State blacklists 52 companies in long-overdue procurement crackdown

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JEREMY MAGGS: Government has blacklisted 52 companies in what’s being presented as a decisive crackdown on corruption and non-performance in public procurement.

But blacklisting only happens after the damage is done – after contracts have failed, after money has been spent, and often after consequences have been avoided.

I think the real question is not just who’s been punished but how this was allowed to happen at scale, who inside the system enabled it and whether this is genuine accountability or maybe just a cleanup exercise after years of weak oversight.

Let’s discuss that with the Minister of Public Works, Dean Macpherson, a very warm welcome to you. Let’s get straight to it, let’s be clear, what did these 52 companies actually do and how serious are the failures that we’re talking about?

DEAN MACPHERSON: Thanks Jeremy, great to be with you and your listeners. These range from various failures, from failures to adhere to the contracts to which they were appointed, work quality issues and in some cases people who just simply walk off the site and don’t complete their project.

So they are through a range but at the heart really of all of it is, in my assessment, is project management and a failure to project manage not only the development itself but also the various contractors involved.

I think that you will have seen that between 2002 and 2024 only two contractors had been blacklisted by the Construction Industry Development Board. In the last 18 months we have now blacklisted 52.

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So it does show that there is a lot more scrutiny and a lot more work being done to ensure that we derive value for money.

But of course, we need to then start holding them civilly liable for costs that have had to be borne by the state as a result of their inaction.

JEREMY MAGGS: Well, let’s talk about that in just a moment and I do acknowledge the scrutiny but one has to ask why it’s taken so long to act. Surely, Minister, there were warning signs that have been ignored for a long time.

DEAN MACPHERSON: Yes, of course, there were definitely warning signs that were ignored, that is self-evident, but I think that under my leadership I’ve shown that we’ve gone from two being blacklisted in 22 years to 52 in 18 months and that’s because we are having a lot more scrutiny on these projects.

We’ve also said that we want to increase the capability and the ethical standard of these businesses that do work for the state and that it should be seen as an act of service almost.

It should be something that one is proud to do instead of just a demand or an expectation.

Again, I’ll come back to the point about project management that if we properly manage these projects then those warning signs will be there.

I’ve also been very clear, this thing of pre-payments baffles me. We do pre-payments sometimes in large amounts of money and then we wonder why people don’t deliver on that.

I think that we’ve got to have a better system in how we are able to support contractors to do work but also be able to protect our interests which is the money that taxpayers give us to build these projects.

JEREMY MAGGS: Minister, what stops these same companies from simply resurfacing under new names or through proxy?

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DEAN MACPHERSON: Absolutely, that’s true. What we do is we then submit the names of the companies and the directors to National Treasury so that we ensure that they aren’t able to resurface somewhere else.

We also as part of our Construction Action Plan that we adopted with all nine provinces last year, we share that information with provinces through a database.

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So that if they have done work in KwaZulu-Natal that was not up to scratch and they try and resurface in Limpopo, that the provincial government there themselves also has that information.

We’re working hard to make sure that these guys aren’t able to be rewarded under a different name.

JEREMY MAGGS: Let me ask you about consequence if, I can. You referenced civil liability. I would also ask you a timeline or process around that and what officials within the department itself are being investigated.

DEAN MACPHERSON: Let me be upfront and I’ve been very clear to everyone around this is that the way that we procure and award projects is wholly unacceptable and that is evident by the need to blacklist 52 companies.

If we were awarding contracts to people who could perform, that number would be zero. We look at the entire value chain from procurement to award and to completion. The 52 is one part of that.

We are embarking on a radical overhaul in how we procure.

That obviously makes me very unpopular and the subject to all sorts of claims and smears that I have to live with, but it is what it is because we need to make sure that when we procure, we procure the right people.

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We’re also working hand in hand with the Construction Industry Development Board so that we are able to have them guide and advise us on types of grading that is required for these projects.

Listen/read: Macpherson: Poor performers will be blacklisted from state projects

So Jeremy, one would be your least qualified or least technical and nine would be your most technical. If we’re going to do something hugely technical it makes sense that anyone who is awarded that contract must be a level nine. The problem is that you award those projects to someone who’s a five or a six and then that just doesn’t work out.

We’re embarking on that procurement reform, which is obviously very difficult because of entrenched interests there.

On the civil side, we have also been working with the SIU (Special Investigating Unit) to recoup money, and we have successfully had a number of cases where we’ve been able to get some of that money back.

But of course, you’ve got to go through a litigation process and then often some of these companies will file for liquidation and that makes it more difficult because you then have to claim against the individuals and they manage to hide their money and assets.

So it can be a complicated process, but we’re committed to it, Jeremy, because when we show consequences we then disincentivise the behaviour that we see and have seen previously.

JEREMY MAGGS: Dean Macpherson is the Minister of Public Works.

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