GAUTENG PROVINCIAL GOVERNMENT
SUPPLY CHAIN MANAGEMENT POLICY MODEL
1 PROVINCIAL SUPPLY CHAIN MANAGEMENT
MODEL POLICY
Model policy for adoption by departments and public entities in terms of the
Public Finance Management Act and its accompanying regulations.
Instructions:
1.
Review this model policy to ensure it meet the needs and requirements of the
department or entity, and amend where required.
2.
Insert the name of department or entity and other variable information where
required throughout the policy. Check for words written in italic and delete one,
and also provide the full name of the department or entity.
3.
Public entities must substitute the term “Accounting Officer” with Accounting
Authority.
4.
Throughout the policy the name “(Bid Adjudication Committee (BAC)” is used
instead of “Departmental Acquisition Council (DAC)”. The aim is to keep in line
with SCM reforms in the country and to encourage departments to reconfigure
their DACs accordingly.
5.
The accounting officer or the accounting authority is responsible for implementing
the policy and must ensure it is annually amended and submitted to Gauteng
Department of Finance before the end of the first quarter of each financial year.
6.
Departments and entities must write their own introductory policy statements that
are aligned to the mandate of the department or entity and the province at large.
Replace the introduction on the model policy.
7.
If the accounting officer or accounting authority approve a policy that substantially
differs from the model policy, the accounting officer or authority must ensure that
such a policy complies with the relevant legislation and regulations. The
accounting officer or accounting authority must report any deviations from the
model policy to the Department of Finance.
8.
Departments and entities are required to make additions to the model policy if
necessary.
2 CONTENTS
1
INTRODUCTION AND BACKGROUND
4
2
TERMINOLOGY
5
3
APPLICATION OF THE POLICY
7
4
AMENDMENTS TO THE POLICY
7
5
SUPPLY CHAIN MANAGEMENT UNIT
8
6
SOCIO-ECONOMIC OBJECTIVES
8
7
GOOD GOVERNANCE
9
8
THE LEGISLATIVE FRAMEWORK
9
9
PROCUREMENT OF GOODS AND SERVICES
10
10
APPOINTMENT OF CONSULTANTS
20
11
CONTRACT MANAGEMENT
23
12
PARTICIPATION IN CONTRACTS ARRANGED BY OTHER
ORGANS OF STATE
23
13
AVOIDING ABUSE OF SUPPLY CHAIN MANAGEMENT SYSTEM
24
14
PILLARS OF PROCUREMENT
25
15
REPORTING OF SUPPLY CHAIN MANAGEMENT INFORMATION
27
16
DISPOSAL AND LETTING OF STATE ASSETS
27
17
DISPOSAL MANAGEMENT
28
18
INVENTORY MANAGEMENT
29
19
RESOLUTION OF DISPUTES, OBJECTIONS, COMPLAINTS
AND QUERIES
30
20.
COMMENCEMENT
30
21.
ANNEXURE: PROCUREMENT PROCEDURES
31
3 1.
INTRODUCTION AND BACKGROUND
Since 1994 the government of national unity instituted a process of reforms in all spheres of
government including the procurement reforms. The procurement reforms were informed by the
deficiencies in the previous procurement system, and aimed to move away from procurement and
provisioning system to an integrated supply chain management function. These reforms are
embodied in various policy initiatives in the country that include, amongst others, Constitution of
the Republic of South Africa Act, 108 of 1996, the PFMA, the MFMA, the ten point plan, the
PPPFA, and the BBBEEA. In 2003 the Country Procurement Assessment Review (CPAR), a
joint initiative of the South African Government and the World Bank, further reviewed and
analysed the procurement system in the country and made recommendations to improve
efficiency and effectiveness in the economy. The department / entity will continue to adopt new
procurement reforms to ensure alignment with latest developments.
Section 217 of the Constitution of the Republic of South Africa Act, 108 of 1996 requires any
organ of state to contract for goods or services in accordance with a system that is fair, equitable,
transparent, competitive and cost effective. This policy has been drawn up to give effect to these
pillars of procurement and the enabling legislative environment, in the advancement of the
department / entity’s support of good governance and socio economic change.
The publication of the Public Finance Management Act in 1999, and the Preferential
Procurement Policy Framework Act in 2000 marked a new era in procurement in South Africa.
The introduction of tighter financial controls for good governance, and a preference point system
to address socio-economic issues and value for money, made it compulsory to score bids thereby
facilitating the move away from relying solely on the traditional practice of only accepting the
lowest price bid.
The procurement reform process was accelerated significantly with the publication of the Supply
Chain Management (SCM) Regulations. The SCM Regulations are intended to modernise public
sector procurement and related functions. The implementation of an integrated SCM system will
contribute significantly towards the improvement of financial management in the public sector.
4 At the same time, SCM aims to create a consistent framework for achieving good governance,
and the Government’s preferential procurement objectives. The four major objectives of the
SCM are to:
•
Transform government procurement and provisioning practices into an SCM function;
•
Introduce a systematic approach to the appointment of consultants;
•
Create a common understanding of the preferential procurement policy; and
•
Promote the consistent application of “best practices” throughout government’s supply
chain, whilst embracing “value for money” principle.
The department / entity will continue to align its SCM processes to the norms and standards
prescribed by the National Treasury and Treasury Division of Gauteng Department of Finance.
Uniform procurement processes, bid documents and contract documents will be used to enable
ease of reading and understanding by emerging enterprises in the province. The department /
entity recognizes that SCM is a critical operational function for service delivery in the public
sector. The SCM processes will be aligned with new reforms to ensure that service delivery
obstacles are reviewed and promote the delivery of services within the required timeframe.
2.
