VODAWORLD, MIDRAND, 28 MARCH 2001
OPERATIONS OF OUR PUBLIC AND PRIVATE SECTORS NEED TO ACHIEVE ECONOMIC EFFICIENCY, WHILE AT THE SAME TIME BEING TRANSPARENT AND ACCOUNTABLE.
SINCE THE DAWNING OF MANKIND, PROCUREMENT HAS ALWAYS PLAYED ONE OF THE MOST IMPORTANT ROLES FOR SURVIVAL. IT STARTED WITH BARTERING IN 3000BC, CHANGED TO CURRENCY TRADING WITH THE CHINESE AND VENETIANS, EVEN FORMED PART OF WAR WITH THE SPARTANS AND EVEN THE ROMAN EMPIRE AND FINALLY DEVELOPED INTO THE MULTI-DISCIPLINED FORM WE KNOW TODAY.
BUT WHAT DOES PROCUREMENT MEAN TO US TODAY, ESPECIALLY IN SOUTH AFRICA. SINCE OUR POLITICAL EMANCIPATION WE HAVE TRANSITIONED TO A MULTIPARTY DEMOCRACY AND ENTERED THE WORLD OF MARKET ECONOMICS. THE OPERATIONS OF OUR PUBLIC, AND EVEN PRIVATE SECTOR NEED TO ACHIEVE ECONOMY AND EFFICIENCY, WHILE AT THE SAME TIME BEING TRANSPARENT AND ACCOUNTABLE. THIS NECESSITATES THE ESTABLISHMENT OF SOUND PROCUREMENT POLICIES AND PRACTICES. OPEN AND FAIR PROCEDURES IN THE AWARDING OF PUBLIC SECTOR CONTRACTS FOR GOODS, WORK AND SERVICES HELP TO CREATE DEPENDABLE AND STABLE MARKETS.
HOWEVER, THE QUESTION STILL REMAINS: IS PROCEDURE AND PRACTICE ENOUGH?
WHAT OTHER COUNTRIES AND INSTITUTIONS ARE DOING
VARIOUS COUNTRIES AND INTERNATIONAL INSTITUTIONS HAVE ALSO WRESTLED WITH THE QUESTION: HOW DO WE SELECT, CONTRACT AND MONITOR FIRMS DELIVERING GOODS, WORK OR SERVICES?
MULTILATERAL AGREED RULES GOVERNING FAIR TRADE BETWEEN COUNTRIES AND AGREEMENTS UNDER THE WORLD TRADE ORGANISATION (WTO) DO NOT GENERALLY APPLY TO GOVERNMENT PURCHASING. GOVERNMENTS, AS BEING THE LARGEST BUYERS OF GOODS AND SERVICES, HAVE LONG SINCE REALISED THAT THE LACK OF UNIFORM GUIDING PRINCIPLES WITHIN THEIR OWN COUNTRIES AND IN ORGANISATIONS SUCH AS THE WTO, POSE A SERIOUS PROBLEM TO INTERNATIONAL TRADE.
MAJOR INSTITUTIONS SUCH AS, BUT NOT LIMITED TO, THE WORLD TRADE ORGANISATION (WTO), THE WORLD BANK (WB), AFRICAN DEVELOPMENT BANK (AFDB), ASIAN DEVELOPMENT BANK (ADB) AND THE EUROPEAN BANK FOR RECONSTRUCTION AND DEVELOPMENT (EBRD) HAVE SET DOWN VARIOUS PROCEDURES, GUIDELINES AND PRINCIPLES RELATING TO PROCUREMENT TO ADDRESS THIS PROBLEM.
THE WTO, AS FAR BACK AS 1996, ALREADY DEVELOPED THE AGREEMENT ON GOVERNMENT PROCUREMENT (AGP) PROVIDING PRINCIPLES AND PROCEDURES REGULATING PROCUREMENT. ALTHOUGH THIS AGREEMENT IS NOT ENFORCEABLE ON ALL MEMBERS OF THE WTO, VARIOUS COUNTRIES DID INITIALLY JOIN. MORE RECENTLY, COUNTRIES SUCH AS AUSTRALIA, CANADA, USA, JAPAN AND SWITZERLAND, AS WELL AS THE EUROPEAN UNION, REVISED THE EXISTING AGP AND ENTERED INTO AGREEMENTS FOR A REVISED AGP. THIS AGREEMENT NOT ONLY ADDRESSES SHORTCOMINGS OF THE EXISTING AGREEMENT, BUT ALSO INCLUDES STRONGER DISPUTE SETTLEMENT MECHANISMS.
