Original Research

Bettering procurement by Central Supplier Database in the public sector: A panacea or a fallacy?

Nontuthuko S. Nkwanyana, Albert T. Agbenyegah

Received: 14 July 2023; Accepted: 27 Oct. 2023; Published: 06 May 2024

Copyright: © 2024. The Author(s). Licensee: AOSIS.
This is an Open Access article distributed under the terms of the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

Abstract

Background: The fulfilment of customer needs is dependent on the availability and accurate selection of supplier(s). In the public sector in South Africa, Central Supplier Database is used for this purpose for the procurement up to the value of R1 000 000.00.

Aim: This article examines Central Supplier Database as a supplier search engine, with its impact in procurement process efficiency as well as customer needs satisfaction.

Setting: The study comprised of 20 participants at the nine provinces of a public sector institution in South Africa.

Methods: This article utilised simple random sampling to secure a total number of 20 participants performing a procurement function in the Department of Justice and Constitutional Development. Qualitative data were collected through interviews and later analysed through thematic analysis.

Results: The study’s findings reflect that Central Supplier Database is open for manipulation, too open-ended, enabling suppliers to register for anything, everything and everywhere they deem fit, thus causing service delivery constraints.

Conclusion: There is an urgent need for rethinking and reengineering of Central Supplier Database for the enhancement of process efficiency and fulfilment of customer needs.

Contribution: The study contributes to the limited research on procurement utilising Central Supplier Database in South Africa. It provides insight into the history, the current state as well as the envisaged future of procurement with Central Supplier Database.

Keywords: supply chain; procurement; supplier selection; Central Supplier Database; public sector; South Africa.

Introduction

Central Supplier Database (CSD) is an established supplier search engine that is used by public sector institutions in South Africa for the procurement up to the value of R1 000 000.00. This tool follows extensive developments that have been tried and/or adopted in the past, within the procurement space in this sector. The following sections provide brief background on how procurement was conducted in the past, its transition up until the use of CSD to date.

Brief history of procurement in the public sector in South Africa and elsewhere

Procurement represents a part of supply chain management (SCM) that has been in existence since the onset of organised trading. Its origins can be traced to Spain and Egypt in 300 before the birth of Christ (BC), a trade between a Greek colony and China in 800 BC, and in Syria between 2400 and 2800 BC (Thai 2001:11). This, according to the preceding author, is when the very first contracts were entered into, procurement practices formulated, and silk trade and a procurement order for smooth oil were issued, respectively. During this period, the majority of procurement functions were not performed by practitioners but rather commissioners or commissaries in exchange for a commission such as kickbacks, as these posts were unpaid civil servant posts. It was only in the late 1800s when state legislatures in the United States began to create boards or bureaus responsible for purchasing, and these were hardly centralised.

The emergence of centralised procurement began in 1810 when Oklahoma became the very first state government to establish a board to execute procurement centrally for all state departments and agencies (Thai 2001:11). This became a trend whereby cities such as the City of Chicago, the City of Los Angeles and the City of New York provided for some degree of centralisation of procurement in their charters between the period 1898 and 1917, adds the preceding author. Similarly, centralised procurement can be traced back to around the year 1968 within South African government, wherein the State Tender Board was introduced. This board drew its powers from the State Tender Board Act 1968 (Act No. 86 of 1968) with its regulations as further amended in 1988 (South Africa, National Treasury 2003). The board’s fundamental role was to make responsible decisions regarding the allocation of contracts to private bodies for the provision of goods and services in the public sector (Raga 2002:17 cited from Raga & Taylor 2010), thereby forming a more centralised procurement approach. Notable also during this time was that the award of tenders was purely on the basis of price, thus making it almost impossible for smaller and newly established enterprises to partake in the procurement system (Raga & Taylor 2010). In fact, the Nationalist Government purposefully prevented South Africa’s diverse population (other than the white minority) from accessing government contracts, add the preceding authors. As such, these procurement processes were characterised heavily by marginalisation, discriminatory and unfair practices.

Transition in procurement

Soon after the first democratic government of South Africa was established in 1994, procurement reforms began to emerge in the country in 1995. This follows a joint effort that was conducted by the Ministries of Public Works and Finance (Raga & Taylor 2010). Prior to the promulgation of these reforms, during the political transition, a need existed for interim measures to be put in place during the takeover of the new government after the 1994 general elections. This was when the 10-Point Plan was adopted (South Africa, State Tender Board: User Manual 1996:03–04). This plan made provisions for targeting those from the emerging, small, medium and micro enterprises (SMMEs), advocating for skills transfer and human resource development through partnerships and joint ventures. According to South Africa, firstly, the Department of Public Works (1996:03–18), the 10-Point Plan included, access to tendering information, where the State Tender Board was to assist with the compilation and dissemination of tendering and related information in a simplified and uncomplicated format.

