke about the achievements of the Special Tribunal of the Special Investigative Unit. The court is said to have recovered around 8.6 billion rand from illegal contracts and in recent weeks set aside more than 100 million rand in irregularities. and illegal contracts in Covid-related public markets. Ramaphosa’s emphasis on the need not only to prosecute but also to recover funds is significant. (Photo: Jairus Mmutle/GCIS)

It is therefore not unreasonable to expect that the Minister of Finance and the President, in their Budget Speeches and in the State of the Nation Address (SONA) respectively, will explain how the government intends to s tackling massively compromised and opaque public procurement governance environments.

But that wasn’t quite the case.

There were encouraging signals in the Sona and the 2022 budget for plans to strengthen state capacity and anti-corruption interventions. This includes the allocation of R426 million to the NPA’s Investigations Directorate and the Financial Intelligence Center to support the investigation and prosecution of criminal cases emanating from the State Capture Commission. Worryingly, however, some of these funds (R262.1m) will be euphemistically ‘re-prioritised’ from existing budgets.

However, given the deep corruption involving networks of private and state actors, the apparent lack of urgency by the presidency and treasury to implement critical reform is worrying. A range of civic actors forming the task force on public procurement reform raised concernsfor example, on the government’s lax approach to public procurement reform and anti-corruption interventions.

Among the proposals made in the NHI bill is the centralization of procurement of health sector goods and services. The Public Procurement Bill also aims to “create a single regulatory framework for public procurement and eliminate the fragmentation of laws that deal with public procurement in the public sector”.

Centralizing purchasing can have significant benefits, including substantial cost savings. In a 2016 supply chain management review, the Treasury described a range of benefits, including eliminating unnecessary duplication, reducing leakage, making better use of scarce procurement skills, and reducing administrative burdens on civil servants. Particular emphasis was placed on the need to ensure that agents “refocus” their efforts on the effective management of contracts. This is particularly important.

The Special Investigation Unit (SIU) report concerning millions diverted under the Digital Vibes contract exposed weaknesses in the management of projects and contracts of the Ministry of Health.

The State Capture report highlights the abuse of the provisions of the Public Financial Management Act allowing entities to deviate from standard procurement practices. The report says that instead of good planning and effective contract management (and contrary to the Constitution and the Public Financial Management Act), deviations seem to be the norm rather than the exception.

Thus, the benefits of centralization are likely to be reaped only under specific conditions that will require significant strengthening and capacity building, not only of the health sector, but of the civil service in general.

This objective is not a clearly budgeted priority. In the short to medium term, it is useful to implement more e-government platforms and open data to support healthcare supply. In the context of the NHI, the alignment of tender data with the Office of the Chief Procurement Officer online tender portals and central vendor databases to ensure access and Centralization of data using uniform open data standards can be an important safeguard using existing platforms.

The NHI and public procurement bills should meet the transparency commitments of the Open Government Partnership (OGP) and the African Peer Review Mechanism (APRM). Both OGP and APRM involve international and regional agreements signed by the government to foster multi-party collaboration and accountability to improve governance and deepen democracy. This is particularly important for the publication of budget and procurement data.

nhs bribery shopping
Many public submissions on the National Health Insurance (NHI) Bill have exposed the disastrous consequences and risks of corruption in public procurement in the health sector. (Photo: Rosetta Msimango/Spotlight)

In the financial years 2020/21 and 2021/22, R10.1 billion was allocated to the deployment of vaccinations against Covid-19. During the current fiscal year, the Department of Health has been assigned R4 billion to purchase and administer vaccines with provisional funds set aside. However, it is worrying that there has been no public disclosure of related contract details despite the vulnerability of this sector.

On March 14, the President shared his thoughts on the accomplishments of the SIU Special Tribunal he created. The SIU tribunal is said to have recovered around R8.6 billion from illegal contracts and in recent weeks set aside more than R100 million in irregular and illegal contracts in connection with Covid-related supplies. by Ramaphosa accent on the need not only to see lawsuits, but to recover funds is important.

The President will announce his Cabinet’s response to the findings of the State Capture Commission in June 2022. Here is a detailed and fully resourced plan that recognizes the extreme urgency of this “moment” in South Africa’s history. DM168

Zukiswa Kota is Monitoring and Advocacy Manager at the Public Service Accountability Monitor at Rhodes University.

This article was first published by Projector — public interest health journalism.

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