MITCHELLS PLAIN SKILLS CENTRE (MPSC)

2015 - 2018

PREFERENTIAL PROCUREMENT REGULATIONS, 2001

Definitions

In these regulations, unless the context indicates otherwise, a word or expression to which a meaning has been assigned in the Act bears the same meaning, and-

(a) “Act” means the Preferential Procurement Policy Framework Act, 2000 (Act No 5 of 2000);

(b) “Agent” means a person mandated by another person (“the principal”) to do business for and on behalf of, or to represent in a business transaction, the principal, and thereby acquire rights for the principal against an organ of state and incur obligations binding the principal in favour of an organ of state;

(c) “Comparative price” means the price after the factors of anon-firm price and all unconditional discounts that can beutilised have been taken into consideration;

(d) “Consortium or Joint Venture” means an association of persons for the purpose of combining their expertise, property, capital, efforts, skill and knowledge in an activity for the execution of a contract;

(e) “Contract” means the agreement that results from the acceptance of a tender by an organ of state;

(f) “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;

(g) “Firm price” is the price that is only subject to adjustments in accordance with the actual increase or decrease resulting from the change, imposition, or abolition of customs or excise duty and any other duty, levy, or tax which, in terms of a law or regulation is binding on the contractor and demonstrably has an influence on the price of any supplies, or the rendering costs of any service, for the execution of the contract;(h) “Historically Disadvantaged Individual (HDI)” 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 SouthAfrica,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

(a) who is a female; and / or

(b) 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 an HDI;

(i) “Management” in relation to an enterprise or business, means an activity inclusive of control and performed on a daily basis, by any person who is a principal executive officer of the company, by whatever name that person may be designated, and whether or not that person is a director;

(j) Non-firm prices” means all prices other than “firm” prices;

(k) “Person” includes reference to a juristic person;

(l) “Rand value” means the total estimated value of a contract in Rand denomination which is calculated at the time oftender invitations and includes all applicable taxes and excise duties;

(m) “Small, Medium and Micro Enterprises (SMMEs)” bears the same meaning assigned to this expression in the National Small Business Act, 1996 (Act No102 of 1996);

(n) “Sub-Contracting” means the primary contractor’s assigning or leasing or making out work to, or employing, another person to support such primary contractor in the execution of part of a project in terms of the contract;

(o) “Tender” means a written offer or bid in a prescribed or stipulated form in response to an invitation by MPSC for the provision of services or goods;

(p) “Trust” means the arrangement through which the property of one person is made over or bequeathed to a trustee to administer such property for the benefit of another person;

(q) “Trustee” means any person, including the founder of a trust, to whom property is bequeathed in order for such property to be administered for the benefit of another person.

(r) “MPSC” means Mitchells Plain Skills Centre.

(s) “Purchaser” means MPSC.

GENERAL CONDITIONS OF CONTRACT

Definitions

1. The following terms shall be interpreted as indicated:

  • “Closing time” means the date and hour specified in the bidding documents for the receipt of bids.
  • “Contract” means the written agreement entered into between the purchaser and the supplier, as recorded in the contract form signed by the parties, including all attachments and appendices thereto and all documents incorporated by reference therein.
  • “Contract price” means the price payable to the supplier under the contract for the full and proper performance of his contractual obligations.
  • “Corrupt practice” means the offering, giving, receiving, or soliciting of any thing of value to influence the action of a public official in the procurement process or in contract execution.
  • “Country of origin” means the place where the goods were mined, grown or produced or from which the services are supplied. Goods are produced when, through manufacturing, processing or substantial and major assembly of components, a commercially recognized new product results that is substantially different in basic characteristics orin purpose or utility from its components.
  • “Day” means calendar day.
  • “Delivery” means delivery in compliance of the conditions of the contract or order.
  • “Delivery ex stock” means immediate delivery directly from stock actually on hand.
  • “Delivery into consignees store or to his site” means delivered and unloaded in the specified store or depot or on the specified site incompliance with the conditions of the contract or order, the supplier bearing all risks and charges involved until the supplies are so delivered and a valid receipt is obtained.
  • ”Force majeure” means an event beyond the control of the supplier and not involving the supplier’s fault or negligence and not foreseeable. Such events may include, but is not restricted to, acts of the purchaser in its sovereign capacity, wars or revolutions, fires, floods, epidemics, quarantine restrictions and freight embargoes.
  • “Fraudulent practice” means a misrepresentation of facts in order to influence a procurement process or the execution of a contract to the detriment of any bidder, and includes collusive practice among bidders(prior to or after bid submission) designed to establish bid prices at artificial non-competitive levels and to deprive the bidder of the benefits of free and open competition.
  • “GCC” means the General Conditions of Contract.
  • “Goods” means all of the equipment, machinery, and/or other materials that the supplier is required to supply to the purchaser under the contract.
  • “Imported content” means that portion of the bidding price represented by the cost of components, parts or materials which have been or are still to be imported (whether by the supplier or his subcontractors) and which costs are inclusive of the costs abroad, plus freight and other direct importation costs such as landing costs, dock dues, import duty, sales duty or other similar tax or duty at the South African place of entry as well as transportation and handling charges to the factory in the Republic where the supplies covered by the bid will be manufactured.
  • “Local content” means that portion of the bidding price which is not included in the imported content provided that local manufacture does take place.
  • “Manufacture” means the production of products in a factory usinglabour, materials, components and machinery and includes other related value-adding activities.
  • “Order” means an official written order issued for the supply of goods or works or the rendering of a service.
  • “Project site,” where applicable, means the place indicated in bidding documents.
  • “Purchaser” means the organization (MPSC) purchasing the goods.
  • “Republic” means the Republic of South Africa.
  • “SCC” means the Special Conditions of Contract.
  • “Services” means those functional services ancillary to the supply of the goods, such as transportation and any other incidental services, such as installation, commissioning, provision of technical assistance, training, catering, gardening, security, maintenance and other such obligations of the supplier covered under the contract.
  • “Written” or “in writing” means handwritten in ink or any form of

