The Impact of Poor Supplier Performance on Government Service Delivery
This Duja Consulting paper explores how poor supplier performance undermines government service delivery in South Africa. Here are the key takeaways from the paper:
- Service Disruptions: From electricity blackouts to incomplete water schemes, poor-performing suppliers cause outages and delays that hurt communities.
- Eroding Trust: High-profile tender scandals (like faulty trains and PPE) have damaged public confidence in government services, sparking protests and frustration.
- Accountability Gaps: Weak oversight allows underperforming contractors to escape consequences. Strengthening audits, blacklisting, and legal action is essential.
- Call to Action: The paper urges policymakers, supply chain managers, and procurement officials to enforce higher standards, improve planning, and uphold integrity in public contracts.
Read the full paper to understand these challenges and solutions in detail, and let’s work together to ensure South Africans get the quality services they deserve.
Executive Summary
Poor supplier performance is emerging as a critical threat to effective government service delivery in South Africa. When contractors and vendors fail to deliver on their obligations – whether by missing deadlines, providing substandard work, or abandoning projects – the consequences cascade across society. Essential services are disrupted, public funds are wasted, and citizens lose trust in the very institutions meant to serve them. This paper explores how underperforming suppliers undermine service delivery across key sectors such as energy, transportation, healthcare, and local municipalities. It examines multiple dimensions of the issue, including the economic costs of failed contracts, reputational damage to the government, operational disruptions in public services, accountability deficits, and systemic challenges in procurement. Real-world case studies (from Eskom’s power supply crises to stalled municipal infrastructure projects and healthcare procurement scandals) illustrate the severity of the problem. In conclusion, the paper calls for urgent action by policymakers, supply chain managers, and procurement officials to strengthen accountability, improve supplier management, and reform systemic weaknesses. By addressing poor supplier performance head-on, South Africa can protect public resources, restore trust, and ensure reliable service delivery to its people.
Introduction
Government service delivery is the cornerstone of South Africa’s social contract, underpinning everything from healthcare and education to electricity and clean water. However, this delivery often depends on third-party suppliers and contractors tasked with building infrastructure, supplying goods, or managing services on behalf of the state. In recent years, poor supplier performance has emerged as a significant impediment to timely and quality service delivery. Poor supplier performance refers to situations where contractors or vendors fail to meet their contractual obligations – whether through delays, substandard work, cost overruns, or complete non-delivery. The South African public sector has witnessed numerous high-profile examples of such failures, and their impact is felt acutely by citizens and communities waiting for critical services.
In the South African context, this issue is entangled with broader challenges of governance and corruption. During the era of “state capture” and beyond, investigations have revealed contracts awarded to unqualified or unscrupulous suppliers, often as a result of patronage or bribery. The outcomes are predictably dire: infrastructure projects left half-finished, essential equipment not maintained, and taxpayer funds siphoned off with little value returned. Even when corruption is not the cause, weak project management and a lack of accountability can enable mediocre or failing suppliers to continue operating with impunity. The result is a systemic erosion of service delivery quality, undermining the state’s developmental goals and public trust.
This paper delves into the impact of poor supplier performance on government service delivery through several lenses. First, it examines the direct economic costs of supplier failures, including wasteful expenditure and budget overruns. Next, it considers the reputational damage to government institutions when services collapse due to contractor non-performance. The analysis then explores operational disruptions – how everyday services like electricity, transport, water, and healthcare are interrupted or degraded. Further, it discusses issues of accountability and governance, questioning how poorly performing suppliers often escape consequences. Finally, the paper addresses systemic issues within public procurement and supply chain management that allow these problems to persist. Throughout, real-world South African case studies (such as Eskom’s electricity supply challenges, PRASA’s procurement fiascos in rail transport, municipal infrastructure project failures, and health sector tender scandals) provide tangible examples. The paper concludes with a set of recommendations and a call to action aimed at policymakers, supply chain managers, and procurement officials. These stakeholders collectively have the power to enforce higher performance standards, close governance gaps, and ultimately ensure that public services are delivered efficiently and reliably to all South Africans.
1. Economic Cost of Poor Supplier Performance
One of the most immediate and measurable impacts of poor supplier performance is the economic cost incurred by the government – and by extension, the taxpayer. When suppliers fail to deliver, public funds are often wasted or additional unplanned expenditures are required to remedy the situation. These costs come in many forms: incomplete projects that need further injections of money to finish, budgets that balloon due to delays and overruns, and outright losses when payments are made for services or goods never received.
Cost Overruns and Wasteful Expenditure: South Africa has seen multiple large-scale projects where contractor underperformance led to staggering cost overruns. A notorious example is Eskom’s Medupi and Kusile power stations, which were initially budgeted at around R80 billion each. Due to contractor delays, design failures, and poor workmanship, these projects ran years behind schedule and hundreds of billions of rand over budget. By the time Medupi was finally declared “complete” (after more than a decade of construction), it and its sister station Kusile were roughly eight years late and a combined R300 billion over their initial budgets. South Africans not only paid more for these plants than anticipated, but the delay in adding new generation capacity also meant costly power outages persisted for years, further harming the economy. In this case, poor performance by multiple suppliers and contractors (from civil engineering firms to boiler manufacturers) directly translated into an enormous financial burden.
