Impact of Collaboration between State Owned Enterprises (SOE S) Presentation to CIPS Pan African Conference. Fantas Mobu

Transcription

1 Impact of Collaboration between State Owned Enterprises (SOE S) Presentation to CIPS Pan African Conference Fantas Mobu Chairperson of SOEPF & ESKOM GM: Tactical Procurement

2 Objectives of this discussion Give the CIPS Conference an overview of the activities of the Forum To recap the key strategic objectives of the Forum To demonstrate how SOEPF can advance support government initiatives such as Supplier Development, B-BBEE, Job creation, New Growth Path, Fraud and Corruption Provide recommendations and way forward To generate a conversation for action To align on & recommend ways to Strengthen the SOE by being efficient and effective for the betterment of SA

3 Agenda Background & Overview of SOEPF Challenges Benefits of SOEPF Areas of possible collaboration Recommendations/actions

4 . Background to SOEPF Element What When was it Formed Members Authority Detail SOEPF was formed in June 2004 A voluntary forum of Procurement/Supply Chain Management heads of the State Owned Enterprises Share best practices in Supply Chain Management within the SOEs Founder Members :Denel, Telkom, PetroSA, SAPO, Eskom Additional Members:Transnet, SAA, SITA, Eskom, IDC, SARS, National Treasury, Metrorail, CSIR, Transwerk, Rand Water, USA (Universal Service Agency), National Ports Authority (NPA), South African Rail Commuter Corporation (SARCC) City Power; Umsobomvu Youth Fund, Armscor & NEF, ATNS, IDT, SASDA (also SOEPF Admin Rep) Guest Status;SMME Forum; The DTI; SMME desk under BUSA; Consensus Decision-making Decision made by Forum cannot bind SOEs Each entity reserves the right to approve or reject any proposal made by the forum or approve a proposal on such terms and conditions as it deems fit SASDA provides administrative support

5 Authority The forum shall have no powers to take decisions that will bind the individual entities The forum shall be empowered to make proposals, to be unanimously agreed upon, for adoption by individual entities Each entity reserves the right to approve or reject any proposal made by the forum or approve a proposal on such terms and conditions as it deems fit

6 What do we hope to achieve? 1. identify synergies and exploit to benefit SOEs - Tenders includes sharing of tender specifications - Vetting / Due Diligence Audits on Suppliers - Fronting and other transgressing / circumventing activities - Procurement system engines - Supplier Development Opportunities - Black Economic Empowerment 2. determine a joint procurement strategy which will assist SOEs with the formulation and alignment of entity specific preferential procurement policies, procedures and processes

7 What do we hope to achieve? Continued 3. Facilitate the creation of sustainable suppliers through Supplier and Enterprise Development Initiatives 4. To share information on global best practices in the procurement of goods and services 5. Lobby government in order to influence policy with respect to BBBEE and Enterprise Development policies in the procurement of goods and services

8 What do we hope to achieve? Continued 6. To actively promote and adhere to the Prevention of Corrupt Activities Act by recommending the blacklisting of suppliers who engage in irregular activities in procurement 7. To establish and participate in the management of a central SOE database aimed at creating and/or developing sustainable suppliers 8. To create a conducive environment for supplier development and link joint supplier development programs to contracts

9 What do we hope to achieve? Continued 9. To advise SOEs with the reviewing, controlling, regulating, governing and managing the implementation of procurement policies and procedures 10. To promote Procurement as an integral function and profession 11. To ensure quality and continuous improvement of processes and procedures in SOE procurement areas

10 What do we hope to achieve? Continued 12. To leverage on economies of scale by joint participation in tenders and other joint purchasing activities. In all instances, this will be subject to the rules and governance structures of each individual participating entity 13. To provide guidance and assistance with respect to the adequacy, efficiency and economical use of SOE resources in the acquisition of goods and services whilst ensuring compliance with policies, standards, procedures and applicable laws and regulations 14. Promoting local value-add and manufacturing

11 Summary of role of SOEPF Element Role of SOEPF (Strategic Objectives) Detail Identify Synergies Determine a joint procurement strategy Promote adherence to the Prevention of Corrupt Activities Act Establish a central SOE Database Link joint supplier development programs to contracts Lobby government in order to influence policy To share information on procurement Advise SOEs on procurement policies and procedures With SASDA & others work to create of sustainable suppliers Continuous improvement of SOE procurement, through collaboration To Leverage on SOE economies of scale Provide guidance in the acquisition of goods and services Promoting of local value-add and manufacturing Promote Procurement as a profession

12 Agenda Background & Overview of SOEPF Challenges Benefits of SOEPF Areas of possible collaboration recommendation / actions

13 Challenges for SOEPF Challenges Duplication of administrative activities (e.g. contracts, standard tender documentation etc.) Lack of intelligence gathering tools No central database of local/bee suppliers No central advertising platform Skills shortage and lack of proper co-ordination No common approach to Supplier Development Challenges Procurement not used effectively to create jobs No common approach to reporting Poor monitoring of BEE targets and contradictions among SOEs on BEE issues Poor utilization of state resources among SOEs Poor co-ordination of legislative issues (as a result procurement legislation is seen as a financial control as opposed to an economic imperative.