Secondly, the Tender Advice Centres (TACs) were to be established throughout the country to assist and provide effective communication with tenderers. Thirdly, the Provincial Tender Boards were to review the current database of suppliers and ensure incorporation of SMMEs in it. Fourthly was the waiver of sureties when contractors are provided with loans and fifthly was the introduction of breakout procurement, which encompassed portioning of procurement into smaller parts thus allowing participation by even smaller enterprises. Points 6 and 7 of the plan were enforcement of early payment cycles, that is, 30 days, as well as preferences or targeted procurement, respectively. Points 8 and 9 addressed simplification of tender submission requirements and appointment of a procurement ombudsperson who will attend to complaints and deal with TACs and Provincial Tender boards. Lastly, point 10 aimed to create an enabling environment that would result in effective participation by SMMEs through classification of building and civil engineering contracts. Supporting the two broader initiatives of transformation, namely good governance and targeted procurement, the Green Paper: Public Sector Procurement in South Africa came to fore. The Green Paper proposed scrapping of both the State and Provincial Tender Boards, instead forming Procurement Centres (PCs) overseen by the Procurement Compliance Office (PCO), having a similar status as that of the Auditor General (South Africa, Ministry of Finance and the Ministry of Public Works 1997). This meant each state institution needed to establish its own procurement bodies under its own accounting officer. In turn, it would devise its own procurement strategies in line with the framework set out by the PCO. Therefore, the PCO will maintain overall responsibility for providing the links among all spheres of government, including regulating and prescribing all procurement-related documentation so as to achieve a uniform procurement system with standard bidding procedures and control documentation in the public sector in SA (Raga & Tylor 2010:8). In the bid to achieve the socioeconomic objectives, by developing emerging suppliers through integrating them into the mainstream of the economy, a database of suppliers needed to be created (South Africa, Ministry of Finance & the Ministry of Public Works 1997). Provisions were set for regulating terms of participation, promoting good business practices and reprimanding those who transgress, such as failing to meet their tax obligations and/or engaging in misconduct. Most importantly, South Africa, Ministry of Finance and the Ministry of Public Works (1997) cited that registration of supplier(s) into a database was to be subjected to the observance of a code of conduct, which meant supplier(s) pledge among others to:

• Tender only for projects they are capable of, as per access to required resources;
• Remunerate staff as per existing legislations, pay all relevant regulatory charges or taxes;
• Abide by environmental, health and safety standards, be fair and ethical in every business transactions;
• Adhere to environmental standards.

Having said this, South African Ministry of Finance and the Ministry of Public Works (1997) stated that those not registered in the database were not to be allowed to participate in public sector procurement activities. In fact, to date, registration of suppliers is done in many countries, but some developed countries use a qualification system to prequalify suppliers that may be listed into the ‘approved list’ of tenderers. A number of supplier’s registrations forms were created by various state institutions. These were completed and submitted by those enterprises intending to do business with that specific procurement unit(s). With this method, state institutions were expected to make ‘a call’ for prospective suppliers to come and register themselves at least annually (South Africa, National Treasury 2007:3).

Procurement in the public sector in South Africa to date

Reforms continued as South Africa made every effort to correct the injustices of the past. During this time, the so-called SCM emerged in the year 2003 when it was adopted by the cabinet of the Republic of South Africa (RSA) (Nkwanyana & Agbenyegah 2020:3). Its inception came with the similar purpose of (1) good governance and (2) promotion of preferential procurement. On this, Migiro and Ambe (2008:23) asserted that SCM sought to introduce internationally best accepted practices. Notably, this reform was characterised by more structured, orderly and defined functions, with an emphasis on separation of duties. Currently, procurement, inter alia referred to as acquisition in this reform, forms part of overall SCM functions. Following demand planning and the availability of financial resources, the procurement process commences. As reported in the South Africa, Department of Justice (DOJ) and Constitutional Development (CD) (2021:54[25–27]), there is a mix of methods that organisations use to procure goods and services. South African DOJ & CD (2021:104[20]) states that where a minor need exists, petty cash can be made available to pay for petty expenditures; before use, the head of office must satisfy him or herself that there are no other means available to incur the expenditure other than petty cash. Other more formal ways include the sourcing between R0.01 and R1000000.00. The procurement using this method follows the selection of service providers from the CSD (South Africa, DOJ & CD 2021:54[12]).

