The SmartProcurement ‘Tenders in Government’ Technical Workshop met with such a positive response that this niche P & SM online media organisation is planning to take the one-day programme country-wide, for the benefit of SCM practitioners on the procure and supply side.
A total of 65 delegates attended the hands-on workshop on the third day of the Summit, which was facilitated by Riana Bredell, Senior Manager Consulting at Deloitte, together with Tjaart van der Walt, a highly experienced procurement professional in the field of Bids and Tenders. The demographics favoured the public sector which represented two thirds of the attendees.
SmartProcurement specifically developed this workshop to address the confusion and frustration which exists throughout the economy regarding Government’s complex supply chain management framework which, must be read in conjunction with a web of legislations, regulations, directives, guides and policy documents which have arisen since 1994.
The policies, procedures and systems differentiate national and provincial Government from municipalities and from State Owned Enterprises. Tertiary educational institutions are exempted as they fall under their own Act (and regulations) of Parliament. As a result, the present climate is one of ignorance (particularly of the law) and mistrust which must urgently be addressed by the authorities. The anomalies and dirth of conflicting provisions create a field day for lawyers and for those with criminal intent. Just a few examples:
•The Preferential Procurement Act (PPPFA) is a useful policy tool for Government to achieve transformational objectives. Yet, more than one delegate pointed out that the ‘points system’ is actually perceived to be against the interests of SMME’s where most people who were historically marginalized find themselves. It is perceived as a price preference tool that is not conducive to small business people. (The BBBEE Codes of Conduct are seen by many as an incentive and not a penalty system – Ed)
•The preference class is now termed Historically Disadvantaged Individual (HDI) as opposed to the prior term Previously Disadvantaged Individual. It now includes all women and disabled persons. The crux of the matter is that definitions are crucial in the public environment and often differ from those in the private sector.
•To tender for government business you need a valid tax clearance certificate. However, such a certificate is only valid for 12 months from issue and an out of date certificate will disqualify your bid. Furthermore, as a supplier you need to provide a new certificate with each bid you make, there is no central repository for this crucial (to the tender process) document, not even with SARS.
Bredell detailed the practicalities of the Three Bid Committees system (Specification/ Evaluation/ Adjudication), which now straddles the Government tendering process.
This system offers an efficient mechanism which, if correctly implemented, also provides the checks and balances essential for countering fraud, fronting and other unlawful situations, said Bredell.
The key lies in the effectiveness and competence of the responsible and accountable personnel who must rely on “training, training and more training” to master the complexities of public sector procurement via tendering, said Bredell.
Some of Bredell’s pointers:
•The members of the Specification Committee are crucial because very often detail of the product or service required by the end user is missing. Millions of Rands are wasted owing to the poor specification process adopted in many departments and municipalities, said Tjaart Van der Walt.
•The members of the Bid Evaluation Committee must be carefully selected. They must have the technical and operational expertise essential to the commodity (product or service) that is being sourced.
•Only involve external advisors when the technical expertise is lacking in- house or, where a special skills transfer is required as, for instance, when a new technology is being acquired.
Bredell also gave detailed attention to the often vexing exercise of ‘Mastering the Maths’. How to perform the calculations and award the points?
No system is needed for purchases under R30 000. So this is an area where diligent executives can in fact promote local HDIs and SMEs with meaningful support. While the amount is relatively low it is where the many, regular transactions are to be found in most departments. This implies that a tax certificate is only mandatory above a purchase price of R30 000.
It is clear that the procurement officer’s task is to analyse and verify the suppliers’ details and claims and, based on her findings, to allocate the appropriate points. Hence, for example, owners must be South African citizens (prior to the Interim Constitution of 1999) to qualify for those points.
Likewise, procurement is free to provide the desired criteria for the product/ service and can, where the 80:20 rule applies (transaction values below R500 000), in an example technical application, allocate 40 points for price and 40 for functionality, provided that the formula is always clearly specified and transparent up-front.
Negotiations in Government procurement is always a sensitive subject as, by the definition of the tender process, bargaining with service providers (SP) or suppliers appears to be excluded. “Not so,” said Bredell. “Negotiations around detail are very important in Government contracts. What must not happen is that negotiation discussions disadvantage a party. Nevertheless, you are free to discuss price and get as much value as you can for your organisation”. Also, every transaction under R30 000 is fully negotiable by public sector buyers, which accounts for expenditure of many millions of Rands.
Managing contracts and measuring supplier performance is a crucial responsibility (and accountability), of public sector buyers. Bredell stressed that in a contracts office it is the onus of Government organizations to:
•be clear on all the roles and each of the deliverables expected from an SP/ supplier;
•set-up correct project management structures to maximise the value of each contract;
•be sure to manage all those contracts in writing with detailed minutes of every related meeting; and
•it is not necessary to have a Service Level Agreement (SLA) in all cases, “only where you need to further define who does what and when. Then by all means take it a step further with the supplier and put it in writing and that then becomes your SLA,” explained Bredell.
Bredell also addressed a recurring theme throughout the Summit, that of the urgent need for mechanisms of standardisation and uniformity in public sector SCM. “Do not always wait for Treasury to take the initiative,” she pointed out. “You can begin by standardizing your own organization, such as with:
•general conditions of contract;
•policy and procedures;
•the central filing of supplier information on an annual basis which is available to all members of your team”.
Bredell concluded the Q&A session with and observation that “there is a strong case for electronic databases which can make it easier for HDIs and SMEs to be absorbed into the mainstream economy. If we can simplify, not complicate, the entry process to SCM, we can go a long way to assisting real transformation and make a difference
where it is needed most. Even with the most sophisticated ICT system, you must always cater for the lowest common denominator in the supplier groups, those who have the capability to communicate only in less technological means”.
For further information on SmartProcurement‘s future ‘Tenders in Government’ workshops, please contact Erieka Santos on 0861 334 326 or email her at email@example.com