SUPPLY CHAIN MANAGEMENT POLICY

Transcription

1 NRCS CSP SUPPLY CHAIN MANAGEMENT POLICY Compiled by Approved by Date of approval Date of implementation CFO CEO 29 January February 2014

2 Contents 1. Purpose Scope Informative and normative Normative Informative Definitions and Terminology Annexures Replacement and withdrawal Revision history Elements of Supply Chain Management Demand Management Acquisition Management General Principles Threshold values for Acquisitions Logistics Management General Placing of orders Ordering process Vendor performance Stores/warehouse management Issuing/distribution of items Stocktaking Disposal and Letting of State Assets Service Providers and Specialised Services Service Provider Performance and Selections Procurement of Information Technology and Information Technology Services Appointment of Consultants Price Quotations Price Quotations Process Price Quotations requirements Competitive Bids Competitive Bidding Process Invitation of Bids Bid Specification Committee Bid Evaluation Committee Bid Adjudication Committee (BAC) Deviations to Normal Procurement Procedures Contracts and Legal Services Page 2 of 44

3 17.1 Contracts Contract Administration Legal Services Other considerations Risk Management Training of SCM Officials Non-Compliance National Industrial Participation Programme (NIPP) Reporting of Supply Chain Management Information Compliance, Responsibilities and Accountabilities SCM Official s responsibilities Responsibilities of all employees, including SCM Officials NRCS Management Responsibilities Finance Department s responsibilities SCM transaction principles NRCS Financial Thresholds Exceptions iro quotations and RFQ s Goods and Services above the transaction value of R (VAT Included) Bids based on functionality as a criterion NRCS Suppliers Registration of suppliers on the accounting system Establishment of supplier database Pre SCM Process Process preceding the SCM process Process preceding the SCM process Obtaining of quotes / RFQ Process Process flow for RFQ process Obtaining quotes for RFQ Quotes not required Issuing of Requisitions Orders GRV and Payments The Bid / Tender Process Process flow for bid / tender process Bid Adjudication Committee User requirements and Business Case /motivations Specification of goods/works or services The RFB Process Planning an RFB Preparing the Bid Documents Publication of Bids Page 3 of 44

4 25.9 Information Meetings or Site Inspections Communicating with Prospective Bidders Changing of Information Submission of Bids Closing Date of Bids Validity Period of Bids Opening and Screening of Bids Late Bids Consideration of Bids Clarification of Responses Cancellation and Re-invitation of Bids Other matters iro Bids SARS Tax Clearance Certificate Evaluation of Bids Evaluation Phases Phase 1: Mandatory Specification Evaluation Phase 2: Financial Evaluation Phase 3: Awarding of Points Phase 4: Calculation of points for B-BBEE status level of contributor Phase 5: Company Profile Phase 6: Approval of Bids Evaluation of bids that scored equal points Notification and Debriefing Contract Negotiation and signing Records ANNEXURE A : SCM DELEGATION OF AUTHORITY Page 4 of 44

5 1. Purpose SECTION 1: MANDATORY INFORMATION This document serves to set the policy for a fair, equitable, transparent, competitive, cost effective and uniform acquisition process for goods and services within the NRCS. 2. Scope The scope of this document is to outline the policy that must be followed by NRCS staff for the acquisition of goods and services. 3. Informative and normative 3.1 Normative CPO 620 Conflict of Interest CSP 502 Approval routes and limits for expenditure - Delegation of Authority CSP 520 Petty cash CSP Code of Conduct CSP Asset Management Policy CPO 600 Fraud Prevention Policy CPO 160 Enterprise Risk Management Policy PFMA Public Finance Management Act (No.1 of 1999, as amended) PPPFA Preferential Procurement Policy Framework Act, 2000 (No.5 of 2000, as amended) BBBEEA Broad Based Black Economic Empowerment Act, 2003 (No.53 of 2003 PAIA The Promotion to Access of Information Act, (No.2 of 2000, as amended) PAJA Promotion of Administrative Justices Act, 2000 (Act 3 of 2000 as amended) SITA State Information Technology Act, 1998 (Act 88 of 1998 as amended) National Treasury Circulars, Guidelines and Practice Notes on SCM The Prevention of and Combating of Corrupt Activities Act (No.12 of 2004 as amended) Competition Act, 1998 (Act 89 of 1998 as amended) CIDB Act 38 of Informative CPO 110 CPO 601 Code of ethics Zero tolerance fraud and corruption policy 4. Definitions and Terminology Term / Abbreviation Accounting Authority B-BBEE B-BBEE status level of Definition / explanation NRCS Board Broad Based Black Economic Empowerment Act (No.53 of 2003) Details Accountable authority for a public entity as indicated in the PFMA. Means broad-based black economic empowerment as defined in section 1 of the Broad-Based Black Economic Empowerment Act. Means the B-BBEE status received by a measured entity based on its overall performance using the relevant scorecard Page 5 of 44

6 Term / Abbreviation contributor Definition / explanation Details contained in the Codes of Good Practice on Black Economic Empowerment, issued in terms of section 9(1) of the Broad- Based Black Economic Empowerment Act. Committee appointed by the CFO to evaluate bids and recommend bids for award. Committee appointed by the CFO to establish the requirements for a new bid. Committee appointed by the CEO to award bids. BEC Bid Evaluation Committee BSC Bid Specification Committee BAC Bid Adjudication Committee BU Head Business Unit Head Head of a business unit within NRCS, regardless of the level of seniority. Bid or tender Means a written offer in a prescribed or stipulated form in response to an invitation by NRCS for the provision of services, works or goods, through price quotations, advertised competitive bidding processes or proposals. Bidder CEO CFO Chairperson Closed Bid EME Executive Fruitless and Wasteful Expenditure Functionality Chief Executive Officer Chief Financial Officer Exempted Micro Enterprises GRV Goods receipt voucher HDI/PDI Historically / Previously disadvantaged individual Irregular Expenditure Any natural or legal person who makes an offer in response to an RFB, RFP or RFQ. Is the Administrative head of the NRCS General responsibility of the CFO is to assist the Accounting Authority in discharging the duties prescribed in Part 2 of Chapter 6 of the PFMA. Means the person duly elected to chair any of the SCM bid committees. Any bid that is not open for general public and limits the number of possible responses. Means any enterprise with annual total revenue of R5 million or less. Most senior head of a business unit, appointed as an Executive or acting executive in the NRCS Expenditure which was made in vain and would have been avoided had reasonable care been exercised as defined in the PFMA. Means the measurement according to predetermined norms, as set out in the tender documents, of a service or commodity that is designed to be practical and useful, working or operating, taking into account, among other factors, the quality, reliability, viability and durability of a service and the technical capacity and ability of a tenderer. An internal transaction to record the receipt of goods from suppliers. An individual as defined in the PPPFA who is a South African citizen who previously had no participation in National Elections prior to the introduction of the Constitution, and/or who is female and/or as a disability. Expenditure, other than unauthorised expenditure, incurred in contravention of, or that is not in accordance with a requirement of any applicable legislation, as defined in the PFMA. Page 6 of 44

