Transcript TREASURY REGULATIONS

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HIGHER EDUCATION
PROCUREMENT CONFERENCE
24 OCTOBER 2012
Good Governance in Supply Chain Management / Procurement
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Core Principles and Objectives of the
Supply Chain Management Policy
In achieving value for money, the University will base procurement outcomes
around core principles of government procurement. This means that the
University is committed to:
• Ensuring that transactions achieve the best net value for money outcomes
for the University;
• Providing suppliers with the opportunity to compete for business in an
open, fair and transparent manner;
• Encouraging effective competition through procurement methods
suited to market circumstances. In addition, ethics and fair dealing
considerations require the University to conduct procurement so as to ensure
that:
• Suppliers are dealt with in a fair, equitable and ethical manner;
• Staff, contractors or consultants do not compromise the University through unethical
behaviour;
• Conflicts of interest are identified and managed at all levels;
• There is effective use of the University property, and
• Appropriate communication channels and support exist to prevent fraud and corruption
across the organisation.
• Ensuring accountability for decisions, actions and responsibilities.
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DEMAND
DISPOSAL
ACQUISITION
SUPPLY CHAIN
PERFORMANCE
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RISK MANAGEMENT
FACILITIES
LOGISTICS
DATABASE OF SUPPLIERS
GOVERNMENT’S PREFERENTIAL PROCUREMENT POLICY
INFRASTRUCTURE (SYSTEMS)DISPOSAL
Summary of Key Terminology and Definitions of
the Supply Chain Management Model
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Policy
Value for money
• Value for money remains the essential test against which
supply chain management outcomes in the University
must be justified. While it is not a criterion, it is
nonetheless the basis for comparing supply chain
management alternatives and offers from suppliers in
order to identify the one that meets the needs in the most
cost-effective manner when all costs and benefits are
taken into account.
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Roles and Responsibilities
The CEO has to appoint Bid Committees as indicated
below:
Committee system for competitive bids
A committee system for competitive bids is hereby
established, consisting of the following committees for each
procurement or cluster of procurements as the CEO may
determine:
• a bid specification committee;
• a bid evaluation committee; and
• a bid adjudication committee;
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Competitive Bids
Pre-bid/ tender preparation
• The user or originating department, must inform procurement
and the the University Bid Adjudication Committee of their
intention to procure any services or goods with an amount
exceeding R1 000 000 (VAT included).
• The GM from the user department will convene a Bid
Specification Committee, where the bid/tender documents,
detailing the bid specifications, the evaluation criteria,
functionality and pricing requirements and other standard
documents/certificates that the vendors will be required to
submit to qualify for the tender specifications. The bid
documents must contain specifications which promote the
broadest possible competition.
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Competitive Bids
• Bid/Tender Information
• Bid/Tender Invitations
• Awarding the Contract
• Negotiations
• Monitoring Conformity
• Tender Regulations
• Supplier Requirements
• Emergency bids
• Extra-ordinary Expenditure
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Competitive Bids
BEE Compliance
• All suppliers must submit a verified BEE certificate and
supporting documentation, issued by a verification
agency. the University reserves a right to choose
relevant elements from the BEE scorecard to be
emphasised when adjudicating tenders.
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Competitive Bids
80:20 preference point system
The 80:20 preference point system applies to bids with an
estimated value of less than or equal to R1 000 000.
80 Points are allocated for price and a maximum of 20
points may be awarded to a bidder for achieving socioeconomic and BBBEE objectives set out in this document.
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Competitive Bids
90:10 preference point system
The 90:10 preference point system applies to all bids in
excess of R1 000 000. A maximum of 90 points are
allocated for price and a maximum of 10 points may be
awarded to a bidder for achieving socio-economic and
BBBEE objectives as set out in this document.
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Competitive Bids
Closed/Selected bids/Confinement
• Such bids should only be considered for specialised
services and goods, and should be motivated to the the
University Bid Adjudication Committee and the CEO for
evaluation, thereafter the bids will be dealt with in
accordance with the Delegation of Authority document
and the Supply Chain Management Policy.
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Disposal Management
• Objective
• Disposal Management Activities
• Unserviceable assets;
• Redundant assets, and
• Obsolete stock and assets, according to the University policies.
• Responsibility and Accountability
• Mandate
• Disposal Committee
• Composition
• Method of Disposal
• Members of the University staff may submit bids for assets to be
disposed by the the University.
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Performance Management
• Objective
• An effective internal monitoring system aims to, on the basis of a
retrospective analysis, determine whether authorised supply chain
management processes were followed or not, and whether the
desired objectives were achieved.
