As large organisations themselves, public sector entities shouldn’t be any different - but it is clear that government’s maturity in terms of understanding technology lags that of big business. One opportunity being missed is in procurement.

A trend towards cost reduction in big businesses began just before the financial crisis that emerged at the end of 2008. In the years since then, we have seen the devastation of recession take hold and destroy companies that couldn’t control their costs.

While big businesses clammed up in terms of procurement during the recession, government in SA was seen as an industry where spend continued to be strong. As private sector spending decreased, IT and services companies turned their attention towards the public sector. In many cases, government had no choice but to continue spending money on the development of systems such as those that affected the Department of Home Affairs and Department of Transport, as it was required to meet deadlines. But recession trends also showed us that government was not thinking like big businesses when it came to procurement.


HOW TO SPEND? SERVICE RECORD

Finance Minister Pravin Gordhan highlighted public spending as an area of concern. South African municipalities have shown, in recent years, that they face challenges in terms of utilising their budgets. You’d expect spending money to be the easy part, but instead municipalities in SA are having their budgets cut because they aren’t spending money allocated to them.

At the heart of these challenges are government’s tender processes, which have been made complicated in order to protect against corruption and misspending. On the one hand, municipal structures are afraid to spend money while on the other hand, they are faced with tender processes that mean it can take a very long time to select and initiate engagements with service providers to government.

This, in turn, affects service delivery – a key focus of the current government.

In his 2011 budget speech, Gordhan said, “Poor delivery and stealing from the fiscal are never acceptable.

Senior managers of our institutions and municipalities are expected to work actively to improve their procurement processes and oversight.”

Gordhan did not provide guidance as to how those processes and oversight can be bolstered, but to technologists the answer is clear.

COMBATTING CORRUPTION For the 2011/2012 tax year, government budgeted just under R889 billion toward expenditure, and has highlighted the fight against corruption and tender-rigging in making sure that the money will be spent efficiently. Government revealed that there are currently 53 investigations underway involving procurement irregularities for contracts worth R3 billion. More than R250 million has been seized by the state so far. SARS is investigating another nine cases of tender-specific fraud, with a value of about R1.7 billion. SARS has also increased its analytical capacity with the aim of ensuring that vendors winning state contracts fully satisfy their tax obligations. Effective end January 2011, SARS had identified some 13 000 vendors who have won state contracts, and who owe taxes amounting to over R1 billion.

CREATING CONFIDENCE

Joe Phago, public sector chief technology officer at Business Connexion (BCX), says that technology could be used not only to provide oversight and enable processes for government’s tender processes, but also to restore confidence in those processes, both for the public, goods and service providers to government and officials within public organisations.

“Currently, many people do not have confidence in the tender processes of government,” he said.

Phago used the example of the South African Post Office that was essentially crippled by tender processes of the government department that administered it.

“The department was scared to make decisions and eventually outsourced it [the post office],” he explains. “This was essentially the result of a lack of confidence.”

According to Phago, one of the first results governments would experience in applying technology to its tender processes is the transparency it so desperately needs. Technology would give government a way to track and record every step of the process, with information it could make available to anyone who asks.

He warns, however, that technology cannot be seen as a silver bullet.

“You have to have the processes to back up the technology,” says Phago.

“A key part of this, of course, is the people involved in the process who must be properly trained, have bought into the system and understand the processes that are being supplemented with technology.”

He explains that government could make quick wins in the way information is recorded and archived, which would go a long way to restoring confidence. Technology could also be used to more clearly communicate government’s policies and requirements.


KILLING CONFUSION

The State Information Technology Agency (SITA) recently removed many people from its tender processes, says Phago, and much confusion over the organisation’s procurement procedures has resulted.

“When you have the three working together –people, process and technology – then people believe in what you’re doing. They see you working together,” he explains.

Another advantage to be gained is in expediting the whole process of awarding tenders.

“Turnaround time is a major problem for government,” says Phago.

“We have seen examples of departments telling people they are working on an opportunity and then three years later still nothing has happened. It takes a long time to award tenders and it’s simply not good enough,” he adds.

The lack of transparency means that providers do not understand how tender processes work or what to expect when engaging with state-run organisations. Having policy articulated on paper is one thing, but government needs to practise what it preaches when executing on its procurement policies.

There are also tangible examples of how technology could support government processes outside of procurement, which would help to convince any doubtful parties.

RETHINKING PROCUREMENT SITA implemented a new structure for its procurement processes in 2009 and 2010. The restructuring included the merging of The State IT Acquisition Centre (ITAC) and SITA’s internal procurement department into the new Procurement Services Department. This department, in turn, has been divided into three distinct business units. The first of these is the Strategic Sourcing Unit that is responsible for effective sourcing of IT goods and services. The Purchasing and Inventory Management business unit is supposed to ensure delivery of all purchasing activities and the Procurement Admin, Governance and Compliance business unit is responsible for developing and implementing procurement policies and procedures. SITA maintains guidelines on procurement and related processes at www.sita.co.za.

SOME AUTOMATION IN ORDER

Phago says that government elections are an easy example of processes crying out for technology.

“At the moment we are not using technology for that. Elsewhere in the world technology is used in the voting process. As soon as voting is closed, results are available because they can be calculated very quickly and accurately by technology systems,” he explains.