7 Term / Abbreviation Outsourcing Official Level A delegation Level B delegation Management PFMA PPPFA Definition / explanation Public Finance Management Act Preferential Procurement Policy Framework Act (Act No.5 of 2000) & Regulations Details The provision of an agreed deliverable or level of service for a pre-determined fee stipulated in a formal agreement. Means a person in the employ of NRCS. The highest level of delegation below that of CEO. This level of authority is usually delegated to an Executive. It can also be delegated to a specific person for a specific project, period or function that a person performs on a regular basis as part of that person s performance of his/ her daily duties. The next lower level of delegation to a level A delegation. This level of authority is usually, but not necessarily delegated to a General Manager. Such delegations may also be given to Regional Manager / Senior Managers / Manager in business units where there is no General Manager. It can also be delegated to a specific person for a specific project, period or function that a person performs on a regular basis as part of that person s performance of his/ her daily duties. Refers to the level below the Executives and includes General Managers, Senior Managers and Managers. To regulate Financial Management in entities, national government and provincial governments; to ensure that all revenue, expenditure, assets and liabilities of those governments are managed efficiently and effectively; to provide for the responsibilities of persons entrusted with financial management in those governments. Act which provides preference towards previously disadvantaged individuals and RDP goals. Preferred Supplier A type of a supplier from which NRCS can derive economic benefits as compared to other similar suppliers. QSE Qualifying Small Enterprises Qualifying Small Enterprises as defined in the DTI s BBBEE Act. QN Quotation note Refers to a quotation which is received from a supplier Rand Value Means the total estimated value of a contract in South African currency, calculated at the time of tender invitations, and includes all applicable taxes and excise duties. Restricted Service Provider Means A Non-preferred Service Provider who has been listed by National Treasury and must not be used by the NRCS for the entire period of prohibition. RFB RFP RFI RFQ SARS Request for Bid or Request for Proposal Request for Information Request for Quotation South African Request for a purchase above the threshold value for quotations sent out on bid to the market. Request for information on purchase of goods and services. Request for purchase which is below the threshold value of bids. Page 7 of 44

8 Term / Definition / Details Abbreviation explanation Revenue Services SLA Service Level Agreement An agreement between the NRCS and a provider of services to the NRCS. SCM Supply Chain Management An organ intended to formalise the procurement environment within the NRCS. Sub- Contracting The primary contractor s assigning or leasing or making out work to, or employing another person to support such a primary contractor in the execution of part of a project in terms of the contract. TOR Terms of Reference Statement of the background, objectives, and purpose of a program, project, or proposal. TR Treasury Regulations Regulations issued by National Treasury which support the implementation of the PFMA. Tax Clearance Certificate A Tax Clearance Certificate as issued by the South African Revenue Services, where the bidder is registered for Income Tax or VAT purposes. Transversal Contract Means period contracts that are arranged by National Treasury for more than one Department to participate in. Unsolicited Bid Unauthorized Expenditure Overspending of a budget or not in line with the main purpose of the budget Means a proposal presented to the NRCS by a contractor, consultant or service provider, through his/her own initiative, without having been invited to do so by the NRCS. A payment or part of a payment on a good or service authorised in terms of the budget, resulting in the total amount appropriated for the budget item concerned, being exceeded without being approved according to the Delegation of Authority (CSP501), as per the PFMA. VAT Value Added Tax Value-Added Tax is commonly known as VAT. VAT is an indirect tax on the consumption of goods and services in the economy. Revenue is raised for government by requiring certain businesses to register and to charge VAT on the taxable supplies of goods and services. These businesses become vendors that act as the agent for government in collecting the VAT. 5. Annexures 5.1 Annexure A: SCM Delegation of Authority 6. Replacement and withdrawal This Policy replaces the previous Procurement policy CSP Page 8 of 44

9 7. Revision history Rev No Effective date Nature of revision 01 Editorial changes, alignment of terminology with NT notes and clarification of certain delegations and deviations. Refer to: Clause 4 (definitions) and clauses ; ; ; 27.1,2,3,4,5; ; ; ; ; 33.2; ; and 34.29(f) Annex A Monetary threshold values Annex B Delegation authority Page 9 of 44

10 SECTION 2: SCM POLICY 8. Elements of Supply Chain Management A supply chain management system must- 8.1 Be fair, equitable, transparent, competitive and cost effective; 8.2 Be consistent with the Preferential Procurement Policy Framework Act, 2000 (Act 5 of 2000); 8.3 Be consistent with the Broad Based Black Economic Empowerment Act, 2003 (Act 53 of 2003); and 8.4 Provide for at least the following Demand management; Acquisition management; Logistics management; Disposal management; Risk management; and Regular assessment of supply chain performance. 9. Demand Management 9.1 Demand management is the first phase of SCM. The objective is to ensure that the resources required to fulfill the needs identified in the strategic plan of the institution are delivered at the correct time, price and place and that the quantity and quality will satisfy those needs. As part of this element of SCM, a total needs assessment should be undertaken. This analysis should be included as part of the strategic planning process of the NRCS and hence will incorporate the future needs. 9.2 The SCM Unit must ensure that: Future as well as current needs are understood; Requirements are linked to the budget; Specifications are determined; The need forms part of the strategic plan of the NRCS; An industry and commodity analysis is conducted Page 10 of 44