Stalled and Abandoned Projects: Another economic consequence is the money sunk into projects that stall or are abandoned due to contractor failure. The housing sector provides a sobering case study. As of 2025, the Department of Human Settlements reported 262 stalled housing projects across the country, many of which had been delayed or completely halted because contractors either abandoned the sites or failed to deliver as promised. Billions of rand had already been spent on these unfinished projects – including advance payments to contractors who then walked away. It is estimated that an additional R7.7 billion is required to revive and complete these housing developments. This is effectively double spending: funds were paid once to a non-performing supplier, and now more funds must be allocated to fix or finish the work. For a nation with significant housing backlogs and fiscal constraints, this kind of waste is devastating. Every rand tied up in re-doing work could have been used to start new projects or deliver other services. Poor supplier performance in construction has thus left families waiting longer for homes while draining budgets that yield no value.
Irregular and Fruitless Expenditure: The Auditor-General of South Africa consistently flags irregular, fruitless, and wasteful expenditure in government audits, much of which links to poor procurement outcomes. Irregular expenditure often means procedures weren’t followed – frequently the root cause of choosing incapable suppliers – and fruitless expenditure often means money spent with no benefit received. In recent audit cycles, these figures have reached tens of billions of rand. For instance, between 2019 and 2023 the Auditor-General’s office identified over R14 billion in losses attributable to “material irregularities” such as payments for goods or services that were not delivered or not fit for purpose. Only a small fraction of these losses has been recovered. A striking example involved a R700 million payment for training services in the water and energy sector that were never delivered – a stark reminder that poor supplier performance can sometimes mean outright fraud. Such losses represent opportunities missed: these funds could have built schools, hospitals or provided water and electricity to communities, but instead they vanished with little to show.
Higher Operational Costs: Even when poor supplier performance doesn’t result in a visible failed project, it can quietly inflate the cost of day-to-day operations. Consider routine maintenance contracts – if a supplier responsible for maintaining hospital equipment or municipal water pumps does a sub-par job, breakdowns become frequent. The government then spends more on emergency repairs or on hiring new contractors to fix recurring issues. Similarly, if a contractor delivers inferior quality materials (say, substandard building materials for a road or a bridge), that infrastructure may deteriorate faster than expected, necessitating early refurbishment at additional cost. Over time, the lack of durability and efficiency from poor suppliers means taxpayers pay more for less. This erodes the value-for-money principle that is supposed to guide public spending.
In summary, the economic cost of poor supplier performance is multi-faceted and expansive. From headline-grabbing mega-project overruns to numerous smaller failures scattered across municipalities, the financial toll is borne by the public. Money wasted on failed or incomplete contracts directly reduces the funds available for other essential services. At a macro level, it also contributes to fiscal pressure – South Africa’s government has limited resources, and inefficiency in spending forces difficult trade-offs or increased borrowing. The economic dimension is therefore not just about accounting losses; it translates into slower development and continued hardship for communities that remain without adequate services.
2. Reputational Damage and Erosion of Trust
When government suppliers underperform or projects fail spectacularly, it’s not only the balance sheet that suffers – the government’s reputation and public trust in state institutions also take a hit. In South Africa, repeated instances of procurement failures and contractor non-delivery have left citizens increasingly sceptical of the government’s ability to provide reliable services. Reputational damage occurs both domestically (in the eyes of citizens) and internationally (affecting investor confidence and the country’s image).
Public Perception of Government Competence: South Africans have grown accustomed to news of bungled projects and corruption scandals, breeding a climate of cynicism. Public opinion surveys reflect this disillusionment. According to recent Afrobarometer findings, fewer than one in three citizens approve of the government’s performance in delivering basic services. In fact, only 28% of South Africans are satisfied with government efforts on water and sanitation services, and a mere 12% give a thumbs-up to the government’s handling of electricity provision. Such low confidence is unsurprising when lights go off regularly due to load-shedding and when taps run dry or potable water is scarce. Each incident of a failed supplier contract – be it shoddy construction of a school that then has to be closed, or a critical shipment of medical supplies that never arrives – reinforces the narrative that the government is inept or indifferent. Over time, this perception hardens into a significant trust deficit. Citizens begin to doubt not just the politicians but the entire public service machinery. This erosion of trust is a serious consequence: when people don’t believe their government can deliver, it frays the social contract and can lead to apathy, tax non-compliance, or unrest.
Service Delivery Protests: South Africa has, for many years, experienced frequent service delivery protests – localised demonstrations, sometimes violent, by communities fed up with lack of services or broken promises. Poor supplier performance is often a trigger for such protests. For example, a municipality might promise a new clinic or water project, hire a contractor, hold a groundbreaking ceremony – and then nothing is completed. Residents, seeing an unfinished clinic building languishing for months or years, understandably feel betrayed. Protests in these cases are as much about the failure of contractors as about government officials, since citizens usually view it holistically as government’s responsibility. The reputational damage here is two-fold: visibly angry communities signal to the wider public that the authorities have failed, and media coverage of burning tyres and barricades amplifies a narrative of governance failure. Each protest is a very public reminder of promises unfulfilled – and they have been common in sectors like housing (where incomplete RDP housing projects spark anger), water (when promised infrastructure doesn’t materialise and people still rely on tankers), and electricity (communities off the grid protesting for delivery). The government’s image suffers with every such incident, portrayed as incapable of enforcing contracts or meeting basic needs.
