PROVINCIAL SUPPLY CHAIN MANAGEMENT (SCM) POLICY

REFORMS SUMMIT:

Date: 03 Feb 2011Bolivia Lodge

Key Features of the Draft Provincial SCM Policy

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CONTENTS

1. Purpose2. Background3. Current Key Challenges in the SCM Process4.Mandate5. Applicability6. Key Features of the Draft Provincial SCM

Policy7. Conclusion

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1. PURPOSE

The purpose of the presentation is to give overview on the Key features of the Draft Provincial Supply Chain Management Policy Framework.

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2. BACKGROUND

• The Executive Council (EXCO) and the HOD Forum called for a review of the Policy;

• Priorities and the Limpopo Employment and Growth Development Plan (LEGDP):2009/10

• Draft Discussion Document on Maximizing Government Procurement towards achieving LEGDP goals: 2010

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2. BACKGROUND CONT………..

• The Auditor General’s audit report on entities that are connected with government employees and doing business with departments of the Limpopo Provincial Administration;

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3. CURRENT KEY CHALLENGES IN THE SCM PROCESS

Process Level• SCM Process which is not responsive to socio-

economic challenges of the Province;

• LPPP is not consistent with PPPFA and its regulations;

• Lack of integrated procurement planning with the Business Plans;

• Exorbitant prices charged for goods and services;

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3. CURRENT KEY CHALLENGES IN THE SCM PROCESS CONT……

• Limpopo Preferential Procurement Policy is not providing adequate preferential points system per designated HDI group with a provision of SMME procurement opportunities;

• Impending new SCM Regulations by National Treasury.

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3. CURRENT KEY CHALLENGES IN THE SCM PROCESS CONT……

People Level

• Need to improve ethical culture in the SCM process and good corporate governance.

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3. CURRENT KEY CHALLENGES IN THE SCM PROCESS CONT……

Systems Level

• Poor performance by Contractors and Service Providers

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4.MANDATE

• The Preferential Procurement Policy Framework Act and its regulations sets out a framework within which all organs of the state are obliged to implement suitable preferential procurement policies.

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5. Applicability

• Provincial Departments• Public Entities

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6. KEY FEATURES OF THE DRAFT PROVINCIAL SCM POLICY

1. Role of Procurement in Strategic Planning Process:

• Procurement planning, to provide direction in strategic planning and translate business strategy into procurement strategy:

Reasonable assessment of price in the market context

ABC costing to inform the budget Cost cutting strategy

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6. KEY FEATURES OF THE DRAFT PROVINCIAL SCM POLICY CONT….

2. SCM Performance and Institutional arrangements:SCM Delegations and Bid Committee FrameworkDevelopment of SCM delegations to be mandatoryMinimum SCM capacity defined with competency

levels

3. SCM governance: Risk management, ethics, fraud and prevention: SBD 4, alternative dispute resolution (ADR);

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6. KEY FEATURES OF THE DRAFT PROVINCIAL SCM POLICY CONT….

4. Focus of provision of Value: function/ costsValue for benefit;

5. Strategy on identification of Transversal commodities/ bids: Economies of scale

6. Revision of preferential points system per designated HDI group;

Allow for flexibility of 80/20 and 90/10 points, remove prescription.

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6. KEY FEATURES OF THE DRAFT PROVINCIAL SCM POLICY CONT….

7. Improved contract management

8. Incorporation of all Provincial and National Practice Notes

9. Corporate Social InvestmentMandatory on medium to high value contracts

10. Implement BBBEE codes of good practice, verification to mitigate the risk of fronting

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6. KEY FEATURES OF THE DRAFT PROVINCIAL SCM POLICY CONT….

11.Job creation & Local empowerment: R10m contracts and above:

all bidders from outside the province shall enter into a joint venture with local SMMEs or suppliers

the percentage of the contract value managed or executed by the local partner must not be less than 10% of the project value.

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6. KEY FEATURES OF THE DRAFT PROVINCIAL SCM POLICY CONT….

On all labour intensive projects 70% of the labourers must be employed from the local community where the project will be executed.

On all period contracts at least 50% of the labourers must be employed from the local community where the project will be executed.

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6. KEY FEATURES OF THE DRAFT PROVINCIAL SCM POLICY CONT….

12. VAT: SARSVerification on vendor registration

13. Green Economy Include in the Specification of all bidsEncourage business community to contribute

substantially to preserving or restoring environmental quality

Creation of Green economy jobs

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7. CONCLUSIONBulletin published 21 Jan 2011 for public

comments due, 15 Feb 2011;Consultation with Stakeholders for inputs through

the Summit;Translate Summit Resolutions into Provincial SCM

Policy and its Procedures;Executive Council to approved by end of March

2011;Anticipated effective date 01 April 2011.

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