TERMINOLOGY
2.1
Acceptable offer means any bid which, in all respects, complies with the specifications
of bid as set out in the bid document.
2.2
Bid means a written offer in a prescribed or stipulated form in response to an invitation
by an organ of state for the provision of goods, works or services.
2.3
Contract means the agreement that results from the acceptance of a bid by an organ of
state.
2.4
Disability means in respect of a person, a permanent impairment of a physical,
intellectual, or sensory function, which results in restricted, or lack of ability to perform
an activity in the manner, or within the range, considered normal for a human being.
5 2.5
Historically Disadvantaged Individual means a South African Citizen:
(1) Who, due to the apartheid policy that had been in place, had no franchise in national
elections prior to the introduction of the Constitution of the Republic of South Africa,
1983 (Act No 110 of 1983) or the Constitution of the Republic of South Africa, 1993,
(Act No 200 of 1993) (“the interim constitution); and/or
(2) Who is a female; and/or
(3) Who has a disability;
provided that a person who obtained South African citizenship on or after the coming to
effect of the Interim Constitution, is deemed not to be a HDI.
2.6
Joint venture or Consortium means an association of persons for the purpose of
combining their expertise, property, capital, efforts, skills and knowledge in an activity
for the execution of a contract.
2.7
2.8
Procurement refers to a process which creates, manages and fulfils contracts relating to:

The provision of supplies, services or engineering and construction works;

The hiring of anything;

Disposal; and

The acquisition or granting of any rights and concessions.
Quotation means a verbal or written offer that is made in response to an invitation by the
department / entity for a value threshold determined by National Treasury.
2.9
Small, Medium and Micro Enterprises (SMMEs) bears the same meaning assigned to
this expression in the National Small Business Act, 1996 (No 102 of 1996).
2.10
Sub-contracting means the primary contractor assigning or leasing or making out work
to, or employing another person or contractor to support such primary contractor in the
execution of part of the project in terms of the contract.
6 2.11
Supply Chain Management refers to a process and activities encompassing oversight of
materials, information and finances as they move in a process from suppliers to
manufacturer to wholesaler to retailer to consumer. SCM involves the management of
working capital that is invested in goods, stores and services with the objective of
optimizing the economic return on such investment.
2.12
Supplier is a person or legal entity that supplies goods and services to the department /
entity.
3.
APPLICATION OF THE POLICY
This policy applies when the department / entity:
•
Procures goods or services;
•
Procures professional services, including professional services in the build environment;
•
Procures engineering and construction works subject to the provisions of the
Construction Industry Development Board (CIDB); and
•
Disposes goods no longer needed.
This policy, except where provided otherwise, does not apply in respect of the procurement of:
•
Water from the Department of Water Affairs or a public entity, a municipality or a
municipal entity; and
•
4.
Electricity from Eskom or another public entity, a municipality or a municipal entity.
AMENDMENTS TO THE POLICY
On an annual basis, the Accounting Officer / Authority must:
•
Review the implementation of this policy;
•
Make necessary amendments to the policy; and
•
Submit the new policy with amendments to Department of Finance (Treasury Division).
7 When amending this policy the need for uniformity in SCM practices and processes between
organs of state in all spheres of government must be taken into account in order to promote
accessibility of SCM information by emerging enterprises.
5.
SUPPLY CHAIN MANAGEMENT UNIT
The Accounting Officer / Accounting Authority must establish Supply Chain Management unit
that provides for demand, acquisition, logistics, disposal, risk, and performance management.
The Supply Chain Management unit reports directly to the Chief Financial Officer.
6.
SOCIO-ECONOMIC OBJECTIVES
Public procurement accounts for the substantial part of South Africa’s Gross Domestic Product
(GDP) and can be used to achieve economic transformation, create employment opportunities
and reduce poverty. The department / entity will strive through its SCM processes, to achieve
socio economic objectives of the country in order to contribute to the upliftment of the lives of
the people of Gauteng and facilitate sustainable development. The promotion of socio-economic
objectives through public procurement will be guided by the provisions of the Preferential
Procurement Policy Framework Act, the Broad Based Black Economic Empowerment Act and
their associated regulations and codes of good practice. The socio-economic objectives include,
but not limited to, the following:
6.1
Empowerment of Historically Disadvantaged Individuals including women and people
with disabilities.
6.2
The promotion of SMMEs.
6.3
The promotion of locally manufactured products.
6.4
Supporting the proudly South African campaign.
6.5
The promotion of enterprises located in the province, enterprises located in rural areas,
enterprises located in specific municipalities in the province, and enterprises located in
the country.
6.6
The upliftment of communities through the development of social infrastructure.
8 6.7.
The development of human resources.
6.8.
The promotion of export oriented production to create jobs, and the promotion of labour
intensive production.
7.
GOOD GOVERNANCE
The department / entity will promote effective and efficient Supply Chain Management system
that enable the department / entity to deliver the required quality and quantity of goods and
services to its clients. The employees of the department / entity are expected to carry their
mandate in accordance with the code of conduct for the public service, Batho Pele principles, the
legislative framework governing SCM in the country and other codes of good conduct issued by
the National Treasury and the GDF: Treasury division to promote the culture of zero tolerance to
corruption. The department / entity will also adopt any measures to ensure that the following
principles of corporate governance are achieved:
7.1
Discipline by managers to adhere to behavior that is universally recognised and accepted
as correct and proper.
7.2
Accountability for the decisions and actions taken by employees, through mechanisms
that are established to handle queries and problems.
7.3
Mechanisms to avoid conflict of interest in bidding processes and penalise
mismanagement.
8.
THE LEGISLATIVE FRAMEWORK
This policy is guided by the following legislative framework governing SCM:
8.1.
Constitution of the Republic of South Africa Act, 1996
8.2.
