Supply Chain/Procurement ManagementWestern Cape Government

12 September 2013

Provincial Spend

R 21 757R 8 179

R 3 502

R 6 440

Budget 2012/13=R 40b

PersonnelGoods & ServicesCapitalTransfers

Procurement Spend

R 313 309 R 224 615R 106 909

R 2 060 264

R 5 336 313R 193 352

R 3 065 229

R 150 474R 123 218 2012/13=R 11,573 b

Dept of Premier

Other

Community Safety

Education

Health

Social Development

Constitution of the Republic of South Africa (Act No. 108 of 1996) - Section 217 states that government procurement systems must be Fair, Equitable, Transparent, Competitive and

Cost Effective

Fair, Transparent, Competitive, Cost Effective Equitable

Public Finance Management Act

(Act No. 1 of 1999)

Municipal Finance

Management Act (Act No. 56 of

2003)

Construction Industry

Development Board Act (Act No. 38 of 2000)

Preferential Procurement

Policy Framework Act (Act No. 5 of

2000)

Broad Based Black Economic Empowerment

Act (Act No. 53 of 2004)

PFMA MFMA CIDB PPPFA BBBEE

Public Sector Clients

Public Sector Clients

Public and Private Sector Clients

Public Sector Clients

Public and Private Sector Clients

Legislative Framework governing procurement

Section 217(1) of the Constitution provides the basis for procurement by determining that:

When an organ of state in the national,provincial or local sphere of government, or anyother institution identified in national legislation,contracts for goods and services, it must do so inaccordance with a system which is fair, equitable,transparent, competitive and cost effective.

Supply Chain Management

SCM could be described as a function that ensures that goods andservices are delivered to the right place, in the right quantity, with theright quality, at the right cost and at the right time.

These are the underlying principles that drives any procurementprocess.

This process is aimed at: As its primary function to render services to the public; and As a secondary function to address socio-economic benefit.

Setup in the Province

A Provincial Treasury must promote and enforce transparency andeffective financial management

The Province is committed to proper transparent and accountable governancethat is mainly aimed at how we conduct our daily business (governance) andinteract with our people (citizens and employees);

This vision is captured as: To be the best run regional government in the world;which seeks to ensure that the organisation and its people are able toeffectively deliver on the other objectives; and

With a strategic focus on Management for Results aimed at performancethrough achieving desired outcomes and ultimate impact, using performanceinformation for internal management learning and decision-making andaccountability in reporting results to stakeholders.

Provincial Context

Supply Chain Management vests under the auspices of theaccounting officers of each institution /department in theProvince whose role it is to deliver the services that each isresponsible for, in a cost effective and efficient manner;

This is done via the accounting officers access to two mainresources, i.e. Personnel and Goods & Services;

Central to this responsibility is that of good, clean andaccountable and transparent decision making in the supplychain management process through adherence tolegislative requirements and good governance as the guidingprinciples .

Procurement Methods Informal bidding- purchasing to the value of R500 000 Competitive bidding- purchasing more than R500 000 Limited bidding where there is a sole supplier or limited

suppliers Contracts arranged by

National TreasuryProvincial TreasuryGovernment agenciesOther organs of state

Public Private Partnerships

Preferential Procurement and BBBEE

The PPPFA, Act 5 of 2000 incorporates the 80/20 and 90/10 preferencepoint systems as discussed earlier;

Definitions contained in the B-BBEE Act and Codes of Good practice isused, e.g. Black people instead of HDIs. B-BBEE status level attained bya tenderer must be used to determine the number of points scoredout of 10 or 20 by a tenderer for B-BBEE contribution.

Verification Certificates (indicating B-BBEE Status Level of contributor)that are issued in terms of the B-BBEE Codes of Good Practice(Balance Scorecard Methodology) will be used to calculate pointsout of 10 or 20 which ratings will be conducted by VerificationAgencies accredited by SANAS;

Bidders with annual turnover of less than R5million qualify as Exempted MicroEnterprises. Automatic level 4 B-BBEE status level. Evidence of such qualificationmust be issued with a certificate by a registered auditor or accounting officer or anaccredited verification agency.

Evaluation of bids on functionality

Clear indication must be provided in bid documents if bids will be evaluated onfunctionality. Evaluation criteria must also be objective.

Evaluation criteria, the weight for each criterion, applicable values and theminimum qualifying score (for each bid on its own merit) must be indicated in biddocuments;

Bids failing to achieve qualifying score for functionality must be disqualified.

Bids achieving the minimum qualifying score must be evaluated further in terms ofpoints for price and B-BBEE status level contribution.

Preferential Procurement and BBBEE -continued

Initiatives

1. Supplier Database Revision for the Provincial Departments

Move toward compulsory registration on the supplier database that willmanage and house tax clearance certificates, declarations anddisclosures and certain bid documents that require annual submissiononce off for all bid processes as a central governance managementtool for the Province;

Move toward easy access and transacting to eliminate manydocuments being submitted many times over in different tenderprocesses by suppliers.

Currently as at 23 August 2013 the database has: 8 881 duly registered suppliers in total; 1 341 suppliers semi complete registered suppliers on the database

Initiatives continued

2. E-procurement solution (IPS)

Electronic invitation of quotations to suppliers duly registered for a commodityon the Western Cape Supplier database

Roll-out in the long term for formal bids as well 2 pilot sites have now been launched at Health Head Office and Worcester

hospital The nominated officials (buyers and approvers) of the pilot sites have been

formally trained as well as system controllers within PT Pilot site went live on 15 May 2013 publishing the first RFQ in the production

environment Training to suppliers on selected pilot commodities have been provided to pilot

site suppliers via pod casts, one-on- one training Internet access and registration on the database is the only requirement to

receive a bid invitation via the new e-procurement solution

Initiatives continued

3. Supplier Open Days

These initiative are aimed at to exposing the business community (suppliers/vendors) to all the opportunities that exist for doing business with government,both at Provincial and Local level;

Foster relations between the stakeholders of BBBEE and SMME Development,harness cohesion between Local Economic Development and Supply ChainManagement in the provincial and local spheres;

Inform the Public on the legislative requirements in Government Procurement; Facilitate relations between the Provincial and Local spheres of Government,

external stakeholders in the supply chain management environment andsuppliers;

The general approach is a more holistic one toward supplier development.

4. Red Tape Reduction programme

The key requirements of whether something constitutes Red Tapeare unnecessary and burdensome administrative and regulatoryrequirements. Red tape can involve: overlap and duplication insurmountable paperwork resulting in time delays on business unnecessary or inflexible regulations lengthy delays in processing inefficiencies in the system

Project identifies and manages the reduction of Red Tape insupply chain management processes.

Initiatives continued

4. CIDB Initiatives:

The Construction Industry Development Board (CIDB) ismandated through CIDB Act 38 of 2000 to supportcontractor development and emerging sectorparticipation throughout government and industry.

MINMEC specifically, has mandated CIDB in collaborationwith the National and Provincial Departments of PublicWorks to devise and implement a National ContractorDevelopment Programme (NCDP).

NCDP Summary Framework (2010) establishes theparameters for implementation.

Initiatives continued

5. Drive and focus on SCM transparency, accountability andefficiency:

Institutional clarity on policy and procedure; Establishing a credible foundation for a culture of

accountability and transparency; Resources to fight poor governance and malpractices; Efficiency of broader budgeting spend that is growth and

development orientated; Better planning of tenders; Improve specifications and post-tender contract

management; Avoid the snapshot view but take cognisance of long term

impact that delivers efficiency and value for money.

Initiatives continued

THANK YOU!DANKIE!ENKOSI!