THE AGP INITIALLY AIMED TO ENSURE, SUBJECT TO LEGITIMATE BORDER MEASURES, THAT FOREIGN SUPPLIERS AND SUPPLIES ARE ACCORDED NO LESS FAVOURABLE TREATMENT THAN DOMESTIC SUPPLIERS AND SUPPLIES. THE AGP DID GO FURTHER AND ALSO DEAL IN DETAIL WITH VARIOUS ISSUES IN PURCHASING PRACTICE,
JUST TO NAME A FEW.
BUT WHAT IS THE SIGNIFICANCE OF THIS AGREEMENT. THIS AGREEMENT, ESPECIALLY THE REVISED AGP REFLECTS THE EXPERIENCE AND PRACTICES OF BOTH THE UNITED STATES AND THE EUROPEAN UNION, IN PARTICULAR, IN RELATION TO THE BID CHALLENGE OR PROTEST MECHANISM SET OUT IN THIS AGREEMENT. THIS MECHANISM IS ONE OF THE MOST ADVANCED MECHANISMS SUPPORTING NON-DISCRIMINATION AND TRANSPARENCY. THIS AGREEMENT ALSO BRINGS WITH IT MORE INTERNATIONAL CONSISTENCY IN PROCUREMENT WHICH WILL STIMULATE REGIONAL TRADE AGREEMENTS.
A FURTHER IMPORTANT SIGNIFICANCE OF THE AGP IS THE WORLDWIDE ACCEPTANCE OF ITS KEY PRINCIPLES NAMELY:
WHAT ARE WE DOING IN SOUTH AFRICA?
SINCE 1994, SOUTH AFRICA WAS NOT ONLY POLITICALLY EMANCIPATED, BUT ALSO JOINED THE GLOBAL MARKET WITH ALL OF ITS PRO'S AND CON'S. IN VIEW OF WHAT OTHER COUNTRIES AND INSTITUTIONS HAVE ACHIEVED, EYES WILL BE ON OUR POLICIES AND PROCEDURES IF WE WANT TO JOIN THIS GLOBAL VILLAGE.
HOWEVER, SOUTH AFRICA IS ALSO UNIQUE IN ITS APPROACH IN THAT WE AIM TO UPLIFT PREVIOUSLY DISADVANTAGED PEOPLE WHILE AT THE SAME TIME DEVELOPING OUR HUMAN CAPITAL AND INFRASTRUCTURE. FURTHERMORE, THE PRINCIPLES AND PROGRAMMES OF OUR RECONSTRUCTION AND DEVELOPMENT PROGRAMME CAN ALSO FIND THEIR PLACE IN HOW WE PROCURE GOODS AND SERVICES. THIS NECESSITATES SPECIAL PROCEDURES AND PRINCIPLES GOVERNING PROCUREMENT IN SOUTH AFRICA.
IT IS FOR THIS REASON THAT OUR CONSTITUTION ALLOWS FOR A PROCUREMENT POLICY PROVIDING FOR PREFERENTIAL ALLOCATION IN CONTRACTS AND FOR THE ADVANCEMENT OF PERSONS OR CATEGORIES OF PERSONS WHEN PROCURING GOODS, WORK OR SERVICES (SECTION 217 OF THE CONSTITUTION).
WE STARTED THIS PROCESS WITH THE GREEN PAPER ON PUBLIC SECTOR PROCUREMENT REFORM SETTING OUT THE CONCEPTUAL FRAMEWORK FOR PROCUREMENT REFORM IN SOUTH AFRICA. HOWEVER, THIS GREEN PAPER WENT FURTHER IN ALSO SETTING OUT AFFIRMATIVE PROCUREMENT POLICY WITH ITS ESSENTIAL CHARACTERISTICS BEING:
ON 3 FEBRUARY 2000, THE PREFERENTIAL PROCUREMENT POLICY FRAMEWORK ACT (ACT 5 OF 2000) WAS PROMULGATED TO GIVE EFFECT TO THIS. THIS ACT MAKES IT POSSIBLE TO GIVE PREFERENCE WHEN PROCURING TO INDIVIDUALS OR CATEGORIES OF PERSONS THAT HISTORICALLY HAVE BEEN DISADVANTAGED BY UNFAIR DISCRIMINATION ON THE BASIS OF RACE, GENDER OR DISABILITY. IT FURTHER MAKES IT POSSIBLE TO GIVE PREFERENCE TO CERTAIN PERSONS OR GROUPS OF PERSON IF IT IS IN THE INTEREST OF THE RECONSTRUCTION AND DEVELOPMENT PROGRAMME. THIS ACT GIVES THE BASIS FOR TARGETED PROCUREMENT.