“At the moment we are dependent on paper, human counting, and processes surrounding the results being challenged, which all adds to delays.”

The voting system is an extreme example of the reluctance that many within government have to using technology, but the same can be said for tender processes, says Phago.

“We understand the kind of technologies that can be employed to support these processes at BCX, because we use them ourselves,” he says.

“For example, we use IT systems and automated processes in the procurement of travel. If one of our people needs to go to Cape Town on a last-minute trip they are able to request travel, receive authorisation and have tickets booked by an agent – all via one, seamless process,” explains Phago.

“But again, it’s not about the technology in and of itself. It has to be implemented properly. In the past we have seen government buying technology solutions that are never deployed, or are deployed incorrectly. This leads to overhead costs for under-utilised assets and further damages confidence.”

Fantas Mobu, general manager of procurement services for Eskom and chairperson of the State Owned Procurement Forum, agrees that government still has a long way to go when it comes to the integration of IT into government processes.

“Some government departments and state-owned enterprises are using it, but most organisations are not yet ready to make full use of technology,” he says.

“Technology has not yet matured within government. A few state-owned enterprises are making use of technology in its tender processes but not in a full scale. I think this will change in a year or two,” predicts Mobu.


BETTER, FASTER

While technology must be implemented alongside people and process, Mobu says that there are some advantages to taking people out of some parts of the picture. This is especially true in terms of combating corruption.

“Technology can help in this way because it takes out the human factor. For example, within the process of procurement or e-tendering,” he explains.

People cannot – and should not – be removed from the entire process, but IT should be used where it has a clear application.

“The system can fetch information from different stakeholders, such as SARS, and conduct the necessary background checking and due diligence, for example. This will be much easier and more accurate than having a human do it. The management reports will be easily auditable. Using technology, consistency will be the order of the day.”

By taking people out of particular parts of the process, it is also possible to speed things up.

“The tender process can be automated from when the need is identified, throughout the evaluation process, which ends in a frills-free tender process,” says Mobu.

“This will obviously increase speed and quality. Thus technology can be used to access information from more sources in a much shorter period of time. In addition, tender announcements can be circulated digitally – through e-mail, SMS, etc. – instead of through traditional mediums such as newspapers,” he continues.

E-TENDERS Many private-sector examples of e-tender Web sites are available that government could use as examples in preparing its own e-tender systems. OnlineTenders.co.za, for example, is an e-tender Web site where suppliers and service providers are able to view business tenders and apply for these online. Supply Chain Network (www.scnet.co.za) allows small to medium-sized businesses to list their products and/or services so that larger businesses can  nd them. The Web site is partnered with the National Treasury. The South African government has a tender section on its information Website at www.info.gov.za but does not include mechanisms for government organisations, and suppliers and service providers to interact.

“The only issue is that smaller businesses may be placed at a disadvantage with regard to accessibility,” he points out.

There are simple ways that technology can be used in tender processes too – it doesn’t have to be a major deployment. More elaborate systems can then be added later on.

“Tenders can be submitted through an e-mail or disk, and then sent to a programme or system that automatically calculates the hurdles which will be involved in the process,” says Mobu.

“The system can then deliver a full report, eliminating many of the practical issues that are associated with the tender process. In addition, the supply management functions, which include all line vendor management, vendor registration, databases and continuous alerting of updates regarding, for example, BBBEE or tax updates,” he adds.

However, government has deeper issues to address when it comes to reducing tender-rigging and corruption. Technology is certainly a piece of the puzzle, but can only effectively support processes once those issues are taken care of.


DEEPER ISSUES

Independent technology analyst, Steven Ambrose from consulting firm Strategy Worx says that government needs to address deeper problems before turning to technology, however.

“Technology is simply a tool to increase efficiency and make processes work better,” he explains.

“The roots of corruption and nepotism go far deeper and often collusion cannot be avoided or prevented. Technology can however make the uncovering of these circumstances more efficient and effective, essentially by allowing proper audit trails and fast dissemination of information to the various bodies who oversee such tenders, for example, the Auditor General’s office,” adds Ambrose.

He says that government also needs to show a commitment to making proper use of technology and convey its plans to the industry. Clarity is needed so that all parties involved understand the processes and policies surrounding procurement.

“The current government has no coherent technology plan and implementation in place. There are too many departments and agencies with conflicting and/or overlapping mandates,” he says.

Once again, Ambrose suggests that government tackles the issue in the same way businesses would.

“We need to appoint a government CIO, as the US has done, who will oversee, coordinate and ensure that all systems are interoperable and allows a clear and coherent picture of all activities within government – both at national and provincial levels,” he suggests.

“This would go a long way to ensuring efficiency and accountability, which would in turn reduce tender irregularities and other activities that are improper.”

“Throwing money at any system in the absence of a clear, coherent and effective strategy is never a solution. Simply buying more technology will do very little to solve the current issues.”

In reality, government has very good policies in terms of tenders, but these are lost in execution and, in other cases, create delays as complex processes are required to support policy.

The victim of the resulting delays is service delivery, as it takes government bodies too long to procure the goods and services they need and get these implemented for the greater good.

Technology offers some opportunities to restore confidence, enforce policy and hasten processes in the way that government engages with IT and service providers.