PRESENTATION BY

NATIONAL DEPARTMENT OF HEALTH

ON

PLANS FOR LOCAL PROCUREMENT THROUGH PUBLIC PROCUREMENT POLICY BAISED TO SMMEs AND COOPERATIVES

TO

PORTFOLIO COMMITTEE ON SMALL BUSINESS DEVELOPMENT

5 AUGUST 2015

5 AUGUST 2015

INTERACTION BETWEEN THE NDOH AND THE DSBD IN DEVELOPING A PLAN FOR THE DEVELOPMENT OF SMMEs AND COOPERATIVES TO

ALLEVIATE POVERTY, INEQUALITIES AND CREATING JOBS NDOH has never had any engagement with DSBD, however the following is taking place:

NDOH has recently advertised for appointment of contractors from level P2 to 9 in terms of CIDB to the part of the panel of maintenance contractors for a period of 3 years to provide maintenance and refurbishment services for identified health facilities which includes community health centers, nursing colleges and hospitals across NHI districts.

By this panel all qualifying SMME’s in construction industry are given opportunities to do the jobs or sub contract which somehow create employment .

The Department will be targeting SMME’s and cooperatives on the basis of proven abilities and commitment to future improvements in order not to compromise value for money.

The department will randomly monitor the development of SMME’s and corporative by means of conducting due diligence with the intension of not compromising public sector health service delivery

Encourage and helping SMME’s and Co-operatives to participate effectively in NDOH competitive bidding processes through supplier engagement dialogues.

Central Chronic Medicines Dispensing and Distribution project where SMMEs are used for distribution and collection of chronic medication at pick up points.

NDOH CONTRIBUTION IN THE DEVELOPMENT/USAGE OF SMMEs’ AND COOPERATIVES (QUOTATION STATISTICS)

BBBEE Level No. Of Quotations ValueLevel 1 13 R1 894 247.72

Level 2 16 R3 806 483.59

Level 3 35 R5 925 947.82

Level 4 3 R 503 053.50

Level 5 1 R 3 933.00

Level 6 1 R 278 160.00

Level 7 0 0

Level 8 0 0

Level 9 0 0

No BBBEE 420 R45 709 210.14

Total 489 R58 121 035.77

NDOH CONTRIBUTION IN THE DEVELOPMENT/USAGE OF SMMEs’ AND COOPERATIVES

QUOTATIONS

NDOH CONTRIBUTION IN THE DEVELOPMENT/USAGE OF SMMEs’ AND COOPERATIVES (BIDS STATISTICS)

BBBEE Level No. Of Bids ValueLevel 1 2 R 3 191 944.44

Level 2 5 R28 421 196.62

Level 3 3 R 7 435 690.12

Level 4 2 R 2 841 538.35

Level 5 1 R10 378 371.90

Level 6 2 R13 203 233.78

Level 7 3 R18 205 736.97

Level 8 1 R 378 708.00

Level 9 10 R19 950 150.65

No BBBEE 0

Total 29 R104 006 570.83

NDOH CONTRIBUTION IN THE DEVELOPMENT/USAGE OF SMMEs’ AND COOPERATIVES (BIDS STATISTICS)

WHAT MARKET AND SKILL DEVELOPMENT OPPORTUNITIES EXIST AT NDOH?

NDOH has an internship program for skills development. Available market opportunities for SMMEs’ are in the

following commodities;– Gardening Services– Sub-contracting of fast food e.g. bread, milk, etc– Laundry services– Security Services– Soft Maintenance e.g. air conditioners (not medical equipment)– Cleaning and Catering services– Travelling and Accommodation– Furniture , Stationery and Office equipment.

NDOH BUDGET ON GOODS AND SERVICES

Description Budget 2014/2015 financial year

Expenditure 2014/2015

Budget 2015/2016 financial year

Expenditure 2015/2016 up to 31 July 2015

Goods and services

1,518,871,000 1.054,220,222 1,578,509,000 326,342,660

WHAT STEPS HAVE BEEN TAKEN BY THE NDOH TO ACHIEVE THE TARGET OF 70% LOCAL

PROCUREMENT?

Through wide Sector Procurement Unit the department is promoting the local procurement of most medicines by advertising and putting a condition for designated local content and manufacturing pharmaceutical companies to bid when such tenders are advertised

WHAT STEPS HAVE BEEN TAKEN BY NDOH TO ACHIEVE THE TARGET OF 30% PROCUREMENT

FROM SMME’s AND COOPERATIVES?

The department is intending to implement procurement of designated products from local SMMEs’ companies on other commodities such as catering services, furniture, stationery and printing works to enable the department to reach the set goal of 30%.

ROLE PLAYED BY THE NDOH TO INFLUENCE BIG COMPANIES WHO ARE SUPPLIERS TO THE DEPARTMENT

TO USE THEIR CORPORATE SOCIAL RESPONSIBILITY BUDGET IN A DEVELOPMENTAL MANNER

The department has recently appointed a Travel Agent through a bidding process, one of the requirement was that the bidders should submit proof that the are promoting and developing SMME’s in their respective fields, by this the department was already influencing big companies to promote and develop SMME’s.

In making proof of social responsibility a functionality requirement will encourage big companies to give back to society they operate in and made their businesses a success. This will automatically stimulate the economy of the country.

SYSTEM IN PLACE IN THE NDOH THAT ENCOURAGES INVESTMENT OF SUPPLIERS IN UNDERDEVELOPED

AREAS?

More often we have National events such HIV/AIDS day, TB day, etc and NDOH make use of service providers around the host area.

The new BBBEE codes also provides for new entrants into the market through enterprise and supplier development element on the score card.

Annually NDOH invites SMMEs’ and other service providers to come and register in the Supplier database.

ADHERENCE TO 30 DAYS PAYMENT FOR SMMEs’.

Financial Year

No of payment processed

Value of payments processed

No of invoices paid after 30 days

Value of invoices paid after 30 days

Percentage no of invoices paid late

Percentage value of invoices paid late

2014/2015 6296 1,306,321,520 100 83,009,310 1.59% 6.35%

2015/2016 1838 401,000,748 2 51,241 0.11% 0.01%

SUPPORTING COOPERATIVES IN THE PROCESS OF DEVELOPING COMMUNITIES TO BECOME SELF-

SUFFICIENT AND SELF-RELIANT

Yes, appointed staff in the procurement Unit of NDOH 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.

ALIGNMENT OF NDOH STRATEGIC PLAN WITH DSBD TO ACHIEVE THE NDP GOALS OF REDUCING POVERTY TO 0% BY 2030 AND CREATION OF 11 MILLION MORE JOBS BY 2030.

NDOH Strategic plan adheres to the National Development Plan in so far as public health sector services delivery is concerned, however it must be noted that has never engaged with the Department of Small Business Development in alignment of the NDOH strategy with DSBD envisaged plan on development of SMMEs’ and Cooperatives.

CONCLUSION AND WAYFORWARD• NDOH will wish to engage with DSBD on strategic

issues relating to the development of SMMEs’ and Cooperatives.

• NDOH is prepared to utilise SMMEs’ and Cooperatives in their procurement processes by designating certain commodities for them.

• As way forward DSBD and Small Businesses Development Agency must develop the SMMEs’ and Cooperatives and develop database that should be utilised by all government departments and monitor progress on a quarterly or bi-annual.