Finance and Economic Opportunities:
- Whether he can give a detailed breakdown of each department’s expenditure on PPE, including the (a) unit price, (b) quantity purchased and (c) details of the supplier and/or manufacturer used; if not, why not; if so, what are the relevant details;
- what are the (a) details of local suppliers and (b) amount paid to each of them for the purchase of PPE;
- whether the provincial government has procured any of its PPE from the Proudly SA website, which lists several local suppliers; if not, why not; if so, what are the relevant details;
- what are the reasons for the varying amounts paid by different departments for the same PPE items;
- whether he will institute an investigation into the different prices being paid for the same PPE items by the provincial government’s departments; if not, why not; if so, what are the relevant details?
1. (a), (b) and (c) Please see attached Annexure A in terms of the requested information. Please note that:
- Total expenditure of each department on PPE for March 2020 to May 2020 (as extracted from the system on 8 June 2020) is reflected in the sheet titled “Summary of Expenditure”. Please note that, for technical reasons, this excludes the Department of Health;
- Expenditure information as it relates to unit price, quantity purchased, and details of the suppliers are reflected in the sheet titled “Unit Price Information”;
- A separate dashboard in the attached annexure reflected in the sheet titled “DOH” has been included for the Department of Health only in respect of average unit prices, stock on order and stock on hand, as this is the only available information at this point in time (extracted by the PT from departmental shared site on 18 June 2020).
- Subsequently we did the DOH analysis.
- (a) and (b) Below are details of suppliers within the boundaries of SA only as well as the amount paid to each supplier. This excludes the suppliers for the Department of Health, it must be noted that the Department of Health used their own transversal contracts that they normally put in place as part of their core business to which they benefitted from by placing most orders in the last two months of the 2019/20 financial year. The Provincial Treasury receives weekly insights into the Department Health PPE stock levels used to manage the pandemic. We suggest that the member request the detail of suppliers and amount paid to each directly from the Department of Health.
- No. No due diligence check is done in this regard as procurement of Proudly South African products is not a prescribed requirement by the National Treasury for procuring institutions to comply with in the procurement process. The local content and production requirements have been prescribed by the National Treasury via Instruction Notes to which the Province must comply with. Local Content and Manufacture verification and certification is done by the SABS and assigned by the dtic.
- Prior to the lock down, the Provincial Treasury (PT) anticipated the need for PPE items and the potential for the hiking of prices due to scarcity in respect of supply and demand in the market for these essential items. Whilst the PT cannot control how suppliers hike their prices, the PT can guide departments on mechanisms to focus on value for money and/economically viable purchasing.
The prices are influenced by the timing of when the procurement process happens as well as the number of suppliers who can respond in the market based on supply and demand needs. Suppliers are also aligning their prices to the NT maximum benchmark prices; however NT’s benchmark prices have been amended twice to which the market has not re-adjusted its prices downwards. Departments find themselves having to approach the market many times to secure the requisite stock of PPE items needed which also results in varied pricing.
In some cases, departments have utilised pre-existing contracts and hence they are paying the prices in respect of these contracts whilst other departments are subject to the current fluctuation in market prices.
- The Provincial Treasury is currently monitoring the procurement of PPE items by departments and has also provided a mechanism for departments to ensure that they manage pricing at an appropriate level by including the following in the provincial database:
- Standardised, uniform specifications approved by the Department of Health and NDOH;
- Pricing for each item, lead times for delivery and quantities that suppliers could deliver; and
- Comparative pricing that was issued by the National Treasury as benchmark prices for medical PPE items.
The Provincial Treasury has further issued Treasury Circular 23 of 2020, issuing the Regulations on Competition Tribunal Rules for COVID-19 excessive pricing compliant referrals, to which the Department of Health specifically as advised are referring cases of excessive pricing to the Competition Commission in terms of the Competition Commission regulations issued during lockdown.