High-Profile Scandals: Beyond localised incidents, certain national scandals have become emblematic of procurement and supplier failures, tarnishing the reputation of not only the specific entities involved but the state as a whole. The saga of PRASA (Passenger Rail Agency of South Africa) and its infamous “too tall” locomotives is one such example. PRASA spent roughly R3.5 billion on new locomotives from a European supplier, only to discover that some of the trains were literally too tall for South African rail lines and could not be used. This debacle, rooted in flawed procurement and lack of due diligence, became a national laughingstock and a symbol of maladministration. It underscored how incompetence (or malfeasance) in contracting can lead to absurd outcomes. The joke about “trains too tall for the tracks” was repeated in headlines and talk shows, deeply embarrassing the government. It suggested that even critical transport upgrades were being handled irresponsibly. Similarly, Eskom’s struggles with frequent breakdowns and load-shedding have often been linked to poor performance by maintenance contractors and coal suppliers (some coal suppliers delivered sub-standard coal or even debris, causing damage to power plant boilers). Each time the lights go out, trust in the government’s ability to manage essential infrastructure dips further. Internationally, these stories also travel – investors and foreign partners read about such fiascos and may question the reliability of doing business with state entities that appear mismanaged.
Impact on Investor and Stakeholder Confidence: Reputational harm extends to how businesses and investors view the South African government and its institutions. If the state gains a reputation for inefficiency and corruption in procurement, investors might be hesitant to partake in public-private partnerships or might demand higher risk premiums. For instance, if a construction firm from abroad sees that many local companies have abandoned projects or that contracts are frequently mired in legal disputes, they may conclude that the environment is too risky or poorly regulated. This can reduce healthy competition in bidding for government work, ironically leaving the field open to the very suppliers who have underperformed in the past. Moreover, institutions like multinational development banks or donors monitor governance indicators – a government perceived to be struggling with basic project execution might find funding or loans coming with stricter conditions or not at all. In short, the credibility of the state is at stake. When poor supplier performance is endemic, it signals underlying governance weaknesses, and those signals can deter much-needed investment and expertise.
Erosion of Morale within the Public Sector: An often overlooked aspect of reputational damage is the effect on the morale of honest public servants. Many dedicated officials work diligently to deliver projects, only to see their efforts thwarted by an inept or unscrupulous contractor. Repeated disappointments can demotivate even enthusiastic civil servants and erode the pride that officials take in their work. It becomes disheartening to announce projects to communities only to return later empty-handed because a supplier failed to deliver. Over time, this could foster a culture of lowered expectations within the public service: project managers might become resigned to delays and failure as “normal”, which is dangerous for a striving bureaucracy.
In summary, the reputational damage from poor supplier performance is profound. It undermines citizen faith in government, provides fuel for social instability through protests, embarrasses the nation on the global stage, and can even internally corrode the ethos of the civil service. Rebuilding trust is much harder than building infrastructure – once lost, confidence in government competence is difficult to regain. Thus, tackling supplier performance issues is not just an operational concern but a public relations and governance imperative as well.
3. Operational Disruption of Public Services
Perhaps the most tangible impact of poor supplier performance is the direct operational disruption it causes in the delivery of public services. When a supplier fails to uphold their end of a contract, the services that depend on that contract often grind to a halt or degrade in quality. In South Africa’s key public service sectors, these disruptions have had real and sometimes life-threatening consequences for ordinary people.
Energy Sector – Load Shedding and Power Failures: South Africans are all too familiar with the term “load shedding.” While Eskom’s generation shortfalls have multiple causes, poor supplier and contractor performance is a significant contributing factor. For example, the delays and defects in constructing new power stations (Medupi and Kusile) by various contractors kept much-needed electricity generation offline for years longer than planned, directly leading to prolonged periods of nationwide power cuts. Additionally, ongoing maintenance of existing power plants often involves external contractors. When these maintenance contractors do substandard work or miss deadlines, breakdowns occur more frequently. The result is that millions of households and businesses face regular electricity blackouts, sometimes for several hours a day. This isn’t merely an inconvenience – it disrupts every aspect of life, from students unable to study at night to hospitals having to rely on generators. Small businesses lose income when they cannot operate equipment, traffic lights fail causing transport chaos, and crime can increase in darkened neighbourhoods. In a very real sense, the unreliable performance of suppliers feeding into the energy supply chain (be it coal suppliers delivering poor-quality coal, or contractors failing to maintain turbines) has cascaded into an energy crisis. The operational continuity of the power grid is only as strong as its weakest link, and when multiple links are weak, the grid fails. South Africa’s developmental ambitions are heavily curtailed by this – you cannot industrialise or grow an economy on an unstable power supply. Thus, poor supplier performance in Eskom has translated into a national operational disruption with few parallels.