Public Finance Management Act, 1999
8.3.
Treasury Regulations for departments, Constitutional Institutions and public entities,
2005
8.4.
Preferential Procurement Policy Framework Act, 2000
9 8.5.
Preferential Procurement Regulations, 2001
8.6.
Broad Based Black Economic Empowernment Act, 2003
8.7.
Policy to Guide Uniformity in Procurement Reform Processes in Government, 2003
8.8.
National Treasury General Procurement Guidelines, 2009
8.9.
National Small Business Act, 1996
8.10. Construction Industry Development Board Act, 2000
8.11. Promotion of Administrative Justice Act, 2000
8.12. SCM: A Guide for Accounting Officers and Accounting Authorities, 2004
9.
PROCUREMENT OF GOODS AND SERVICES
Procurement of goods and services, either by way of quotations or through a bidding process,
must be within the threshold values as determined by the National Treasury from time to time.
A supply chain management system must, in the case of procurement through bidding process,
provide for:
9.1
•
The adjudication of bids through a Bid Adjudication Committee;
•
The establishment, composition and functioning of bid committees;
•
The selection of bid committee members;
•
Bidding procedures; and
•
The approval of bid committee recommendations.
DEMAND PLANNING AND MANAGEMENT
9.1.1 Demand management is the first phase of SCM. The objective is to ensure that the
resources required to fulfill the needs identified in the strategic plan of the department /
entity are delivered at the correct time, price and place and that the quantity and quality
will satisfy those needs. As part of this element of SCM, a total needs assessment should
be undertaken. This analysis should be included as part of the strategic planning process
of the department / entity and hence will incorporate the future needs.
10 9.1.2 It is vital for managers to understand and utilise sound techniques to assist them in their
planning, implementation and control activities. As part of the strategic plan of the
institution, resources required for the fulfillment of its obligations should be clearly
analysed. This includes a detailed analysis of the goods, works and services required,
such as how much can be accomplished, how quickly and with what materials,
equipment, etc.
9.1.3 In performing demand planning as the initial stage of SCM process, the Accounting
Officer / Authority should ensure that:
•
Future as well as current needs are understood;
•
Requirements are linked to the budget;
•
Specifications are determined;
•
The needs form part of the strategic plan of the department / entity;
•
An analysis of the past expenditure may assist in determining the manner in which the
department / entity fulfilled this need in the past;
•
The optimum method to satisfy the need is considered, including the possibility of
procuring goods, works or services from other institutions (e.g. stationery, printing and
related supplies from the Government Printer or furniture from the Department of
Correctional Services), or on transversal or ad hoc contracts;
•
The frequency of the requirement is specified;
•
The economic order quantity is calculated;
•
Lead and delivery times are identified; and
•
An industry and commodity analysis is conducted.
Managing demand will be a cross-functional exercise that brings the supply chain practitioner
closer to the end user and ensures that value for money is achieved.
11 9.2
THRESHOLD VALUES FOR PROCUREMENT OF GOODS AND SERVICES
The department / entity’s procurement directives should be aligned to the threshold values for
quotations and competitive bids as prescribed by National Treasury.
9.3
COMMITTEE SYSTEM
The Accounting Officer / Authority should appoint bid committees (specification, evaluation, and
adjudication) as indicated below:
9.3.1 Bid Specification Committee
This is the committee responsible for compiling bid specifications / terms of reference in an
unbiased manner to allow all potential bidders to offer their goods and / or services without
favour or prejudice. The specification committee may be comprised of:
•
Appropriately skilled officials of the department / entity;
•
One Supply Chain Management practitioner;
•
One or more suitably qualified specialist; or
•
An external consultant under the direction of the official or component concerned.
It is recommended that specifications should be approved by the Accounting Officer / Authority
or his / her delegate/s, e.g. the Bid Adjudication Committee, prior to invitation / advertisement of
bid(s) as bids may only be evaluated according to the criteria stipulated in the bid documentation.
9.3.2 Bid Evaluation Committee
The evaluation committee should be cross-functional and should be comprised of SCM
practitioners and suitably skilled officials from other relevant disciplines. A Bid
Evaluation Committee should consist of a minimum of five members. When it is deemed
necessary, independent experts may also be co-opted to a Bid Evaluation Committee in
12 an advisory capacity. This committee is responsible for the evaluation of bids received in
accordance with the criteria specified in the bid documentation. The evaluation
committee should evaluate all bids received and submit a report with recommendations
regarding the award of the bid to the Bid Adjudication Committee.
9.3.3 Bid Adjudication Committee
Treasury Regulation 16A6.2 stipulates that an institution’s SCM system must, amongst
others, provide for the adjudication of bids through a Bid Adjudication Committee, the
establishment, composition and functioning of bid specification, evaluation and
adjudication committees and the selection of Bid Adjudication Committee members.
The Bid Adjudication Committee is appointed in writing by the Accounting Officer /
Authority for a period of twelve months. The Bid Adjudication Committee should be
composed of cross-functional teams comprising of senior officials of whom at least one
must be a Supply Chain Management practitioner. The chairperson of the committee is
the Chief Financial Officer of the department / entity, or his / her delegate. Where
considered necessary, additional officials or advisors may be co-opted on account of their
specialised knowledge.
The Bid Adjudication Committee must consider the recommendations / reports of the Bid
Evaluation Committee and, depending on the delegated powers, make:
•
A final award; or
•
A recommendation to the Accounting Officer / Authority to make a final award; or
•
Another recommendation to the Accounting Officer / Authority on how to proceed
with the relevant procurement.