Part 1.

INTRODUCTION AND BACKGROUND

Purpose

The purpose of this document is to outline MPSC’s policy regarding Supply Chain Management.

Legislative requirements

MPSC’s Supply Chain Management policy, incorporating, amongst others, the requirements and principles of the above legislation, is detailed in this document.

Improving accountability

This Policy aims to improve accountability by placing responsibilityfor decisions in the hands of the board of directors of MPSC.

The accountability chain is the most critical driver for improving financial management in the private sector. The Annual Report and the report of MPSC will indicate achievement against the intentions specified in MPSC’s strategicplan and may highlight areas that require improvement.

In addition, the award and management of contracts is an area where fraud and corruption has been found in the past and the institution’s Fraud Prevention Plan should reflect this, through cost-effective use of control measures and procedures and an ethical culture.

Supply Chain Management objectives

There are four major objectives of the Supply Chain management policy:

  • TransformMPSC’s procurement and provisioning practices into an integrated SCM function;
  • Introduce a systematic approach for the appointment of consultants;
  • Create an understanding and interpretation of thepreferential procurement policy; and
  • Promote the consistent application of ‘best practices’ throughout the supply chain.

The supply chain function and process

The introduction of an integrated SCM function is aimed at addressing theinefficiencies in the method of procurement, contract management, inventory/asset control and obsolescence planning.

The elements of SCM are summarised below and an explanation of the detailed application of each is contained in subsequent paragraphs of this Policy.

Demand Management: This is the beginning of the supply chain where:

  • a needs assessment to ensure that goods or services are acquired in order to deliver the agreed service is done;
  • specifications are precisely determined; requirements are linked to the budget; and
  • the supplying industry has been analysed.

This phase will bring the supply chain practitioner close to the end user, to ensure that value for money is achieved.

Acquisitioning Management:In the past, almost all the focusof procurement activity has been given to this stage (to the almost total exclusion of the other aspects of SCM). The management, rather than purely procedural considerations are:

  • to decide on the manner in which the market will be approached;
  • to establish the total cost of ownership of a particular type of asset;
  • to ensure that bid documentation is complete, including evaluation criteria;
  • to evaluate bids in accordance with published criteria; and
  • to ensure that proper contract documents are signed.

Disposal Management: At this stage consideration is given to:

  • obsolescence planning;
  • maintaining a data base of redundant material;
  • inspecting material for potential re-use;
  • determining a disposal strategy; and
  • executing the physical disposal process.

Supply Chain Performance:

This is a monitoring process, undertaking a retrospective analysis to determine whether the proper processes have been followed and whether the desiredobjectives were achieved. Some of the issues that may bereviewed are:

  • compliance to norms and standards;
  • cost efficiency of SCM process (i.e. the cost of the process itself); and
  • whether supply chain practices are consistent with MPSC’s broader policy focus.

The appointment of consultants

There are minimum requirements of quality and efficiency when appointing consultants. It is necessary to impose measures to ensure that consultancy assignments are executed in such a way as to ensure that the ethical priciples of the relevant profession are met at all times. This includes ensuring that advice and service received is unbiased ie. free from any affiliation, economic or otherwise, which may cause conflict between the consultant’s interests and those of MPSC.

Preferential procurement

The Preferential Procurement Policy Framework Act 2000 (Act 5of 2000) and its accompanying Regulations were promulgated to prescribe a framework for a preferential procurement system.This Act and its Regulations incorporate the ‘80/20’ and ‘90/10’preference point systems. One of the aims of the Regulations is to align the Regulations with the aims of the Broad Based Black Economic Empowerment Actand its supporting Regulations.

Promoting improved SCM practices

Improved SCM practices will be promoted in the following manner:

Bid procedures, policies and control measures

Bidding procedures should become easy to interpret, cost effective, inexpensive, quick, transparent and free of corruption. A formal set of delegations should be issued to the bid evaluation/adjudication committee, which should be constituted of at least three members, of whom at least one should be a SCM practitioner. When it is deemed necessary, independent experts may also be co-opted to a bid evaluation/adjudication committee in an advisory capacity.

