Contract specification as a barrier for SMME access to eThekwini Electricity procurement services.

Abstract

Public procurement has been identified as a tool to fight South Africa’s triple bottom line challenges of unemployment, inequality and poverty. Similarly, Small, Medium and Micro Enterprises (SMMEs) growth and development is seen as part of the solution to the same triple bottom line. However, failure rate of SMMEs is very high, estimated to be 71%. Access to public procurement is one of the identified support mechanism/tool for SMMEs to develop and grow. During South Africa’s apartheid era, public procurement was mostly used to protect the interests of white-owned enterprises. Some people still argue that even during the current democratic South Africa, public procurement is still used for similar purpose, specifically in the Electricity sector where most part of the work is considered specialised and only the well-known companies have the necessary skills and resources to provide required services. Tender or contract specification is one of the greatest tool used during public procurement to select a suitable company to provide the required service or product. The same contract specification can be a barrier to SMMEs. This study is principled with the aim to determine if contract specification is a barrier for SMMEs to access procurement services. The study was conducted within the Electricity Utility environment of eThekwini Municipality: Electricity Unit (eThekwini Electricity). The descriptive quantitative study was used with population or sample of eThekwini Electricity officials/Employees which were Engineers and Contract Site Supervisors (Clerk of Works) as well as eThekwini Electricity bidders (potential contractors) as participants. Primary data was collected through a web-based survey questionnaire on a random sample size of 80 of eThekwini Electricity Employees and 140 bidders. Data was analysed using SPSS statistical tool. The response rate was 64% for eThekwini Electricity employees and 41% for eThekwini Electricity external bidders. The study found that contract specification is a barrier for SMMEs access to eThekwini Electricity procurement services and the greatest barrier is the contract value or size. It has also been found that Engineers can and should develop contract specification that will provide SMMEs access to procurement without compromising service delivery. Success of any procurement projects should be measured on both SMMEs development and value for money rather than the current quality of delivered service within budget and time.