MFMA SCMPPOS Learning material Your partner in worldclass

MFMA SCM-PPOS Learning material Your partner in world-class business learning Date: 2013

MFMA SCM PPOS = NDP, 2013 -2030 Fix the engine room to get SA growing says Manuel” – Business Day, 12 March 2013 It is the contestation of Minister T Manuel, Minister in the Presidency, that the implementation of the National Development Plan [NDP] depends on fixing the machinery of the state, so that it delivers efficiently. He is of the opinion that economic development in a developmental State cannot be achieved if the ‘engine room’ does not work. He also states that the search for quick fixes has diverted attention from more fundamental priorities and this create instability in organisational structures and policy approaches that further strain limited capacity The approach of the Treasury is to assist in fixing the Engine Room by providing practical tools related to a sound SCM System which is fair, equitable, transparent, competitive and cost-effective whilst at the same time ensuring BBBEE 2

MFMA SCM PPOS – MFMA ENGINE ROOM 3

MFMA SCM PPOS – MFMA ENGINE ROOM 4

FMIP III ENGINE ROOM CRITERIA PER KEY ACTIVITY & FINANCIAL DISCIPLINE KRA 1 INSTITUTIONAL REGULATORY PLATFORM PFM DASHBOARD KRA 2 ORGANISATIONAL KNOWLEDGE PLATFORM KRA 3 - INDIVIDUAL PFM CD PLATFORM KRA 4 -STAKEHOLDER PLATFORM • Constitutional • M/PFMA • PSA/MSA • DORA • TR's • TI's [NT/PT] • STANDARDS • Delegation System & admin actions • Judiciary • IGR • Academia • Prof Bodies • NT • PT • Loc Govt • AA/AO • CFO/Line management • PFM Practitioners • AA/AO/CFO Guide • Instr/SOP's/Policies • Delegations • Systems • Risk Mgt • IC • Complaince and Corrections • M&E & FMCMM • Comm of Practice INSTITUTIONAL ORGANISATIONAL STAKEHOLDER INDIVIDUAL • Org structure and JD • Competency frwk • Selection, assessment & recruitment • On-boarding • Career pathing • IPMDS • Retention & Succession • ILM • ETD delivery model

FINANCIAL DISCIPLINE READINESS 80% 70% 3=75% - NEEDS REVIEW 60% 2=50% - INADEQUATE GOVERNANCE 50% MA FA 40% AM 30% SCM MISCELLANEOUS 20% 10% 0% 1 2 3 Presentation by FMIP III team 4

MFMA SCM PPOS – SCM ENGINE ROOM MUNICIPAL SCM SYSTEM MAP [NOTE that public sector SCM provides for 3 systems – (1)goods and services, (2)infrastructure, (3)immovable property INSTITUTIONALISATION SCM System (Legislative environment inclusive of Preferential Procurement) Planning SCM Function, Unit and Capacity Building Delegations Roles and responsibilities SCM Governance: ·Ethics ·SCM abuse system ·Complaints, disputes, enquiries and objections mechanism ·SCM related appeals ·Compliance ·Access to Information Committee System: ·Specification Committee ·Evaluation Committee ·Adjudication Committee ·IDMS (Infrastructure Development Committees ·Disposal Committee ·SCM abuse, complaints, M&E Committee ·Secretariat service ·Resolution of committee disagreements DEMAND MANAGEMENT Needs analysis (inclusive of Annual Procurement Plan) ACQUISITION MANAGEMENT Acquisition Management System ·Compilation of bid documents ·Receipt and opening of bids ·Evaluation and adjudication of bids Funding Specifications/To. R Database of suppliers Strategic sourcing Acquisition process: ·Petty cash ·Verbal Quotes ·Written Quotes ·Competitive bidding ·Limited bidding ·Transversal bids ·Direct negotiation ·Consultants ·IT ·Banking ·Safety arrangements ·Procurement abroad ·Organs of state ·Roster ·List of selected suppliers ·Emergency ·Urgent procurement ·Unsolicited bids ·Sponsorships LOGISTICS MANAGEMENT Inventory management: ·Requisition ·Placing orders ·Receiving goods ·Returning goods ·Goods distribution ·Warehouse management ·Matching documentation ·Preparation for payment/Accounts payable Inventory stock count, verification &reconciliation (including ICN mgt) and treatment of discrepancies MOVABLE/IMMOVAB LE ASSET MANAGEMENT [Inclusive of biological assets/infrastructure assets] Management System) Contract negotiation, administration, management and contract related risk management Responsibilities Planning Capital projects Internal controls MATR Land Disposal Policy DISPOSAL MANAGEMENT Inventory disposal Preparation Process Control of documentation Immovable Asset disposal Advertisement Application Approval Negotiation Risk and Performance Management ·Risk management ·Guarantees ·SCM performance review ·Supplier performance ·Reporting of SCM information ·Optimal system utilisation ·Safeguarding of SCM information 7

