Hon Speaker, I think I'll continue where my colleagues in the committee left off. I will deal with one or two areas that the Auditor- General highlighted in the performance audit, that is noncompliance with both Treasury regulations and with value- added tax legislation.
Before I tackle the findings and the committee's resolutions thereon, it's important to remind the House what those Treasury regulations pertain to.
Firstly, TR 16A8 regulates compliance with ethical standards, read with practice note number SCM 4 of 2004. It prescribes that all employees and other role-players involved in supply-chain management must adhere to the National Treasury's code of conduct for supply-chain management practitioners.
Secondly, TR 16A8.5 states that an official in the supply-chain management unit who becomes aware of a breach or failure to comply with an aspect of the supply-chain management system, must immediately report such to the accounting officer in writing.
Thirdly, TR 16A9.2 states that the accounting officer may disregard the bid of any bidder, if that bidder or any of its directors had abused the institution's supply-chain management system; had committed fraud or was guilty of any other improper conduct in relation to such a system, or had failed to perform on any previous contract.
Fourthly, practice note number SCM 5 of 2004 states in paragraph 3.1(b) that accounting officers should make provision for the training of at least the practitioners who are involved in the day-to-day operations of supply- chain management.
I'm sure we all agree that all these regulations have noble intentions, and if implemented, will ensure that government tenders go to those most deserving. However, the Auditor-General found that though the National Treasury's code of conduct must be adhered to, there's no legal requirement for employees working in supply-chain management to sign a code of conduct. In short, departments do not have signed codes of conduct, or, perhaps more likely, it would affect too many bank balances.
Of the 20 national departments, 17, that is 85%, indicated that officials had not been aware of any breach or failure to comply, while officials in two departments reported supply-management system cases to the accounting officer. One department did not respond. Of the two reported, one indicated that no action had been taken, as required by TR 16A9.1(b).
Of the 20 departments, 19 departments, that is 95%, indicated that no bids were disregarded, as none of the bidders nor any of their directors had abused the system. One department did not respond, a case perhaps of "See no evil, hear no evil". Equally worrisome, cases were identified where regional supply-chain management employees had either not been trained, training had been cancelled or trained staff had not been retained.
The Auditor-General recommended, and the committee strongly agreed, that all provincial and national departments should ensure that supply-chain management sign a code of conduct committing themselves to fair and ethical procurement practices. It is the least that our people expect, considering the handsome packages earned by senior public servants and the fact that they're in the Public Service, not through compulsion, but to serve, and there's nothing precluding them from joining private enterprises, if they so wish.
I now come to noncompliance with VAT legislation. It's generally accepted that tax authorities are not to be trifled with, as anyone who's ever received a letter of demand from Sars can attest. However, there seems to be a thriving industry in noncompliance when it comes to supplying goods and services to some government departments. Section 23(1) of VAT Act of 1991 states that all trading entities must register for VAT if taxable supplies or services rendered during a 12-month period amount to more than