Consulting Engineers South Africa (Cesa), which has nearly 500 member firms that together earn yearly fee income of R17-billion, has made an application to the Department of Trade and Industry (DTI) for engineering consulting services to be given ‘designated’ status under government’s preferential procurement rules.
But the body has also raised serious concerns about exemptions made for certain State-owned companies (SoCs) from the new regulations associated with the Preferential Procurement Policy Framework Act (PPPFA).
It has also called for quality criterion to be incorporated along with prices in the adjudication process for professional engineering services and for a better alignment between the PPPFA and the Broad-based Black Economic Empowerment (BBBEE) law.
Under newly introduced regulations, the DTI has the authority to stipulate that government departments, agencies and SoCs procure designated products and services from local manufacturers, or providers.
The aim of such designations is to use public sector procurement to support the reindustrialisation of the domestic economy in line with the New Growth Path and the Industrial Policy Action Plan.
In December, the first designations were identified as being power pylons, railway rolling stock, buses, canned vegetables, clothing, textiles, footwear and leather products, as well as set-top boxes. However, Trade and industry Minister Dr Rob Davies has indicated that other products and services could be added to the list over time.
Cesa president Naren Bhojaram argues that the designation of consulting engineering services has the potential to stimulate additional work for the industry, which, in turn, could support job creation and an enlargement of South Africa’s cadre of professional engineers.
However, he also says Cesa is deeply distressed that certain SoCs, including Eskom, Transnet, the Airports Company South Africa and the water boards, have received exemption from the new PPPFA regulations, which came into force on December 7.
In fact, he described the decision as a “bombshell”, which could dilute the effectiveness of the PPPFA, while creating confusion in the market.
“We were very excited by the new regulations and are still very supportive . . . but we were disappointed that the application was not widespread and the Minister has exempted State-owned enterprises from complying with the regulations,” Bhojaram laments.
Cesa also wants quality considerations to be integrated into the pricing dimension of public sector adjudication processes when consulting engineering services are being procured.
Currently, the rules stipulate that price be given a 90% weighting and preferential-policy considerations 10% when large purchases of goods and services are being made by the public sector – an 80:20 ratio could be applied for smaller projects.
QUALITY & PRICE
But Cesa CEO Graham Pirie argues that the model is inappropriate for the procurement of professional services, where experience and quality are often as important as the final price. Therefore, Cesa would like the 90% price consideration to be adjusted to cater for the experience of the service provider and the quality of the service provided.
“In procurement of professional services, we believe that the element of quality must be brought into the procurement regulations in a single process,” Bhojaram adds.
He acknowledges that would this would result in the introduction of subjectivity to the adjudication, but says this could be overcome through the inclusion of technical professionals in bid evaluation committees. Cesa members are required to have a quality management system as a condition of membership.
Inconsistencies between the PPPFA regulations and the Construction Sector Codes of Good Practice promulgated in terms of the BBBEE Act are also a worry and Cesa has, thus, called upon National Treasury and the DTI to urgently address the inconsistencies.
Pirie argues that the construction sector codes should be applied for the procurement of Cesa member company services, noting that these codes will be adjusted to the stipulations contained in amendments to the BBBEE Act.
Bhojaram stresses that Cesa remains supportive of both the PPPFA and moves to tighten the BBBEE legislation, including the introduction of criminal sanctions against those found to have engaged in fronting activity.
He describes fronting as the worst kind of corruption and says Cesa will support all endeavours to combat it. He notes that it is mandatory for member firms to comply with Cesa’s business integrity management system and that disciplinary action can be taken against those breaching its code of conduct.
“We will continue to bring top of the mind awareness to our members and individuals in our industry to continuously explore their personal ethical balance so that we remain unquestionably ethical.”