City of Cape Town

Supply Chain Management

Processes

Presented by: Leonard Shnaps

�Legal Framework

�SCM Conceptualised

�Demand Planning

�Supplier Management

�Tenders

�Procurement

�Website

�Unsolicited Bids

�Ethics

A Walk Through

LEGAL FRAMEWORK

LEGAL FRAMEWORK� Constitution

� Preferential Procurement Policy Framework Act (PPPFA)

� Municipal Finance Management Act (MFMA)

� Municipal Supply Chain Management Regulations

� Broad Based Black Economic Empowerment Act (BBBEE)

LEGAL FRAMEWORK - Municipal Finance Management Act� MFMA Chapter 11 - Applies to the procurement of goods and services;

� City must have and implement a Supply Chain Management Policy (SCMP);

� The SCMP must be fair, equitable, transparent, competitive and cost-effective and comply with a prescribed regulatory framework;

� Prescribed Regulatory Framework contained in Supply Chain Management Regulations published in May 2005.

LEGAL FRAMEWORK - Supply Chain Management Regulations� Published i.t.o MFMA

� Regulations deal with –

� Establishment and Implementation of Supply Chain Management Policies

� Framework for Supply Chain Management Policies i. Demand management;ii. Acquisition management;iii. Logistics, Disposal, Risk and Performance Management iv. Other :

Ethical StandardsObjections and DisputesRewards and Gifts

LEGAL FRAMEWORK - SCM Policy, Processes & Procedures

� SCM Policy underpins the processes and procedures for the City’s procurement environment

� The policy is reviewed on a regular basis and is vetted by Provincial counterparts

� Processes and procedures are reviewed as and when required and published on the web

� Where a need requires innovative thinking, the process and procedure is adapted in line with policy.

Supply Chain ManagementConsists of:

PlanningVendor Management

Tenders & Contract AdminOrder / Acquisition

Inventory & Stores Management

SCM CONCEPTUALISED

Supply Chain ManagementIs not:

Project managementSpecification Definition

Quantity AssessorsQuality Control

Payment Control

SCM CONCEPTUALISED

DEMAND PLANNING

� Value for money

� Good governance

� Cost efficiency

� Competitive

� Equitable

� Transparent

� Fair access to procurement opportunities

PLANNING – SCM Overview

� Identify the need to procure

� Assemble specifications

� Advertise in media and web

� Evaluate and recommend

� Adjudication and award

� Notify bidders of the and the project commences

� Line departments manage the project and supply to conclusion

� Emphasis on term contracts

PLANNING – SCM Overview

InventorySupplier

Support

SCM&

Line

DemandTenders / Contracts

Spending Enabler

R14.5bn

DEMAND PLANNING - The 80/20 Principle� 80% of our direct procurement spend through properly secured contracts

� 20% is indirect through approved procedures

� 15% is via ISM (secured contracts)

� 5% via exceptions requiring individual reports� Single source� Emergencies� Condonations� Strip & Quote

1 1 111

187

1829 24

51

7283

59

3138

203

2518 18

1123

10 9 716

143

5 2 71 4 1 3 7

67

1 1 10

50

100

150

200

250

DEMAND PLANNING – Current plan overview

SUPPLIER MANAGEMENT

SUPPLIER MANAGEMENT� CoCT standardised and streamlined an in-house SAP Vendor Master data

system.

� All potential vendors must be registered on the City of Cape Town SAP Vendor database.

� All registered vendors must be tax compliant and registered with relevant statutory bodies (CIDB, BIBC, COIDA, etc)

� Vendors are blocked if they are non compliant

� Ability to communicate with vendors via Fax, e-Mail or SMS

� Onus is on Vendors to keep their information housed in the vendor database up to date

SUPPLIER MANAGEMENT - Vendor registration� Information to Vendors regarding Vendor registration

� Registration form, related documentation and information can be:� Downloaded from the City Web

http://www.capetown.gov.za/en/SupplyChainManagement/Pages/SupplierRegistration.aspx

� Collected from the Supplier Management office on the 2nd Floor, Civic Centre, City of Cape Town.

� Registration form, once completed, accompanied by all relevant documentation must be handed in at the Supplier Management office for processing.

� Goods and services may only be provided after an official order has been issued, followed by the GRN and payment process after successful completion.

TENDERS

TENDERS - Advertising and opening of Bids� Tender advertisements are published in the Municipal Notices Section of the

Cape Times and Die Burger and on the City of Cape Town’s website� Bid number and description� Where to obtain documents� Briefing and/or Site visit if applicable� Closing date and time� Contact person’s details

� Goods and Services – 21 days after publication

� Construction Works – 21 days after publication

� Contract > R10m or > 1 year – 30 days after publication

� Banking Services – 60 days after publication

� Register of documents drawn

TENDERS - Advertising and opening of Bids

� Must submit before closing time indicated in advert

� Late bids will not be accepted

� Bids opened in public

� Bidder details and more read out to public at opening

� Bid documents stamped, signed and secured at the opening

� Register of bids received (published)

