The list of companies that have been awarded multibillion-rand contracts to supply critical medical equipment for the country’s fight against Covid-19 is dominated by white-owned companies.
Although Business for South Africa (B4SA), which has been selecting suppliers on behalf of government and the Solidarity Fund, has maintained that more than half of the contractors were compliant with broad-based black economic empowerment (BBBEE), the list obtained by Sunday World showed the entities are majority white-controlled.
Last week, Sunday World reported that the Black Business Council (BBC) was among top organisations that raised concerns that B4SA, the Solidarity Fund and the government were excluding black businesses in the awarding of contracts to supply personal protective equipment (PPE).
This forced National Treasury to reverse, on Wednesday, its exclusionary procurement approach, saying this follows “various representations that have raised concerns about the procurement process, that the approach adopted has excluded a number of domestic suppliers and that it covered too wide an array of goods, especially goods that can be manufactured locally”.
The decision by the state to allow B4SA to select suppliers for PPEs has drawn sharp criticism, with business federation South African United Busines Confederation (SAUBC), saying it was not in line with government procurement policies.
The SAUBC said they met with National Treasury director-general Dondo Mogajane to raise concerns about B4SA.
“We raised SAUBC concerns with regards to, firstly, government outsourcing of procurement of Covid-19 goods and services to B4SA. Secondly, adherence to government procurement policies and procedures. Thirdly, the outsourcing of Solidarity Fund procurement to B4SA instead of National Treasury,” he said.
B4SA – which has so far bought 45-million pieces of PPE to the tune of R994-million – received applications from 6 000 bidders and so far over 16 companies have been appointed based on price, quality and availability of products.
“To date, 50% of the current suppliers have a broad-based black economic empowerment level between 1-4, and 48% of all medical equipment procured comes from BBBEE level 1-3,” the organisation said.
“In the emergency phase, where procurement of PPE was critical, suppliers were chosen on the lowest prevailing price at the time, quality and availability of products.
“The stabilisation phase allows for B4SA to continue to prioritise local black-owned companies and, where there is price parity, black-owned suppliers will be given preference.”
The list, which was confirmed by B4SA, shows R556-million was awarded to 16 companies. Of the 16 companies, eight have level 4 BBBEE status, which is a level given to predominantly white-owned and controlled companies, while two are on level three, another level given to majority white-owned firms.
The remaining six are on level 1 and 2, which is companies that are majority black-owned.
Level 4 companies got R275 861 700 of the R566 million spent on PPEs so far, while level 3 got R32 114 804. Companies with level 1 and 2 B-BBBE got a combined R214 932 324.
The organisation has also been under re over the composition of the panel that appoints suppliers.
B4SA said the panel for the selection of suppliers was currently being expanded to be more “diverse and representative”, adding that any initiative established in an emergency would be imperfect.
Imperial Health Services has been appointed as the implementing agent of the centralised system.
Government departments, municipalities, state-owned enterprises, among others, were now allowed to appoint their preferred suppliers for PPEs at market prices already set by the National Treasury, and following regulations to avoid inflation of costs.
The National Treasury said given the rapid changes in demand for specialised products such as testing kits and ventilators, a centralised procurement system was required at the time of the outbreak of the virus.
Solidarity Fund CEO Nomkhitha Nqweni said they provided the National Treasury with funding to secure critical medical equipment through B4SA.
“We helped the national command centre and the National Treasury with funding to urgently secure 19-million patient masks, 300-million sanitisers, 100 000 gowns, 2-million N95 masks, 20 000 goggles and 900 000 gloves for frontline health-care workers,” according to Nqweni.