If a bidder other than the one recommended by the Bid Evaluation Committee is approved by the
Bid Adjudication Committee, the Accounting Officer / Authority or a senior official delegated by
the Accounting Officer / Authority, must first be notified. The Accounting Officer / Authority or
the delegated official may, after considering the reasons for the deviation, ratify or reject the
13 decision of the Bid Adjudication Committee. If the decision of the Bid Adjudication Committee
to approve a bid other than the one recommended by the Bid Evaluation Committee is ratified,
the Auditor-General, GDF: Treasury Division and the National Treasury must be notified of the
reasons for deviating from such recommendation.
All members as well as the secretary of the Bid Adjudication Committee should be cleared at the
level of “confidential” by the Accounting Officer / Authority and should be required to declare
their financial interests on an annual basis.
A declaration of confidentiality form must be signed by all members for every meeting of the
Bid Adjudication Committee.
9.4
ADVERTISEMENT OF BIDS
Timely notification of bidding opportunities is essential in competitive bidding. Bids should be
advertised for a period of at least thirty (30) days before closure in at least the Government
Tender Bulletin and in other appropriate media should the Accounting Officer / Authority deem it
necessary to ensure greater exposure to potential bidders except in urgent cases when bids may
be advertised for such shorter periods as the Accounting Officer / Authority may determine. The
shortened tender period cannot be less than 14 days. The department / entity will bear the
responsibility for advertising costs. The department / entity will maintain a list of responses to
the advertisement. The related pre-qualification or bidding document, as the case may be, should
be available on the publication date of the advertisement.
9.5
OPENING OF BIDS
The time for the bid opening should be the same as the deadline for receipt of bids, or promptly
thereafter and should be announced, together with the place for bid opening, in the invitation to
bid. All bids shall be opened at the stipulated time and place. Bids should be opened in public,
that is, bidders or their representatives should be allowed to be present. If requested by any
bidder, the name of the bidders and if practical the total amount of each bid and of any
14 alternative bids, should be read aloud. The names of the bidders and their respective total prices
should be recorded when bids are opened.
9.6
VALIDITY PERIOD
Bidders should be required to submit bids or quotations valid for a period not exceeding 60 days.
This period should be sufficient to enable the department / entity to complete the comparison and
evaluation of bids, review the recommendation and award the contract.
An extension of bid validity, if justified in exceptional circumstances, should be requested in
writing from all bidders before the expiration date. The extension should be for the minimum
period required to complete the evaluation, obtain the necessary approvals and award the
contract. In the case of fixed price contracts, requests for second and subsequent extensions
should be permissible only if the request for extension provides for an appropriate adjustment
mechanism of the quoted price to reflect changes of inputs for the contract over the period of
extension. Bidders should have the right to refuse such an extension without forfeiting their bid
security, but those who are willing to extend the validity of their bids should be required to
provide a suitable extension of bid security, if applicable.
9.7
EVALUATION OF BIDS
All bids shall be evaluated in terms of the 80/20 or 90/10 scoring models as prescribed by the
PPPFA and its associated regulations. A bid is regarded as acceptable if:
•
It complies in all respects with the specification and conditions of the bid;
•
The bidder completed and signed all the prescribed bid forms to enable the principal to
evaluate the bid submitted;
•
The bidder submitted the required original valid tax clearance certificate and other
clearance / registration forms as prescribed by various acts and / or in the bid
documentation; and
•
The bidder has the necessary capacity and ability to execute the contract.
15 The bid will be awarded to the bidder scoring the highest points in respect of price and
preference.
9.8
CALCULATION OF POINTS
The department or entity must indicate the following when inviting bids:
•
Whether the bids will be evaluated on functionality;
•
The evaluation criteria for measuring functionality;
•
The weight of each criterion; and
•
The applicable values as well as the minimum threshold for functionality.
When functionality is part of the evaluation criteria, the evaluation of bids must be conducted in
the following two stages:
•
Firstly, the assessment of functionality must be done in terms of the evaluation criteria
and the minimum threshold. A bid must be disqualified if it fails to meet the minimum
threshold for functionality as per the bid invitation.
•
Thereafter, only the qualifying bids are evaluated in terms of either 80/20 or 90/10
preference points systems, where the 80 or 90 points must be used for price only and the
20 or 10 points are used for HDI ownership and / or for achieving the prescribed RDP
goals. The price submitted by the lowest acceptable bidder must be used in the formula as
the basis (Pmin) when calculating the points for price.
Should, during any stage of the evaluation and / or adjudication process, it become evident that
the bidder who scored the highest number of points is an unacceptable or non-responsive bidder
and this bidder also scored the highest points for price, the points scored by each bidder must be
recalculated using the new lowest acceptable bidder’s price as the basis (Pmin) for calculation
purposes. The bid cannot be awarded to the bidder next-in-line as this may lead to an incorrect
16 award of the bid. Recalculation of the points may result in a different bidder, other than the one
who was next-in-line, scoring the highest number of points.
9.9
REGISTRATION OF SUPPLIERS / BIDDERS
Suppliers / bidders who are required by law to register with regulatory bodies regarding their
goods / services to be delivered / rendered, should ensure that their relevant registration is in
order prior to the closure of the bids.
9.10
DEVIATIONS FROM NORMAL PROCUREMENT PROCESSES
If in a specific case it is impractical to invite competitive bids, the department / entity may
procure the required goods or services by other means, provided that the reasons for deviating
from inviting competitive bids must be recorded and approved by the Accounting Officer /
Authority (Treasury Regulations 16A6.4). The Accounting Officer / Authority may dispense with
the normal procurement processes only if the following conditions exist:
•
In cases of emergency where immediate action is necessary to avoid a dangerous or risky
situation or misery or disaster such as floods and fires.
•
When the goods and services required are produced or available from a sole service
provider.
•
For the acquisition of special works of art or historical objects where specifications are
difficult to compile.