BUT WHAT DOES THIS MEAN FOR PROCUREMENT IN SOUTH AFRICA AND WHAT SHOULD BE THE BASIS FOR AWARDING CONTRACTS? SECTION 217(1) OF THE CONSTITUTION GIVES US THE ANSWER.
PROCUREMENT SHOULD BE DONE IN ACCORDANCE WITH A SYSTEM THAT IS FAIR, EQUITABLE, TRANSPARENT, COMPETITIVE AND COST-EFFECTIVE. THE REAL CHALLENGE FOR US ALL IS TO GET THE RIGHT BALANCE BETWEEN THESE REQUIREMENTS OF PROCUREMENT AND OUR GOALS OF TARGETED PROCUREMENT AIMED AT RIGHTING THE WRONGS OF THE PAST.
WE LIVE IN A WORLD RULED BY "COMFORT". EACH AND EVERY ONE OF US HAS HIS OR HER OWN "COMFORT ZONE". THE SAME WITH BUSINESS. JUST LOOK AT THE JOHANNESBURG STOCK EXCHANGE AND ONE WILL CLEARLY SEE THAT SHARES OF COMPANIES WHICH INSPIRE COMFORT THROUGH THEIR POLICIES AND PROCEDURES, USUALLY GIVES THE BEST RETURNS ON INVESTMENT.
THE BUSINESS BEHAVIOUR OF COMPANIES IS THE INSTRUMENT THROUGH WHICH CONFIDENCE IS AROUSED IN INVESTORS. THE SAME IS TRUE FOR PROCUREMENT. OUR PROCUREMENT POLICIES AND PROCEDURES MUST AT ALL TIMES INSPIRE CONFIDENCE IN THE MARKET, BOTH FOR INVESTORS AND FIRMS DELIVERING GOODS AND SERVICES TO GOVERNMENT.
OUR BEHAVIOUR IN THE WAY IN WHICH WE CONDUCT BUSINESS IS THE SINGLE MOST IMPORTANT FACTOR THROUGH WHICH WE CAN INSPIRE CONFIDENCE IN THE BUSINESS WORLD AS WELL AS THE ARENA OF INTERNATIONAL POLITICS.
OUR BEHAVIOUR, CONSISTING OF VARIOUS SMALL AND LARGE ACTIONS, WILL DETERMINE THE SUCCESS OF ANY POLICY OR PROCEDURE. AS THE LATIN PROVERB GOES: "ETIAM CAPILLUS UNUS HABET UMBRAM SUAM", THE SMALLEST HAIR CASTS A SHADOW, INTEGRITY AND PROBITY SHOULD FORM THE BASIS OF EACH AND EVERY ACTION, HOW SMALL OR LARGE, THAT WE TAKE.
SOUTH AFRICA IN COMPARISON TO OTHER COUNTRIES DUE TO OUR PAST OF DISCRIMINATION, UNFAIR PRACTICES AND MARGINALISATION OF PEOPLE, WE ARE FACED WITH VARIOUS GROUPS IN OUR SOCIETY THAT WERE DENIED THE PRIVILEGE OF BEING ECONOMICALLY ACTIVE WITHIN THE BROADER SOCIETY. IN ORDER TO ADDRESS THIS PROBLEM OF IMBALANCE, PROCUREMENT IS USED AS A VEHICLE TO RECTIFY THIS IMBALANCE AND TO TRANSFER SKILLS AND KNOWLEDGE TO THOSE WHO WERE PREVIOUSLY DENIED.
SOUTH AFRICA HAS A TOP-DOWN APPROACH TO GOOD GOVERNANCE IN AS MUCH THAT THE NEED FOR FAIR PUBLIC PROCUREMENT PRACTICES IS TAKEN UP IN OUR CONSTITUTION. WHILE THIS IS UNIQUE AMONG MANY COUNTRIES, SOUTH AFRICA'S EMPHASIS ON ENSURING THAT ITS SYSTEM OF CONTRACTS IS "FAIR, EQUITABLE, TRANSPARENT, COMPETITIVE AND COST EFFECTIVE" PROVIDES A MODERN EXAMPLE OF THE IMPORTANCE OF PUBLIC PROCUREMENT.
THE GOAL OF CONTINUOUS IMPROVEMENT IN PUBLIC SECTOR PROCUREMENT REQUIRES A CLEAR LEAD AND STRONG COMMITMENT THROUGH SOUND MANAGEMENT PRACTICES. THIS, TOGETHER WITH THE BASIC VALUES AND PRINCIPLES GOVERNING PUBLIC ADMINISTRATION AS ENSHRINED IN THE NEW SOUTH AFRICAN CONSTITUTION, PROVIDED A FRAMEWORK TO DEVELOP SOUND ORGANISATIONAL AND INSTITUTIONAL ARRANGEMENTS THAT WILL RESULT IN A PUBLIC PROCUREMENT SYSTEM, WHICH BECOMES MORE EFFICIENT AND EFFECTIVE.
