11 November 2022 – SARS has welcomed the judgment of the High Court to set aside the Report of the Public Protector on the “Investigation into Allegations of Maladministration, Corruption and Procurement Irregularities and Improper Conduct by the South African Revenue Service (SARS) in Connection with the Handling of a Tender for the Provision of Bespoke Software Development, Maintenance and Support Services for the Benefit of SARS for a period of 7 (seven) years”.
The central finding contained in the Public Protector’s report is that SARS had unlawfully procured the IT services of BBD, a supplier, and that SARS’s conduct constitutes improper conduct for the purposes of section 182(1)(b) of the Constitution and section 6(4)(a)(iii) of the Public Protector’s Act.
SARS is delighted that the court upheld SARS’s contention that the findings and remedial action contained in the Public Protector’s Report are irrational, unlawful, unreasonable and unfair and that the Court set aside the Report.
BB&D has played a pivotal role in SARS’s Modernisation Programme, which is one of the great success stories of public service in the democratic era. The report of the Commission of Inquiry into Tax Administration and Governance by the South African Revenue Service (“the Nugent Commission”) found that, in 2014, “SARS had an effective and world-class IT division” with well-documented successes.
The Modernisation Programme, initiated by former Commissioner Gordhan in 2004, enabled SARS’s transformation from an archaic institution dependent on cumbersome manual processes, outdated computer systems, and enormous volumes of paper documents, to one that uses cutting-edge technology and electronic information to enhance its productivity, efficiency and effectiveness.
Commissioner Kieswetter said: “Since 2006, SARS has chosen to implement a hybrid solution, which comprises a combination of bespoke and commercial off-the-shelf systems, with the bulk of the system being bespoke. It is precisely the bespoke approach to building the SARS IT platform that has laid the foundation that has enabled SARS during the past few years to rapidly expand its enabling service to taxpayers. This core competency was especially valuable when we needed an agile response at the start of the Covid-19 pandemic. However, the bespoke approach comes with inherent and unavoidable procurement challenges.”
“The Public Protector sought to find SARS guilty of wrongdoing when, like public entities in other jurisdictions, SARS was endeavoring to procure the cutting-edge technology it required using procurement regulations designed for another purpose. If there is indeed a problem, it is not the conduct of the public entity and officials who succeeded in modernising SARS; it is the traditional procurement regime, which has not kept up with the IT needs of digital entities in the twenty-first century.”
“Sadly, the current procurement policies and National Treasury regulations have done little to prevent large-scale procurement corruption, but rather have constrained the dynamic and agile procurement requirements of a modern data and technology enabled business model that SARS is pursuing.”
“I am therefore heartened by the recent announcement of the Minister of Finance that the Public Procurement Bill will be tabled in the course of 2023. It is foreseen that the new Bill will abandon the complicated and stifling rules that constrain IT procurement procedures and unleash the potential of public procurement so that commercial suppliers can tailor their procedure to meet the needs of the market. This will further enable SARS to continue on its journey to reimagine a future revenue authority where increasingly its work will be informed by data-driven insights, self-learning computers, artificial intelligence and interconnectivity of people and devices”.
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