•
Acquisition of animals for zoos.
•
When procuring water from Department of Water Affairs, municipality, municipal entity,
or public entity.
•
When procuring electricity from Eskom, municipality, municipal Entity, or public entity.
The Accounting Officer / Authority cannot allow lack of proper planning to constitute a reason
for dispensing with prescribed bidding processes.
17 The Accounting Officer / Authority will report within ten (10) working days before the award of
the contract to GDF: Treasury Division and the Auditor General, all cases where goods and
services above the value of R500 000 (VAT inclusive) were procured in terms of Treasury
Regulation 16A6.4. The Accounting Officer / Authority will put measures in place to avoid
unauthorized expenditure, irregular expenditure, fruitless and wasteful expenditure. In instances
where irregular expenditure occurred and is not considered relevant for condonation, or where
the Accounting Officer / Authority does not condone the irregular expenditure, immediate steps
must be taken to recover the irregular expenditure from the responsible employee, if he / she is
liable in law.
9.11
PROCUREMENT OF IT-RELATED GOODS AND SERVICES
In terms of the State Information Technology Amendment Act, 2002 (SITA Act) and its
subordinate regulations, accountability for decisions related to the procurement of ICT related
goods and / or services is vested with the respective Accounting Officer / Authority. This is
further emphasised in the PFMA which requires that Accounting Officers and Accounting
Authorities be responsible for the effective, economical and transparent use of their institution’s
resources.
In instances where SITA acts as the procurement agent on behalf of the department / entity,
SITA will facilitate the procurement process strictly in terms of the prescribed legislation. SITA
will make a recommendation to the Accounting Officer / Authority on the preferred bidder(s).
The Accounting Officer / Authority, however, retains the right to accept or reject SITA’s
recommendation. In the event where the Accounting Officer / Authority is rejecting SITA’s
recommendation, the reasons for such rejection must, within 10 working days, be submitted in
writing to GDF: Treasury Division and the Auditor-General.
18 9.12
UNSOLICITED PROPOSALS
An unsolicited proposal / concept means any proposal / concept received by an institution
outside its normal procurement process that is not an unsolicited bid (a submission that must be
innovative, unique and provided by a sole supplier).
The department / entity is not obliged to consider an unsolicited proposal but may consider such
a proposal only if it meets the following requirements:
•
A comprehensive and relevant project feasibility study has established a clear business
case; and
•
The product or service involves an innovative design; or
•
The product or service involves an innovative approach to project development and
management; or
•
The product or service presents a new and cost-effective method of service delivery.
The Accounting Officer / Authority must reject the unsolicited proposal if the proposal:
•
Relates to known institutional requirements that can, within reasonable and practicable
limits, be acquired by conventional competitive bidding methods;
•
Relates to products or services which are generally available;
•
Does not fall within the institution’s powers and functions;
•
Has not been submitted by a duly authorised representative of the proponent; or
•
Contravenes the provisions of any law.
If the Accounting Officer / Authority decides to reject the unsolicited proposal, he or she must:
•
Notify the authorised representative of the proponent by registered post that the
department / entity has rejected the unsolicited proposal;
•
Ensure that the department / entity does not make use of any of the intellectual property
or proprietary data in the unsolicited proposal; and
19 •
Return to the proponent by registered mail all documents received in the unsolicited
proposal including any copies of these documents.
If the Accounting Officer / Authority decides to consider the unsolicited proposal, he or she must
send a registered letter to the proponent confirming the decision to consider the unsolicited
proposal. If the unsolicited proposal agreement is concluded, then the department / entity must
prepare and issue bid documents.
10.
APPOINTMENT OF CONSULTANTS
10.1
The department / entity will engage consultants principally for the following reasons:
•
To provide specialised services for limited periods without any obligation of permanent
employment;
•
To benefit from superior knowledge, transfer of skills and upgrading of a knowledge base
while executing an assignment; and
•
To provide independent advice on the most suitable approaches, methodologies and
solutions of projects.
10.2
In procuring consulting services, the Accounting Officer / Authority should satisfy
himself / herself that:
•
The procedures to be used will result in the selection of consultants who have the
necessary professional qualifications;
•
The selected consultant will carry out the assignment in accordance with the agreed
schedule, and
•
10.3
The scope of the services is consistent with the needs of the project.
If the Accounting Officer / Authority wishes to appoint a person for a limited period to
perform duties to a post on the fixed establishment, the person should, as a general rule,
20 be appointed on contract in terms of section 8(c) (ii) of the Public Service Act, 103 of
1994.
10.4
Should the Accounting Officer / Authority experience additional work demands which are
not permanent and there are no suitable vacancies, he / she may consider creating
additions to the fixed establishment based on the specific nature of the activities to be
undertaken as well as the level at which the activities are to be performed. This may
include appointing persons on contract in terms of the Public Service Act, 103 of 1994.
Under no circumstances should a person be appointed as a consultant merely to be
granted higher remuneration packages than are prescribed by the Public Service Act.
10.5
The Accounting Officer / Authority should be responsible for preparing and implementing
the project, for selecting the consultant, awarding and subsequently administering the
contract. While the specific rules and procedures to be followed for selecting consultants
depend on the circumstances of the particular case, at least the following five major
considerations should guide the Accounting Officer / Authority’s policy on the selection
process:
•
The need for high-quality services;
•
The need for economy and efficiency;
•
The need to give qualified consultants an opportunity to compete in providing the
services;
•
The importance of transparency in the selection process; and
•
The need to promote transformation.
10.6
The particular method to be followed for the selection of consultants for any given
project should be selected by the Accounting Officer / Authority. When appropriate, the
Accounting Officer / Authority may include under the special conditions of contract, the
following or similar condition:
21 “A service provider may not recruit or shall not attempt to recruit an employee of the
principal for the purposes of preparation of the bid or for the duration of the execution of
this contract or any part thereof”.
