DEFENCE MATÉRIEL DIVISION Plans for Local Procurement Through Public Procurement Policy to Support SMMEs and Cooperatives

DEFENCE MATÉRIEL DIVISION

Plans for Local Procurement Through

Public Procurement Policy to Support SMMEs and

Cooperatives


AIM

• To present the Department of Defence’s response to the focus points that support the integrated approach to stimulate radical economic transformation through entrepreneurship.

2


APPROACH

• The Parliamentary Committee on Small Business Development sent a list of questions to the Department of Defence pertaining to small business support through public procurement.

• The approach taken in this presentation is that of responding to each of these questions.

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FOCUS AREA 1

Has there been an interaction between the department invited here today and the DSBCD to plan on how the two departments would work together to develop SMMEs and Cooperatives with the aim of reducing poverty, inequalities and creating jobs ?

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CONSULTATION BETWEEN DoD AND DSBD

Consultation is ongoing between the DoD and the DSBD. This will culminate in the signing of an MOU between the two departments.

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MARKETS AND SKILLS DEVELOPMENT

What market and skill development opportunities exist in each departments? Markets and related skills development:

LogisticsRetail, motor trade, maintenance and repairsWholesale tradeCatering, accommodation and travelTransport, storage and communicationFurniture manufacturing, maintenance, repairs and

recyclingPrinting etc

6


DOD EXPENDITURE ON GOODS AND SERVICES

What is the total budget expenditure on good and services of each department?±R11,337bn (Only RB2.8 acquired through service

centres)This encompasses spending on Goods and Services,

such as:Business and advisory services Infrastructure and planningLaboratory servicesLegal costsContractorsAgency and support/outsourced services

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FOCUS AREA 4

What steps have been taken by the department to achieved the target of 70% local procurement?

Requirement to adhere to 70% local procurement is incorporated in all applicable terms of reference of the advertised bids.

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FOCUS AREA 5

What steps have been taken by the department to achieve the target of 30% procurement from SMMEs and Cooperatives? Local foot print (i.e. Provincial and Local foot

print) is prioritized when awarding bids.

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TOWARDS 30% PROCUREMENT from SMMEs and COOPERATIVES

• Procurement centres procure from suppliers that are nearest to the procuring unit.

• For FY2014/15 the Central Procurement Service Centre spent RB2.8 on procurement of goods and services from SMMEs.

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SPEND ON GOODS AND SERVICES

Seriel No: Service/Commodity Total Amount

1 Total CPSC Spend for 2014/15 RB2.8

2 Total Direct SMME Spend RM434

3 Indirect SMME Spend (i.e. sub-contracting)

RM560

4 Total % on SMME’s 35%

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Focus Area 6

What role is played by the department to influence big companies who are suppliers to the department to use their Corporate Social Responsibility budget in a developmental mannerSuppliers are involved in social community

upliftment initiatives

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SMME CONTRIBUTION TO SADI

15,000

EMPLOYEES

TOTAL TURNOVERTOTAL

MEMBERS

77R15.8 BN

R500MCONTRIBUTION

62% SMME’s3%

CONTRIBUTION13% EMPLOYEES

13


DENEL’S CONTRIBUTION TOWARDS SMMES DEVELOPMENT

Cooperation with SMMEs Denel trades with various SMMEs. An enterprise development programme has been developed to support SMMEs.

Percentage (%) support to SMMEs (BBBEE)

Spend on black owned companies constitutes 22% black, black women owned 8.1% and black youth owned 1% of total spend.

Contribution to SMMEs and Cooperatives

Through the Enterprise Supplier Development initiative, Denel has developed 25 suppliers at a total cost of R17.3m. (excluding spend on suppliers)

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FOCUS AREA 7

Is there a system in place in the department that encourages investment of suppliers in underdeveloped areas?

Through MOU between the DoD and the North West Provincial Government, the DoD is contributing to the government strategic imperative of rural development. Amongst the aspects to be covered by this project are the following:

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INVESTMENT IN SUPPLIERS FROM UNDERDEVELOPED AREAS

Agricultural interfaceIndustrial and services sectorsHuman resources and Infrastructure development

The first pilot project is to be implemented in the North West in FY2016/17.

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FOCUS AREA 8

Does the department adhere to 30 days payment policy for SMMEs and Cooperatives?Yes, with effect from date when

legitimate/compliant invoice is received.The DoD’s target for payment of suppliers

within 30 days is 75%.For the 1st Qtr of FY2015/16 72 % was achieved.

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CORRECTIVE ACTIONS TO ADDRESS THE DEVIATION

The Department finalised an investigation to trace the root causes of delays in payments. An action plan has been formulated to improve performance and solve the issues identified.

The process to electronically track invoices from receipt to payment has been developed. FMS has been enhanced to cater for this process and to include additional controls in the monitoring process.

Improved and integrated training between SCM and Finance are being developed

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FOCUS AREA 9

Is there a person in the procurement unit of the department who has knowledge and understanding of the cooperatives concept and benefits of supporting cooperatives in the process of developing communities to become self- sufficient and self-reliant?

Yes. Initiative to register the Military Veterans Cooperatives is in process.

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FOCUS AREA 10

How aligned is the strategic plan of the department is to the strategic plan of the Department of Small Business and Cooperatives Development in order to achieve the NDP goals of reducing poverty to 0% by 2030 and 11 million more jobs by 2030.Youth empowerment initiatives are at an

advanced stage to ensure that youth are a key target group for economic opportunities.

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YOUTH LEADERSHIP DEVELOPMENT PROGRAMME (YLDP) STATISTICS

INTAKE DATE VENUE COMPLETED REMARKS

01 10 Feb-03 May 2014 Kimberly 1025

02 11 Sep-31 Oct 2014 Kimberly 630

03 15 Sep-03 Dec 2014 Saldanha 352

04 07 Apr-12 Jun 2015 Kimberly 566189

189 at DRDLRThabaNchu College

05 26 Jul-30 Oct 2015Current intake

Kimberly 382103

TOTAL 3247

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YLDP…

Discipline and drillPhysical trainingLeadershipCivic educationLife skillsYouth regenerationDiversity managementEnvironmental

managementPublic Service induction Communication and social

responsibility

The following modules are covered in the Youth Leadership Development Programme:

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Alignment to Government Strategic Priorities

Goal 4 of the recently approved Defence Review 2015 addresses developmental and other ordered tasks, whereby the DoD can in terms of Task 13 contribute to the developmental agenda as outlined in the government strategic priorities.

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ALIGNMENT TO GOVERNMENT STRATEGIC PRIORITIES

Accelerate supplier targeting for women and youth

Increased oversight on big companies Corporate Social Responsibility (incorporate in ToR)

Increased oversight on supplier investment in underdeveloped areas (incorporate in ToR)

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ALIGNMENT TO GOVERNMENT STRATEGIC PRIORITIES…

Compliance to applicable legislation i.e. PPPFA

Utilisation of a comprehensive supplier database

Marketing opportunities to suppliers through the annual Suppliers Day and Industry Day

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CONCLUSION

The DoD is committed to advancing the development of SMMEs and Cooperatives through collaboration with other relevant stakeholders.

Efforts are in progress to ensure full alignment with government intent to accelerate economic transformation and alleviate poverty, inequality and unemployment.

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Questions &

Comments

Thank You!

Documents

DEFENCE MATÉRIEL DIVISION Plans for Local Procurement Through Public Procurement Policy to Support SMMEs and Cooperatives