• Key Role Players
• Performance Management Activities
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Performance Management
• Performance Indicators
• Performance indicators in respect of availability
• Operational performance indicators
• Reliability performance indicators
• Vendor performance
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Feedback from Monitoring and Performance
Management
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Risk Management
The risk management process should involve the following:
• Identifying what, how and why things might go wrong and the
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potential consequences;
Evaluating how serious the risks are and putting them in order of
priority for treatment;
Treating risks, by planning and implementing strategies to reduce
the likelihood they will occur and/or mitigate the seriousness of their
consequences; accept them; transfer them; retain them; or avoid
them;
Monitoring risks by reviewing and documenting their
management on a continuing basis to ensure that the overall strategy
remains valid, and
Reporting risks to the risk management committee on a
continuing basis to ensure that the effectiveness of risk management
within supply chain management activity within the University.
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Risk Management
Red Flags
The following is an illustration of common red flag within supply chain
management:
• Bid fixing – suppliers obtain inside information about a bid process from
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an employee, usually in return for a payment;
Bid rigging – suppliers manipulate the purchasing process by acting
collusively to fix prices and terms;
“Kickbacks” – payments made to decision makers to influence choice of
supplier or product;
Connected companies – intermediary companies or agents are used for
purchasing which are somehow connected to the purchasing company’s
decision makers;
Supplies for personal use – diversion of product for employees’ own
use;
Dummy suppliers – payments made to non-existent companies; or
substandard work/short deliveries – goods/services received not correct;
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Risk Management
Red Flags
The following is an illustration of common red flag within supply chain
management:
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Higher prices, lower quality;
Consistent shortages;
Regular deviations from established procedures;
Poor, inaccurate or non-existent record-keeping;
Inexperienced buyers dealing with overbearing suppliers;
Excessive entertaining of Supply Chain Management Unit staff by suppliers;
No segregation of duties, thereby creating a one-to-one relationship with the
supplier;
• Resistance by Supply Chain Management Unit staff to audit and procedural
reviews, and
• Informal communication methods between procurement staff and suppliers, such
as calls to mobile phones or messages to personal e-mail addresses, and visible
evidence of officials living beyond their means.
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Effective Policy Governance, Oversight
and Management
Effective policy management requires policy governance
and oversight
This is made possible by an organised policy management
committee, an individual assigned to the role of manager,
and a well-designed policy management lifecycle process
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Organised Corporate Policies
Why Policy Matters?
Policy defines boundaries for the behaviour of individuals
or roles, business processes, relationships, and systems.
At the highest level, policy starts with a code of conduct,
establishes ethics and values to extend across the
enterprise, and authorise policies to govern the entire
organisation. These filter down into specific policies for
business units, departments and individual business
processes.
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Organised Corporate Policies
Why Policy Matters?
• Define the organisation’s governance culture and
structure: Without good policy as a guide, corporate culture
and control morphs, changes and takes unintended paths.
• Articulate a culture of risk: Policy addresses risk and
establishes risk responsibility, communication, appetites,
tolerance, and risk ownership. Without clearly written policy,
risk governance is ineffective.
• Establish a culture of compliance: Policy establishes how
the organisation meets its obligations and commitments and
how it will stay within legal, regulatory, and contractual
boundaries.
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Organised Corporate Policies
Policy attaches a legal duty of care to the organisation and
cannot be approached haphazardly. Mismanagement of
policy can introduce liability and exposure, and noncompliant policies can and will be used against the
organisation in legal (both criminal and civil) and regulatory
proceedings. Regulators, prosecuting and plaintiff
attorneys, and others use policy violation and noncompliance to place culpability.
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Hordes of Policies Scattered Across the
Organisation
Policy matters; however, when you look at the typical
organisation you would think policies are irrelevant and a
nuisance. The typical organisation has:
• Policies scattered throughout the organisation;
• Policies bound by electronic dumping grounds and print
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formats;
Policies which are out of date;
Policies that lack ownership;
Policies without lifecycle management;
Policies that do not map to exceptions or incidents;
Policies that fail to cross-reference standards, rules, or
regulations, and
Policies that do not adhere to a consistent style.
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Policy Management, Governance and
Oversight
• Policy Management Committee
• Policy Manager
• Policy Management Lifecycle
• Environment Change
• Corporate environment
• Risk environment
• Regulatory environment
• Policy Development
• Policy ownership
• Policy writing
• Policy approval
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Policy Management, Governance and
Oversight
• Policy Management Lifecycle
• Policy Communication
• Policy publication
• Policy training
• Policy attestation
• Policy Monitoring
• Enforcement
• Exception management
• Policy Maintenance
• Review
• Archival
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Technology Enables Policy Management
• Organisation management
• Technology integration
• Accessibility
• Workflow
• Task management
• Content management
• Training management
• Notifications
• Audit trail
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Hidden Costs of Outsourcing
• Vendor search and contacting
• Transitioning to the Vendor
• Managing the Effort
• Transitioning after Outsourcing
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Challenges Facing the Procurement
Function
• Unrealistic expectations
• Communications to bridge the exception gap
• Legal responsibilities and liabilities
• Sharing of information
• Quality of information
• Knowledge of best practice standards
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SUPPLEMENTARY
GUIDANCE
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16A3 Supply Chain Management System
16A3.1
The accounting officer or accounting
authority of an institution to which these
regulations apply must develop and implement
an effective and efficient supply chain
management system in his or her institution for
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(a) the acquisition of goods and services; and
(b) the disposal and letting of state assets,
including the disposal of goods no longer
required.