MFMA SCM PPOS – HOW TO USE SCM PPOS AND GUIDE Both documents are divided in Modules • • • Module 1 – General Module 2 – Institutionalisation Module 3 – Demand Management Module 4 – Acquisition Management Module 5 – Contract Management Module 6 – Logistics Management Module 7 – Immovable Asset Management Module 8 – Disposal Management Module 9 – Risk and Performance Management SCM PPOS consist of Parts which provide the details as per index Each Part consists of: • • Prescript Policy – which is focus area of Council Principles – which is focus area of the institution and its management Operational – which is the focus area of the SCM user and practitioners Each Module provides for case studies and/or assignments for management and users and practitioners. Councillors only have one case study. 8

MFMA SCM PPOS – MODULE 1 INSTITUTIONALISATION SCM System (Legislative environment inclusive of Preferential Procurement) 1. Country ruled by LAW Planning 2. 58 pieces of legislation governing SCM Function, Unit and Capacity Building 3. Objective: To ensure effective, efficient and Delegations Roles and responsibilities SCM Governance: ·Ethics ·SCM abuse system ·Complaints, disputes, enquiries and objections mechanism ·SCM related appeals ·Compliance ·Access to Information Committee System: ·Specification Committee ·Evaluation Committee ·Adjudication Committee ·IDMS (Infrastructure Development Management Committees ·Disposal Committee ·SCM abuse, complaints, M&E Committee ·Secretariat service ·Resolution of committee disagreements System) uniform SCM practices, whilst at the same time promoting BBBEE and SMME’s 4. SCM system includes demand mgt, acquisition mgt, logistics mgt, disposal mgt, risk mgt and performance mgt 5. AO must have an operational SCM Unit under the direct supervision of the CFO 6. Delegations within a specific framework 7. Advisors may not make decisions 8. SCM Principles 9

MFMA SCM PPOS – MODULE 1 INSTITUTIONALISATION SCM System (Legislative environment inclusive of Preferential Procurement) Planning SCM Function, Unit and Capacity Building Delegations Roles and responsibilities SCM Governance: ·Ethics ·SCM abuse system ·Complaints, disputes, enquiries and objections mechanism ·SCM related appeals ·Compliance ·Access to Information Committee System: ·Specification Committee ·Evaluation Committee ·Adjudication Committee ·IDMS (Infrastructure Development Management System) Committees ·Disposal Committee ·SCM abuse, complaints, M&E Committee ·Secretariat service ·Resolution of committee disagreements 1. MFMA 2. SCM TR + MATR 3. CIDBA 4. PPPFA 5. BBBEE 6. COMPETITION ACT 7. CORRUPT ACTIVITIES ACT 8. PAJA 9. PAIA 10. DELEGATIONS 10

MFMA SCM PPOS – MODULE 1 INSTITUTIONALISATION inclusive of Preferential Procurement) CASE STUDY: Planning i. SCM System (Legislative environment SCM Function, Unit and Capacity Building What are the five pillars of SCM to ensure it complies with the Constitution, section 217? Delegations Roles and responsibilities SCM Governance: ii. Why do you need to adhere to the legal prescripts? ·Ethics ·SCM abuse system ·Complaints, disputes, enquiries and objections mechanism ·SCM related appeals ·Compliance ·Access to Information iii. What is the specific legislation applicable to your area of responsibility? Committee System: ·Specification Committee ·Evaluation Committee ·Adjudication Committee ·IDMS (Infrastructure Development Management System) Committees ·Disposal Committee ·SCM abuse, complaints, M&E Committee ·Secretariat service ·Resolution of committee disagreements iv. What are the specific elements you as a manager want to see in the municipal SCMP 2 OS? 11