11 9.3 Demand Management is intended to build discipline into how the NRCS plans for its business requirements, the implementation of this element of SCM will be a phased approach. 9.4 BU Heads must, annually, align activities in their business plan, operational plan and approved budget allocations, with the capital procurement requirements of the NRCS to develop a Demand Management Plan. 9.5 The Supply Chain Manager must analyze key issues, assess the appropriateness of existing purchases and identify the need and time frames for new requirements in support of service delivery. 9.6 The Supply Chain Manager must develop sourcing strategies and buying mechanisms to address the Demand Management Plan. 9.7 The NRCS must submit to the relevant authority by 30 April of each year, a procurement plan containing all planned procurement for the financial year in respect of the procurement of goods, works and/or services which exceed R (all applicable taxes included). 9.8 The procurement plan must be approved by the CEO prior to its submission. 9.9 The Supply Chain Manager may consider the following alternative strategies prior to the acquisition process: acquisition of redundant/obsolete material, goods and assets from other institutions; sourcing of expertise from other institutions; utilization of transversal contracts administered by other institutions; local versus international sourcing; or public / private partnerships. 10. Acquisition Management 10.1 General Principles Acquisition Management provides guidance on how goods, services and assets should be procured from the market place All procurement over R must be in line with the Demand Management Plan. Exceptions must be approved by the CEO Service Providers must be selected on the basis of best value for money, therefore the selection of Service Providers must be based on functionality and price according to the threshold value s indicated in the attached Annexure A All NRCS staff members must comply with the standard procurement methods, which include quotations and Bids The appointment of consultants must adhere to standard procurement procedures as indicated in Practice Note 3 of It is the responsibility of the end-user / BU Head to finalise detailed terms of reference / specifications and manage the appointed consultants NRCS staff members may only consider an unsolicited Bid by a Service Provider in conjunction with Practice Note 11 of 2008/ The business unit will pre-empt the procurement process by completing the following: A completed requisition, duly approved ito the Delegation of Authority A business case duly authorised in terms of the Delegation of Authority for all procurement over R or where SCM deems necessary The Supply Chain Manager will initiate the formal process after which BEC evaluation will be constituted to evaluate the bids received and arriving at a recommendation that will be submitted to the BAC Bids awards shall be published in the media by which the bids were advertised NRCS shall comply with all Treasury Regulations relating to Supply Chain Management that will be issued from time to time. Page 11 of 44

12 10.2 Threshold values for Acquisitions The threshold values for procurement of goods, works and services: Value Up to R2000 Above R2000 up to R per case Above R up to R per case Above R up to R per case Above R per case Procurement method No quotes necessary At least three (3) verbal or written quotations must be obtained and where possible from the list of prospective suppliers and the official order must be placed against a written confirmation from the selected supplier if the quotation was submitted verbally. At least three (3) written quotations must be obtained from as many suppliers as possible that are registered on the list of prospective suppliers Invite and accept written price quotations for requirements up to an estimated value of R from as many suppliers as possible, that are registered on the list of prospective suppliers. The 80/20 preference point system is applicable to bids with Rand value equal to, or above R and up to a Rand value of R1 million (all applicable taxes included). No tender may be awarded to any person whose tax matters have not been declared by the South African Revenue Services to be in order. Competitive bids must be invited for all procurement above R Should it be impractical to invite competitive bids for specific procurement, e.g. in urgent cases or in case of a sole supplier, the NRCS may procure the required goods or services by other means, such as price quotations or negotiations in accordance with Treasury Regulation 16A6.4. No tender may be awarded to any person whose tax matters have not been declared by the South African Revenue Services to be in order. The 90/10 preference point system is applicable to bids with a Rand value above R 1 million (all applicable taxes included). 11. Logistics Management 11.1 General This aspect pertains, among others, to coding of items, setting of inventory levels, placing orders, receiving and distribution, stores/warehouse management, expediting orders, transport management and vendor performance. This process should also activate the financial system to generate payments Placing of orders An order should be placed either when a pre-determined stock level is reached or when a request is received from an end user for an item which is not held in stock Ordering process Contract purchase: Where a contract exists, orders should be placed for the item from the contract Price quotations/competitive bidding method: Where there is no contract, the price quotation or competitive bidding method of ordering should be applied within delegated authority Vendor performance The reliability of the supplier should be monitored in terms of, among others Delivery periods; Quality; and Quantity Should problems be encountered, they should be followed up with the vendor and, if it is a contract item, it should also be reported to the body that arranged the contract. Page 12 of 44

13 11.5 Stores/warehouse management Expediting orders: If the delivery conditions reflected on the order form are not complied with, it should be followed up with the supplier immediately Receiving of items: All goods received should be verified for quality and quantity against the ordering documentation. It is recommended that a receipt voucher be generated for payment purposes Storage: Municipal, legal stipulations and safety regulations should be complied with when items are being stored, e.g. flammables, poison, explosives, ammunition, weapons, etc. An effective item location system should be utilized. Shelf-life of stock should be taken into consideration Stock and equipment should be stored properly and arranged in such a manner that the checking and handling thereof are being facilitated and the possibility of damage, exposure, deterioration and perishing thereof is limited or eliminated Issuing/distribution of items An issue voucher should be generated for all goods issued Consumable items should not be recorded after issue Non-consumable items should be recorded from receipt to disposal Transit officials should ensure that goods are delivered promptly to the end-user Stocktaking Stocktaking of all assets in stock or on distribution shall be conducted at least once a year. This procedure entails the comparison of stock counted with official records of what should be in stock. Differences should then be accounted for. 12. Disposal and Letting of State Assets 12.1 Disposal of movable assets must be at market-related value or by way of price quotations, competitive bids or auction, whichever is most advantageous to the state, unless determined otherwise by the relevant Treasury Notwithstanding the provisions of the paragraph above, the NRCS may transfer movable assets free of charge to other departments, constitutional institutions or public entities by means of formal vouchers Any sale of immovable state property must be at market-related value, unless the relevant treasury approves otherwise The letting of immovable state property (excluding state housing for officials and political office bearers) must be at market-related tariffs, unless the relevant treasury approves otherwise. No state property may be let free of charge without the prior approval of the relevant treasury The NRCS must review, at least annually when finalizing the budget, all fees, charges, rates, tariffs or scales of fees or other charges relating to the letting of state property to ensure sound financial planning and management The NRCS must, when disposing of computer equipment, firstly approach any state institution involved in education and/or training to determine whether such an institution requires such equipment. In the event of the computer equipment being required by such a state institution, the NRCS may transfer such equipment free of charge to the identified institution. Page 13 of 44

14 13. Service Providers and Specialised Services 13.1 Service Provider Performance and Selections Supply Chain Management Unit shall verify the National Treasury s Register for Tender Defaulters and Database of Restricted Suppliers prior to awarding any bid to ensure that no recommended bidder or any of its directors are listed as companies or persons prohibited from doing business with the public sector The NRCS must use the service provider database when considering the procurement of any goods or services through quotations The following exceptions shall apply where NRCS is able to obtain quotes outside its database, where the SCM Manager shall approve such cases: In instances where there are insufficient suppliers on the database The current suppliers approached for quotes are not responsive The services requested are unique Certain emergency cases The Supply Chain Manager must ensure that the service provider database is accurately maintained At the completion stage of material projects, an assessment of the service and service provider should be undertaken and this assessment should be available for future reference Payment to supplier will only be for goods supplied or services rendered Procurement of Information Technology and Information Technology Services NRCS as a Schedule 3A entity may at its discretion on whether to acquire any of the mandatory or non-mandatory services from SITA Mandatory ( must ) services that are to be provided by SITA. SITA must provide the following services to national and provincial departments Provide or maintain a private telecommunication network or a value added network; Provide and maintain transversal or departmental specific information systems; Provide data-processing or associated services for transversal or departmental specific information systems; Provide IT (Information Technology) for Government; Set standards for interoperability; Set standards for ISS (information security standards) Set standards for Certification of IT acquisition; Certify all acquisitions for standard compliance; Eliminate duplication; and Leverage economies of scale Non mandatory ( may ) services that may be provided by SITA Training in IT or information systems; Application software development; Maintenance of software and infrastructure; Data process for department specific applications or systems; Technology or business advice for IT; Research and development; Management services for IT; and Sell or provide authentication products In the event that these services are acquired from SITA, it should be in accordance with business and service level agreements. Should SITA indicate in writing that it is unable to Page 14 of 44

