Wednesday, June 1, 2011

Love Me Tender, Love Me True

May 31, 2011

The Treasury has published its first blacklist of tenderers, naming companies and individuals who will no longer be eligible for government business because of poor performance, maladministration and fronting. 

"We need to ensure that our supply chain processes are as watertight and secure as they can be," Finance Minister Pravin Gordhan told parliament's finance committee yesterday.

He also announced stringent new regulations designed to crack down on tender fraud and overpricing. 

Gordhan said the Treasury would monitor all tenders above R500 000 at all levels of government, including municipalities. 

The regulations, released yesterday by accountant-general Freeman Nomvalo, require the Treasury to list on its website the names of all companies that bid for a tender, as well as details, including the price, of the winning bid. 

Gordhan said bid documents would have to include the names of all directors and senior officials of a company so that the authorities could check them against the state's payroll. 

This was to ensure that the directors and senior officials were not elected public representatives or public servants. 

Nomvalo said the listing provision would make it possible for the government to stop the prevalent practice of bidding under different company names. 

"All bids will have to list the directors and management so we can check the names against the directors and managers of companies on the list of restricted suppliers," he said. 

The participation of a blacklisted corporate executive in the management of another company would result in the other company being blacklisted. 

Many smaller government contracts currently go to "shelf companies", which are bought from agents for a few hundred rands and exist only for a single project. 

When something goes wrong with the execution of the tendered project, the company's owners close or liquidate the company and file their next bid under another name. 

Companies on the initial list include Ace of Hearts Trading and PDI Development Enterprises, which were blacklisted for "poor performance". 

Other reasons for excluding businesses ranged from fronting - putting blacks on the board merely to meet BEE requirements - to maladministration, bribery, non-performance and misrepresentation. 

Gordhan said the new regulations would limit variations to contracts. 

This would block one common way of evading tender restrictions - expanding the job description after a contract has been awarded. 

He said government departments and local authorities would be required to give the Treasury a list of the tenders they planned to issue well ahead of time to ensure efficient management of the process and to fight overpricing. 

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