MODULE 2 - INSTITUTIONALISATION SCM System (Legislative environment 1. supervision of the CFO inclusive of Preferential Procurement) Planning AO must have an operational SCM Unit under the direct 2. Application of preference system SCM Function, Unit and Capacity Building 3. Delegations within a specific framework Delegations 4. Advisors may not make decisions Roles and responsibilities 5. Roles and responsibilities of: SCM Governance: ·Ethics ·SCM abuse system ·Complaints, disputes, enquiries and objections mechanism ·SCM related appeals ·Compliance ·Access to Information • Council, AO and CFO • Bid Committee (roles, establishment and composition) • Bid Evaluation Committee (roles, establishment and composition) Committee System: • ·Specification Committee ·Evaluation Committee ·Adjudication Committee ·IDMS (Infrastructure Development Management Committees ·Disposal Committee ·SCM abuse, complaints, M&E Committee ·Secretariat service ·Resolution of committee disagreements Spec Bid Adjudication Committee (roles, establishment and composition) System) 6. Ethics – Code of Conduct, declaration of interest, fraud and corruption and fronting, SCM abuse, complaints and disputes, access to information 7. Committee System 12

How Do I Apply My Mind? • TEST: (tick-off) 1. All relevant and permissible facts and circumstances were taken into consideration. 2. All prescripts, limits and conditions are adhered to. 3. Ensure decision is within ambit of delegation. 4. Ensure result of action/decision will serve a legal permissible purpose. 5. Ensure result falls within ambit of budget, budget description and objectives of

MODULE 2 - INSTITUTIONALISATION BID SPECIFICATION COMMITTEE Purpose: Determine Specs/To. R ·Line function identify need ·Line function & SCMU prepare specifications and bid documents ·SCMU facilitate and approve BSC members ·Line function maintain minutes BSC: ·Approve Bid documentation ·Approve Specifications ·Consider special conditions ·Approve evaluation criteria and weights ·Consider risks ·Consider contract requirements ·Delegated Authority considers minutes and signs-off on bid documentation ·SCMU advertise bid ·Line Function hold briefing/site meeting (optional) BID EVALUATION COMMITTEE Purpose: Evaluate bids received ·SCMU receive and stamp bids ·SCMU prepare bids for evaluation ·SCMU validate declarations and claims ·SCMU facilitate and approve BEC members ·SCMU/Line function maintain minutes of BEC meetings BEC: ·Evaluate bids as per evaluation criteria and weights ·Consider additional objective criteria ·Verify validity of claims/declarations ·Consider potential risks and make recommendations for mitigation ·Consider contractual issues ·Consider presentations (if part of procurement process) ·SCMU facilitate request for further information ·BEC review recommendation if BID ADJUDICATION COMMITTEE Purpose: Make final recommendation ·SCMU facilitate and AO approve BAC members ·SCMU maintain minutes of BAC meetings ·SCMU submit minutes and BEC resolution to BAC for adjudication BAC: ·Consider recommendations from BEC ·Consider additional objective criteria ·Consider potential risks and make recommendations for mitigation ·Consider contractual issues ·Consider validity of procurement process Other matters by BAC: ·Consider extension/ expansion/ variation of contracts ·Consider unsolicited bids ·Consider limited bid applications ·SCMU facilitate request for further information ·SCMU submit minutes and resolution to AO/delegated SECRETARIAT FUNCTION Purpose: Maintain portfolio of evidence for bid processes ·Compile agenda ·Issue notice of meeting ·Prepare meeting documentation ·Execute administrative and logistic functions for committee ·Maintain expenditure register for committee ·Maintain attendance register ·Maintain declaration register ·Maintain record of meeting (minutes and voice recording – if required) ·Prepare and maintain ‘briefing sessions’ and/or ‘presentation sessions’ documentation - if part of procurement process ·Maintain register of access to information ·Secure all bid documents ·Facilitate documentation flow between committees and relevant delegated authorities ·Maintain portfolio of evidence file per bid 14

MODULE 2 - PAIA Information access Informing the unsuccessful bidders Disclosure of information Refer to section 42 of PAIA – commercial information Publishing of award 15