15 provide the service itself, SITA will act as the procurement agent to acquire such services on behalf of NRCS In instances where SITA acts as the procurement agent on behalf of an institution, SITA must facilitate the procurement process strictly in terms of the prescribed legislation. SITA will make a recommendation to NRCS on a preferred bidder(s). The NRCS, however, retains the right to accept or reject SITA s recommendation Appointment of Consultants Appointment for consultants for specific products may be considered. However, appointment of consultants may only be done with prior approval of the Chief Executive Officer and in line with Practice Note 3 of Consultants should be appointed by means of competitive bidding processes, whenever possible. All bids and contracts should be subject to the General Conditions of Contract (GCC) issued by the National Treasury The term consultants includes, among others, consulting firms, engineering firms, construction managers, management forms, procurement agents, inspection agents, auditors, other multinational organizations, investment and merchant banks, universities, research agencies, government agencies, non-governmental organizations (NGOs), and individuals The NRCS may use these organizations as consultants to assist in a wide range of activities such as policy advice, NRCS s reform management, engineering services, construction supervision, financial, procurement services, social and environmental studies and identification, preparation, and implementation of projects to complement NRCS s capabilities in these areas Consultants should only be engaged when the necessary skills and/or resources to perform a project/duty/study are not available and the NRCS cannot be reasonably expected either to train or to recruit people in the time available The relationship between the NRCS and the consultant should be one of purchaser / provider and not employer / employee. The work undertaken by consultant should be regulated by a contract. The NRCS is, however, responsible for monitoring and evaluating contractor performance and outputs against project specifications and targets and should take remedial action if performance is below standard The procedures outlined herein apply to all contracts for consulting services. In procuring consulting services, the NRCS should be satisfied that the procedures to be used will result in the selection of consultants who have the necessary professional qualifications; the selected consultant will carry out the assignment in accordance with the agreed schedule, and the scope of the services is consistent with the needs of the project The NRCS should be responsible for preparing and implementing the project, for selecting the consultant, awarding and subsequently administering the contract. While the specific rules and procedures to be followed for selecting consultants depend on the circumstances of the particular case, at least the following major considerations should guide the NRCS s policy on the selection process: the need for high-quality services; the need for economy and efficiency; the need to give qualified consultants an opportunity to compete in providing the services; and the importance of transparency in the selection process Considerations could include, but are not limited to: Qualification of key personnel Experience relevant to assignment Page 15 of 44

16 Methodology used Training or transfer of knowledge and skills If the assignment includes an important component for training or transfer of knowledge and skills, the Terms of Reference (TOR) should indicate the objectives, nature, scope and goals of the training programme, including details of trainers and trainees, time frames and monitoring and evaluation arrangements. The cost for the training programme should be included in the consultant s contract and in the budget for the assignment Establishment of a list of approved service providers Where consultancy services are required on a recurring basis, a panel of consultants / list of approved service providers for the rendering these services may be established. These panels / lists should be established through the competitive bidding process, usually for services that are of a routine or simple nature where the scope and content of the work to be done can be described in detail The intention to establish a panel / list of approved service providers is published in the Government Tender Bulletin and the closing time and date for inclusion in the panel/list of approved service providers should be indicated. For this purpose, a questionnaire should make provision for the following: Full details of the service provider, among others: Composition of the firm in terms of shareholding; Personnel complement; Representation of expertise in respect of the disciplines required, e.g. accounting, legal, educational, engineering, computer, etc National / international acceptability of experts in the various professions; Experience as reflected in projects already dealt with; and Financial position Requirements for admission to the list and criteria should be linked to the numeric value in terms of which applicants will be measured, for example qualifications, experience, acceptability and resources, etc. A pre-determined standard method of awarding points should be followed The applications received should be evaluated and any rejection of applicants should be motivated and recorded Once the panel/approved list of service providers has been approved, only the successful applicants are approached, depending on the circumstances, either by obtaining quotes on a rotation basis, or according to the bid procedure when services are required, with the exception that the requirement is not advertised in the Government Tender Bulletin again. Page 16 of 44

17 14. Price Quotations 14.1 Price Quotations Process 14.2 Price Quotations requirements Transaction values up to R There is no requirement for quotations In the event Petty cash is utilised to pay for the transaction, the Bank and Cash policy must be adhered to Transaction values over R2 000 up to R At least three (3) verbal or written quotations must be obtained Where possible quotes should be from the list of prospective suppliers An official order must be placed against a written confirmation from the selected supplier if the quotation was submitted verbally Transaction values over R up to R At least three (3) written quotations must be obtained from as many suppliers as possible Suppliers should be registered on the list of prospective suppliers, exceptions may however exist. (Refer 20.2) An official order must be placed against a written confirmation from the selected supplier Transaction values over R up to R Invite and accept written price quotations for requirements up to an estimated value of R from as many suppliers as possible, Suppliers should be registered on the list of prospective suppliers The 80/20 preference point system is applicable to bids with Rand value equal to, or above R and up to a Rand value of R1 million (all applicable taxes included) No tender may be awarded to any person whose tax matters have not been declared by the South African Revenue Services to be in order. Page 17 of 44

18 15. Competitive Bids 15.1 Competitive Bidding Process 15.2 Invitation of Bids Bid documents must be compiled by making use of Standard Bid Documents, General Conditions of Contract, Special Conditions of Contract and the relevant Terms of Reference or Specifications The CFO must authorize the levying of a non-refundable deposit for Bid documents as and when required All invitations for Bid using the bidding process must be advertised in the Government Tender Bulletin for a period of at least 21 days before the closing date The BAC may approve a shortening of the closing period to a minimum of 14 days Bids received after the closing period must not be considered Bid Specification Committee The Bid specification committee shall be appointed by the CFO, on recommendation from the SCM Manager and must meet prior to the invitation of any Bid The BSC should comprise of 3 or more representatives to make up the diverse, cross functional team. The BSC may include (but not limited to): The BU Head Functional expert Managers responsible or associated with the bid, End users, Supply Chain representative, External consultants, where necessary The responsibility of the this committee is to prepare a specification or terms of reference for a bid, that is consistent with procurement policies and regulations, that covers the total scope of the project, that takes into account all the deliverables and requirements of the bid The BSC must also determine the evaluation criteria for every Bid. Page 18 of 44