Transportation – Stranded Commuters and Deteriorating Infrastructure: The transport sector, especially public transport, has also been severely affected. PRASA’s rail services once ferried millions of commuters daily in urban centres; now, due to a combination of theft/vandalism and failed procurement, the network is a shadow of its former self. One key operational failure was the collapse of PRASA’s security contracts a few years ago. After the agency failed to renew contracts with private security firms (due to tender irregularities and disputes), vast portions of the railway infrastructure were left unguarded. This led to rampant vandalism and cable theft, effectively shutting down train services on many lines. Commuters who relied on affordable trains were left stranded or forced to pay more for minibus taxis and buses. The roads became more congested as a result, and those who couldn’t afford alternatives simply lost mobility. Additionally, the procurement of new trains was meant to modernise the rail service; instead, the process was mired in controversy (as with the too-tall locomotives) and years of delay, meaning aging, unreliable trains continued to be the only option until they too broke down. In the roads sector, poor performance by contractors can mean unsafe or unfinished roads. There have been cases where companies contracted to maintain roads or build new ones did such a poor job that roads started crumbling within months. Potholes and collapsing bridges are not just inconveniences – they cause accidents, vehicle damage, and can even cut off communities. Each failed contract in infrastructure leaves a physical legacy of disruption that citizens experience daily, whether it’s a half-built bridge closed to traffic or a train station that never opened because its construction stalled.
Water and Sanitation – Incomplete Projects and Health Risks: Clean water and proper sanitation are fundamental services that have also suffered when suppliers underperform. South Africa has invested in numerous bulk water supply projects and wastewater treatment upgrades to meet the needs of a growing population and to replace apartheid-era backlogs. Yet, progress is often stymied by contractors failing to deliver on time. A telling excerpt from a recent government report highlighted that not a single planned “mega” water infrastructure project was completed in the first half of the year due to a combination of poor contractor performance and electricity supply issues for pump stations. This means communities that were expecting new or improved water systems are left waiting indefinitely. In some towns, contractors have dug trenches for pipelines and then abandoned the site, leaving dangerous ditches and no flowing water. Operational disruption in water supply forces people back to unsafe sources or to rely on water tankers (which themselves often struggle to meet demand, and ironically, those tanker services can be run by private suppliers as well, with their own reliability issues). Poor sanitation projects – like incomplete sewer systems or treatment plants – can lead to environmental contamination. Sewage spills and water contamination pose direct health risks, increasing diseases like cholera or gastroenteritis. Thus, the failure of a supplier to finish a sanitation project isn’t just a contractual breach; it’s a threat to community health and dignity.
Healthcare – Equipment, Supplies, and Facilities: The health sector also experiences operational disruptions due to supplier failures, though these sometimes garner less publicity until a crisis hits. Consider hospital facilities and medical equipment: provincial health departments often rely on contractors for building clinics, maintaining hospital infrastructure, or supplying critical equipment and consumables. There have been instances where contractors abandoned the construction of new clinics or hospital wards, leaving communities without promised facilities. A recent case in Gauteng province saw a contractor halt work on a new clinic after being paid a substantial amount, turning what should have been a functional clinic into an idle construction site for years. Meanwhile, the local population continued to crowd into an overburdened older facility or go without care. Maintenance contracts are another Achilles’ heel – for example, in some hospitals, vital equipment like radiotherapy machines or oxygen plants failed because maintenance providers did not fulfil their duties. In one alarming incident, a contractor responsible for servicing hospital oxygen equipment was implicated in a tender fraud scandal, resulting in delays and faults in oxygen supply during a critical period. Similarly, poor performance by suppliers during the COVID-19 pandemic – such as delivery of faulty personal protective equipment (PPE) or price gouging for medical supplies – directly endangered frontline workers and patients. When masks tear, gloves fail, or orders of ventilators simply don’t arrive, the healthcare system’s ability to save lives is compromised. These examples underscore that reliable service delivery in health is a matter of life and death, and suppliers who fall short can literally put lives at risk.
Across these sectors – energy, transport, water, healthcare, and more – the operational disruptions caused by poor supplier performance share a common theme: the public ends up bearing the brunt. Ordinary people may not always know the details of which contractor failed or why a project stalled, but they certainly feel the impact when the lights are off, the train doesn’t arrive, the taps are dry, or the clinic isn’t built. The continuity and quality of public services are only as strong as the supply chains behind them. When those chains break, service delivery unravels in very concrete ways. This makes it all the more urgent to ensure that suppliers are chosen wisely, managed diligently, and held to high standards – because the cost of failure is measured in darkened homes, lost jobs, frustrated commuters, and human suffering.
4. Accountability and Governance Gaps
A recurring question in the face of widespread supplier underperformance is: Why are these suppliers not held accountable? The prevalence of repeated failures suggests significant gaps in governance and accountability within the public procurement system. If poor performers are not penalised – or worse, if they are rewarded with new contracts – the cycle of failure continues. Strengthening accountability is therefore crucial to breaking this cycle and improving service delivery outcomes.
