Weaknesses in the provincial transport department’s supply chain management processes were found by the auditor-general, which was investigating tenders awarded by the unit.
THE Auditor-General of South Africa (AGSA) has found that certain officials in the Gauteng transport department awarded tenders to companies in which they had interests.
MEC Ismail VadiMEC Ismail Vadi: disciplinary action will be taken against transgressorsThe AGSA report was presented by Ismail Vadi, the transport MEC, on 14 June. “Today, it is my unpleasant task to formally table the Report to the Standing Committee on Public Accounts and the Portfolio Committee on Transport in the Gauteng Legislature,” he said.
It had found irregular dealings regarding the procurement process in respect of 13 tender awards, which were decided between 1 September and 15 December 2010.
These tenders relate to: the provision of security to departmental buildings (R49-million); the intelligent number plate project (R1,3-million); establishing new driver-learner testing stations and a turnaround strategy for those stations (R35-million); the installation of a Biometric Verification System (R4-million); construction and renovation at Derek Masoek Centre (R20-million); and the construction of roads (R900-million over three years).
The purpose of the investigation by the auditor-general was to establish whether or not the decisions taken by the Departmental Adjudication Council (DAC) in respect of the tenders were in accordance with the established legal and regulatory prescripts of government.
More specifically, the investigation had to establish if there were any irregularities or non-compliance with prevailing prescripts during the procurement processes in respect of the tenders.
Vadi also used the opportunity to reassure the public that departmental officials who had awarded these tenders in conflict of interest, would be held accountable and necessary action would be taken against them.
The report was comprehensive in scope and detailed in its findings and recommendations. It pointed to systemic weaknesses in the department’s supply chain management (SCM) processes, related particularly to the poor quality of reporting, ineffective governance arrangements and inadequate leadership oversight within the department, he added.
Overall, the report identified 20 significant findings in relation to the tenders under review that pinpointed poor monitoring and inadequate oversight in SCM by the departmental leadership.
The AGSA also made recommendations in the report, namely that the department’s executive management should compile and implement an effective and proper corrective plan to:
Address the irregularities and deficiencies identified in the investigation;
Enhance the adequacy of leadership oversight, which includes setting the correct “tone at the top” and organisational culture by, among others, leading by example, focusing on promoting ethical conduct, addressing issues of non-compliance decisively, and directing and closely monitoring the operations and activities of the department; and
Improve the quality of management information and reporting, which facilitate proper and continuous monitoring by the leadership.
Vadi stressed that no contracts had actually been signed between the department and the respective companies. He was also determined to ensure integrity in the department’s procurement processes.
The AGSA recommended that the letters of award in respect of the tenders be declared null and void. It also recommended that corrective and disciplinary action should be instituted against selected staff members.
In addition, Vadi has instructed the executive management to fix the departmental SCM system. The procurement system should be underpinned by the constitutional principles of fairness; being equitable; transparent; competitive; and cost-effective.
Furthermore, stringent accountability and reporting mechanisms must be put in place.
Regarding the recommendations in the report, Vadi said: “The department and my Office, insofar as it falls within my executive responsibility, will act on the other recommendations of the AGSA. It will in due course initiate, where appropriate, disciplinary proceedings against employees identified in the report.”
The department would, among other undertakings, develop a clear procurement plan for all projects for the 2011/2012 financial year; establish multidisciplinary bid evaluation committees with no conflict of interest in the evaluation of tenders submitted to the department; and institute extensive supply chain management training for all officials involved in the procurement value chain in line with the directives issued by the National Treasury.
Reassuring the public, Vadi stated: “I wish to emphasise and to affirm the department’s commitment to effective, efficient and transparent delivery of services to the public.”
He also spoke about the need to upgrade roads in communities such as Sharpeville and Protea Glen, and said he was mindful of the road safety concerns of residents and motorists in relation to the Pinehaven Interchange and William Nicol Drive.
“The department will ensure that construction work on these roads will proceed expeditiously in the current financial year, without compromising on compliance with the SCM regulatory system.”
He was appointed the transport MEC in November 2010, and completed a preliminary review of departmental records. Thereafter he asked the auditor-general to examine these documents in January 2011.
“The auditor-general came back to me early this year and said that there were grounds for a further, in-depth investigation … This is essentially an internal investigation to assess whether or not there was due diligence on the part of departmental officials and compliance with established regulatory framework.”
He pointed out that the “most important issue is the perceived negative public image of the department. Whether it is true or not, the perception exists that the department’s procurement and tender processes lacked integrity and transparency.”
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