19 The specifications should be written in an unbiased manner to allow all potential bidders to offer their goods and or services Evaluation criteria and bid specifications must be approved by the Bid Adjudication Committee Bid Evaluation Committee This committee is responsible for the evaluation of bids received, which includes: The assessment of functionality (the capability/ability of the bidder to execute the contract) The bidders compliance to the mandatory criteria (eg: tax clearance certificate issued by SARS, or other mandatory criteria included in the specification) Assessment of compliance to the national industrial participation programme requirements (only applicable for contracts in excess of R10 million) The BEC must only evaluate bids in accordance with the criteria specified in the bid documentation The Bid Evaluation Committee members must be appointed by the CFO The BEC should comprise of 3 or more representatives to make up the diverse, cross functional team. The BEC may include (but not limited to): The BU Head Functional expert Managers responsible or associated with the bid, End users, Supply Chain representative, External consultants or independent experts as observers, where necessary The Evaluation Committee must evaluate the functional requirements of the Bids and must make recommendations to the Bid Adjudication Committee Bid Adjudication Committee (BAC) The Bid Adjudication Committee must be appointed in writing by the CEO and the CEO will determine the term of office for members The BAC must consist of at least four senior officials constituted as follows: BAC Role Stipulations Chairperson Where possible, the chairperson should be the Chief Financial Officer. Other members The Bid Adjudication Committee should be composed of crossfunctional teams comprising: A minimum of 3 senior officials (management) SCM representative Legal representative Where considered necessary, additional officials or advisors may be co-opted on account of their specialized knowledge. Secretariat An official from the institution s SCM Unit must be made available to act as secretary. Quorum The Bid Adjudication Committee should only consider recommendations/ reports if at least sixty percent (60%) of its members are present. Secundi For the purpose of continuity and not to delay meetings, the CEO may also appoint secondi to temporarily replace members that are absent from meetings due to illness, leave, etc. The CEO will also decide Page 19 of 44

20 BAC Role BEC representation Stipulations whether or not such secundi will have the same powers as members. The project owner shall be in attendance when their bid is discussed, but will not have voting rights Members of BEC may present / assist in presenting the report to the BAC The Bid Adjudication Committee must consider the recommendations / reports of the Bid Evaluation Committee and: Make a final award Make another recommendation to the Project owner on how to proceed with the relevant procurement in the event that an award is not made The SCM unit must ensure that relevant approvals in terms of the Delegation of Authority are obtained after the BAC has made its award The Bid Adjudication Committee must ensure that: All necessary bid documents have been submitted; Disqualifications are justified and that valid and accountable reasons / motivations were furnished for passing over the bids; Scoring has been fair, consistent and correctly calculated and applied; and Bidders declarations of interest have been taken cognizance of If a bid other than the one recommended by the Bid Evaluation Committee is approved by the Bid Adjudication Committee, the CEO, must first be notified The CEO may after consideration of the reasons for the deviation, ratify or reject the decision of the Bid Adjudication Committee If the decision of the Bid Adjudication Committee to approve the one other than the one recommended by the Bid Evaluation Committee is ratified, the Auditor- General, the relevant provincial treasury and the National Treasury must be notified of the reasons for deviating from such considerations The CEO / Accounting Authority may at any stage refer any recommendation made by the Bid Evaluation Committee or the Bid Adjudication Committee back to that committee for reconsideration The Bid Adjudication Committee must also consider and rule on all recommendations / reports regarding the amendment, variation, extension, cancellation or transfer of contracts awarded The BAC is restricted to adjudicating whether the process of procurement was fair, equitable, transparent, competitive and cost effective The BAC must: Reject a Bid from a service provider who fails to provide written proof from the South African Revenue Service (SARS) that the service provider either has no outstanding tax obligations or has made arrangements to meet outstanding tax obligations Reject a recommendation for the award of a contract if the recommended Bidder has committed a corrupt or fraudulent act in competing for the particular contract Cancel a contract awarded to a service provider of goods or services if: Page 20 of 44

21 The service provider committed any corrupt or fraudulent act during the bidding process or the execution of that contract ; or Any official or other role player committed any corrupt or fraudulent act during the bidding process or the execution of that contract that benefited that service provider The BAC may disregard the bid of any bidder if that bidder or any of its directors have: Abused the institution s SCM system Committed fraud or any other improper conduct in relation to the SCM system Failed to perform on any previous contract. 16. Deviations to Normal Procurement Procedures 16.1 Deviations to the normal procurement procedures refers to special services, cases of urgency and emergency, cases where the invitation of Bids is not in the best interest of the NRCS The reasons for deviating from the normal procurement procedures must be recorded and approved in accordance with the Delegations of Authority Special services are services such as specialist technology / expertise where limited capacity in the market exists e.g. copyright or patents and investigations that require specialized testing and expertise Urgent procurement is where early delivery is of critical importance and the invitations of competitive Bids are either impossible or impractical Emergency procurement is due to imminent or transpired crises, disaster or tragedy, immediate action is necessary in order to avoid a dangerous or risky situation, misery or want Applicable rules in the case of deviations Emergency or urgent procurement must not be used to circumvent normal procurement procedures, as a result of insufficient stock-levels for items that are used daily, as a result of poor or inadequate planning or as a result of no/insufficient internal communication Ex post facto procurement may be approved in line with the delegations of authority provided the procurement was in the best interest of the NRCS. 17. Contracts and Legal Services 17.1 Contracts Contracts must be approved in terms of the DOA Prior to signing a formal contract or service level agreement with a contractor, NRCS must ensure that such contracts or agreements are legally sound to avoid potential litigation and to minimize possible fraud and corruption. This must include legal vetting by at least the Legal Services of NRCS and applicable BU Head Such contracts or agreements must be actively managed in order to ensure that both the NRCS and the contractors meet their respective obligations The procurement processes at SCM gives rise to the need for the formulation of formal contracts to ensure the necessary protection of all rights and obligations between NRCS and suppliers It is necessary to enter into a formal written contract for all SCM of goods and services estimated in value over R provided by suppliers where NRCS determines the complexity and/or risk to be significant enough to warrant it. Page 21 of 44