MODULE 2 - INSTITUTIONALISATION SCM System (Legislative environment inclusive of Preferential Procurement) Planning SCM Function, Unit and Capacity Building Delegations Roles and responsibilities SCM Governance: ·Ethics ·SCM abuse system ·Complaints, disputes, enquiries and objections mechanism ·SCM related appeals ·Compliance ·Access to Information Committee System: ·Specification Committee ·Evaluation Committee ·Adjudication Committee ·IDMS (Infrastructure Development Management System) i. CASE STUDY: May a member of the Bid Evaluation Committee, be a member of the Bid Adjudication Committee? ii. What are you to do if a Councilor wishes to discuss or participate in a tender? iii. May you accept gifts and if so, where do you declare gifts? iv. What do you do if the Municipal Manager decides to award the bid to another bidder, irrespective that the Bid Adjudication Committee recommended another bidder? Committees ·Disposal Committee ·SCM abuse, complaints, M&E Committee ·Secretariat service ·Resolution of committee disagreements v. What is different with a construction/infrastructure tender? 16

MODULE 3– DEMAND MANAGEMENT Needs analysis (inclusive of Annual System of Demand Management Procurement Plan) • Establishment of a cross-functional team Funding Specifications/To. R Database of suppliers Strategic sourcing • SDBIP ALIGNED TO SCM = STRATEGIC SOURCING • Annual performance planning process • Assessment of current and future needs • Assessment of available assets • Analysis of past expenditure • Analysis of supplying industry • Sourcing strategy • Annual operational plan • Business plan for Procurement 17

MODULE 3 – DEMAND MANAGEMENT Needs analysis (inclusive of Annual Procurement Plan) Funding Specifications/To. R Database of suppliers Strategic sourcing Establishment of the list of prospective providers per commodity • Establishment details • Application details • Evaluation and approval • Updating of list ******Utilisation procedure **** • Removal from the prospective provider list 18

MODULE 3– DEMAND MANAGEMENT Needs analysis (inclusive of Annual Procurement Plan) Funding Specification for goods To. R for services • Needs analysis Specifications/To. R Database of suppliers Strategic sourcing • Scoping through a request for information (RFI) • Determining specifications/Terms of Reference • Compilation of specifications/Terms of Reference • Specification/Terms of Reference guidelines • Planning for Publication Remember: Tolerances/ Thresholds 39 points to consider in specs 19

MODULE 3 – DEMAND MANAGEMENT Needs analysis (inclusive of Annual Procurement Plan) ASSIGNMENT Funding Specifications/To. R Database of suppliers Prepare a Bid Specification/Terms of Reference in your area of responsibility as per Annexure A Strategic sourcing Complete the bid project plan as per Annexure B 20

MODULE 4– ACQUISITION MANAGEMENT Hierarchy of satisfying requirements: Acquisition Management System STEP 1 – Internal resources ·Compilation of bid documents ·Receipt and opening of bids ·Evaluation and adjudication of bids STEP 2 – Pre-established sources, e. g. Acquisition process: ·Petty cash ·Verbal Quotes ·Written Quotes ·Competitive bidding ·Limited bidding ·Transversal bids ·Direct negotiation ·Consultants ·IT ·Banking ·Safety arrangements ·Procurement abroad ·Organs of state ·Roster ·List of selected suppliers ·Emergency ·Urgent procurement ·Unsolicited bids ·Sponsorships q Pre-established municipal contracts q Redundant or obsolete items q Other government institutions q Contracts arranged by other organs of state STEP 3 – Special conditions: E-commerce, PPP, CIDBA and Consultants STEP 4 – Term contracts STEP 5 – Other procurement within thresholds, e. g. : q. Petty cash = R 200 q. Verbal quotes = R 2 000 q. Written quotes = R 30 000 q. Formal written quotes = R 30 000 – R 200 000 q. Open or limited bidding = R 200 000 and more 21

MODULE 4– ACQUISITION MANAGEMENT Acquisition Management System ·Compilation of bid documents ·Receipt and opening of bids ·Evaluation and adjudication of bids Acquisition process: ·Petty cash ·Verbal Quotes ·Written Quotes ·Competitive bidding ·Limited bidding ·Transversal bids ·Direct negotiation ·Consultants ·IT ·Banking ·Safety arrangements ·Procurement abroad ·Organs of state ·Roster ·List of selected suppliers ·Emergency ·Urgent procurement ·Unsolicited bids ·Sponsorships Competitive bidding: q. Two-stage bidding q. Pre-qualifying bidders q. Rotation basis of pre-approved bidders Limited (deviations) bidding: q. No appropriate bids received through open bidding process q. Exceptionally advantageous conditions q. Change of provider would result in incompatible equipment q. Specified designer q. No reasonable alternative or substitute exist q. Legal or technological or safety reasons q. Urgency q. Emergency q. Provision of legal advice NOTE: reasons for limited bidding must be recorded and approved 22