14 High Performance Mastery Dimensions The procurement survey compared each SOE s current capability maturity to Accenture s High Performance Procurement research based on six dimensions of procurement mastery Procurement strategy Sourcing and category management Requisition to pay Supplier relationship management Workforce and organization Technology Vision, mission, core values Operating model Strategic sourcing Category policy setting Transaction processing Assisted buying Supplier performance mgt Contract management Having the right network of competent people Performance management Category strategic planning Category management framework Compliance monitoring Master data management Fulfillment Supplier development and integration Working in an organization that facilitates working together Technology that delivers the right information Systems cover all functions: strategy to operations

15 Capability Findings Overview: Summary The top three procurement challenges across the SOEs surveyed were: Lack of resources /talent; organisational barriers and lack of accountability

16 SOE spending on Infrastructure 40 % of the R372 billion in state investments would go directly to public enterprises

17 War Against Corruption Economic, Social Crime Corruption is a complex social, political and economic phenomenon that affects all countries. Corruption undermines democratic institutions, slows economic development and contributes to governmental instability. Corruption attacks the foundation of democratic institutions by distorting electoral processes, perverting the rule of law and creating bureaucratic quagmires whose only reason for existing is the soliciting of bribes. Economic development is stunted because foreign direct investment is discouraged and small businesses within the country often find it impossible to overcome the "start-up costs" required because of corruption. 17

18 Perception Political parties 71% 80% Parliament/legislature Police Religious bodies Business/private sector 28% 61% 60% 59% 57% 53% 52% 47% Judiciary Media Education system 43% 41% 44% 39% 39% 54% NGOs (non governmental organisations) Military 31% 26% 30% 33% % 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% % of people reporting the sector/institution to be corrupt or extremely corrupt

19 Contributing Factors

20 Fraud and Corruption The Impact SOCIAL The hardest hit by corruption: The Poor Diverts resources and holds back development Compromises public service delivery Affects access to basic public services Further erodes already declining social values

21 Is This Problem Big Enough to Act

22 Agenda Background & Overview of SOEPF Challenges Benefits of SOEPF Areas of possible collaboration & recommendations / actions

23 SOEPF will benefit the country Value Proposition Huge cost savings (economies of scale, optimisation of resources, admin costs through removal of duplication etc.) Focused, and clear Supplier Development Programme (SDP) Job creation spin off from SDP programme Contribute in GDP growth beyond Focused skills development Transformation through increased B-BBEE expenditure Professionalize procurement environment Increased influence of legislative issues affecting procurement Security of supply Alignment with Government objectives Impacts on New Growth Path and Industrial Policy Action Plan Impacts Economic Development Job Creation Impacts SMME Development Broad Based Black Economic Empowerment Foreign Investor attraction - through procurement opportunities Local Manufacture/value add

24 Agenda Background & Overview of SOEPF Challenges Benefits of SOEPF Areas of possible collaboration & recommendations/actions

25 Proposed key interventions by SOEPF Clustering of SOE s Authority Board Representatives Executive Representative Strategic SoE s should be clustered according to goods, services and works. Easy to track the priorities Reduction in clashes in priorities between departments Empower the clusters to advance the said common objectives and commit to stated Procurement strategy & the uniform implementation thereof by SOEs CPO to be part of the Board so that they should be driving the Supply Chain objectives and strategy Elevate the Supply Chain Head positions to be part of Executive for proper accountability,aptitude and dexterity Challenges Skilling the Procurement Practitioners in a mass Should we decide centralise Procurement? if yes how should the structure of centralised be? How do we resolve the change management issues that are likely to come in the way of Centralisation What process change should we make to get value out of centralisation without affecting the government business Commit to change procurement policies & procedures among others to allow for Supplier Development Product & procurement without tender from other SOEs approved Suppliers Centralisation of Procurement Economies of scale, reduction in costs of duplication, standardisation

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27 Thank you Copyright SOEPF 2005

28 Action Planning

29 Thank You Questions