22 For purposes of this policy, a contract is an agreement between two or more competent persons to perform or not to perform a specific act or acts A contract will be in writing. A purchase order containing NRCS pre-printed standard terms and conditions, when accepted by a supplier, becomes a contract but a formal written contract is necessary for values over R as stated above An order should never be placed for values exceeding this amount without a contract except where negotiations to finalize a contract is underway and where orders must be placed to meet NRCS s required delivery dates. If this is done, the terms and conditions of the applicable Request for Bid (or Proposal) should be made to apply until the final contract is executed Acceptance may be either in writing or by performance unless the purchase order requires acceptance to be in writing. All agreements must be signed by the appropriate levels as designated in the Delegation of Authority Contracts generally fall into two categories of types, either for products or services and they are commitment or non-commitment, or any combination thereof All contracts should be captured on the accounting system and purchase order should also be generated from the same system. All transactions should be initiated through generation of an electronic purchase order The CFO may provide written authority to the SCM unit to negotiate a contract on behalf of NRCS, in conjunction with the Legal Division Contract Administration The SCM Unit must maintain a complete register of contracts The end-user must manage contracts and inform the Supply Chain Manager of any nonperformance or breach of contracts by the service providers Any contract variation must be approved as per the delegations of authority It is recognized that, in exceptional cases, NRCS may deem it necessary to expand or vary orders against the original contract The absence of a prescribed threshold for the expansion or variation of orders against the original contract has, however, led to gross abuse of the current SCM system For transactions with an original value over R , the BAC may expand or vary any contract by not more than % or R20 million (including all applicable taxes) for construction related goods, works and/or services and % or R15 million (including all applicable taxes) for all other goods and/or services of the original value of the contract, whichever is the lower amount For transactions with an original value of R or less, the CFO may expand or vary any contract by not more than % for construction related goods, works and/or services and % for all other goods and/or services of the original value of the contract, whichever is the lower amount Any deviation in excess of these thresholds must be approved by the CEO Over 20% for construction related goods, works and/or services and Over 15% for all other goods and/or services of the original value of the contract, whichever is the lower amount The cases approved by the CEO should be exceptional, and supported by thorough arguments and business cases from the responsible BU. Page 22 of 44

23 Once approval is provided, the NRCS must forward the approval together with a motivation, as required by National Treasury to National Treasury and the Auditor-General within 10 Days The contents of paragraph , , are not applicable to transversal term contracts facilitated by the relevant treasuries and specific term contracts as in such contracts, orders are placed as and when commodities are required and that at the time of awarding the contract, required quantities are not known If a Service Provider fails to deliver any of or all of the goods or fails to perform services within the period(s) specified in the contract, the NRCS shall, without prejudice to its other remedies under the contract, deduct from the contract price as penalty, a sum calculated on the delivered price of the delayed goods or unperformed services. The NRCS may also consider termination of the contract Controls will be implemented to ensure that contracts are not extended to circumvent quote or bid process 17.3 Legal Services Legal Services should be involved when all contracts/memorandum of agreements are concluded. 18. Other considerations 18.1 Risk Management All NRCS staff members involved in procurement must comply with the approved Risk Management and Fraud Prevention Plan The Supply Chain Manager is responsible for setting up independent verification control points within the SCM processes to mitigate risks Risks and rewards of ownership will only be transferred to the NRCS on acceptance, of the assets or goods on the premises of the NRCS by a duly authorised NRCS official The responsibilities of reporting any known fraudulent or non-compliance activity will rest with all NRCS officials The Supply Chain Manager must report on regularly to the CFO on the performance of SCM Training of SCM Officials The CFO must ensure that officials implementing the NRCS s supply chain management system are trained and deployed in accordance with the requirements of the Framework for Minimum Training and Deployment issued by the National Treasury Non-Compliance NRCS officials must comply with the standard operating procedures issued in terms of this policy Where an NRCS official is suspected of breaching the policy or allegation made against an official, an internal investigation must be undertaken preferably by Internal Audit division and depending on the outcome, internal, civil and/or criminal legal action may be instituted against the employee. Conduct that may constitute an offence will be reported to the South African Police Services Any disciplinary action arising from breach of this policy will be taken according to the disciplinary code and grievance procedure of the NRCS. Page 23 of 44

24 18.4 National Industrial Participation Programme (NIPP) The NRCS must obtain clearance for a recommended bidder from the Department of Trade and Industry, in respect of contracts which are subject to the National Industrial Participation Program of that Department Reporting of Supply Chain Management Information The CFO must submit to the relevant Treasury such supply chain management information as that Treasury may require. 19. Compliance, Responsibilities and Accountabilities 19.1 SCM Official s responsibilities Each SCM official must: Ensure that in any procurement related negotiation or evaluation, all participants are dealt with fairly with all quotations and bids in a manner that reflects the ethical principles in the code of conduct for SCM practitioners as contained in Practice Note SCM4 of Comply with the code of conduct which obliges all officials to refuse gifts, hospitality, favors or any other act that would materially compromise the credibility and integrity of the SCM system Comply with the highest ethical standards in order to promote Mutual trust and respect; and An environment where business can be conducted with integrity and in a fair and reasonable manner Adhere to The National Treasury s Code of Conduct for Supply Chain Management Practitioners Sign the relevant Codes of Conduct with an undertaking to adhere to their requirements as per National Treasury Practice Note No. 7 of 2009/2010. This includes newly appointed officials or officials transferred to the SCM unit should also be required to sign the Codes of Conduct Comply with the NRCS Code of Ethics, which acts as a guideline for ethical behavior Upon becoming aware of a breach of or failure to comply with any aspect of the supply chain management system, must immediately report any the breach or failure to the Accounting Authority, in writing Responsibilities of all employees, including SCM Officials All employees must adhere to the SCM policies and procedures All employees must recognize and disclose any conflict of interest that may arise; Must treat all suppliers and potential suppliers equitably and fairly; May not use their position for private gain or to improperly benefit another person; Must ensure that they do not compromise the credibility or integrity of the supply chain management system through the acceptance of gifts or hospitality or any other act; Must be scrupulous in their use of public property; and Must assist CEO and Accounting Authority in combating corruption and fraud in the supply chain management system Maintain the highest standards of honesty, integrity, impartiality, transparency and objectivity Remain and appear to remain independent and at arms- length from any supplier. Page 24 of 44

