DEPARTMENT WATER AFFAIRS AND FORESTRY PORTFOLIO COMMITTEE BRIEFING

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DEPARTMENTWATER AFFAIRS AND FORESTRYPORTFOLIO
COMMITTEE BRIEFING

• PROCUREMENT

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AGENDA

• Introduction
• Procurement Policies
• State Tender Board
• DCC and Tender Committees
• Black Economic Empowerment
• Fraud prevention
• Statistical information
• Conclusion

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INTRODUCTION

• Political Mandate
• Guided by Section 217 of the Constitution of the
  Republic of South Africa, 1996 (Act No. 108 of
  1996) which states that
• When an organ of state in the national,
  provincial or local sphere of government, or any
  other institution identified in national
  legislation, contracts for goods or services, it
  must do so in accordance with a system which is
  fair, equitable, transparent, competitive and
  cost-effective.

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INTRODUCTION (CONT)

• Subsection (1) does not prevent the organs of
  state or institutions referred to in that
  subsection from implementing a procurement policy
  providing for
• a)        categories of preference in the
  allocation of contracts and
• b)        the protection or advancement of
  persons, or categories of persons, disadvantaged
  by unfair discrimination.

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INTRODUCTION (CONT)

• National legislation must prescribe a framework
  within which the policy referred to in subsection
  (2) must be implemented.

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INTRODUCTION (CONT)

• Section 38(1)(a)(iii) of the public Finance
  Management Act, 1999 (Act No. 1 of 1999) which
  states that
• The accounting officer for a department, trading
  entity or constitutional institution --
• must ensure that that department, trading entity
  or constitutional institution has and maintains
  
• an appropriate procurement and provisioning
  system which is fair, equitable, transparent,
  competitive and cost-effective.

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PROCUREMENT POLICIES

• General Procurement Directives
• Based on the five pillars of procurement or
  principles of behaviour which are
• Value for money
• Open and Effective Competition
• Ethics and Fair Dealings
• Accountability and Reporting and
• Equity.

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STATE TENDER BOARD

• Establishment
• Established through an act of parliament (Act no
  86 of 1968).
• The amendment has been promulgated in terms of
  section 13 of the State Tender Board Act, 86 of
  1968 in Government Gazette 25766 dated 5
  December 2003 as Government Notice 7836.
• The promulgation allows national departments an
  option to arrange their own ad hoc tenders
  through State Tender Board or in terms of the
  PFMA.

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STATE TENDER BOARD (Cont)

• Functions
• To provide supplies and services for and on
  behalf of the State, the hiring or letting of
  anything or the acquisition or granting of any
  right for and on behalf of the state and the
  disposal of movable State property shall be
  procured, arranged or disposed of through the
  Board.

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STATE TENDER BOARD (Cont)

• Amendments to the State Tender Board Act, 1968.
• Before, the Regulations required that procurement
  of all goods and services must be done only
  through the State Tender Board,
• the amended Regulations now allow for accounting
  officers of national departments to procure goods
  and services either through the State Tender
  Board or alternatively in terms of the Public
  Finance Management Act, No. 1 of 1999 (as amended
  by Act 29 of 1999) (PFMA).
• Supports section 38(1)(a)(iii) of PFMA which
  empower accounting officers to arrange their own
  Ad Hoc Tenders

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STATE TENDER BOARD (Cont)

• Pilot Status
• As from 1 June 2001 the Department, together with
  3 others, were released from the State Tender
  Board.
• Quarterly reporting to the State Tender Board.
• Full accreditation in June 2001.

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DEPARTMENTAL CONTROL COMMITTEE REGIONAL TENDER
COMMITTEES

• Establishment of the DCC
• Originally a Tender Committee established in
  January 1990.
• The Departmental Control Committee was
  subsequently established in March 1992.

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DEPARTMENTAL CONTROL COMMITTEE

• Rationale for existence
• To assist the Accounting Officer to discharge of
  his/her responsibilities relating to procurement
  of goods and services in a fair, equitable,
  transparent, competitive and cost-effective
  manner in line with the provisions of the PFMA.

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DEPARTMENTAL CONTROL COMMITTEE

• Objective of the DCC
• To exercise control, within a Departmental
  context, over the implementation of policy and
  procedures for the procurement or disposal of
  supplies, equipment and services and,
• To consider, review and recommend expenditures
  against the background of the approved budget.

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DEPARTMENTAL CONTROL COMMITTEE

• Functions of the DCC
• Control that funds are specifically allocated to
  the relevant procurement actions and approved by
  the relevant Programme Manager.
• Reconsideration of expenditure on procurement
  actions where funds are not specifically
  allocated by the Budget Committee, and make
  recommendations in this regard .
• The consideration and approval of submissions to
  the Department of National Treasury or to the
  Accounting Officer which hold financial
  implications for the Department.

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DEPARTMENTAL CONTROL COMMITTEE

• Duties of the DCC
• Consider and check specifications and tender
  documents for supplies, equipment and services to
  be purchased (or disposed of) by tender before
  tenders invitations are advertised in the
  Government Tender Bulletin.
• Control that the procedures for the calling,
  receipt, evaluation and awarding of tenders occur
  according to the Accounting Officers Procurement
  Procedures, the General Conditions and the User
  Manual .
• Consider and award tenders for the procurement or
  disposal of supplies, equipment and services up
  to an unlimited amount.