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16A3 Supply Chain Management System
16A3.2 A supply chain management system
referred to in paragraph 16A.3.1 must –
(a) be fair, equitable, transparent,
competitive and cost effective;
(b) be consistent with the Preferential
Procurement Policy Framework Act,
2000 (Act No. 5 of 2000);
(c) be consistent with the Broad Based
Black Economic Empowerment Act,
2003 (Act No. 53 of 2003); and
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16A3 Supply Chain Management System
16A3.2 A supply chain management system
referred to in paragraph 16A.3.1 must –
(d) provide for at least the following: –
(i)
(ii)
(iii)
(iv)
(v)
(vi)
demand management;
acquisition management;
logistics management;
disposal management;
risk management, and
regular assessment of supply chain
performance.
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16A4 Establishment of Supply Chain
Management Units
16A4.1
The accounting officer or accounting authority
must establish a separate supply chain
management unit within the office of that
institution’s chief financial officer, to
implement the institution’s supply chain
management system.
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16A5 Training of Supply Chain
Management Officials
16A5.1
The accounting officer or accounting authority
must ensure that officials implementing the
institution’s supply chain management system
are trained and deployed in accordance with
the requirements of the Framework for
Minimum Training and Deployment issued by
the National Treasury.
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16A6 Procurement of Goods and Services
16A6.1
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.
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16A6 Procurement of Goods and Services
16A6.2
A supply chain management system must, in the
case of procurement through a bidding process,
provide for –
(a) the adjudication of bids through a bid
adjudication committee;
(b) the establishment, composition and
functioning of bid specification, evaluation
and adjudication committees;
(c) the selection of bid adjudication
committee members;
(d) bidding procedures; and
(e) the approval of bid evaluation and/or
adjudication committee recommendations.
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16A6 Procurement of Goods and Services
16A6.3
The accounting officer or accounting authority
must ensure that –
(a) bid documentation and the general
conditions of a contract are in accordance
with –
(i) the instructions of the National Treasury; or
(ii) the prescripts of the Construction Industry
Development Board, in the case of a bid relating to
the construction industry;
(b) bid documentation include evaluation and
adjudication criteria, including the criteria
prescribed in terms of the Preferential
Procurement Policy Framework Act, 2000
(Act No. 5 of 2000) and the Broad Based
Black Economic Empowerment Act, 2003
(Act No. 53 of 2003);
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16A6 Procurement of Goods and Services
16A6.3
The accounting officer or accounting authority must
ensure that –
(c) bids are advertised in at least the Government
Tender Bulletin for a minimum period of 21
days before closure, except in urgent cases
when bids may be advertised for such shorter
period as the accounting officer or accounting
authority may determine;
(d) awards are published in the Government
Tender Bulletin and other media by means of
which the bids were advertised;
(e) contracts relating to information technology are
prepared in accordance with the State
Information Technology Act, 1998 (Act No. 88
of 1998), and any regulations made in terms of
that Act;
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16A6 Procurement of Goods and Services
16A6.3
The accounting officer or accounting authority must
ensure that –
(f) Treasury Regulation 16 is complied with when
goods or services are procured through public
private partnerships or as part of a public
private partnership; and
(g) instructions issued by the National Treasury in
respect of the appointment of consultants are
complied with.
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16A6 Procurement of Goods and Services
16A6.4
If in a specific case it is impractical to invite
competitive bids, the accounting officer or
accounting authority 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 or
accounting authority.
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16A6 Procurement of Goods and Services
16.A6.5
The accounting officer or accounting authority may
opt to participate in transversal term contracts
facilitated by the relevant treasury. Should the
accounting officer or accounting authority opt to
participate in a transversal contract facilitated by the
relevant treasury, the accounting officer or accounting
authority may not solicit bids for the same or similar
product or service during the tenure of the transversal
term contract.
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16A6 Procurement of Goods and Services
16A6.6
The accounting officer or accounting authority may,
on behalf of the department, constitutional institution
or public entity, participate in any contract arranged
by means of a competitive bidding process by any
other organ of state, subject to the written approval
of such organ of state and the relevant contractors.