Lack of Consequences for Non-Performance: Historically, one of the largest governance issues in South African procurement has been a culture of impunity. Many suppliers who deliver late, overcharge, or do shoddy work face few consequences. Contracts often include clauses for penalties or termination in cases of non-performance, but enforcement of these clauses has been inconsistent. In numerous instances, contractors who abandoned projects or failed to meet specifications have simply moved on without reimbursing the state or fixing their mistakes. For example, as noted in the housing project debacle, some contractors took advance payments (“trench payments”) and then abandoned construction sites, effectively pocketing public money with no service delivered. Ideally, such behaviour should result in lawsuits, financial penalties, and blacklisting from future government work. Yet, it has been all too common for these firms (or their directors under new company names) to pop up again in new tenders elsewhere in the country. This lack of consequences sends a dangerous message: that one can get away with poor performance or even fraud. It undermines any deterrent effect that contract law might have and leaves diligent suppliers at a disadvantage (why follow all the rules and incur costs to deliver properly if your competitor can make a quick profit by cutting corners?).
Weak Oversight and Monitoring: Effective accountability requires that problems are detected early and acted upon. However, oversight mechanisms in many departments and municipalities are under-resourced or ineffectual. Project management teams may fail to rigorously monitor progress, meaning that a contractor’s failures only come to light when a deadline is long past or a structure collapses. The Auditor-General has repeatedly highlighted poor contract management practices as a root cause of wasteful expenditure. Internal audit units and oversight boards often flag issues, but their recommendations might not be implemented. In some cases, the officials tasked with oversight may themselves lack the training or authority to enforce compliance. The result is that red flags are missed or ignored. For example, a building contractor might invoice for sub-standard materials; if no one checks thoroughly, payment is made and only later does the infrastructure show defects. By then, the supplier is paid and possibly gone. Strengthening monitoring – through better trained project managers, independent engineers, and community oversight – is necessary so that non-performance is spotted and corrected before it spirals into total project failure.
Corruption and Collusion: A significant impediment to accountability is the spectre of corruption. In some cases, the reason a poor-performing supplier isn’t held accountable is because someone in authority has a vested interest in protecting them – perhaps due to kickbacks received or personal relationships (nepotism or patronage networks). The State Capture era unearthed many such examples where contracts were awarded as part of corrupt schemes, and oversight institutions were actively weakened to avoid scrutiny. While South Africa has been working to rebuild institutions and empower watchdogs, the residue of that corruption is still evident. If a municipal official helped an unqualified company win a tender in exchange for a bribe, that official is unlikely to enforce penalties when the company fails to deliver. Thus, corruption directly undermines accountability, creating a situation where everyone from contractors to complicit officials can act with impunity. Furthermore, collusion among suppliers – bid-rigging cartels – can also hamper accountability, as they might collectively cover up each other’s failures or influence officials. Breaking these corrupt ties is essential; it requires strong political will and transparency.
Legal and Administrative Challenges: Even in cases where the state does seek to hold suppliers accountable, the legal process can be slow and fraught. Cancelling a contract and suing a contractor for damages, or pursuing criminal charges for fraud, can take years in court. During this time, essential projects remain in limbo or need to be restarted with new tenders. South Africa has established bodies like the Special Investigating Unit (SIU) and Special Tribunal to fast-track recovery of stolen funds and to set aside tainted contracts. These are promising developments – for instance, several irregular COVID-19 PPE contracts have been declared invalid and funds ordered to be repaid by the Special Tribunal. However, the scale of the problem means these institutions are inundated. The wheels of justice turn slowly, and not all cases can be pursued. Additionally, blacklisting (banning a company from future tenders for a period) is underutilised or inconsistently applied. A more systematic approach to debarment could prevent habitual offenders from simply moving to the next contract. It’s encouraging that some provinces are starting to talk tough: recently, the KwaZulu-Natal Department of Public Works announced intentions to blacklist contractors who abandon projects or fail to deliver on time. This came after frustrations with a hospital refurbishment where the first contractor left the job incomplete. Such public commitments to blacklisting mark a step in the right direction, but they must be followed through and adopted nationwide.
Accountability of Public Officials: It’s not only private suppliers who must be held to account – government officials and project managers who enable or overlook poor performance must also face consequences. The Auditor-General now has enhanced powers under the amended Public Audit Act to flag “material irregularities” and demand accounting officers (heads of departments, for example) take action or face personal liability. This has led to some recovery of funds, as mentioned earlier, but the implementation is still in early stages. The fundamental principle is that if a department consistently has projects failing due to supplier issues, the leadership of that department should answer for it. Were procurement processes followed? Were background and capacity checks on the supplier adequate? Did the department pay in advance without safeguards? These questions often reveal internal negligence or worse. Strengthening internal accountability – through performance assessments, disciplinary actions against officials who facilitate breaches, and a general ethos of zero tolerance for negligence – is key to complementing external oversight.