Central Supplier Database in the public sector in South Africa

Central Supplier Database forms part of continuous enhancements that have been taking place within procurement space in the public sector in South Africa. It is a database wherein all public institutions search and obtain their prospective suppliers from (South Africa, National Treasury 2016a:7). It is a modernised way that, according to the then Minister of Finance Mr Nhlanhla Nene, was aimed at reducing the related administrative burden for both businesses and the public sector in South Africa (Ambe 2016:287) while ensuring uniformity and standardisation in registration and verification of supplier information (South Africa, National Treasury 2016a:1–2). With CSD, potential suppliers interested in doing business with the state in South Africa enlist themselves into this database following steps as per Figure 1.

FIGURE 1: Steps for supplier self-registration into Central Supplier Database.

It is upon this registration wherein suppliers can register for as many as possible addresses and commodities. This is evident where South Africa (National Treasury n.d:1) states that suppliers are required to select their industry classification as well as the commodities they supply per locations. Clearly this postulates that no limit is set regarding the number of commodities as well as locations, which a supplier can register for. It is also understood that commodities and/or locations can later be added on or amended. Whether or not this brings value to the procurement processes and the state at large is an interesting area of debate is yet to be established.

Nevertheless, one of the greatest strengths of CSD is its ability to integrate with various institutions for verification purposes. This includes verification of company’s registration and status with Companies and Intellectual Property Commission, owner and/or shareholder’s information with the Department of Public Service and Administration, Department of Home Affairs, tax status with South African Revenue Services as well as correctness of banking details with various banks (South Africa, National Treasury 2016b). Though the fact that CSD does not verify those in the Department of Defence, local government and public entities are somewhat a drawback. Moreover, no indication of verification of authenticity of addresses and commodities is indicated, thus making this CSD ‘supplier list’ questionable too. However, what is known is that CSD has since been in use from the period 01 July 2016 (South Africa, National Treasury 2016a:1), thus abolishing the requirement for accounting officers or authorities to compile a list of prospective suppliers with whom they will engage for their procurement requirements up to the threshold value of R500000.00 applicable at that time as per the instruction of National Treasury Practice Note No 8 Of 2007/2008 (South Africa, National Treasury 2007:3). Therefore, an administrative relief to state organisations. Then again, CSD is continuously available for supplier’s self-enlistment, anytime and anywhere, and there is no need for multiple applications to various procurement units; this too presents an added value to suppliers. It is for this reason that Aarnio (2019:5) asserts that CSD adds value to the efficiency of an organisation as it reduces time and resource utilisation, thus creating value for procurement processes. Central Supplier Database is referred at as a single source of consolidated, accurate, up-to-date, complete, key and verified supplier information, where state organisations search and obtain their prospective suppliers (South Africa, National Treasury 2016a:7), thereby enabling a procurement process for purchases up to the value of R1 000 000.00. to commence. According to South Africa, National Treasury (2019:13) supplier search at this time was driven by supplier commodity, delivery location, tax-compliant indicator and local address indicator as shown in Figure 2.

FIGURE 2: Central Supplier Database search criteria.

As shown earlier, the search result would reflect those suppliers that have enlisted themselves for a specific commodity and at the address stated, being province, city or town. Moreover, only those that would be tax-compliant at that time will reflect on search result. Subsequent to this, CSD has further advanced in the past few years. It now allows primary and secondary users of state institutions to restrict their search further to suppliers with verified banking details, preferred local address and interestingly it provides for the preferential procurement policy framework act (PPPFA) filters. This is shown in Figure 3 and Figure 4.

FIGURE 3: Latest Central Supplier Database search criteria.

FIGURE 4: Preferential procurement policy framework act filters.

Taking from the above, it can be concluded that CSD is rather a tool enabling procuring through provision of suppliers. Moreover, bids or quotations can only be awarded to prospective suppliers registered on it, unless it is not possible to source them on the CSD and authority has been sought from the delegated authority to approach the market (South Africa, DOJ & CD 2021:54[12]). Prospective suppliers obtained this way must, however, be registered on the CSD before conclusion of an order. If a purchase was on an emergency basis, such supplier must register on the CSD within seven calendar days upon conclusion of the work. This excludes transactions concluded via petty cash, sundry payments and foreign suppliers with no local registration.