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DEPARTMENTAL CONTROL COMMITTEE

• Duties of the DCC (Cont)
• Consider and approve submissions from RTCs where
  the recommended tenderer is not the lowest and
  not according to specification and which is above
  the RTCs delegated powers.
• Control for compliance with the Accounting
  Officers Procurement Procedures, the proceedings
  and minutes of RTCs/RSTCs in regions and all
  offices where such committees are established for
  the procurement of supplies, equipment and
  services up to the value per case as delegated to
  such offices by the Accounting Officer from time
  to time.

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DEPARTMENTAL CONTROL COMMITTEE

• Duties of the DCC (Cont)
• Consider and approve submissions with financial
  implications for the Department to the Department
  of National Treasury or the Accounting Officer
  and provide advice on the drafting of such
  submissions.
• Give advice in connection with procurement
  actions within the Department and resulting
  expenditures.
• Recommend the levels of delegated authority to
  officers outside Head Office to the Accounting
  Officer for approval.
• Perform procedures in line with the 5 pillars of
  procurement (i.e. Value for money Open and
  Effective Competition Ethics and Fair Dealings
  Accountability and Reporting and Equity).

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REGIONAL TENDER COMMITTEES

• Establishment
• Per region.
• Within Regions by means of Sub Tender Committees.
• Rationale for Existence
• To manage procurement quickly
• Reduce turn around time.

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REGIONAL TENDER COMMITTEES

• Functions of the Tender Committees
• Same as those for the DCC but,
• Limited to the level of chairpersonship
• Above set limits, sent to the DCC
• Set Limits are
• ltR250 000 Deputy Director
• ltR350 000 Director
• ltR500 000 Chief Director

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BLACK ECONOMIC EMPOWERMENT

• Guided by the Broad Based Black Economic
  Empowerment Policy.
• Preferential Procurement Policy Act
• The objective of the Act is to
• address the inequalities of the past
• allow for more flexibility
• eliminate fronting and corruption

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Preferential Procurement Policy Act

• The framework for the implementation of the
• preference point systems as prescribed is
• basically as follows
• for contracts with a Rand value above R500 000 a
• maximum of 10 points to be allocated for
  specific
• goals. The lowest acceptable tender will score
  90
• points for price and
• for contracts with a Rand value equal to or below
  
• R500 000 a maximum of 20 points to be allocated
  
• for achieving specific goals. The lowest
  acceptable
• tender scores 80 points for price.

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POLICY FOR THE APPOINTMENT OF PSPs

• Give as wide as possible a spread (rotation) of
  work within the various disciplines amongst
  suitable PSPs
• Strengthening HDEs and HDIs through deliberate
  and active measures aimed at capacity building
  and skills development, by implementing
  participation rates and JVs
• Emphasise and acknowledge projects with a
  multi-disciplinary and complex nature by
  selecting the PSP with the best technical
  capabilities and project approach at all times
  (above R3 million) and
• Incorporate the PPR, 2001 and a uniform
  evaluation system for the evaluation of project
  proposals.

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POLICY FOR THE APPOINTMENT OF PSPs

• The Policy is basically divided into five (5)
  major
• parts, namely
• Definitions, planning and control issues
• Category 1 Contract value up to R150 000
• Proposals/Quotations
• Category 2 Contract value above R150 000 and up
  to R3 million
• Proposals and Formal Evaluation.
• Category 3 Contract value above R3 million
• Open Tender

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POLICY FOR THE APPOINTMENT OF PSPs

• Major Parts (Continued)
• Evaluation system and
• Monitoring system (Using the PSP Database as a
  search tool)

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POLICY FOR THE APPOINTMENT OF PSPs

• Using the PSP Database as a search tool
• Consulting discipline
• HDI ownership
• Province
• Field(s) of specialisation.
• Each search result (i.e. PSP) can thereafter be
• interrogated in detail, e.g. employee profile,
  JV
• partners, branch offices, client references,
  etc.

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PROCUREMENT WITHIN DWAF

• Forestry Restructuring
• Normal Procurement

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FORESTRY RESTRUCTURING

• DPE run function
• 75 of SAFCOL holding sold to Private Sector
  Companies.
• 25 shares still held by SAFCOL for distribution
  as follows
• 9 Workers
• 6 Government
• 10 Communities
• BEE component for each private sector company
  shown in the next table.

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FRAUD PREVENTION

• DWAF has anti-corruption toll free hotline,
  managed independently by tip-offs anonymous.
• Members of committees,
• Declare their private interests.
• Recuse themselves from such decision making
  process.
• Refrain from discussion related to such process.

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FRAUD PREVENTION (Cont)

• Declaration of interest that companies must
  indicate ito any relationship with DWAF officials
  that can influence decision.
• Check on individual companies ito HDI status.
• In the event that false information by companies
  is discovered, companies and individuals
  restricted from contracting with DWAF for 10
  years.

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Statistical Information

• The following represents the results of the
  procurement reform process within DWAF
• Period April 2004 August 2004
• R167 million contracts awarded
• R46 million awarded to HDIs (28)
• R121 million awarded to Non HDIs (72)
• R13 million of the R46million awarded to Black
  Women and
• R3million of the R 46 million to white women.

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Statistical Information (Targets - PSP)
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CHALLENGES

• Some of the challenges that the Department is
  facing are
• Fronting
• Fraud Corruption
• Lack of delivery resulting in additional costs
• Supplier performance
• Determining BEE Status
• SMME companies

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CONCLUSION

• Thank You !
• Questions