In essence, closing the accountability gap requires both will and capacity. The government must be willing to pursue underperforming suppliers relentlessly, even if they are politically connected, and to support oversight bodies in doing so. It also requires building the capacity of the state to monitor contracts effectively and act decisively at the first sign of trouble. Encouraging signs include legislative tools and tougher rhetoric on blacklisting, but the proof will be in consistent action. When suppliers know that failure has real consequences – financial loss, legal action, reputational ruin – they will be far more incentivised to deliver properly. And when officials know they will be held responsible for overseeing contracts, they too will be motivated to ensure things stay on track. This cultural shift toward accountability is fundamental if service delivery is to improve.
5. Systemic Challenges in Procurement and Service Delivery
Poor supplier performance in South Africa’s public sector doesn’t happen in a vacuum – it is enabled (and often exacerbated) by systemic challenges within the procurement and service delivery environment. Addressing these underlying issues is critical to formulating sustainable solutions. Key systemic factors include complex regulations, skills deficits, political interference, and economic constraints, all of which create an environment where underperformance can thrive.
Bureaucratic Complexity and Capacity Constraints: South Africa’s public procurement process is governed by a framework of laws and regulations (such as the Public Finance Management Act and Municipal Finance Management Act, along with detailed Treasury regulations). While these rules aim for fairness and transparency, they can be very complex. Many procurement officials at local government level, in particular, lack the training or experience to navigate this complexity effectively. The result can be poor planning – for instance, tenders that go out late, evaluations that are done improperly, or contracts that are written with unclear deliverables. A common scenario is that by the time a contractor is appointed, the project is already behind schedule due to procurement delays, which puts pressure on delivery and might tempt officials to overlook certain shortcomings just to catch up time. Additionally, in smaller municipalities, there may simply be no specialised engineers or project managers to oversee technical projects. A water treatment plant project, for example, might be handled by a general technical officer who doesn’t have deep expertise in that area, limiting the municipality’s ability to properly assess the work of the contractor or to anticipate problems. This skills gap means the government often is an unequal partner in the contractor-client relationship; savvy contractors can exploit loopholes or weak oversight when the client side is under-capacitated. Therefore, systemic investment in building skills and capacity in contract management is required to prevent poor performance.
Political Interference and Patronage Networks: Another systemic issue is the politicisation of procurement. In an ideal system, suppliers are chosen purely on merit and ability to deliver value. However, South Africa’s tender system has long been plagued by political interference, where contracts are awarded to companies with political connections or to appease certain power brokers, rather than to the most qualified bidder. This practice, often referred to by the colloquial term “tenderpreneurship,” means that the quality of suppliers is compromised from the start. Companies that secure contracts through connections may not actually have the requisite experience or resources to do the job, leading to poor performance. Moreover, they might subcontract the work out to someone else (sometimes in multiple layers), taking a cut at each stage – by the time the work is done, those actually performing it are under-resourced and corners get cut. Political patronage also complicates accountability; if a contractor is known to be linked to a senior figure, officials may be reluctant to take action when things go wrong. This systemic issue was highlighted during the State Capture inquiry, which revealed how major infrastructure and supply contracts (including those at Eskom, Transnet, and other entities) were manipulated to benefit connected individuals, often at the expense of competence. Breaking these patronage networks is challenging, but it is essential for improving supplier performance – procurement decisions must be insulated from undue political influence and based on objective criteria.
Economic and Market Factors: The broader economic landscape in South Africa also plays a role. There may be instances where poor supplier performance is a result of the supplier’s own financial distress. Government departments are notorious for late payments to suppliers; smaller contractors sometimes run into cashflow problems mid-project because they haven’t been paid on time for completed work. This can cause them to delay or halt work not entirely due to incompetence but due to financial strain. It’s a systemic problem when the government, as a client, doesn’t pay within the stipulated 30 days, undermining the very suppliers it contracts. Additionally, the pool of capable suppliers in certain specialised fields may be limited. If only a few companies in the country can, say, build a power substation or implement an advanced IT system, those companies might be stretched thin across many projects. This scarcity can lead to overextension and quality issues. Moreover, when such a company underperforms and gets blacklisted, there might be few alternatives to step in, which is a systemic challenge in itself. Encouraging competition and developing emerging suppliers’ capacity is necessary so that government has a broader choice of capable partners and is not held hostage by a few entities.
Procurement Culture and Ethics: Systemic issues also encompass the prevailing culture and ethical standards in procurement. If cutting corners has become “how things are done,” it perpetuates poor outcomes. In some circles, winning a tender is seen simply as a gateway to quick profit, not as a serious public service responsibility. This mindset leads to minimal effort in delivery once the contract is secured. Changing this requires a cultural shift towards seeing public contracts as a public trust. The Batho Pele (“People First”) principles, which emphasize courtesy, transparency and value in public service, need to extend into the procurement realm. Suppliers should be made to understand – through both carrot and stick – that delivering quality is non-negotiable. When ethical standards rise, both on the government side and the supplier side, the incidence of deliberate underperformance should fall.