10.7
CONFLICT OF INTEREST
10.7.1 Consultants are required to provide professional, objective and impartial advice and at all
times hold the client’s interests paramount, without any consideration for future work and
strictly avoid conflicts with other assignments or their own corporate interests.
Consultants should not be hired for any assignment that would be in conflict with their
prior obligations to other clients, or that may place them in a position of not being able to
carry out the assignment in the best interest of the State. Without limitation on the
generality of this rule, consultants will not be hired under the following circumstances:
•
A firm, which has been engaged by the Accounting Officer / Authority to provide goods
or works for a project and any of its affiliates, should be disqualified from providing
consulting services for the same project. Similarly, a firm hired to provide consulting
services for the preparation or implementation of a project and any of its affiliates, should
be disqualified from subsequently providing goods or works or services related to the
initial assignment (other than a continuation of the firm’s earlier consulting services ) for
the same project, unless the various firms (consultants, contractors, or suppliers) are
performing the contractor’s obligations under a turnkey or design-and-build contract;
•
Consultants or any of their affiliates should not be hired for any assignment which, by its
nature, may be in conflict with another assignment of the consultants. As an example,
consultants hired to prepare an engineering design for an infrastructure project should not
be engaged to prepare an independent environmental assessment for the same project,
and consultants assisting a client in the privatisation of public assets should not purchase,
nor advise purchasers of such assets.
22 10.7.2 When consultants are appointed, the prescripts of the Preferential Procurement
Regulations, 2001, must be adhered to. These relate to the compulsory involvement of
HDIs and the promotion of the RDP goals.
10.7.3 If the assignment includes an important component for training or transfer of skills, the
Terms of Reference (TOR) should indicate the objectives, nature, scope and goals of the
training programme, including details of trainers and trainees, skills to be transferred,
time-frames and monitoring and evaluation arrangements. The cost for the training
should be included in the consultant’s contract and in the budget for the assignment.
11.
CONTRACT MANAGEMENT
The Accounting Officer / Authority of the department /entity must:
•
Take all reasonable steps to ensure that a contract or agreement procured through
this policy is properly enforced.
•
Monitor on a monthly basis the performance of the contractor or service provider
under the contract or agreement.
•
Establish capacity in the department or entity to oversee the day to day
management of the contract or agreement.
12.
PARTICIPATION IN CONTRACTS ARRANGED BY OTHER ORGANS OF
STATE
The department / entity may procure goods and services under a contract arranged by the
National Treasury, Gauteng Department of Finance and other organs of state, only if the
following conditions are met:
•
The contract has been secured by that organ of state through a competitive
bidding applicable to that organ of state.
23 •
The department / entity has no reason to believe that such contract was not validly
procured.
•
There are demonstrable discounts or benefits for the department / entity to do so.
•
That other organ of state and the service provider have consented to such
procurement in writing.
13.
AVOIDING ABUSE OF SUPPLY CHAIN MANAGEMENT SYSTEM
13.1
The Accounting Officer / Authority must-
•
Take all reasonable steps to prevent abuse of the Supply Chain Management system;
•
Investigate any allegations against an official or other role player of corruption, improper
conduct or failure to comply with the Supply Chain Management system, and when
justifiedi.
Take steps against such official or other role player and inform the GDF:
Treasury Division of such steps; and
ii.
Report any conduct that may constitute an offence to the South African
Police Service.
•
Check the National Treasury’s database prior to awarding any contract to ensure that no
recommended bidder, nor any of its directors, are listed as companies or persons
prohibited from doing business with the public sector;
•
Reject any bid from a supplier who fails to provide written proof from the South African
Revenue Service that that supplier either has no outstanding tax obligations or has made
arrangements to meet outstanding tax obligations;
•
Reject a proposal for the award of a contract if the recommended bidder has committed a
corrupt or fraudulent act in competing for the particular contract; or
•
Cancel a contract awarded to a supplier of goods or services-
24 i.
If the supplier committed any corrupt or fraudulent act during the bidding
process or the execution of that contract; or
ii.
If any official or other role player committed any corrupt or fraudulent act
during the bidding process or the execution of that benefited that supplier.
13.2
•
•
14.
The Accounting Officer / Authority:
May disregard the bid of any bidder if that bidder, or any of its directors:
i.
Has abused the institution’s Supply Chain Management system;
ii.
Has committed fraud or any other improper conduct in relation to such system; or
ii.
Has failed to perform on any previous contract; and
Must inform GDF: Treasury Division of any action taken in terms of the above.
PILLARS OF PROCUREMENT
The following five principles of procurement, referred to as the pillars of procurement, should be
applicable when procuring goods, services and works:
14.1
VALUE FOR MONEY
This is an essential test against which the department / entity must justify the procurement
outcomes. Price alone is often not a reliable indicator and the department / entity will not
necessarily obtain the best value for money by accepting the lowest price offer that meets the
mandatory requirements. Best value for money means the best available outcome when all
relevant costs and benefits over the procurement cycle are considered.
25 14.2
OPEN AND EFFECTIVE COMPETITION
This requires:
•
A framework of procurement laws, policies, practices and procedures that is transparent,
i.e. they must be readily accessible to all parties;
•
Openness in the procurement process;
•
Encouragement of effective competition through procurement methods suited to market
circumstances; and
•
14.3
Observance of the provisions of the PPPFA.