MODULE 4 – ACQUISITION MANAGEMENT Acquisition Management System ·Compilation of bid documents ·Receipt and opening of bids ·Evaluation and adjudication of bids Acquisition process: ·Petty cash ·Verbal Quotes ·Written Quotes ·Competitive bidding ·Limited bidding ·Transversal bids ·Direct negotiation ·Consultants ·IT ·Banking ·Safety arrangements ·Procurement abroad ·Organs of state ·Roster ·List of selected suppliers ·Emergency ·Urgent procurement ·Unsolicited bids ·Sponsorships v. Language of Quotation/Bid documents v. Calling for Bids v. Advertising of Bids v. Closing time of Bids v. Determining the closing period v. Determining the validity period v. Availability of Bid documents v. Sale of Bid documents v. Responses received v. Elements for inclusion in Bid documents v. SCM Unit responsibility v. User division responsibility v. Quotation/bid documentation pack v. Standard bid documentation v. Elements to take into account when compiling pack v. Pre-bid information meetings v. Particulars of information sessions v. Particulars of presentation meetings v. Changing information before closing time v. Postponement of closing date 23

MODULE 4 – ACQUISITION MANAGEMENT Acquisition Management System ·Compilation of bid documents ·Receipt and opening of bids ·Evaluation and adjudication of bids Acquisition process: ·Petty cash ·Verbal Quotes ·Written Quotes ·Competitive bidding ·Limited bidding ·Transversal bids ·Direct negotiation ·Consultants ·IT ·Banking ·Safety arrangements ·Procurement abroad ·Organs of state ·Roster ·List of selected suppliers ·Emergency ·Urgent procurement ·Unsolicited bids ·Sponsorships q Procedures for quotations up to R 2 000 q Receiving and opening procedure for quotations up to R 30 000 q Receiving and opening procedure for Bids above R 30 000 q Admission of bids q Confidentiality q Bids received late q Dealing with unsolicited Bids q Reason for rejection q Compliance check procedures q Signing of Bids q Authority to sign bid documents q Tax Clearance Certificates Non responsive q Submission and signing of declaration or certificate tenders – See q Declaration of interest notes on q Providers own conditions Municipal taxes q Evaluation from R 30 000 and up to R 200 000 and Tax clearance q Bid evaluation committee for procurement above R 200 certificates 000 q Format of the recommendation report q Information that must be supplied 24

MODULE 4 – ACQUISITION MANAGEMENT Acquisition Management System ·Compilation of bid documents ·Receipt and opening of bids ·Evaluation and adjudication of bids Acquisition process: ·Petty cash ·Verbal Quotes ·Written Quotes ·Competitive bidding ·Limited bidding ·Transversal bids ·Direct negotiation ·Consultants ·IT ·Banking ·Safety arrangements ·Procurement abroad ·Organs of state ·Roster ·List of selected suppliers ·Emergency ·Urgent procurement ·Unsolicited bids ·Sponsorships q Consideration of additional information q Cancellation of Quotation Bids q Discussion with bidders q Verifying Preferences q Amendment of prices prior to lapse of validity q Extension of validity period q New and unproven products q Country of origin q Deviations from specifications q Alternative offers q Improvement on specifications q Equal offers q Additional Quantities q Samples q Comparison of Quoted prices q Comparative prices: Bids for contracts of more than three years q Confidentiality q Subcontracting and joint ventures q Clearance of providers prior to the award of a contract 25

MODULE 4 – ACQUISITION MANAGEMENT Acquisition Management System ·Compilation of bid documents ·Receipt and opening of bids ·Evaluation and adjudication of bids Award structures Powers of Award structure up to R 200 000 – delegated authority Acquisition process: ·Petty cash ·Verbal Quotes ·Written Quotes ·Competitive bidding ·Limited bidding ·Transversal bids ·Direct negotiation ·Consultants ·IT ·Banking ·Safety arrangements ·Procurement abroad ·Organs of state ·Roster ·List of selected suppliers ·Emergency ·Urgent procurement ·Unsolicited bids ·Sponsorships Powers of Award structure above R 200 000 q Evaluation and Adjudication Committees q Accounting. Refer Officer (MFMA to templates for section 114) committee minutes and resolutions + meeting procedures 26

