Committee Report on Colloquium on Local Public Procurement

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Trade, Industry and Competition

13 October 2016
Chairperson: Ms J Fubbs (ANC)
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Meeting Summary

The Committee considered its report on the colloquium on local procurement and its linkages to the industrialisation drive on a paragraph by paragraph basis. A few corrections were made to some parts of the report, after which Members of the Committee agreed on the information contained in the report, and adopted it..

The Committee programme for the rest of the month was also considered, and adjustments were made where necessary.

Meeting report

The Chairperson expressed concern at the absence of quite a number of Members of Parliament (MPs) from the meeting. It was noted that Mr J Esterhuizen (IFP) was ill and currently admitted to hospital; a written apology had been received from Adv A Alberts (FF+); and Mr B Mkongi (ANC), who was on study leave, had also sent in a written apology.

Committee Report on Colloquium on Local Public Procurement
In terms of the formal consideration of the Committee’s report on the colloquium on local public procurement, the Chairperson proposed consideration of the report on a paragraph by paragraph basis, which was accepted.

Some of the corrections to the report were as follows:

- the Chairperson said that the word ‘South Africa’ should be replaced with ‘South African’ in the second sentence of paragraph 2, page 2.

- the replacement of the word ‘or’ in ‘…black economic transformation or empowerment’ with ‘and’, in sentence 3, paragraph 2, page 2, as suggested by the Chairperson.

The information contained on page 1 was agreed upon by Members. The information on pages 2, 3 and 4 was also agreed upon without corrections.

Under the consideration of the key industrial sectors that public procurement focused on in South Africa, the Chairperson noted that there was no specific presentation on leather and footwear. She suggested that this should be taken into account in future, as there were quite a number of mothers and single fathers who had no footwear. Members were urged to properly consider this issue in their various constituencies. Mr Tenda Madima, Committee Secretary, was asked to include this in the list of issues to be considered during the regular monthly engagement with the Committee, and a update be provided at each meeting.

The information on page 5 was agreed upon by Members .

The information contained in pages 6 and 7 was agreed upon, without corrections.

The Chairperson noted that the meaning of Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) on page 4 differed from the one on page 6, because of the inclusion of ‘s’ in the word ‘Power’. Ms Zokwanda Madalane, Content Adviser to the Committee, confirmed that the accurate meaning was the one contained on page 8, and she had since corrected the error on page 4. The rest of the information contained on page 8 was agreed upon.

Ms Madalane noted that a correction had been made to a sentence to read thus: ‘the Committee cautioned that the verification process may create a regulatory burden…’ The Chairperson said there might be a need to explain the impact of not identifying the weakness in an audit aimed at assessing an entire value chain. The information contained on page 9, and the correction made to it, was agreed upon by Members.

On page 10, the Chairperson corrected the sentence on the first bullet point, to be re-written as “verification was performed on electric cables in this case, and the bidder paid for the cost.” Members agreed on the information contained on page 10, with the aforementioned correction.

On page 11, the Chairperson threw open the suggestion to replace the word ‘conclusion’ with ‘consensus’ in the sentence “there was no conclusion on how this challenge should be addressed”. Ms Madalane proposed that the sentence be deleted, because the National Treasury was yet to specify the means of dealing with the issue. Members agreed with the proposal, and with the information contained on page 11.

On page 12, a correction was made to the sentence “CRR (Merger of China South rail and China North Rail). Ms Madalane also noted that the word ‘agencies’ in bullet 2, under the proposed solutions of the Department of Trade and Industry (DTI), had been changed to ‘agency. The information contained on page 12 was agreed to by Members, with the aforementioned corrections.

Under bullet 5.1.2, on page 13, the Chairperson said that the apostrophe after ‘ensuring the role of the DTI is…’ should be deleted. She also pointed out to Ms Madalane that bullet 5.3 revealed that there were numerous verification agencies, which included unofficial verification agencies and privately owned verification agencies.
Ms Madalane was asked to explain the second sentence under bullet 5.4. She said that the recommendation had been included because it had been suggested by a Member, but relevant corrections had been made to ensure that the recommendation was all encompassing. The Chairperson, however, proposed that the recommendations be separated into two. The information on page 13, along with the various corrections made by Members, was agreed to.

On page 14, the Chairperson said that the point under bullet 5.7 should not be concluded with the word ‘to’.

Mr A Williams (ANC) sought clarity on whether ‘acknowledgements’ should come after ‘recommendations’, since the document showed that the reverse was the case. The Chairperson clarified that the positioning of the items was accurate.