Realisation of transformation of public sector procurement in South Africa: A focused approach to developing targeted suppliers

In pursuit to address specific socioeconomic goals by integrating emerging suppliers into the mainstream of the economy, the government of RSA continued promulgating reforms that were set to dissemble apartheid laws, correct the terrible past injustices and ensure black people participation both politically and economically (Babarinde 2009:356). It was ‘now’ the time to put to an end to all breaches that divided South Africa, announced the then president of RSA Dr Nelson Mandela (Mabece 2019:2). It was a time to build and liberate all the people from the continuing oppression of poverty, deprivation, suffering, gender and other discrimination, he added. Therefore, without a doubt, this was a time for change, but most importantly, measures needed to be put in place to address the dissemination of public funds so as to meet up with these socioeconomic challenges. To this end, directives such as Preferential Procurement Regulations as well as Broad-Based Black Economic Empowerment (BBBEE) Act 2001 as amended in 2013 with a drive to uplift SMMEs, among others, came to emergence.

Broad-Based Black Economic Empowerment Act 2001 as amended in 2013

Broad-Based Black Economic Empowerment is defined by Essec in 2016 in Nzo (2019) as an:

[I]ntegrated and coherent socio-economic process that directly contributes to the economic transformation of SMME’s in Africa to bring about significant increases in the number of black people who manage, own and control the country’s economy, as well as significant decreases in income inequalities. (p. 31)

According to Shai, Molefinyana & Quinot (2019:4–5), the Act defines black people as all previously disadvantaged groups of people namely Africans, mixed race people and Indians. The Act follows shortly after the inception of PPPFA and implemented a set of philosophies and activities to achieve the intended government goal of economic transformation, adds the preceding author. Common between PPPFA and BBBEE is that they aim for economic transformation. Economic transformation refers to a rapid and a fundamental change in the systems and patterns of ownership and control that govern the economy (South Africa, National Treasury, n.d.:11).

According to Mathonsi and Sithole (2020:15966) in the State of the Nation’s Address (SoNA) delivered in February 2017, the President indicated that the State will play a pivotal role to drive transformation in the economy. It would do by utilising the maximum strategic levers such as legislation, regulations, licensing, budget and procurement as well as Broad-based Black Economic Empowerment charters available to the State to influence the behaviour of the private sector. As such, SMMEs are considered to contribute significantly to sustainability through job creation, economic growth and more equal income distribution, thus to the overall Gross Domestic Product (GDP). According to Nieuwenhuizen (2019:665), SMMEs contribute between 16% in low-income countries and 51% in high-income countries on GDP. This author adds that 95% and more of businesses across the world are SMMEs, thus employing 60% of workers. Nevertheless, South African estimates may differ because of the large sum of informal businesses in the country, making it impractical to estimate their contribution to economy, GDP and employment. However, the value of SMMEs to the economy cannot be undervalued. Hence a need exists for South Africa too to support SMMEs. However, whether or not this will benefit the state is another interesting aspect that requires further and future exploration. Bushe (2019:1) reported that an estimated number of 40% of new businesses in South Africa fail in their first year of inception, meanwhile while 60% do so in their second year while 90% fail within the first 10 years of existence.

Preferential procurement regulations

Aside from BBBEE instructions with its purpose for economic transformation of SMMEs, preferential procurement regulations were enacted to support realisation of the similar goal. Preferential Procurement Regulations give effect to the PPPFA, established for one other reason, accelerated environmental, social and economic upliftment of historically disadvantaged individuals (DHIs), a way of giving HDIs a chance to participate in the economy through public procurement processes (Fourie & Malan 2020:2). As directed by the constitution of the RSA, PPPFA emerges as a national legislation that seeks to promote advancement of those who were less favoured by the past system. It aims to do this by allocating preference points in the evaluation of the advertised quotations or bids depending on the threshold values. For instance, according to South Africa, National Treasury (2022:24), a maximum of 20 points are earmarked for preference for the procurement of goods or services up to R50 million, whereas a maximum of 10 points are earmarked for preference for the procurement of goods or services for rand value above R50m. This means other than 80 points allocated for price, state institutions will allocate an additional maximum of 10 or 20 points in quest to favour those historically disadvantaged. A number of points that ought to be awarded were previously informed by BBBEE status level of the company as depicted from the BBBEE certificate or affidavit (South Africa, National Treasury 2017:24–25). However, such points are now determined by the ownership status or composition of a company (South Africa, National Treasury 2022:5–6). By direction of procurement regulations 2022, a company with 51% or more ownership by black people receives 10 more points, which with 51% or more ownership by women gets extra 5 points, and that with 51% or more ownership by youth and disabled persons receives 3 and 2 points, respectively. It is noteworthy that despite the fact that CSD is powered for registration of all suppliers who intend doing business with the state, however, Figure 4 illustrates that state institutions are able to further refine their search to restricted group of companies owned by previous DHIs such as women and youth.