TENDERSInformation on Tenders � The list of tenders awarded is available on the City’s website

� Information on why bidders were unsuccessful is available on request, but personal information cannot be disclosed. Such information can only be disclosed subject to the guidelines set out in the Promotion of Administrative Justice Act (Act 3 of 2000)

Tender fee� A minimal non-refundable tender fee is payable which only covers the cost of

printing the relevant documents

Always consider� 21 Day appeal period and appeal legal process

� Abuse policy for non-performance, fraud, fronting, etc

TENDERS - Supply Chain Management Committees

� Bid committees established:� Bid Specification Committee� Bid Evaluation Committee� Bid Adjudication Committee

� SCM Representative at all meetings

� Regular committee meetings

� Tender process needs to be well-documented ie specifications, criteria and functionality using the standardised set of documentation.

� Legally sound process with emphasis on compliance and good governance

� Bid Specification Committees� Compile specification for inclusion in tender documentation – Line Director to authorise

� No brand names – use of “equal to” and “or equivalent”� May not be written for any specific service provider

� Compile evaluation criteria – “functionality” and “criteria”

� Consists of minimum of 3 members (Chair, Line rep, SCM Rep)

� Chairpersons appointed by Director SCM

� Chairperson drives tempo and proceedings

� SCM Representative at all meetings

� Declarations of interest

TENDERS - Supply Chain Management Committees

� Bid Evaluation Committees

� Consists of minimum of 3 members (Chair, Line rep, SCM Rep)

� Evaluate submissions for functionality and or price

� Compile report to BAC

� Chairpersons appointed by Director SCM

� Chairperson drives tempo and proceedings

� SCM Representative at all meetings

� Declarations of interest

TENDERS - Supply Chain Management Committees

� Bid Adjudication Committee

� Appointed by City Manager

� Regular committee meetings

� Bound by delegations

� High level of integrity and due diligence required

TENDERS - Supply Chain Management Committees

PROCUREMENT

PROCUREMENT - Threshold Values� Petty cash purchases up to the value of R250 (VAT incl)

� A transaction value less than R2 000 (VAT incl) At least one written price quotation

� From R2 000 to R200 000 (VAT incl)At least three written price quotations (Advertised RFQ process)

� Above R200 000 (VAT incl) or contract longer than 12 monthsCompetitive Bid Process (Tender)

PROCUREMENT – Process� Line department to identify the need to procure

� Draw up specifications – Project Manager

� Estimate the value of service to be provided, ie. Under or Over R30 000.00

� < R30 000.00 advertised for 2 days on the City’s website

� > R30 000.00 advertised for a minimum of 7days on the City’s website and official notice board

� Evaluate and recommend – Project Manager

� Adjudication and award – Supply Chain Management

� Generate Purchase order and commence with project

WEBSITE

SCM WEBSITE� One-stop information hub

� Planning

� Vendor Registration

� Request for Quotations -Bid Initiations

� Tenders & Procurement

� Inventory & Disposals

� Contact Us and Useful Links

SCM WEBSITE – New Tenders

SCM WEBSITE – Awarded Tenders

UNSOLICITED BIDS

� City is not obliged to consider an unsolicited bid

� If the City is to consider an unsolicited bid� the product or service is a demonstrably or proven unique innovative

concept;� the product or service will be exceptionally beneficial to, or have

exceptional cost advantages� the person who made the bid is the sole provider of the product or

service; � and� the reasons for not going through the normal bidding processes are

found to be sound by the accounting officer.

UNSOLICITED BIDS

ETHICS

PROCUREMENT – Typical Corruption

� Price Fixing� Companies agree to keep a price at a specific level

� Dividing Markets� Company A agrees that it will not approach Company B’s clients or

territory

� Collusive Tendering� Company A, B and C are the only players in a specific industry and they

share information before government tenders to ensure that the prices remain high and they each get some tenders

Ethics - Prohibitions� No award may be made to:

� A person in service of the State� A company with a director / principal shareholder who

is in service of the Sate� An advisor / consultant contracted to the Municipality

� Awards to family members of people in service of the State� Awards above R2000 to Spouse, Child or Parent of a

person in service of the State must be disclosed in financial statements:� Name, position, amount

Ethics - Disclosures� Declarations of interest

� Employees must disclose any private or business interests that they or close family have

� Committee meetings� Withdrawal from involvement in such processes

� Gifts� No gift in excess of R350 may be accepted� All gifts must be declared and recorded in gift register� DO NOT OFFER GIFTS

Ethics – Abuse of the process� Trying to influence the process unduly

� Fraud

� National Treasury register for defaulters which means that no government entity will be allowed to deal with you

� Contracts cancelled

� Criminal prosecution, fines and imprisonment

� Same applies to Municipal officials who do not adhere� Disciplinary action� Criminal prosecution

Ethics - Summary� Purpose

� To achieve fair procurement process� To deliver services to the community� To develop businesses

� It requires us all to know our rights and take up our responsibilities

� Duty to report abuse

� Your knowledge and active participation will help build an ethical Municipality

Thank you.