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18 January 2012 | Angeline Albert    

A lack of skilled purchasers in South Africa’s public sector is resulting in an absence of written contracts and excessive payments made to suppliers.

This was view of Terrence Nombembe, auditor-general of South Africa (AGSA), who found procurement irregularities – such as payments made in excess of agreed prices and uncompetitive contract extensions – carried out by some of the country’s public bodies.

Nombembe, who presented the audit findings for the 2010/2011 financial year to parliament on Monday, said while most government departments received good reports, more needed to be done to improve supply chain practices.

“Inadequate management of projects and contracts remains a weakness. In most cases the reason for these weaknesses was insufficient capacity and skills to manage contracts. In monitoring the effectiveness of internal controls, keen emphasis needs to be directed towards service delivery and compliance with laws and regulation, particularly supply chain management.”

In his audit, Nombembe focused on legislative requirements including procurement and contract management for the financial year ended March 2011 and tested the purchasing processes of 4,193 contracts totalling R25.6 billion ($3.1 billion).

Less than a fifth of organisations checked received clean audit results (46 provincial departments and bodies). And only three national departments received clean reports (8 per cent) – the Department of Public Enterprises, the Department of Science and Technology and the Department of Environmental Affairs.

For six national government departments and 55 other national bodies the audit results were worse than the previous financial year.

Some contracts were extended so much that competitive bidding processes were circumvented. A competitive bidding process must be followed for purchases above R500,000 ($62,446) but such bids were not invited at 28 public bodies for goods and services totalling R516 million ($64.4 million). In some cases, bids were not advertised through the public media and the required number of price quotations for contracts were not always obtained.

The AGSA has offered to hold quarterly update meetings with public sector leaders to help them ensure transparent, competitive and cost-effective supply chain management processes.