Improving Local Government Procurement through the use of technology

Nirvesh Sooful

Chief Executive Officer (CEO)

African Ideas

Municipal e-Procurement Solution

(concept note)

1

Innovation Development Empowerment Action Solutions

African Ideas – who we are

• Strategic consultancy helping Governments to accelerate the benefits of ICT enabled change through transformation of the public sector and the wider economy. Operates primarily in the ICT4D space.

• Key projects

– Western Cape Broadband – Strategy & Digitisation Readiness Advisory Service

– Western Cape Municipal ICT roadmap

– Municipal Shared Service Solution (Cloud based)

– ICAN Centres (Digital Inclusion)

– WIFI Mesh (Rural – Saldanha, Urban – Khayelitsha & Mitchells Plain)

– Rethinking Libraries (Libraries of the future)

– Community spaces of the future

– E-enabling Education (utilising broadband)

2

“dropping a stone, or even a drop of water, in a pond causes ripples to

emanate from the source, getting bigger and bigger the further away from

the source they get.

This is a powerful example of small changes causing large and far-

reaching effects”

At African Ideas, we specialise in working with our clients to identify these ‘big

lever’ projects – the projects which, when embarked upon, will set the

necessary ripples in motion to drive change and transformation throughout an

eco-system. In this way we aim to have a profound effect on the society in

which we operate.


Government Procurement (GP): Clearly an ongoing

problem and concern for the Minister

• 2009 - Gordhan poised to cut graft - Finance Minister Pravin Gordhan is

poised to give government's R80bn procurement system a radical overhaul.

Examples of R26 for a loaf of bread as part of a school feeding scheme,

and R25 for a bottle of water that costs R4.

• 2010 - Finance Minister Pravin Gordhan has proposed a number of

proposed measures to eradicate fraud in public procurement in South

Africa. In a bid to increase the detection of fraud, government departments

and agencies would be required to provide specific information to the

National Treasury on procurement practices.

• 2011 - Gordhan highlighted the impact of fraud and corruption in public

procurement on the government's ability to deliver services effectively,

saying citizens and taxpayers do not get full value for money because of

waste and corruption in public procurement.

"This compromises the integrity of governance and frustrates the pace of

service delivery," he said, adding "A strong procurement framework is

critical to boosting jobs and service delivery.”


New Treasury “instruction note”

• Issued in terms of the Public Finance Management Act and covers all spheres of government and all competitive bids exceeding R500 000.

• Designed to “combat fraud” and “improve accountability”

• Names of all bidders should be published online within ten working days after the closure of any advertised competitive bid.

– Where practical, institutions must also publish the total price and the preferences claimed by the respective bidders.

– Information should remain on the website for at least 30 days.

• Bidders also by compelled to submit full details of directors, trustees and/or shareholders

– accounting officers are required to verify, through identity numbers, whether any member of the preferred bidder has any relation to the institution’s staff, or whether they are in the service of the State.

– Such verification must take place during the bid evaluation process.

• The preferred bidder’s tax matters also need to be in order

• Due diligence process should establish whether the service provider is indeed in a position to execute the contract.

The AG is complaining that the information is just not there. When they

audit public entities, tender information, information on how the

decisions were taken, etc, it is just not there


SALGA National Conference 2011

• Addressing corruption requires a combination of legislative and policy interventions as well as moral and ethical regeneration

• Publication of companies that have been awarded tenders with all the company particulars

• Municipalities to publicly declare all companies that have been awarded tenders.

• Obtaining a Clean Audit from the AG is but the first step towards excellence (complying to minimum legal requirements).

• Good record management is essential for Clean Audit

• SALGA to continuously build capacity in municipalities to detect, investigate and conclude on cases of corruption.

• SALGA to advocate for the declaration of interest to be cascaded to all levels of employees in the municipality and for Councillors to sign the declaration of interest at the beginning of their term (within 90 days) and update on an ongoing basis as their business interest change.

• However SALGA Local Government E-government Review – Strategies and policies to update and maintain information on websites badly lacking.

– 47 municipalities don’t even have a website


Other issues with the current system of

government procurement • Lack of standards

– Cost of obtaining tender documents

– Depth of information online - Adverts, whole tenders, downloads, etc.

– Differing ways of accessing

• No integrated view of all state tenders – i.e. no single view

• Increasing red tape – limiting the ability of small business to access procurement opportunities.

• Huge reliance on paper based forms with repetitive information – much of which is meaningless and is largely ignored in the tender evaluation exercise.

• Exclusionary practices. Example: SITA tenders having compulsory briefing sessions only in Pretoria, excluding vendors from the rest of the country. Yet - generally for IT tenders, there is no real reason for there to be compulsory, on site briefing sessions. Also, technology can enable national participation very easily (at low cost) – like Skype video conference briefings or YouTube briefings coupled with a Question and Answer forum.

