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INFLUENCE: SPECIAL FEATURE FORENSIC ACCOUNTING: Proactive Procurement Reviews add clarity and credibility to procurement

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nov2013_p42“Attempting to correct a misguided contract or tender after the award is often too late and the damage will have already been done.”

Gaining popularity – a procurement process for minimising potential corruption and controversy in tender awards

We can expect an upsurge in the demand for proactive procurement reviews after the Finance Minister has prioritised the establishment of a Chief Procurement Office and supply chain management processes are being tightened to combat corruption in the public sector.

Insisting on a proactive procurement review (PPR) is essential for both public and private organisations undertaking major procurement transactions. This form of review not only maintains the integrity of the process but also safeguards against possible post-award litigation costs and delays in project delivery, which can escalate overall project costs. It is also a means of preventing reputational risk through minimising potential conflict of interest issues.

Because the PPR entails reviewing the procurement process step by step – from need identification, to request for proposal and eventually the award – potential issues are identified and, where possible, resolved as the process unfolds. Attempting to correct a misguided contract or tender after the award is often too late and the damage will have already been done. Costs will ramp up, the project could be delayed and the problematic contract may still be enforced.

A procurement process that conforms to the expected standards is one in which clear procedures that are consistent with institutional polices and legislation are established, understood and followed from inception. These procedures need to consider the legitimate interests of service providers, ensuring that all potential service providers are treated equitably. An authentic PPR provides for the best outcome for all parties.

Essentially, a PPR has three main objectives: firstly, to provide advice during the procurement process to establish procedures which meet recognised standards, as well as ensuring that any problems or questions are dealt with in a satisfactory manner; second, to provide independent scrutiny so that prescribed processes are actually adhered to; and third, to provide a report at the end of the process which records an independent and professional view of the way in which the procurement process was managed.

However, while there is no question as to the tremendous value PPRs bring to the procurement process, organisations need to be realistic in their expectations. A PPR cannot be expected to completely eliminate the inherent risks associated with the procurement process. It will, however, identify and significantly reduce these risks.

Employing the services of a PPR specialist at the start of the transaction is critical. Trying to rescue a procurement process or remedy an already tainted process part way through is a recipe for disaster. Here again it must be emphasised that it is a proactive, as opposed to reactive approach to procurement, that will ultimately provide transparency and credibility to the process.

Author: Lawrence Moepi CA(SA) is Director of Forensic Services at SizweNtsalubaGobodo.