Systemic Oversight Weaknesses: Lastly, the fragmentation of oversight across various entities can create gaps. For example, large state-owned enterprises like Eskom or PRASA have their own procurement policies and boards, separate from central government tender processes. Ensuring consistency and high standards across national departments, SOEs, provincial governments, and hundreds of municipalities is a colossal task. It is in these cracks that poor performance can hide. A contractor banned in one province might still snag a deal in another that isn’t aware of their history. The lack of a unified national database of blacklisted suppliers (until relatively recently) was one such gap; even with one now in place, it requires diligent updating and use. Coordination between law enforcement and procurement offices is another systemic challenge – often a department might quietly settle for project completion by a new contractor rather than pursue criminal charges against the original one, thus no signal is sent to the system that this supplier misbehaved.
In summary, systemic challenges form the backdrop against which individual supplier performances play out. They are the root causes that need to be addressed to prevent recurring problems. Simplifying procurement processes, investing in human capital within the supply chain management profession, depoliticising tender decisions, and fostering a more ethical, performance-driven culture are all long-term solutions that South Africa must continue to pursue. Without fixing the system, efforts to manage individual suppliers will always be reactive and piecemeal.
Conclusion
Poor supplier performance is far more than a procurement inconvenience – it is a fundamental threat to South Africa’s government service delivery and, by extension, to the well-being of its people and the country’s developmental trajectory. This paper has illustrated how underperforming and non-compliant suppliers produce a domino effect of negative outcomes: vast sums of public money wasted, critical infrastructure projects stalled, daily services disrupted, and public trust in institutions corroded. From the dramatic collapse of major undertakings like Eskom’s power projects and PRASA’s rail upgrades to the quieter failures of countless municipal contracts for water, housing, and healthcare, the pattern is distressingly similar. When those entrusted to execute public work falter without accountability, citizens are denied the services and opportunities they were promised.
Addressing this challenge is not easy, but it is urgent. South Africa’s aspirations – be it economic growth, social upliftment, or just a dignified standard of living for all – rest on a functioning state that can deliver. In the current environment, even the best-intentioned policies risk falling apart at the implementation stage if the supply chain is weak. However, the situation is not irredeemable. The very fact that these issues are now openly discussed – in audit reports, parliamentary committees, media exposés, and public forums – is a step toward improvement. There is growing recognition within government and civil society that the status quo must change, and indeed some corrective measures are being set in motion.
The solution lies in a multi-pronged approach: tightening oversight and demanding accountability so that failure is not rewarded; reforming procurement processes to make them more transparent and merit-based; building capacity and a sense of pride in public service contracting; and fostering a culture of integrity where delivering quality to the public is the paramount goal. It also requires the political will to confront uncomfortable truths – including calling out corruption and incompetence even when politically costly – and a commitment to protect whistleblowers and watchdog institutions that shine a light on malpractice.
Ultimately, improving supplier performance in government service delivery is about honouring the commitment to citizens. Every time a project is completed successfully – a clinic built to standard, a power station brought online, a water pump repaired swiftly – it strengthens the social fabric and trust between the people and their government. Conversely, every failure chips away at that trust. South Africa cannot afford the latter if it hopes to move forward. By learning from the mistakes highlighted in this paper’s case studies and embracing the recommendations in the following section, stakeholders can work together to ensure that suppliers become partners in progress rather than obstacles to it. The impact of getting this right will be felt in brighter homes lit by reliable electricity, safe and efficient public transport, clean water flowing from taps, functional clinics healing the sick, and communities that feel heard and served.
Turning the tide against poor supplier performance will require concerted action from multiple stakeholders. Below are targeted recommendations and calls to action for key groups – policymakers, supply chain managers, and procurement officials – each of whom plays a critical role in improving service delivery outcomes
1. Policymakers and Government Leaders:
- Strengthen Procurement Legislation and Enforcement: Policymakers should review and tighten the existing procurement laws to close loopholes that allow underqualified suppliers to win contracts. This includes enforcing stringent due diligence on bidders’ track records and capacity. New regulations could, for example, mandate performance bonds or guarantees for large projects, ensuring the government can recover funds or quickly bring in alternatives if a supplier fails. Crucially, laws on blacklisting must be enforced uniformly: if a company or its directors have a history of abandoning projects or fraud, they should be barred from future public contracts across all levels of government. Leaders in government need to champion these reforms and ensure oversight bodies (Auditor-General, Treasury, etc.) are empowered to monitor compliance.
- Promote Transparency and Citizen Oversight: A powerful way to improve supplier accountability is by making the procurement process more transparent. Policymakers should push for all tender awards, contract values, and project progress reports to be publicly available (online dashboards for major projects, for instance). This openness allows the media, civil society, and communities to flag issues early – essentially crowdsourcing accountability. It also deters misconduct when officials and suppliers know that their actions are visible to the public. Consider forming community liaison forums for big projects (like hospital builds or housing developments), so that beneficiaries have a voice and can report concerns about on-the-ground progress directly to authorities.
- Support Consequence Management: Government leaders must back their officials when they take tough action against non-performing suppliers. All too often, legal battles or political pushback discourage departments from cancelling bad contracts. A clear message should come from the top: underperformance and malfeasance will not be tolerated, and accounting officers will be supported (not punished) for acting in the public interest to terminate contracts or pursue recovery of funds. This political will is essential to change the narrative that “contracts are never cancelled” or “it’s too difficult to hold suppliers accountable.” Where necessary, dedicate resources (budget for legal fees, for example) specifically to enforcement actions against defaulting contractors, so that pursuing justice doesn’t strain departmental finances.