• Very environmentally unfriendly solution.


The solution - not more of the same

• Some action is needed. Clearly regulation and/ or capacity building alone is not the solution.

• Need to do things radically different – more of the same will not work.

• Our option: improving the effectiveness of local government can only be effected by utilising an integrated people, process and technology approach – good, solid, repeatable processes enabled by a system (technology) executed by trained people.

• We have a solution that can start to address the challenges. The solution is locally developed and supported . The solution fits in with our model and business philosophy – enabling short time to value capture. We envisage a partnership with Government to continually evolve and enhance the solution to create more value.

Utilise ICT to restore the confidence of the majority of citizens in the municipalities,

as the primary expression of the developmental state at a local level

• Pre-configured solutions that can be implemented rapidly

• Simplified IT solutions, Shorter time-to-value

• Innovative commercial model with scalability options

• Centralized and/or on-site services allowing quicker implementations Opportunity


Scope of e-Procurement

Supplier

Selection

Notification

Publication

Procurement

Need

Submission

Evaluation

Feedback

Monitoring

Payment

Ordering

UPSTREAM DOWNSTREAM

World Bank


Scope of e-Procurement

Supplier

Selection

Notification

Publication

Procurement

Need

Submission

Evaluation

Feedback

Monitoring

Payment

Ordering

UPSTREAM DOWNSTREAM

World Bank

Current

African

Ideas

Solution

focus

area


Scope of e-Procurement (another view)


Scope of e-Procurement (another view)


Example of Phased implementation (World

Bank)we have done Phase 1

Phase 1 Information Service

Tender Advertising

Document Down-Loads

Results Disclosure

Bid Qualification Bid Up-Loads

Bid Processing

etc

Phase 2 Contract Management

Contract Development

Phase 3a Catalogue Purchasing

Framework/Rate Contracts

Online Transactions

Online Workflow

Phase 3b Online Bidding

Reverse Auctions

E-Tendering

E-Contract

Management

E-Purchasing


Benefits

• India munics - Effective cost savings due to eProcurement is 17.71%

• Jamaica – 15% or more

• World Bank – E-GP reduces costs of goods and services by 5%-

25%

– E-GP reduces transaction costs by 25%-50%

• SA Government Procurement – 2009: R80 Billion – 1% = R800 Million

– 0.1% = R80 Million

– 0.2% = R160 Million


What have we done so far (as proof of concept) First step – developed standardised processes


Second step, codify these processes in a system Violation of MFMA & Supply Chain Mgt - results in tender irregularities, fuels corruption,

erodes confidence in municipal leadership and compromises service delivery.


Our concept

• We have a system that we have developed to help municipalities

• Technology demonstrator of a Municipal E-Government Platform incorporating a front end customer facing website integrated with and fed from several back-end process driven applications. This E-Government Platform includes:

– A fully CMS (content management system) driven Municipal Internet site integrated with the following administrative systems

– Supply Chain Management/ e-tendering

– Council Secretariat (including Agenda Management and Council Meeting Management)

– Document Management, Knowledge Management and Knowledge Repository (legislation, reports, etc.)

– Municipal Incident reporting and management system


Our concept cont..

• Supply Chain Management/ e-tendering incorporates

• Information Service (procurement policy, rules, forms, etc.)

• Bid management system (including workflow from bid initiation all the way to bid award – includes recoding of all information and full document management of all relevant documents)

• Tender/ RFQ/ RFP advertising including full tender document downloads

• Results Disclosure

• Single Supplier repository (not fully completed as yet)

– Solution is built using open source software (no licence costs) and is locally developed and supported. Also centrally hosted. Cost structure is very low.

• Should use this as a starting point

• Our proposal is a partnership between Treasury and African Ideas to implement this solution at municipalities - starting with the supply chain management module.

• Partnership incorporates both the technology solution as as well as the process and change management aspects i.e. People, processes and Technology.

• Create competency centre to expand the technology solution to incorporate all aspects of Government e-Procurement over a 5 year period – also creates skilled jobs within the local economy.


Key Message

• Local government is critical to service delivery in South Africa

• However, Local Government is failing

• ICT is a great tool assist in turning this around

• However ICT on its own will not do this – need an integrated municipal turnaround strategy – strategy, people, process, technology

• Need to do things radically different – more of the same will not work.

• African Ideas has tremendous experience and skill in the municipal space. – Offers new perspectives and innovative approaches

– Operates across strategy, people, process & technology

– Should be YOUR partner in helping you enable service delivery

Contact Details: [email protected], www.slideshare.net/nsooful

Municipal e-Procurement Solution

(concept note)

19

Thank You & Discussion

mailto:[email protected]

http://www.slideshare.net/nsooful

Date post:	23-Dec-2014
Category:	Business
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Improving Local Government Procurement through the use of technology

Business