Supplier selection

Firstly, it cannot be denied that a need exists for institutions to discover new suppliers and not just develop existing ones (Beil 2010:2). This is because new suppliers may be superior in some way to an organisation’s existing ones, such as that they may bring in low costs and novel technology. Hence some organisation’s policies may compel buyers to locate a minimum number of viable, potential suppliers for all goods and/or services being procured. This is the case too within the space of the public sector in South Africa. This sector advocates for competition in procurement (South Africa, National Treasury 1999:62). As a way to achieve this, South African Department of Justice and Constitutional Development (2022:54[26]) asserts that for every procurement exceeding R2000.00 up to R1000000.00, as many as possible, but a minimum being five written quotations must be requested from potential suppliers registered on the CSD, and a minimum of three must be obtained for such a procurement to proceed. Suppliers that have listed themselves for commodities and for areas where goods and/or services are required are selected to quote. Therefore, having an increased pool of suppliers on CSD is, with no doubt, an advantage to procurement units searching for potential suppliers. However, whether or not an increased pool results to better procurement processes and in turn enhanced customer services is yet to be explored. In light of this, a process of supplier selection will always form part of organisation’s procurement processes. Nonetheless, supplier selection is an important task (Rashidi et al. 2020:2).

According to Beil (2010:2), supplier selection is the process by which buyers identify, evaluate and contract for goods and/or services with supplier(s). Unfortunately, supplier selection has been reported by Benyoucef, Ding and Xie (2003:4) as being a complicated task as it is informed by multiple criteria that may even conflict. Taherdoost and Brard (2019:1026) concur with Benyoucef et al. (2003:4), alluding to the fact that selecting the right supplier, the responsibility of the purchasing managers, is always a difficult task. Moreover, any incorrect selection can lead to losses that would directly affect the performance of an organisation. Given the requirement of the compulsory use of CSD by state institutions with its intended purposes being enhancement of process efficiency, transparency and cost reduction as well as the applicable processes employed to search, qualify and select suppliers from which state institutions must procure from, it is crucial for the state to reflect, ascertaining how this whole procedure contributes towards overall institutional goals, being satisfaction of the needs of customers (end users of goods and services provided for by CSD suppliers). Despite this view, the problem that exists currently is that there is a paucity of scholarly research conducted to determine the outcomes of usage of CSD. Since its inception 7 years ago, very few studies have been conducted surrounding CSD. Although Mpehle and Mudogwa (2020) are some of the authors that has in the past assessed CSD, however, their study was purely in line with the effectiveness of CSD to increase transparency and accountability in the process of managing and selecting suppliers who qualify to do business with government and overall trustworthiness of CSD; thereof, it was not linked to procurement process efficiency and customer needs satisfaction as a result of CSD inception.

What is known currently among others are significant project delays, despite CSD inception. In 2021/2022 financial year alone, the Department of Public Works and Infrastructure reported 342 of its projects being delayed with more than 50% of the planned project period. Sadly, among the recorded reasons are that of termination of the contractor because of poor performance, that is, poor build quality (Auditor General of South Africa 2022:42). Deducing from CSD’s underlying motive, it is therefore this study’s aim to determine the below:

• The resultant effect of CSD in procurement process efficiency and
• Satisfaction of customer needs as a result of use of CSD.

