Contractor procurement is achilles heel of school infrastructure delivery

As the government stalls on finalising amendments to the Public Procurement Bill, billions of rand of public money is going down the drain, and the basic education sector is one of the biggest culprits.

In 2020, the National Treasury uncovered R3bn of irregular spending in the sector, of which R405m was in the 2020/21 financial year alone.

School infrastructure is often the source of the problem, particularly procurement processes involving implementing agents. Year after year, the agents — middlemen in charge of managing and building schools on behalf of education departments — waste huge amounts or illegally spend money, with little to no intervention or consequences from the government.

In June 2020, Equal Education (EE) and the Equal Education Law Centre (EELC) submitted written comments on the Draft Public Procurement Bill calling for greater accountability and transparency in procurement processes. The draft bill is an opportunity to fix some of the problems outlined in the state capture reports.

In spite of the urgency, after more than two years the bill remains in limbo.

The government has a constitutional duty to provide certain goods and services to the public. When it cannot do so directly, it can contract — through tenders or a competitive bidding process — other providers, including private companies. This process, known as public procurement, needs to be fair, transparent and cost-effective because government is spending public money.

However, South Africa’s procurement system is in crisis, riddled with mismanagement, corruption, a culture of impunity and poor service delivery. The Zondo commission findings clearly demonstrated that the system is not working.

In the basic education sector, procurement guidelines provided in the bill will be central to efforts to eradicate school infrastructure backlogs. This is because there are specific conditional grants: the provincial Education Infrastructure Grant and the School Infrastructure Backlog Grant.

Since national and provincial education departments outsource the bulk of their school building projects, implementing agents are awarded lucrative contracts and hold considerable power, with some of the biggest private beneficiaries being:

• Coega Development Corporation;
• the Independent Development Trust; and
• the Mvula Trust.

The agents hire and manage contractors and professional service providers who build and upgrade schools.

The process of hiring implementing agents must be in line with the National Treasury's broader guidelines outlined in the Procurement Bill and other legislation.

Though there are systems in place to support fair and open hiring, the process remains slow and is often fraught with complications. Mismanagement and corruption in procurement processes are one of the main reasons for poor infrastructure delivery.

Provincial education departments have been criticised by the National Treasury and the auditor-general for failing to provide effective oversight, leading to poor quality work and extra costs. For instance, a presentation by National Treasury in July 2022 revealed that some agents in the Eastern Cape did a shoddy job of evaluating the capacity of local contractors to deliver projects on time and within budget.

Provincial infrastructure delivery progress reports also show costly poor performance by implementing agents, with large portions of money reserved for specific projects being spent without any work being completed. For example, poor planning for a primary school in Gauteng led to a 35% (R27m) overspend. At a school infrastructure round-table on May 4 2021, Limpopo reported that most of its allocations for infrastructure for 2021 were spent with only a small portion of the targets met.

The reality is that the national and provincial education departments have not done enough to provide consequences for agents who act illegally or do not get the job done

The use of implementing agents often causes delays. Poor procurement practices, weak management of agents and contractors, and a lack of punitive measures for defaulters are to blame. The reality is that the national and provincial education departments have not done enough to provide consequences for agents who act illegally or do not get the job done.

There needs to be greater accountability and transparency about school building projects. Equal Education’s report on implementing agents highlights how important it is that information about agents and contractors assigned to school projects, timelines for construction and building plans, and budget allocations and spending be made publicly available. Without this information, it is difficult to to hold agents, contractors and the government accountable. 

The Draft Public Procurement Bill is an important opportunity to fix some of the challenges in the school infrastructure delivery process. The government must finalise the proposed changes urgently to help reduce wasteful and illegal spending in the sector.

To reiterate some of our submissions on the proposed amendments, EE and EELC recommended, among others, that the government:

• make capacity support for efficient, effective and transparent procurement management a mandatory function of provincial treasuries — this would assist in building the internal capacity of these institutions to improve their procurement and supply chain management practices; and
• clarify and strengthen provisions on blacklisting processes outlined in the draft bill to address shortcomings, especially in the ability of these processes to hold accountable role players responsible for school infrastructure delivery.

Moreover, we strongly recommend the draft bill include specific provisions to strengthen implementing agents’ accountability.

The public should also have access to critical information related to procurement projects by making systems such as the Education Facilities Management System publicly available. This would remove the secrecy that is breeding corruption.

Finally, government should create more accessible ways for the public to report cases of contractors or agents underperforming, and ensure the debarment or blacklisting of such defaulters. 

• The writers are researchers at Equal Education