25 Act in such a manner that NRCS reputation is not compromised Avoid any conflict of interest If a NRCS supply chain management official or any other role player, or any close family member, partner or associate of such official or other role player has any private or business interest in any contract to be awarded, that official or other role player must Disclose that interest; and Withdraw from participating in any manner whatsoever in the process relating to that contract. In all cases of withdrawal, the proceedings must be documented All gifts received by NRCS employees or Board Members from suppliers, related to the procurement activities, shall be declared with the CEO by signing the gift register A NRCS staff member who becomes aware of a breach of or failure to comply with any aspect of the SCM system whether by employees or Board members, must immediately report the breach or failure to the CFO, CEO and the Board in writing NRCS Management Responsibilities Each manager is responsible for Ensuring application of this policy in their respective business units / regions Ensuring staff are aware of their responsibilities in terms of this policy Reporting to or ensure the reporting to the SCM Manager (in the office of the CFO) as required in terms of this policy Ensuring procurement for their business unit is in line with this policy, and all other financial and non-financial policies NRCS Management must take all reasonable steps to prevent abuse of the SCM system, and investigate any allegations against an NRCS staff member or other role player involved in corruption, improper conduct or failure to comply with the SCM When justified, the Management must: Take steps against such NRCS staff member or other role player; Reject a recommendation for the award of a contract if the recommended bidder has committed a corrupt or fraudulent act in competing for the particular contract; or Cancel a contract awarded to a supplier of goods or services if found that the contractor: Committed any corrupt or fraudulent act during the bidding process or the execution of that contract; or Any NRCS staff member or other role player committed any corrupt or fraudulent act during the bidding process or the execution of that contract that benefited that supplier Staff that transgress the SCM process could be charged with criminal charges when found guilty and a case at the South African Police Services will be opened where fraud is involved Finance Department s responsibilities The Finance department is responsible: For maintaining the SCM policy and related forms Maintaining the a system of SCM for NRCS Implementing controls in respect of NRCS SCM Convening committees required to ensure effective SCM Report to the CEO any contraventions of this policy Reporting to National Treasury, the AG, the Board and the ARC, any information as required in terms of SCM. Page 25 of 44

26 SECTION 3: SCM PROCEDURES 20. SCM transaction principles 20.1 NRCS Financial Thresholds Transaction values up to R One verbal or written quote will be sufficient In the event Petty cash is utilised to pay for the transaction, the Bank and Cash policy must be adhered to Suppliers should be registered on the list of prospective suppliers. Exceptions may exist in terms of para Transaction values over R2 000 up to R At least three (3) verbal or written quotations must be obtained Where possible quotes should be from the list of prospective suppliers An official order must be placed against a written confirmation from the selected supplier if the quotation was submitted verbally Suppliers should be registered on the list of prospective suppliers. Exceptions may exist in terms of para Transaction values over R up to R At least three (3) written quotations must be obtained from as many suppliers as possible Suppliers should be registered on the list of prospective suppliers, exceptions may however exist An official order must be placed against a written confirmation from the selected supplier Transaction values over R up to R Invite and accept written price quotations for requirements up to an estimated value of R from as many suppliers as possible, Suppliers should be registered on the list of prospective suppliers The 80/20 preference point system is applicable to bids with Rand value equal to, or above R and up to a Rand value of R1 million (all applicable taxes included) No tender may be awarded to any person whose tax matters have not been declared by the South African Revenue Services to be in order A valid Tax clearance certificate must be attached Exceptions iro quotations and RFQ s Where no suitable suppliers are available from the list of prospective suppliers, written price quotations may be obtained from other possible suppliers If it is not possible to obtain at least three written price quotations, the reasons should be recorded and approved by the CFO Where the market or the service is highly specialized it may be appropriate to confine quotations to known vendors For instances where this limited source approach is applied, the NRCS staff member requesting this process must document the reasons for it and how the process to fulfill the requirements will not affect open and effective competition Goods and Services above the transaction value of R (VAT Included) The NRCS must invite competitive bids for all procurement above R Page 26 of 44

27 Competitive bids should be advertised in at least the Government Tender Bulletin and in other appropriate media should NRCS deem it necessary to ensure greater exposure to potential bidders. The responsibility for advertisement costs will be that of NRCS Should it be impractical to invite competitive bids for specific procurement, e.g. in urgent or emergency cases or in case of sole supplier, the NRCS may procure the required goods or services by other means, such as price quotations or negotiations in accordance with Treasury Regulation 16A The reasons for deviating from inviting competitive bids should be recorded and approved by the CEO The NRCS is required to report within ten working days to the relevant treasury and the Auditor-General all cases where goods and services above the value of R1 million (VAT inclusive) were procured in terms of Treasury Regulation 16A 6.4. The report must include the description of goods or services, the name/s of the supplier/s, the amount/s involved and the reasons for dispensing with the prescribed competitive bidding process Goods, works or services may not deliberately be split into parts or items of lesser value merely for the sake of procuring the goods, works or services otherwise than through the prescribed procurement process. When determining transaction values, a requirement for goods, works or services consisting of different parts or items must as far as possible be treated and dealt with as a single transaction The 90/10 preference point system is applicable to bids with a Rand value above R1 million (all applicable taxes included) Refer to paragraph 21 (below) for instances where functionality is a criteria A valid Tax clearance certificate must be attached. 21. Bids based on functionality as a criterion 21.1 In general, not all bids should be invited on the basis of functionality as a criterion. The need to invite bids on the basis of functionality as a criterion depends on the nature of the required commodity or service taking into account quality, reliability, viability and durability of a service and the bidders technical capacity to execute the contract For goods and services exceeding R competitive bids must be invited, unless written approval to do otherwise is obtained and PPPFA 80/20 principle must be applied and functionality evaluation criterion may be considered For goods and services exceeding R1 million and above, competitive bids must be invited, unless written approval to do otherwise is obtained and PPPFA 90/10 principle must be applied and functionality evaluation criterion may be considered Valid Tax clearance certificate must be attached When NRCS invites a bid that will also be evaluated on the basis of functionality as a criterion, the NRCS must clearly specify the following aspects in the bid document Functionality dimensions Evaluation criteria for measuring functionality Weight of each criterion Applicable Details The evaluation criteria may include criteria such as the consultant s relevant experience for the assignment, the quality of the methodology; the qualifications of key personnel; transfer of knowledge etc. The weight that is allocated to each criterion should not be generic but should be determined separately for each bid on a case by case basis. The applicable values that will be utilized when scoring each criterion Page 27 of 44