All members of the bid adjudication committee should be required to declare their financial interest at least annually.

Contract documentation and contract options

Bid documents define the rights, risks and obligations of the parties involved in a contract and define the nature, quantity and quality of the goods, services or works to be provided in the performance of the contract. Accordingly, such documentation should be legally and technically correct and should assign risk in an appropriate manner.

Bid documents will comprise at least the following: GeneralConditions of Contract; specifications, data sheets/drawings; and a specific contract agreement stipulating delivery standards andrequirements. Uniformity in these documents will promote:

  • Ease of entry by new emerging enterprises to government procurement;
  • Cost effectiveness, both in financial and human resource terms;
  • Improved understanding and easier interpretation by newemerging contractors; and
  • Simplification of the documentation process.

Uniformity in contract documentation will result in:

  • Bidders being able to more easily determine the scope and extent of risk;
  • Easier management of contracts between potential contracting parties and the streamlining of administrative procedures;
  • Savings in cost and improvement in quality; and
  • Greater transparency in terms of cost premiums paid in pursuit of Government’s preferential procurement objectives

Dealing with suppliers and potential suppliers

The SCM system should result in continuing improvement in affordability and value for money, based on total cost of ownership and quality of procurement as competition amongst suppliers is enhanced. In dealing with suppliers and potential suppliers, MPSC should:

  • Preserve the highest standards of honesty, integrity, impartiality and objectivity;
  • Be fair, efficient, firm and courteous;
  • Achieve the highest professional standards in the awarding of contracts, so as to maximise value for money while adhering to international standards;
  • Provide clear specifications for requirements which encourage innovation and refer, where appropriate, to relevant technical and other standards;
  • Make available as much information as suppliers need torespond to the bidding process and to define and publicise procurement contact points;
  • Manage the bidding process so that genuine competition is preserved and discrimination is avoided;
  • Make available the broad criteria intended for the evaluation of bids, to evaluate bids objectively and to notify the outcome promptly;
  • Within the bounds of commercial confidentiality, to debrief unsuccessful bidders of the outcome of the bidding process so as to facilitate better performance on future occasions;
  • Achieve the highest professional standards in themanagement of contracts;
  • Pay promptly for work done in accordance to standards as set by a legal and binding contract; and
  • Respond promptly, courteously and efficiently to suggestions, enquiries and complaints.

Suppliers must demonstrate "good standing" as far as all their tax, levy and service charge obligations are concerned as a prerequisite for doing business with Government. Failure to meet such obligations should be sufficient grounds for exclusion from participation in public sector procurement.

Fraud and corruption

MPSC’s policy is to require that contractors, including consultants, observe the highest standard of ethics during the selection and execution of contracts. In pursuance of this policy, MPSC defines the terms set forth below:

“corrupt practice” means the offering, giving, receiving, or soliciting of any thing of value to influence the action of a public official in the selection process or in contract execution; and “fraudulent practice” means a misrepresentation of facts in order to influence a selection process or the execution of a contract to the detriment of the accounting officer/authority, and includes collusive practices among bidders/contractors (prior to or after submission of proposals) designed to establish prices at artificial, non-competitive levels and to deprive the accounting officer/authority of the benefits of free and open competition.

MPSC’s Board:

must reject a proposal for award if they determine that the supplier/service provider recommended for award, has engaged in corrupt or fraudulent activities in competing for the contract in question;may insist that a provision is included in the contract agreement with the contractor, requiring contractors to permit the delegated to inspect their accounts and records relating to the performance of the contract and to have them audited by auditors appointed by the board.

1.2 GENERAL PROCUREMENT GUIDELINES AND PRINCIPLES TO WHICH MPSCIS COMMITTED

These Guidelines are issued by the MPSC board, not only as a prescription of standards of behaviour, ethics and accountability which it requires of its public service, but also as a statement of the MPSC’s commitment to a procurement system which enables the emergence of sustainable small, medium and micro businesses which will add to the common wealth of our country and the achievement of enhanced economic and social well-being of all South Africans.

Introduction

Proper and successful procurement rests upon certain core principles ofbehaviour - the Five Pillars of Procurement. They are best described as pillars because if any one of them is broken the procurement system falls down. The Five Pillars are: Value for Money Open and Effective Competition Ethics and Fair Dealing Accountability and ReportingEquityThese Guidelines address those Five Pillars and prescribe a minimum set ofstandards that are to be observed.

1. Value for Money

This is an essential test against which a department must justify a procurement outcome. Price alone is often not a reliable indicator and departments will not necessarily obtain the best value for money by accepting the lowest price offer that meets mandatory requirements. Best value for money means the best available outcome when all relevant costs and benefits over the procurement cycle areconsidered.The procurement function itself must also provide value for money and must becarried out in a cost-effective way. Procurement organisations, whether centrally located or devolved to individual departments, should: