"Still gaps" in new Treasury price guidelines

2010/06/17

DESPITE the provincial Treasury releasing a price guideline to regulate the way tenders are provided, there are still gaps which need to be filled.

On Monday, the Treasury released a list of items at market-related prices with strict orders to supply-chain managers to disregard any grossly inflated quotes.

While government was previously paying R26 for a loaf of bread, the new pricing guideline ranges between R8 and R9. A typical ballpoint pen which was being charged at R19 is now set to cost between R10 and R13.

A calculator previously costing R500 will now have to be priced between R79 and R87. A stapler costing R120 is now between R46 and R52.

In a circular to departments and parastatals, acting Treasury head Qonda Kalimashe outlined that average prices were determined by Statistics South Africa through quotations directly from suppliers and physical visits to retailers in the province. Thereafter, the average prices were increased by a percentage equivalent to points received. Points are awarded based on where in the province companies are situated.

Companies based in East London and Port Elizabeth earn 10 points and have 12.5 percent added to the average price.

Companies in secondary urban towns such as Grahamstown, Mthatha and Queenstown, earn 15 points and have 18.75 percent added to the average price. The third category consists of other businesses which fall within Eastern Cape rural areas, which earn 20 points and have 25 percent added to the average.

Spokesperson for the Public Service and Accountability Monitor (PSAM) Derek Luyt suggested that the system was flawed as businesses could use fake addresses to apply for tenders.

“The index allows for businesses based outside of metros and secondary urban areas to qualify for preferential ratings in the awarding of tenders,” Luyt said.

“While the PSAM appreciates the rationale behind this reasoning, we hope that there will not be a flood of metro or secondary urban area-based businesses relocating their headoffices to some rural location.”

Luyt added that provincial Treasury would have to be certain to monitor the procurement process as business could exploit the rules.

“These businesses should not benefit from preferential procurement policy by putting a phone and fax machine in a rural town.

“The PSAM urges the provincial Treasury to consider closing down this potential loophole,” added Luyt.

The Democratic Alliance’s Bobby Stevenson said: “The price index issued by the Eastern Cape Provincial Treasury for the procurement of goods is welcome, but this is only one step on the road to rooting out tender corruption.”

Stevenson and the UDM’s Max Mhlati insisted that Treasury should now also focus on creating a similar price index for larger scale items.

“A price index for major items such as clinics, classrooms and roads needs to be issued,” added Stevenson.

“This benchmarking has not yet addressed the major government tenders. It deals with small tenders of things which are required by hospitals and other institutions. — By JUSTIN LAWRENCE and MAYIBONGWE MAQHINA, DAILY DISPATCH