Research method and design

In an attempt to establish what has been the impact of CSD inception in process efficiency and customer needs satisfaction, a qualitative research approach was used in this study because of its powers of being revealing of the ‘entire world’ as it engages with human experiences and the meanings associated with a particular phenomenon (Du Plooy-Cilliers, Davis & Bezuidenhoud 2014:234). Moreover, Harney and Monks (2014:30) assert that qualitative methodology is based on obtaining detailed and in-depth information. This study adopts this methodology in order to attain trustworthiness of the research findings. By utilising qualitative method, the researchers have confidence in that the research findings are consistent with reality (Maree 2007:144). Findings could be relied upon (Scheyvens 2014:215), because research procedure is well-documented and/or auditable. They are also confirmable, because data were recorded on a recording devise with notes being written during interviews and all are available for any audit trail. Then again findings are believed to have meaning to even individuals who were not involved in the study because they can associate these findings with their own experiences (Cope 2014:89). To that end, structured, open-ended questioning techniques were used during interviews with the users and/or beneficiaries of CSD in the public sector so as to enhance subjectivity and gain detailed viewpoints on the effect of CSD in the procurement processes and that of overall customer needs satisfaction served by these users. According to Wagner, Kawulich and Garner (2012:133), interviews are regarded as a valuable source of information as it produces expressive data that assist the researchers see the world through the eyes of the participants. This study adopted a case study approach, whereas the DOJ & CD was selected as a study population. This study site had an estimated population of about 59 procurement staff ranging from junior, supervisors to middle managers across its nine provincial offices of South Africa. A sample of 23 persons, being 40% of the population, was decided upon. This was to ensure that heterogeneous groups of persons characterising the population (middle manager, supervisors and junior staff) stand a chance to participate in the study within the limitedly available resources of the research, being time and monies. This would allow the study to obtain perspectives from heterogeneous groups of persons, thus resulting in reliance and precision of the research outcomes. Participants were then randomly selected in a systematic manner of intervals. Subsequently, 20 eventually participated in the study. Despite the reports that present a larger sample size as being more conducive to the generalisability of results, this is actually not always the case (Matthews & Ross 2010:162). In fact, a smaller sample size too, similar to the one of this study, if selected with accuracy, could better represent a population than a bigger sample.

Preliminary results from primary data

Central Supplier Database inherited complications

The objective of the study was to understand the resultant effect of CSD in procurement process efficiency as well as in overall customer needs satisfaction. This section presents the findings according to the thematic analysis. The key theme is supplier’s database and supplier selection disorder with its subthemes being poor supplier selection, lack of supplier cooperation and commitment, the requirement for supplier rotation, and non-existence of ‘true’ supplier rotation as shown in Figure 5. Sub-theme one and sub-theme two are further illustrated in Figures 6 and 7.

FIGURE 5: Central Supplier Database themes.

FIGURE 6: Subtheme one: poor supplier selection.

FIGURE 7: Subtheme two: Lack of supplier cooperation and commitment.

This study found that anarchy exists in the presently used supplier database, CSD. From a total of 20 participants, at least 15 (75%) reported some CSD-related anarchy as discussed below.

There is a general view that the composition of CSD as well as the supplier selection procedure within CSD is itself a risk in the procurement space. This comes as a result of that the credibility of suppliers in this database is doubted. As suppliers are not vetted as to for what goods and services and for which areas they can register for. Participant 20 and Participant 13 pointed out that CSD allows suppliers to register for anything, everything and everywhere. Respondents indicated that it is rather unbelievable that one would specialise in everything and everywhere.

‘Since anyone can register for anything in CSD – it creates an impression that those suppliers specialise in those aspects – so we select them – only to find they don’t even know what that service is – not to mention having relevant legislative documents to enable them being used – where no documentary proof is required we end even giving them purchase orders and only to find they can’t deliver.’ (Participant 13).

The same was concurred and further expanded by another participant:

‘The fact that they allow suppliers to register for all areas in the country and for all commodities. The risk for me is that you have construction companies doing catering. The quality and time period, all that becomes a problem. We have suppliers that will take the purchase order and they never deliver because at the end of the day, I can’t find the stock or it’s too expensive, I don’t have money – that kind of things, because they have to go to other suppliers to buy it.’ (Participant 20)

This means CSD therefore contains no list of competent ‘approved tenderers’ – instead could be regarded as a mayhem of ‘legit’ suppliers and ‘wanna-be’ suppliers. This gap tampers with the correctness of suppliers being selected for quoting. Therefore, discovering new suppliers as mentioned by Beil (2010:2) for the purpose of obtaining superior services also gets tainted. This is perhaps the reason why Participant 12 voiced concerns on hardships experienced by supply chains, in terms of prolonged and no deliveries that are caused by ‘middle men’.

‘These middle men are the main causes for our sufferings, they have no financial power, no reputation to be trusted even by their suppliers’ (Participant 12)

Unfortunately, this results to adverse outcome in respect of process efficiency and in turn customer need fulfilment.

