Improving Local Government Procurement through the use of technology


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This is a concept note describing a municipal e-procurement prrof of concept that I embarked upon. It aims to get support from the South African Government to support a project such as this. It is part of African Ideas thought leadership - intended to spark debate and discussion.

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Improving Local Government Procurement through the use of technology

  1. 1. Municipal e-Procurement Solution (concept note) 1 Nirvesh Sooful Chief Executive Officer (CEO) African Ideas
  2. 2. 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) “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 farreaching 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. 2 Innovation Development Empowerment Action Solutions
  3. 3. 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.” Innovation Development Empowerment Action Solutions
  4. 4. 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 Innovation Development Empowerment Action Solutions
  5. 5. 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 Innovation Development Empowerment Action Solutions
  6. 6. 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. Innovation Development Empowerment Action Solutions
  7. 7. 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 • • • Opportunity Innovation 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 Development Empowerment Action Solutions
  8. 8. Scope of e-Procurement Procurement Need Feedback Notification Monitoring Publication DOWNSTREAM UPSTREAM Payment Submission Ordering Evaluation Supplier Selection World Bank Innovation Development Empowerment Action Solutions
  9. 9. Scope of e-Procurement Procurement Need Feedback Current African Ideas Solution focus area Notification Monitoring Publication DOWNSTREAM UPSTREAM Payment Submission Ordering Supplier Selection Evaluation World Bank Innovation Development Empowerment Action Solutions
  10. 10. Scope of e-Procurement (another view) Innovation Development Empowerment Action Solutions
  11. 11. Scope of e-Procurement (another view) Innovation Development Empowerment Action Solutions
  12. 12. 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 E-Tendering E-Contract Management E-Purchasing Online Bidding Reverse Auctions Innovation Development Empowerment Action Solutions
  13. 13. 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 Innovation Development Empowerment Action Solutions
  14. 14. What have we done so far (as proof of concept) First step – developed standardised processes Innovation Development Empowerment Action Solutions
  15. 15. 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. Innovation Development Empowerment Action Solutions
  16. 16. 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 Innovation Development Empowerment Action Solutions
  17. 17. 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. • • Innovation Development Empowerment Action Solutions
  18. 18. 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 Innovation Development Empowerment Action Solutions
  19. 19. Municipal e-Procurement Solution (concept note) Thank You & Discussion 19 Contact Details:,