The new Procurement Division

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The new Procurement Division and B-BBEE issues
relevant at UP presented by Susan Adendorff

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Centralised Procurement Division _at_ UP

• Approved in 2005, mainly to implement the
  Preferential Procurement policy of UP.
• Subsequently, four permanent and one temporary
  staff members have joined the Division.
• Initial focus is to compile a generic procurement
  policy to be followed by functional procurement
  policies (eg travel and accommodation.
• Gradual implementation of centralised procurement
  practices in progress.
• Specific emphasis on B-BBEE.
• Housed on level 5 of the Admin Building

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Organisational structure of Procurement Division
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Requisition to purchase order process

• No work may be commissioned from a supplier
  without an official UP purchase order
• This implies that no products/services may be
  commissioned/ordered from a supplier unless the
  company has been registered as a supplier to UP
• If no registered supplier is available on the
  UNIKOM system, it means that a new supplier will
  have to be registered
• Registration requires completion of the new
  (shortened) application form and submission of
  support documentation
• Proof of banking details
• VAT registration document
• Company registration document (CK1 or 2)
• SARS clearance certificate
• B-BBEE rating certificate
• New supplier application form to be implemented
  end May 2007
• Please note that the Procurement Division now
  handles the registration of new suppliers

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What are the implications of the new B-BBEE codes?

• New Codes of Good Practice in Broad-Based Black
  Economic Empowerment were published in the
  Government Gazette on 9 February 2007
• All businesses dealing with Government and
  State-Owned Enterprises have to comply with the
  Codes this includes higher education
  institutions such as UP
• For privately owned businesses, three categories
  exist
• Exempt Micro Enterprises (EMEs) annual turnover
  of less than R5 million
• Qualifying Small Enterprises (QSEs) annual
  turnover between R5 million and R35 million
• Large Businesses annual turnover of R35 million
  or more
• All businesses need to compile a scorecard which
  needs to be verified by an accredited rating
  agency (SANAS does the accreditation of rating
  agencies
• A scorecard is valid for a year
• implication for UP with 6 000 active creditors
  per year!!!!!!!!

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UPs approach to B-BBEE

• Sector involvement
• UP is playing a leading role in uniting HEIs
  regarding the interpretation of the Codes as
  applicable to HEIs through the Purchasing
  Consortium for Higher Education (PURCO) and
  Higher Education South Africa (HESA) as well as
  liaising with the Department of Trade and
  Industry (dti)
• A scorecard for UP
• A B-BBEE steering committee will soon be launched
  to collate all relevant information to compile a
  scorecard
• UP is a specialist enterprise and therefore
  completes a different scorecard it is known as
  the Adjusted Generic Scorecard

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The Generic scorecard vs. the Adjusted scorecard
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B-BBEE status based on the scorecard
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Preferential Procurement

• Attempts to determine BEE scores a few years ago,
  lead to a response rate of less than 5
• An 80/20 analysis of suppliers showed that in
  2006, 80 of the procurement spend was with only
  220 suppliers although UP almost had 5 000 active
  suppliers during that year (out of a total of
  more than 20 000 on the UP system)
• For greatest impact, these 220 suppliers were
  approached to attend a sponsored workshop by
  end of May 2007, 60 suppliers will have attended
  a workshop and a number of other suppliers have
  provided their B-BBEE scores via the PURCO B-BBEE
  toolkit
• UP will not discriminate against a supplier on
  the basis of B-BBEE compliance it may be taken
  into consideration when considering suppliers

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Suppliers

• There is a constant stream of new suppliers that
  needs to be registered.
• More than 250 new applications have been received
  since January 2007!
• Always unique no-one else can help urgent
  business
• More than 30 of the new registrations are post
  facto
• Are we using tax delinquent suppliers? Risk to
  UP!!
• How to find out what is available
• Service/product categories available on UNIKOM
• Applicable categories would be Accommodation
  Catering Florist Marketing Media/Advertisements
  Photography Printing/Copies Rentals
  Stationery Travel agency Travelling (Rentals)

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How to decide on a supplier

• R250 to R2 000
• Obtain one oral/electronic quote
• R2 001 to R5 000
• Obtain at least two oral/electronic quotes
• R5 001 to R50 000
• Obtain at least three written quotations
• R50 000 or more
• Follow the tender process
• Up to R500 000
• Obtain three selective tenders
• R500 000 to R2 000 000
• Obtain four selective tenders
• Above R2 000 000
• Follow an open tender process
• quote should always include VAT (unless it refers
  to an exempt item!)

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Payment

• Ensure that the supplier has accepted UPs
  payment terms
• do not commit UP to payment of deposits
• do not promise the supplier next day payment
• in exceptional cases, liaise with the Finance
  Department to explore other avenues
• When the tax invoice is received
• ensure that it is an original invoice
• ensure that the name of the supplier on the
  invoice corresponds to the name appearing on the
  UP purchase order
• check for VAT numbers of supplier and customer
• check that the invoice has a date
• ensure that the service/product provided is
  specified as well as the quantity
• it should have an invoice number (serialised)
• If invoice is correct, have it authorised
  according to delegations and forward to Creditors
  for payment

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How can Procurement Division assist you?

• If you cannot find a suitable supplier or need
  advice on the service provided by a supplier,
  phone us for assistance
• A number of corporate deals are in place,
  particularly in the travel environment, ask us,
  we will be able to assist
• If you have doubts about the prices quoted for a
  service, phone us, we may be able to negotiate a
  better deal on your behalf remember we have a
  holistic view of the spend with a supplier and
  may have some leverage to negotiate on your
  behalf
• Allow us to help you, to make your budget go
  further.
• Thank you!