Participant 9 stated that on the other hand, delivery constraints are said to be rather caused by under-quoting. This could be associated with incorrect supplier selection as mentioned by Taherdoost and Brard (2019:1026), which is reported to negatively affect organisation’s performance.

Supplier rotation anarchy

Findings revealed that instead of CSD, to enhance process efficiency, its requirements of supplier rotation instead bring hindrance to satisfaction of customer needs, where it is impractical to apply ‘rotation’. Quoting from interview, a participant that was a middle manager with an experience of more than 10 years and was at the age of 60 years and above indicated:

‘Supplier rotation requirement for smaller towns is itself a risk. Prescripts want us to rotate suppliers whereas there’s only one supplier for plumbing or electricity or mechanics; now you have a problem every week, now the process expects you to rotate suppliers and that becomes a risk because you keep on asking same supplier, prescripts will tell us you can’t do that because you don’t rotate suppliers, it doesn’t understand that there is no other supplier in the next 15 or 20 or 100 km, now I will have to go to other town and those suppliers will charge additional monies, because they must include transport, even coming to do a quotation.’ (Participant 10)

This is a drawback or rather misalignment of policies and what the markets, represented by CSD, have to offer. Whereas policies forces procurement units to rotate suppliers, meanwhile there is only one that exist in specific smaller areas, thus incurring added costs of sourcing goods and services in the outside neighbouring areas. Unfortunately, this impedes enhanced satisfaction of customers’ needs and will future deplete overall budget. Then again, CSD does not in any way enforce rotation of suppliers. According to Participant 9, this brings a risk of preference supplier selection even with the inception of CSD, whereby officials select names that they know on the CSD because CSD provides no tool of supplier rotation. From the responses earlier, it is apparent that the CSD, with its requirements and form, though identified as a necessary initiative, also comes with some loopholes that neither spare the public sector from fraud and corruption nor protect it from receipt of inferior goods and services. The same view was expressed by Mpehle and Mudogwa (2020:6), where five (36%) of respondents alluded to the fact that CSD was not reliable, for reasons like suppliers are not vetted when registering, and most of the suppliers register for a commodity that they do not specialise in, in terms of the core function of their business. They can also register for different locations and for any industry classifications without any capacity validation. This, according to the preceding authors, exposes the state to risks of delivery failures because of tight lead times or delivery costs. The earlier findings therefore reject an assertion by South Africa, Department of Finance (2017:23) that CSD would curb fraud and corruption. Further, it rejects the view of Aarnio (2019:5) that suggests CSD will add value to the efficiency of an organisation as it will reduce time and resource utilisation, thus creating value for procurement processes. Instead, further outcries are noted. Notwithstanding, when soliciting the views of participants on what should then be done to curb or overcome CSD dilemmas, what comes out clearly is that none of respondents propose discontinuation of CSD. As such, it can be argued that it is all not unwell with the inception of CSD, instead it requires rethinking and reengineering. Shedding some light on the future of procurement with CSD, Participant 3, pointed out that CSD suppliers must be vetted so as to avoid fronting. Participant 14, a supervisor with more than 10 years of experience, added that due diligence must be done for suppliers registering on the CSD. This includes minimising the number of locations each supplier can register for. According to Participant 4, suppliers must register for where they are located and for items that they specialise in. This is in line with the recommendation of Mpehle and Mudogwa (2020) who stated that:

CSD should also have a limit in terms of the number of commodities that each company can register. This will enable the emerging small and medium enterprises to focus on their core business activities. (p. 7)

Ethical considerations

Ethical clearance to conduct this study was obtained from the Durban University of Technology, Institutional Research Ethics Committee (No. IREC 015/2022).

Discussion of the results

From the context discussed earlier, it is evident that the CSD inception was a vital inception, as it is aimed to support and enhance both the public and private sector procurement processes (Ilhan & Rahim 2013:1). In fact, many other developed countries have adopted the similar ‘drive’ of supplier database or supplier list as a part of e-procurement.

This is in their quest to take advantage of the benefits of e-procurement, such as lower prices for goods and services procured and efficient processes (Anthony 2018:42). Most importantly, to minimise the direct human interaction between the tenderers and the government, procurement officials in the procurement cycle may reduce opportunities for bribery (Anthony 2018:42). It is therefore a good tool for continued use by public sector institutions:

‘However, it is challenging to find that there are a number of factors putting CSD in jeopardy as portrayed in this study. This includes the existence of preferential supplier selection.’ (Participant 9)

Participant 2 stated that no existence of a systematic rotation tool on CSD for example, three quotes coming from a single supplier with different names are accepted, participant 12 prolonged and said there were no deliveries. Undermine the intended purpose of CSD. In essence, this means that though the South African public sector eliminated the administrative burden of supplier registration, new challenges emerged.