MODULE 4 – ACQUISITION MANAGEMENT Acquisition Management System ·Compilation of bid documents ·Receipt and opening of bids ·Evaluation and adjudication of bids Disagreements Where the Bid Adjudication Committee finds that the recommendation is not correct or not in the municipality’s best interest, the reasons for not supporting the review is: q. Firstly returned to the Bid Evaluation Committee for Acquisition process: ·Petty cash ·Verbal Quotes ·Written Quotes ·Competitive bidding ·Limited bidding ·Transversal bids ·Direct negotiation ·Consultants ·IT ·Banking ·Safety arrangements ·Procurement abroad ·Organs of state ·Roster ·List of selected suppliers ·Emergency ·Urgent procurement ·Unsolicited bids ·Sponsorships reconsideration, then q. Submitted to the Accounting Officer for final award. In the event that the Accounting Officer makes an alternative decision than the recommendation submitted by the Bid Adjudication Committee after returning the matter back to the Bid Adjudication Committee for reconsideration, the provisions of section 114 of the MFMA and SCM TR 29 will apply. 27

MODULE 4 – ACQUISITION MANAGEMENT ACCEPTANCE Acquisition Management System q. The SCM Unit must finalise the adjudication by issuing the letter of ·Compilation of bid documents ·Receipt and opening of bids ·Evaluation and adjudication of bids intention to award o preferred bidder. q 14 day period to lodge complaint. q. SCM TR 24 negotiations q. Issue letter of acceptance Acquisition process: ·Petty cash ·Verbal Quotes ·Written Quotes ·Competitive bidding ·Limited bidding ·Transversal bids ·Direct negotiation ·Consultants ·IT ·Banking ·Safety arrangements ·Procurement abroad ·Organs of state ·Roster ·List of selected suppliers ·Emergency ·Urgent procurement ·Unsolicited bids ·Sponsorships q. The acceptance of a successful bid must be in writing and must be sent by registered/certified mail or as indicated in a special condition, the principle being that there must be a mechanism of proof of delivery. q. The official with the necessary delegated authority to commit the municipality, must be satisfied that all the necessary contractual conditions have been included prior to signing. q. The municipality’s contract documents shall promote uniformity across the entity. 28 q. Both parties to the contract shall sign the contract form or formal

MODULE 4 – ACQUISITION MANAGEMENT Acquisition Management System ·Compilation of bid documents ·Receipt and opening of bids ·Evaluation and adjudication of bids OBJECTION Refer SCM TR 21(e) & 50 This process does not constitute an APPEAL and the provisions of SCM TR 50 must be adhered to in order to respond to objections or complaints received in this regard. Acquisition process: ·Petty cash ·Verbal Quotes ·Written Quotes ·Competitive bidding ·Limited bidding ·Transversal bids ·Direct negotiation ·Consultants ·IT ·Banking ·Safety arrangements ·Procurement abroad ·Organs of state ·Roster ·List of selected suppliers ·Emergency ·Urgent procurement ·Unsolicited bids ·Sponsorships Bidders are allowed the opportunity to lodge an objection or complaint against the decisions of the municipality within a period of 14 (working) days of the municipal decision or action. An independent and impartial person deal with objection or complaint 29

MODULE 4 – ACQUISITION MANAGEMENT Acquisition Management System ·Compilation of bid documents ·Receipt and opening of bids ·Evaluation and adjudication of bids Acquisition process: ·Petty cash ·Verbal Quotes ·Written Quotes ·Competitive bidding ·Limited bidding ·Transversal bids ·Direct negotiation ·Consultants ·IT ·Banking ·Safety arrangements ·Procurement abroad ·Organs of state ·Roster ·List of selected suppliers ·Emergency ·Urgent procurement ·Unsolicited bids ·Sponsorships Appeal process q. Bidders are allowed to appeal against a decision or action of the municipality, but only after exhausting the provisions of SCM TR 21(e) and 50 – MSA section 62 q. In strict legal terms the nature of an appeal has a specific meaning in relation to administrative actions. q. The Accounting Officer will not have to defend the merits of any discretionary decisions taken, but will have to confirm that: • Due process was followed in awarding the tender, i. e. all relevant legal prescripts were complied with; and • The discretionary decision made to award the tender was reached having followed such due process. q. If an application for appeal is upheld, the only sanction could be that the tender evaluation and/or adjudication process must be reconstituted following due process. q. Since the Accounting Officer and members of the Adjudication Committee are involved in the final decision making they cannot be an Appeal Authority. 30

