The Western Cape Government (WCG) Provincial Treasury chose to issue the Procurement Disclosure Report (PDR) as a proactive step to ensure transparency on procurement within the WCG. We, therefore, welcome the studying of the report and the raising of questions where there is a need for clarification.
The Department of Public Service and Administration (DPSA) Circular 07 of 2020 issued on 16 March 2020 provided guidelines for the containment and management of COVID-19. Paragraph 2.6.19 of this Circular stated that departments must procure sufficient hand sanitisers, soap, gloves, masks, tissues and, when possible, temperature scanners for use to monitor employees’ possible exposure to COVID-19 symptoms. Masks were therefore urgently needed for officials, including those working in the Chief Directorate: Traffic Management, specifically our frontline traffic officials for law enforcement operations.
According to National Treasury Instruction No. 08 of 2019/2020 issued on 19 March 2020, paragraph 3.7.2. states that “Where an institution or provincial treasury already has a contract(s) in place for the same items listed in Annexure A, the institution must honour the contract and continue to procure from that contract”. At the beginning of the COVID-19 lockdown, the DTPW contacted all suppliers who had transversal contracts with the National Treasury and those who responded indicated they were unable to supply masks at the time due to a lack of stock or an inability to provide masks at the stipulated price.
All procurement was undertaken within the legislative frameworks provided by the National Treasury Regulations and Provincial Treasury Instructions. Orders for personal protective equipment (PPE) placed and received were reported weekly to Provincial Treasury.
Tusk Construction Support Services is not a construction company but consists of a consortium between Tusk, Standard Bank and Massbuild, which have provided a range of services to the Department of Transport and Public Works (DTPW) since their appointment prior to COVID-19. Massbuild operates four complementary brands: Builders Warehouse, Builders Express, Builders Superstore and Builders Trade Depot. The relevant PPE items in question, are sold at these stores.
It should be noted that in terms of the Occupational Health and Safety Act and the Department of Labour’s directive on COVID-19 occupational health and safety (OHS) measures in workplaces, the employer is required to provide PPE items to its employees. Since the DTPW is, in the main, an infrastructure department involved in construction works and the management of construction sites, it is subject to strict OHS requirements in respect of the utilisation of PPE on all construction sites. PPE items have been procured from Tusk Construction Support Services (from Massbuild) since early 2018. It should be noted that PPE has been an OHS requirement in many industries for many years before the COVID-19 pandemic was declared a National State of Disaster. This is also true in the construction industry, which is a key function of the DTPW.
The orders with Tusk Construction Support Services (for Massbuild) were placed early in April 2020 and the products/items were delivered on 24 April 2020. It is important to note that this order, was a small order based on the immediate need of the DTPW and the availability of stock to enable law enforcement operations to proceed.
The first version of National Treasury Instruction 5 of 2020/21 was issued on 28 April 2020, weeks after DTPW had procured these items and several days after the Department received the items it had ordered. The bulk of the order was placed following an open market quotation request via the Integrated Procurement Solution (IPS). Tusk Construction Support Services (Massbuild) was one of three companies awarded a contract through this process based on specifications, ability to deliver and quantums available as well as an evaluation against the National Treasury benchmark price.
Average Unit Prices is a consideration driven by supply and demand. Shine the Way 1065CC required a lead time of one month before they could deliver masks. The masks were also procured via the same process. Items procured from Shine the Way 1065 CC were ordered early in April 2020 and only delivered on 25 May 2020.
The DTPW does not view the prices paid as exorbitant, given the circumstances prevailing at the time they were ordered.
If we examine the other PPE items, thermometers were ordered on 25 March 2020 (on the eve of lockdown) at a time when people were panic buying and thermometers were not readily available in South Africa. As has already been said, prices are driven by consideration of supply and demand. National Treasury Instruction 5 of 2020/21 provided a list of maximum prices for PPE items on 28 April 2020. The list price of a thermometer on the National Treasury list of 28 April 2020 was R2 527.20 per unit while the DTPW paid only R2 300 per unit, all costs included.
The PPE list issued by the National Treasury that provides a thermometer price of R992 per unit was issued by the National Treasury on 3 July 2020 – over nine weeks later. It is clear from this exposition of the facts that the National Treasury benchmarking prices changed from time to time during the period that the PDR covers. The PDR makes these changes clear, as well as the dates on which these changes were made. It is further clear that the DTPW took all possible steps to ensure that no exorbitant prices were paid for PPE – masks and thermometers included.
The WCG and DTPW remain committed to transparency in procurement with a zero-tolerance approach to any wrongdoing. We are committed to the responsible, effective use of public funds at all time.