28 Functionality Details dimensions value should be objective. As a guide, values ranging from 1 being poor, 2 being average, 3 being good; 4 being very good and 5 being excellent, may be utilized. Minimum The minimum qualifying score that must be obtained for functionality in qualifying order for a bid to be considered further should not be generic. It should score for be determined separately for each bid on a case by case basis. The functionality minimum qualifying score must not be prescribed so low that it may jeopardise the quality of the service required nor so high that it may be restrictive to the extent that it jeopardizes the fairness of the SCM system 22. NRCS Suppliers 22.1 Registration of suppliers on the accounting system Suppliers standing data form (AA135) must be completed for all new suppliers The minimum supporting documentation that needs to accompany the completed registration form is: Valid and original Tax Clearance Certificate issued by SARS Proof of company registration or ownership Completed EFT form (AA138) confirming bank details and indemnifying the NRCS from paying the supplier in the bank account provided Proof of existence of bank account in the exact name of the trading entity or registered company (i.e. cancelled cheque, original deposit slip or EFT form stamped by bank) Valid and original B-BBEE Status Level Verification Certificate or a certified copy thereof Completion and submission of Standard Bidding Document 4 Declaration of Interest SCM unit must ensure that the B-BBEE Status Level of Verification Certificates submitted are issued by the following agencies: B-BBEE Status Bidders other than EMEs Bidders who qualify as EMEs Agencies Verification agencies accredited by SANAS; or Registered auditors approved by IRBA Accounting officers as contemplated in the CCA; or Verification agencies accredited by SANAS; or Registered auditors. (Registered auditors do not need to meet the prerequisite for IRBA s approval for the purpose of conducting verification and issuing EMEs with B-BBEE Status Level Certificates) Establishment of supplier database The SCM Manager should compile a list of prospective suppliers to be used for the procurement requirements. This list should be used effectively to promote Black Economic Empowerment through the participation of black owned enterprises (as defined in the Strategy for Broad-Based Black Economic Empowerment issued by the Department of Trade and Industry) as well as the promotion of businesses owned by other Historically Disadvantaged Individuals (HDIs) The NRCS should at least once a year, through local representative newspapers or by any other means, invite prospective suppliers to apply for evaluation and listing as prospective suppliers. The list should be updated on an ongoing basis in order to accommodate especially Page 28 of 44

29 newly established black owned and empowered businesses and other newly established HDI suppliers Once a list has been compiled per commodity and type of service, price quotations should be invited there from. The invitation of price quotations from the compiled list of prospective suppliers per commodity or service should be done on a rotation basis in such a manner that ongoing competition amongst suppliers is promoted. Prospective suppliers must be allowed to submit applications for listing at any time. 23. Pre SCM Process 23.1 Process preceding the SCM process Business unit need identified Inclusion in strategy / business plan Reassess procurement request Estimated cost of goods / services over R No RFQ Process Approval by line manager No Yes Yes Include in demand management plan (Tender process) No Establish timing of procurement (with CFO) Approval in terms of DOA No Yes Inclusion on budget No Establish funding requirements (with CFO) Yes Approval ito DOA No Yes Transaction R and over Yes Prepare business case / detailed motivation and Requisition No Prepare requisition and specifications as required Approval by line manager Yes No Yes Submit to SCM for procurement of goods / services Proceed to RFQ / Tender process 23.2 Process preceding the SCM process Business units must identify the need for goods or services These needs, if over R must be included in the demand management plan for the year All procurement needs for a financial year must also be included in the budget for the respective business units Where a procurement request is not included in the demand management plan or the budget, and there is a genuine need for the goods / services, the CEO / CFO / the Board may approve such request in line with the DOA Business units must submit the following to the SCM section for the procurement process to proceed: Final approved business cases for all transactions with estimated costs of R or over. Page 29 of 44

30 Completed and approved requisitions for all other transactions The SCM unit shall only process requests which are: Approved by the relevant line manager Accompanied by sufficient supporting documents in the case of technical specifications Complete Adequate to ensure a transparent and fair procurement process If upon assessment of the specifications / terms of reference, the SCM unit finds that they are insufficient, the SCM unit may request business units to redo the specifications. 24. Obtaining of quotes / RFQ Process The RFQ process is followed for all transactions under R Process flow for RFQ process BU Responsibility Request for service/ goods under R from Business Unit to SCM Search database for suppliers Update database of suppliers with additions Adequate number of suppliers No Search market / engage enduser for suppliers SCM Responsibility Obtain quotes Yes N/A Quotes not applicable Required number of quotes obtained Yes Evaluate quotes and Generate Purchase Requisition (PR) No Obtain approval ito DOA / Workflow Yes Yes No BU Responsibility PR Approved Yes Generate Purchase order (PO) SCM Responsibility Issue letter of award / PO / enter contract negotiations Page 30 of 44

31 24.2 Obtaining quotes for RFQ The Procurement Officer will endeavor to obtain quotes from the list of approved suppliers If the number of currently approved suppliers is less than three, or if the number of quoting suppliers should be extended, the procurement officer may extend the invitation to quote to other suppliers Where an invitation to quote has been extended to a supplier which is not a vendor on the accounting system, the procurement officer will ensure that the vendor is procedurally engaged, approved and loaded on the accounting system Where the required number of suppliers are engaged, but the minimum number of quotes are not obtained, the CFO and CEO shall approve for transactions lower than R , and transactions R and over, respectively, in terms of the DOA Quotes not required Three quotes will not be required under the following circumstances: If goods and services are sourced from a supplier in terms of a written contractual agreement, within the contractual amounts (if applicable); In the case of an MOU or agreement in terms of National Treasury requirements Subscriptions and /or memberships with professional bodies; Training where such training is not provided by the general market; Conferences and seminars; Repayment of travel expenditure to customers and refunds to employees; Emergency expenses; and Quotes are not required for statutory services for example municipal accounts etc If there are exceptional circumstances and the exception is motivated in writing and approved in terms of the Delegation of Authority Issuing of Requisitions Upon receiving the quotes from the suppliers, the procurement officer and/or evaluation committee will evaluate and recommend the successful supplier on the basis of the best balance of: Price Quality BBBEE score Delivery lead time Requisitions are raised by the administrator in the business unit and approved by the business unit manager on the accounting system. Dependent on the value, approval may be required at higher levels in accordance with the Delegation of Authority The SCM unit shall only action requisitions that have been approved by line management in terms of the Delegation of Authority on the accounting system Thorough documentation for emergency purchases should be prepared by line management and approved or ratified by the relevant Executive Orders The procurement officer will create a requisition on the accounting system which will route the purchase requisition to appropriate manager for approval Quoted specifications and/or goods and services Actual promised delivery date. Page 31 of 44

32 Once the approval has been actioned on the system, the requisition will be sent to the SCM unit for conversion to an order. The purchase order will be sent through to successful suppliers via fax or All purchase orders and supporting documentation will be filed by the SCM unit GRV and Payments When goods or services are received, a GRV will be issued on the system by Finance or the Business Unit. After GRV, the documents are forwarded to accounts payable for payment. 25. The Bid / Tender Process The bid / tender process is followed for all transactions above R Process flow for bid / tender process Request for service/ goods above R from Business Unit to SCM Convene Bid Specification Committee (BSC) Business unit to re-assess submissions / specifications Prepare Bid Specifications in compliance with policy Approval by Bid Adjudication Committee (BAC) No Reasons / guidance provided Advertisement of Bid / Tender Yes Convene Bid Evaluation Committee (BEC) Evaluate tenders and preparation of report recommending award Final award recommended No Submissions prepared for approval of award Yes Yes Approval / Award by Bid Adjudication Committee (BAC) No No Alternative award proposed Yes Approval in terms of Delegation of Authority Alternative award ratified by CEO Issue letter of award / enter contract negotiations Page 32 of 44