Moreover, non-existing suppliers ‘exist’ on CSD. These suppliers do not provide quotations; if they did, they do not fulfil order requirements, thus resulting in procurement requirements being repeatedly advertised. Without a doubt, this negatively affects overall service delivery, being fulfilment of customer requirement. But what makes suppliers deny themselves of the golden opportunity to gain profit? Synthesising from the empirical study, it is evident that suppliers may be selected on an incorrect basis. The fact that suppliers can register for anything, everything and everywhere is a serious challenge, to be relooked at by the South African government.

The verification of supplier information as per the National Treasury (South Africa, National Treasury 2016a:1–2) needs to be intensified. More supplier information such as relevant legislative documents mandatory to provide certain goods and services should be validated at the registration stage. This is in line with the pre-qualification methods as proposed by Beil (2010:3). This will avoid having a fictitious database of suppliers for a specific item or commodity and areas, who actually cannot deliver such goods and/or services at such areas.

This will stop the CSD from having suppliers who self-register for areas and goods and/or services they do not even know, thus providing reasonable assurance to procurement units of the legitimacy of the quotes they receive as well as of receiving quality goods and/or services at the end. Moreover, the same will provide confidence for procurement units in discovering new suppliers (Beil 2010:2), thereby complying with the requirement of competition as per the National Treasury (South Africa, National Treasury 1999:62). With this, supplier selection and its set criterion, namely supplier qualification as discussed earlier in this work, will make a meaningful impact and produce fruitful results for all stakeholders involved, especially the final recipients of goods and/or services.

Strengths and limitations

The current study employed interviewing method to source data. That being said, the study suggests that though CSD is a necessary inception, it requires multiple enhancements so that it does not contain unusable suppliers, thus negatively affecting service delivery. The study also notes possible solutions to the current dilemmas within CSD usage as was found during interview. The use of interviews was the most advantageous method of data collection, because it brings the researcher closer to the beliefs, views, experiences, opinions, ideas and behaviour of participants on a subject matter. Despite this, the study’s findings, especially the imagined ‘future’ of CSD being possible remedial actions to CSD dilemmas, are rather inconclusive. They lack critical inputs from suppliers as one of the important stakeholders in CSD. Future research should consider to include public sector and CSD registered suppliers to establish a holistic view for the future. It is though such assessment where it could be concluded whether or not the use of CSD in procurement is a panacea or a fallacy.

Recommendations and conclusion

This study aimed to examine CSD in the public sector to ascertain its impact on procurement process efficiency and customer needs satisfaction. This was in quest to gain insight into the current state and contribution of CSD towards better procurement processes, customer needs satisfaction and thereafter map the future of CSD in procurement, if any or if required. Overall, the study concludes that the public sector in South Africa requires the CSD; as such, CSD shall remain operational in this sector, all in the effort to lean towards e-procurement. However, it is recommended that, in order for South African government procurement units to enjoy reasonable benefits of this e-procurement inception and for the realisation of the CSD goals, as alluded to, by the then Minister of Finance Mr. Nhlanhla Nene, there is a need for an urgent transformation of CSD. CSD needs rethinking and reengineering in that its content and composition requires purification. This would rebuild confidence in procurement practitioners, allow meaningful rotation of suppliers while enhancing process efficiency and customer needs satisfaction. In light of this, it is this study’s submission that the custodian of CSD, being the National Treasury, has a duty to urgently consult stakeholders involved, especially public sector institutions, to discuss and thereafter implement the necessary reforms to curb the pressure indicated by buyers so as to ensure better customer needs satisfaction and procurement process efficiency.

Acknowledgements

The authors declare that they have no financial or personal relationships that may have inappropriately influenced them in writing this article.

N.S.N. was the main researcher in this article, while A.T.A. was the advisor. A.T.A. contributed to this article by providing the required support and direction.

N.S.N. received a postgraduate support grant from the Durban University of Technology (DUT) where she was a student.

Data sharing was not applicable to this article as no new data were created or analysed in this study.

The views and opinions expressed in this article are those of the authors and are the product of professional research. It does not necessarily reflect the official policy or position of any affiliated institution, funder, agency, or that of the publisher. The authors are responsible for this article’s results, findings, and content.

References