The Chairperson asked Mr D Macpherson (DA) for the timeframe agreed upon for implementing the first recommendation under bullet 7.1. She later asked other Members to suggest an appropriate timeframe within which the first recommendation should be implemented. Mr Williams proposed a timeframe of six months. Members agreed that the timeframe should be placed at end of May 2017.

The Chairperson proposed the inclusion of a new sentence under bullet 7.2, which should read: “Serious consequences should be imposed for non-compliance and sanctions, to encourage compliance.”
Mr Williams proposed that the new sentence should end at ‘…non-compliance’, instead of including incentives for compliance, since compliance was mandatory and failure to comply should attract serious consequences for those departments.

The Chairperson clarified that she had used the word ‘sanctions,’ and not ‘incentives’.

Ms Madalane said that consequences were stipulated both for companies and the government. For companies, there would be consequences where a company failed to carry out verification with the South African Bureau of Standards (SABS), in instances where such a requirement had been specified in a contract. There would be consequences for state-owned enterprises (SOEs) and government departments that failed to adhere to various requirements, such as the requirement to procure locally for designated products.

All corrections and information contained on page 14 were agreed to by Members.

Ms Mantashe proposed that the word ‘contract,’ under bullet point 7.2, should be replaced with ‘engage’. Other Members suggested that the word should be replaced with ‘consult’, while the Chairperson said it should be replaced with ‘in consultation with’.

The Chairperson was confused about the recommendation made under bullet 7.3, but Ms Madalane clarified that the recommendation was one of those that had been addressed and it should have been included that it had already been addressed.

All other information on page 15 was agreed to by Members .

Mr Williams proposed an adoption of the report to be sent forward to the House for consideration, and Mr G Hill-Lewis (DA) seconded the adoption.

The Chairperson noted that both Mr Alberts and Mr Esterhuizen were in support of the report, but she was unsure of the EFF’s stance on the report.

No objections were raised to the adoption of the report.

The Chairperson said she appreciated Ms Madalane’s dedication and commitment to the Committee. Mr Andre Hermans, Committee Secretary, was also appreciated for switching to the Budgetary Review and Recommendations Report (BRRR). Mr Hermans said that Mr Madima would be responsible for a broader report on the DTI.

Committee programme

The Chairperson asked Mr Hermans to make copies of the programme available to all Members, but Members suggested that the programme be projected on the screen, since adjustments would still be made to the programme before distribution to members.

In discussing the programme, the Chairperson noted that the United Nations Educational, Scientific and Cultural Organisation (UNESCO) report would be rescheduled to a more convenient time that would be acceptable to Committee members.

The programme for 18 November 2016 was full. It was suggested that the time be changed from 9.30 am to 9.00 am to enable a proper discussion of all items contained in the agenda for that day. All Members were urged to be present at the meeting, as there would be six minutes of meetings to be considered for adoption, and a quorum would be needed for such adoption.

The Chairperson said that engagement with the national credit regulator (NCR) had been one of the issues discussed in the previous term.

Mr Williams said that the previous discussion around this engagement had focused on the massive debt processes that the poorest of the poor battled with. Measures had to be developed to relieve people with no income and no assets of their debts. More information had been requested from the credit regulator pending legislation to be developed by the Committee.

The Chairperson sought clarity on the reference to legislation to be developed by the Committee.

Mr Williams replied that the ANC was of the opinion that Members would come up with legislation that would go to the House leader.

Mr Hill-Lewis said that a proposal was made that the debt forgiveness should commence with the miners that were recently laid off on the platinum mines. However, taking out a credit agreement where there was employment would translate into credit life insurance; and part of the credit life insurance was designed to pay debts using the income. However, most credit providers failed to clear the credit life insurance because they themselves had been insured, and they diverted the payment of the credit life insurance to themselves. The miners should reconsider their credit agreements, because their debts should have been cleared normally through their insurance policies instead of putting measures in place to clear their debts. It was therefore important to start with people without jobs, as it was expected that income earners should have had credit life insurance to begin with.

The Chairperson said that the NCR referred specifically to the situation mentioned by Mr Hill-Lewis. The issue had been part of an on-going discussion since 2007. She had engaged the National Treasury through the then Minister of Finance; Mr Nhlanhla Nene, as well as Minister Pravin Gordhan, and they had both agreed that the timing was not correct.

There would be a meeting on 21 October 2016 for a formal consideration of the Budget Review and Recommendations Report (BRRR) report. It was expected that the meeting would end by 11.30 am.
The Chairperson said that she would be absent from meetings from 12.00pm on 21 October 2016 till 30 October 2016. It was therefore, necessary to elect a Chairperson to chair the meeting that would be held on 21 October 2016.

Mr Hermans said that the consideration of the Announcements, Tablings and Committees (ATC) report would be done on 18 October 2016.

The meeting was adjourned.



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