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16A7 Disposal and Letting of State Assets
16A7.1
Disposal of movable assets must be at marketrelated value or by way of price quotations,
competitive bids or auction, whichever is most
advantageous to the state, unless determined
otherwise by the relevant treasury.
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16A7 Disposal and Letting of State Assets
16A7.2
Notwithstanding the provisions of paragraph 16A7.1,
accounting officers and accounting authorities may
transfer movable assets free of charge to other
departments, constitutional institutions or public
entities by means of formal vouchers.
16A7.3
Any sale of immovable state property must be at
market-related value, unless the relevant treasury
approves otherwise.
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16A7 Disposal and Letting of State Assets
16A7.4
The letting of immovable state property (excluding
state housing for officials and political office bearers)
must be at market-related tariffs, unless the
relevant treasury approves otherwise. No state
property may be let free of charge without the prior
approval of the relevant treasury.
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16A7 Disposal and Letting of State Assets
16A7.5
The accounting officer or accounting authority must
review, at least annually when finalising the
budget, all fees, charges, rates, tariffs or scales of
fees or other charges relating to the letting of state
property to ensure sound financial planning and
management.
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16A7 Disposal and Letting of State Assets
16A7.7
The accounting officer or accounting authority must,
when disposing of computer equipment, firstly
approach any state institution involved in education
and/or training to determine whether such an
institution requires such equipment. In the event of
the computer equipment being required by such a
state institution, the accounting officer or accounting
authority may transfer such equipment free of charge
to the identified institution.
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16A8 Compliance with Ethical Standards
16A8.1
16A8.2
All officials and other role players in a supply
chain management system must comply with the
highest ethical standards in order to promote –
(a) mutual trust and respect; and
(b) an environment where business can be
conducted with integrity and in a fair and
reasonable manner.
The National Treasury’s Code of Conduct for
Supply Chain Management Practitioners must
be adhered to by all officials and other role
players involved in supply chain
management.
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16A8 Compliance with Ethical Standards
16A8.3
A supply chain management official or other role
player –
(a) must recognise and disclose any conflict of interest
that may arise;
(b) must treat all suppliers and potential suppliers
equitably;
(c) may not use their position for private gain or to
improperly benefit another person;
(d) must ensure that they do not compromise the
credibility or integrity of the supply chain management
system through the acceptance of gifts or hospitality or
any other act;
(e) must be scrupulous in their use of public property;
and
(f) must assist accounting officers or accounting authorities
in combating corruption and fraud in the supply chain
management system.
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16A8 Compliance with Ethical Standards
16A8.4
If a supply chain management official or other
role player, or any close family member,
partner or associate of such official or other
role player, has any private or business
interest in any contract to be awarded, that
official or other role player must –
(a) disclose that interest; and
(b) withdraw from participating in any manner
whatsoever in the process relating to that
contract.
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16A8 Compliance with Ethical Standards
16A8.5
An official in the supply chain management
unit who becomes aware of a breach of or
failure to comply with any aspect of the
supply chain management system must
immediately report the breach or failure to the
accounting officer or accounting authority, in
writing.
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16A9 Avoiding Abuse of Supply Chain
Management System
16A9.1
The accounting officer or accounting authority
must –
(a) take all reasonable steps to prevent abuse
of the supply chain management system;
(b) 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
justified –
(i) take steps against such official or other
role player and inform the relevant
treasury of such steps; and
(ii) report any conduct that may constitute an
offence to the South African Police
Service;
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16A9 Avoiding Abuse of Supply Chain
Management System
16A9.1 The accounting officer or accounting
authority must –
(c) 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;
(d) 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;
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16A9 Avoiding Abuse of Supply Chain
Management System
16A9.1
The accounting officer or accounting authority must –
(e) 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
(f) cancel a contract awarded to a supplier of
goods or services –
(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
contract that benefited that supplier.
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16A9 Avoiding Abuse of Supply Chain
Management System
16A9.2
The accounting officer or accounting authority –
(a) may disregard the bid of any bidder if that
bidder, or any of its directors –
(i) have abused the institution’s supply chain
management system
(ii) have committed fraud or any other
improper conduct in relation to such
system; or
(iii) have failed to perform on any previous
contract; and
(b) must inform the relevant treasury of any
action taken in terms of paragraph (a).
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16A11 Reporting of Supply Chain Management
Information
16A11.1 The accounting officer or accounting authority
must submit to the relevant treasury such
supply chain management information as that
treasury may require.
16A11.2 A provincial treasury must submit to the
National Treasury such supply chain
management information as the National
Treasury may require.
16A11.3 Information referred to in paragraphs 16A11.1
and 16A11.2 must be submitted to the
relevant treasury in such format and at such
intervals as that treasury may require.