ETHICS AND FAIR DEALING
All staff members of the department / entity associated with procurement, particularly those
dealing direct with suppliers or potential suppliers, are required:
•
To recognise and deal with conflicts of interest or the potential thereof;
•
To deal with suppliers even-handedly;
•
To ensure they do not compromise the standing of the state through acceptance of gifts or
hospitality;
•
To be scrupulous in their use of public property; and
•
To provide all assistance in the elimination of fraud and corruption.
14.4
ACCOUNTABILITY AND REPORTING
This involves ensuring that the employees of the department / entity are answerable for their
plans, actions and outcomes in the following manner:
•
The Accounting Officer / Authority is accountable to the MEC / Board of Directors for
the overall management of procurement activities;
26 •
Head of SCM and senior procurement officials are accountable to the Accounting Officer
/ Authority for various high-level management and co-ordination activities;
•
All other procurement officials are accountable to the head of SCM, and to their clients,
for the services they provide; and
•
14.5
All people exercising procurement functions are accountable to management.
EQUITY
The word “equity” in the context of this policy means the application and observance of
government policies which are designed to advance persons or categories of persons
disadvantaged by unfair discrimination. This pillar ensures that the department / entity is
committed to economic growth by implementing measures to support industry generally, and
especially to advance the development of SMMEs and HDIs.
15.
REPORTING OF SUPPLY CHAIN MANAGEMENT INFORMATION
The Accounting Officer / Authority will submit to GDF: Treasury Division and National
Treasury such Supply Chain Management information as GDF: Treasury Division may require.
Such information will be submitted to GDF: Treasury Division in such format and at such
intervals as GDF Treasury Division may require.
16.
DISPOSAL AND LETTING OF STATE ASSETS
The Accounting Officer / Authority must in relation to the sale or disposal of the department /
entity’s assets ensure that:
•
Immovable property is sold at market related prices, unless GDF: Treasury Division
determines otherwise;
•
Movable assets are sold either by way of tender process, auction or at market related
prices, whichever is the most advantageous to the state;
27 •
In the case of the disposal of computer equipment, the Department of Education must
first be approached to indicate whether any educational institutions are interested in the
equipment, and if so, to arrange for the transport of such equipment at its own cost to any
such interested educational institutions; and
•
In the case of the disposal of firearms, the National Conventional Arms Control
Committee approves of any sale or donation of firearms to any person or institution
within or outside the Republic.
The Accounting Officer / Authority must in relation to the letting of state assets:
•
Ensure that all immovable property, excluding state housing for state officials and
political office bearers, is let at market rates, unless GDF: Treasury Division determines
otherwise or approves the letting of property free of charge; and
•
Annually review all fees, charges, rates, tariffs, scales of fees or other charges relating to
the letting of state property.
17.
DISPOSAL MANAGEMENT
17.1
Disposal is the final process when the department / entity is planning to do away with
unserviceable, redundant or obsolete movable assets. The Accounting Officer / Authority
must appoint a Disposal Committee to deal with disposals, (if necessary at each
regional/sub-office) to make recommendations with regard to the disposal of any asset. It
is the responsibility of the Accounting Officer / Authority or his/her delegate to consider
the recommendations of the appointed committee.
17.2
If disposal of any asset is approved, any of the methods indicated below may, amongst
others, be followed:
•
Transfer to another institution in terms of section 42 of the PFMA;
•
Transfer to another institution at market related value;
28 •
Transfer to another institution free of charge (bearing in mind that the assets cannot be
transferred to a sub-office, school, etc. without approval of the Head Office of the
institution under which jurisdiction such sub—office, school, etc. falls);
•
Selling per price quotation, competitive bid or auction, whichever is most advantageous
to the State, unless determined otherwise by GDF Treasury Division (requirements as
prescribed in Regulations 5 and 6 of the Preferential Procurement Regulations, 2001,
should be adhered to); or
•
17.3
Destroying such assets.
If the department/ entity decide to dispose assets by other methods other than the methods
listed above, the Accounting Officer / Authority must ensure that such disposal methods
are consistent with the requirements of the PFMA and any other applicable legislation.
17.4
Should the sale of movable assets not be at market related value, by price quotation,
competitive bid or auction the reasons for the disposal in any other manner should be
motivated, certified and recorded for auditing purposes by the Accounting Officer /
Authority or his/her delegate.
17.5
All assets transferred to another institution should be by means of an issue voucher.
17.6
In cases where stores (inventory) items or assets are traded in for other store items or
assets, the highest possible trade-in price is to be negotiated. The order placed should be
for the net amount, as charged against the vote. The actual value of the new item should,
however, be reflected on the relevant register.
18.
INVENTORY MANAGEMENT
The department / entity will make provision for an effective system of logistics management in
order to provide for the setting of inventory levels, placing of orders, receiving and distribution
of goods, stores and warehouse management, expediting orders, transport management, vendor
performance, maintenance, and contract administration.
29 19.
RESOLUTION OF DISPUTES, OBJECTIONS, COMPLAINTS AND QUERIES
19.1
Persons aggrieved by decisions or actions taken in the implementation of this Supply
Chain Management policy may lodge, within 14 days of the decision or action, a written
objection or complaint against the decision or action.
19.2
The Accounting Officer / Authority must strive to resolve all disputes, objections,
complaints or queries received within a period of 30 days. A dispute, objection,
complaint or query may be referred to Gauteng Department of Finance: Treasury
Division if:
 The dispute, objection, complaint or query is not resolved within 30 days; or
 No response is forthcoming within 30 days; or
 The complainant is not satisfied with the response from the Accounting Officer /
Authority.
19.3
If GDF: Treasury Division does not or cannot resolve the matter, the dispute, objection,
complaint or query may be referred to National Treasury for resolution.
19.4
This paragraph must not be read as affecting a person’s rights to approach a court of law
at any time.
20.
COMMENCEMENT
This policy takes effect on the date of signature by the Accounting Officer / Authority.