THE ACT OF PREFERENTIAL PROCUREMENT POLICY FRAMEWORK ALSO GOES A LOT FURTHER IN ADDRESSING ISSUES RAISED BY VARIOUS GOVERNMENTS AROUND THE WORLD. THESE ISSUES INCLUDE:
THIS NOT ONLY MAKES PROCUREMENT IN SOUTH AFRICA UNIQUE BUT ALSO SHOWS GOVERNMENTS COMMITMENT TO FAIR AND EQUITABLE TREATMENT IN PROCURING.
THIS BRINGS ME TO ETHICS IN BUSINESS.
ACCORDING TO THE KING REPORT ON CORPORATE GOVERNANCE, CONTRACTS BETWEEN CONTRACTING PARTIES REVOLVES AROUND TRUST AND THE RESPONSIBILITY TO DO UNTO OTHERS WHICH YOU WOULD LIKE OTHER HAVE DO TO YOU. IN OTHER WORDS, ETHICAL BEHAVIOUR. THIS ULTIMATELY BOILS DOWN TO INTEGRITY, HONESTY, OPENNESS AND FAIRNESS.
HOWEVER, TO GIVE EFFECT TO THIS, THE KING REPORT SUGGEST A CODE OF CONDUCT WHICH COMPRISES OF THE FOLLOWING:
GOVERNMENT ITSELF HAS ALREADY COMMITTED ITSELF TO THE SAME PRINCIPLES IN AS MUCH AS PROCUREMENT IS ADDRESSED IN OUR CONSTITUTION AND LEGISLATION.
FURTHERMORE INTEGRITY IN PROCUREMENT ENCOURAGES SUPPLIERS AND CONTRACTORS TO MAKE THEIR BEST OFFERS AND THIS IN TURN LEADS TO EVEN BETTER PROCUREMENT PERFORMANCE. PROCURERS AND FIRMS THAT FAIL TO MEET HIGH STANDARDS OF ACCOUNTABILITY AND FAIRNESS ARE QUICKLY IDENTIFIED AS POOR PARTNERS WITH WHICH TO DO BUSINESS.
HOWEVER, WE ALL SO EASILY CAN FALL INTO THE TRAP OF CONFLICT OF INTEREST. ALL OF US DEAL ON A DAILY BASIS WITH DIFFERENT FIRMS AND PROCURERS AND AS SUCH OUR GOOD INTENTIONS TO DO BUSINESS WITH ONE FIRM OR PROCURER FOR OUR OWN CORPORATE INTEREST, MAY WELL BE DETRIMENTAL TO ANOTHER.
BUT HOW DO WE DETERMINE IF WE ARE IN A CONFLICT OF INTEREST, WHETHER ACTUAL, APPARENT, OR POTENTIAL? THE KEY IS TO DETERMINE WHETHER THE SITUATION YOU ARE IN IS LIKELY TO INTERFERE OR APPEAR TO INTERFERE WITH THE INDEPENDENT JUDGMENT YOU ARE SUPPOSED TO SHOW AS A PROFESSIONAL IN PERFORMING YOUR OFFICIAL DUTIES. A GOOD TEST IS THE 'TRUST TEST': WOULD RELEVANT OTHERS [MY EMPLOYER, MY CLIENTS, PROFESSIONAL COLLEAGUES, OR THE GENERAL PUBLIC] TRUST MY JUDGMENT IF THEY KNEW I WAS IN THIS SITUATION. TRUST, IN MY OPINION, IS AT THE ETHICAL HEART OR CORE OF PROCUREMENT.
THE ETHICS WE APPLY IN PROCUREMENT, SHOULD THUS NOT ONLY BE SEEN AS BEING TRANSPARENT AND HAVING INTEGRITY, BUT SHOULD ALSO BE SEEN AS A VEHICLE THROUGH WHICH SOCIO-ECONOMIC DELIVERABLES ARE REALISED. PROCUREMENT IN THIS COUNTRY SHOULD ALSO BE USED TO EMPOWER PEOPLE TO ENABLE THEM TO BETTER THE QUALITY OF LIFE OF ALL OF OUR PEOPLE. THE CONFLICT OF INTEREST OF "WHAT IS RIGHT TO DO" VERSUS "WHAT IS ADVANTAGEOUS AND PROFITABLE" SHOULD BE ELIMINATED AND AVOIDED BY FAIRNESS, INTEGRITY AND THE COMMON GOOD.
AS WE GET THIS RIGHT, THE REST WILL FOLLOW!