2. Supply Chain Managers and Project Managers (Implementers):
- Improve Planning and Vendor Selection: As the professionals on the ground drafting tenders and evaluating bids, supply chain managers must ensure that quality and capacity take precedence over price alone in vendor selection. This might involve revisiting how tender scoring works – making sure that experience, past performance, and technical capability have significant weight. It also means doing thorough reference checks. If in doubt, managers should have the courage to recommend not awarding and re-tendering rather than giving a contract to a supplier who seems dubious just because they are the “last bidder standing.” Better planning can also avoid desperate choices; start procurement processes well in advance so there’s time to get the best supplier, not just the fastest available one.
- Robust Contract Management: Once contracts are awarded, project managers need to be rigorous in monitoring implementation. This includes setting clear milestones and deliverables in the contract and then tracking them closely. If a contractor falls behind schedule or delivers poor work, address it immediately – hold regular progress meetings and document all shortcomings. Use the penalty clauses where appropriate: for example, impose fines for late delivery as stipulated. Don’t wait until a project has completely derailed to take action. In practice, this might mean issuing formal warning letters as soon as performance issues emerge, and if there’s no improvement, proceeding to terminate the contract sooner rather than later. It’s better to cut losses on a failing supplier early than to throw good money after bad in the vain hope they will turn things around.
- Capacity Building and Professionalisation: Supply chain managers and procurement officers should pursue continuous professional development. The field of public procurement is ever-evolving, and being up-to-date on best practices can make a difference. Embrace training opportunities offered by National Treasury or professional bodies, especially in specialised areas like project management, risk management, and ethical procurement. Additionally, build networks – engage with peers in other departments or provinces to share lessons learned about suppliers (for instance, an internal forum where project managers alert others about problematic contractors could prevent repeat issues elsewhere). By elevating procurement from a clerical function to a strategic one, managers can foresee and mitigate performance risks more effectively.
3. Procurement Officials and Oversight Authorities:
- Enforce Accountability Mechanisms: Procurement officials, especially those in oversight roles (internal audit committees, provincial treasuries, etc.), must actively enforce accountability. This means meticulously following up on Auditor-General findings or internal audit red flags related to supplier performance. If the AG’s report identifies, say, a material irregularity where payment was made for no delivery, officials should initiate the recommended corrective action without delay – whether it’s recovering funds, laying criminal charges, or starting disciplinary processes against internal staff involved. The recently enhanced powers of the Auditor-General to issue binding remedial actions should be embraced as a tool to compel accountability.
- Utilise Technology and Data Analytics: Embracing e-procurement systems can help detect patterns of poor performance and corruption. Procurement officials should advocate for and implement integrated contract management systems that track supplier performance metrics. By analysing data (for example, which suppliers consistently ask for extensions, or which projects often require variation orders), officials can identify problem areas early. Technology can also support transparency – for instance, an online platform where progress of infrastructure projects is updated can both keep the public informed and pressure contractors to stay on schedule (since everyone can see if a milestone is missed). Furthermore, maintaining a comprehensive database of blacklisted or underperforming suppliers and checking it diligently before any new award is a straightforward yet impactful step.
- Collaboration with Law Enforcement: Procurement and legal units within government departments should work hand-in-hand with law enforcement bodies like the SIU, Hawks, and National Prosecuting Authority when there’s evidence of fraud or corruption by suppliers. Too often, cases fade away due to poor cooperation or incomplete information from the affected department. Officials need to prepare strong case files and supply all necessary documents to investigators to ensure those who defraud the state face legal consequences. In parallel, improve witness protection and whistleblower support within departments so that employees who come forward about supplier misconduct are protected and encouraged. This will help surface more hidden issues and deter corrupt collusion.
A Shared Commitment:
Finally, a call to action for all stakeholders collectively is to foster a culture of pride and integrity in delivering public services. South Africa’s challenges in service delivery can be overcome if everyone from a minister to a municipal buyer, and from a CEO of a contracting firm to an on-site project engineer, internalises that their work has a profound human impact. Let the metric of success be not how quickly a tender was awarded or how cheaply a project was built, but rather how well it serves the community and stands the test of time. Policymakers, managers, and officials should champion and reward success stories – highlight the projects delivered on time and on budget by diligent suppliers, as these set the benchmark and show that excellence is possible. By the same token, do not shy away from shining a light on failures; confronting them openly is the first step to ensuring they are not repeated.
In closing, improving supplier performance is a journey that requires perseverance. The recommendations above, if implemented, would lay the groundwork for a more resilient, accountable public service delivery system. Policymakers can create a conducive framework, managers can execute with discipline and foresight, and oversight officials can guard the guardians. Together, these efforts will help rebuild public trust, ensure that public funds truly translate into public benefit, and ultimately improve the quality of life for all South Africans who depend on government services.