______________________________
Accounting Officer / Authority
Date:
30 21. ANNEXURE: PROCUREMENT PROCEDURES
The following procurement procedures serve as a guide for the implementation of this SCM
policy.
1. ADVERTISEMENT PROCEDURE (BID)
• Receive approved procurement strategy (request to advertise a bid) from the Bid
Adjudication Committee.
• Receive approved Bid Specification and Bid Evaluation Committee from the delegated
official (preferably the CFO).
• Confirm availability of funds with the relevant official or office for the project to be
advertised.
• Compile or check bid documentation for correctness.
• Attach relevant forms as on National Treasury and CIDB websites.
• Allocate a bid number and record in the register.
• Determine the price for the selling of bid documents.
• Prepare bid advertisement.
• Bid advertisement to include price of the bid documents, date and time of the closing of the
bid.
• Advertise in Government Tender Bulletin and CIDB (i-tender) for construction bids.
• Conduct site meetings or briefing sessions, if applicable.
• Open a file for the bid (keep originals of the bid document, procurement strategy,
confirmation of funds, a letter of appointment of bid specification and evaluation
committee, original advertisement as it appears on the tender bulletin, newspapers and
CIDB website).
• Keep the file in a safe place that is accessible by one SCM official to eliminate risk.
2. STOCK OF DOCUMENTS
•
•
•
•
•
•
•
•
Ensure availability of bid documents.
Sort documentation on shelve for easy access.
Monitor stock on hand.
Record bid documents issued in register.
At a stock level of five and there is still enough time for bids to close, prepare more other
documents.
Stamp each bid documentation issued.
Consolidate schedule of documents sold and received after closing date.
Reconcile documents sold with documents on hand.
3. CLOSING OF BIDS
•
•
•
•
•
Bids normally close at 11:00 unless otherwise specified (as per advert).
Authorised procurement official should open the tender box in the presence of another
official as a witness.
Name and price of each bidder to be read out in public.
Number each and every bid received consecutively, e.g. if 10 bids are received, last bid
receive should be numbered 10/10.
Stamp each and every page of the returnable documents.
31 •
•
•
•
•
Schedule of rates should also be stamped.
Compile register of all bids received.
Keep the original of the register on the bid file.
SCM office to screen all bids received before submission to the relevant end-user for
evaluation.
The SCM office must check, amongst others, the following:
i.
•
•
Submission is in line with approved responsive criteria received from Bid
Adjudication Committee.
ii. Check CIDB compliance.
iii. Original valid tax clearance certificate (the name of bidder should correspond
with the name of the VAT vendor as on the tax clearance certificate).
Submit bid documents together with the copy of the register of bids to the relevant enduser or project leader for evaluation.
Original of the register of bids to be retained on procurement file.
4. MONITORING VALIDITY PERIOD OF BIDS
•
•
•
•
•
•
•
•
Submit reminder to end-user at least 14 days before expiry of validity.
End user to furnish reasons for extension.
Further extension of validity will be approved by Bid Adjudication Committee.
Only responsive bidders will be requested to extend validity.
Make follow-ups with bidders to confirm acceptance of the extension of validity.
Receive extension letters from bidders.
Inform end-users on the responses for further evaluation.
Keep letters of extension in the tender file.
5. EVALUATION OF BIDS
•
•
•
•
•
End-user to convene BEC meeting.
BEC to evaluate bids according to approved procurement strategy.
End-user to submit evaluation report to procurement office.
Procurement office to screen submission before submitting to Bid Adjudication
Committee for approval.
The following to be verified:
i. Bids were evaluated within the validity period.
ii. Check justification of disqualified bidders.
iii. Check points, functionality and preference allocation.
iv. Check relevant signature of authorized official who must be a representative of
the department or entity.
6. EMERGENCY SERVICES
•
•
End-user to identify emergency service.
SCM office to select service provider from database on a rotational basis.
32 •
•
•
Accounting Officer / Authority or delegated official to approve emergency service.
Report to be submitted to Bid Adjudication Committee for ratification.
Record all emergencies in a register.
7. PROCUREMENT THROUGH QUOTATIONS
•
•
•
•
•
•
•
•
•
•
•
•
•
•
End-users to identify a need to acquire a certain product or service.
End-user to compile specification of a service or a product.
Specification committee to review the specification for procurement of a value above R
30 000, 00 (VAT inclusive).
End-user to send a formal request signed by the head of the unit or a delegated official to
the head of Supply Chain Management unit to solicit quotations.
The SCM unit to check the correctness of the document (request).
The SCM unit to confirm availability of funds with the relevant budget office.
The SCM unit to open a file for procurement above R 30 000, 00 (VAT inclusive)
Allocate quotation number for procurement above R 30 000, 00 (VAT inclusive) and put
all original documents on the file.
Set a closing date and time for the submission of quotations (allow 7 days to submit
quotations).
Receive quotations and record them in a quotation register.
Forward the quotations to the relevant end user to recommend the most competitively
priced vendor. (less than R30 000, 00 VAT inclusive cases only)
Quotations with recommendations to be forwarded to a relevant delegated official as per
Supply Chain Management delegations or the Accounting Officer / Authority’s
delegation for approval.
Forward the documents to SCM unit to issue a purchase order. (Purchase order approved
by the relevant delegated official)
Forward the order to the supplier.
8. VARIATION ORDER
•
•
•
Project Manager or End-user to prepare submission for variation orders.
Submit for approval to the Bid Adjudication Committee or the Chief Financial Officer, or
whoever is relevant in terms of Supply Chain Management delegations (Delegations must
specify responsible officials for specific percentages).
Approval of all variation orders to be submitted to SCM unit for record keeping.
33