MODULE 4 – ACQUISITION MANAGEMENT Acquisition Management System ·Compilation of bid documents ·Receipt and opening of bids ·Evaluation and adjudication of bids Acquisition process: ·Petty cash ·Verbal Quotes ·Written Quotes ·Competitive bidding ·Limited bidding ·Transversal bids ·Direct negotiation ·Consultants ·IT ·Banking ·Safety arrangements ·Procurement abroad ·Organs of state ·Roster ·List of selected suppliers ·Emergency ·Urgent procurement ·Unsolicited bids ·Sponsorships ASSIGNMENT Evaluate the template provided in Annexure C and indicate whether it serves as a good management tool to evaluate bids received with substantiating reasons. May a bid be disqualified due to the fact that the bidder did not submit sufficient proof that its Municipal accounts are up to date or did not submit a valid tax clearance certificate? 31

MFMA SCM PPOS – CONTRACT MANAGEMENT Contract negotiation, administration, management and contract related risk management Refer to different types for: • SLA • GCC • Consortium Agreement • Sale of Land Agreement • Services Agreement • Service Delivery Agreement ESSENTIALIA 1. 2. 3. 4. 5. Parties Duration Cost Deliverables Termination • SPECIFICATION COMMITTEE • Consider risks • Consider contract conditions • CONTRACT MANAGER • Negotiate contract • Consider risks • Conclude contract PRE- BID AWARD • CONTRACT MANAGER/CONTRACT ADMINISTRATOR • Contract Manager to review contract and issue contract review certificate • Contract Administrator to close file and report contract close-out as prescribed BIDCLOSE OUT POST -BID AWARD BIDDELIVERY & • CONTRACT MANAGER & CONTRACT PAYMENTADMINISTRATOR • Manage service delivery & risks • Manage communication • Escalate issues • Manage variations/deviations/expansions • Contract Manager certify services rendered and payment due • Contract Administrator administer payment 32

MFMA SCM PPOS – CONTRACT MANAGEMENT Contract negotiation, administration, management and contract related risk management q. General Responsibility q. Managing the contract q. Correction of an incorrect acceptance q. Placing orders near the end of the contract period q. Contract monitoring q. Non-contractual purchases MFMA CIRCULAR q. Payments 62/2012 q. Over/under deliveries q. Discount on invoices q. Insolvency, Liquidation, death, sequestration or judicial management of contractors q. Transfer of cession of contracts q. Transfer of contract payments q. Contract variations/amendments q. Unsatisfactory performance q. Mechanism for SCM System Abuse q. Restriction 33 q. Contract termination

MFMA SCM PPOS – CONTRACT MANAGEMENT CASE STUDY USER What are your responsibilities as a USER to ensure a contract is properly managed (list the items you will be in charge of)? PRACTITIONER What are your responsibilities as a PRACTITIONER to ensure a contract is properly administered (list the items you will be in charge of)? SENIOR MANAGER What are your responsibilities as a manager to ensure a contract is properly managed (list the items you will be in charge of)? 34

MFMA SCM PPOS – CONTRACT MANAGEMENT CONTRACT MANAGER CONTRACT ADMIN 35

MFMA SCM PPOS – LOGSITICS MANAGEMENT LOGISTICS MANAGEMENT Inventory management: ·Requisition ·Placing orders ·Receiving goods ·Returning goods ·Goods distribution ·Warehouse management ·Matching documentation CFO Office to issue logistics management and Inventory stock count, verification &reconciliation (including ICN mgt) inventory SOP ·Preparation for payment/Accounts payable and treatment of discrepancies 36

MFMA SCM PPOS – LOGSITICS MANAGEMENT CASE STUDY USER What logistics activities are you, as a user, responsible for? PRACTITIONER What logistics activities are you, as a practitioner, responsible for? SENIOR MANAGER What logistics information do you, as a manager, require to support you within your area of responsibility? 37

MFMA SCM PPOS – ASSET MANAGEMENT IMMOVABLE ASSET MANAGEMENT • Responsibilities Council decide on conditions for management of immovable assets and capital projects • Planning • Capital projects • Internal controls SCM process then followed • MATR • Land Disposal Policy As per Municipal Asset Management Policy and Land Disposal Policy, MATR, MFMA 14&33 38

MFMA SCM PPOS – POWERS CAPITAL ASSET PROCESS APPLICATION cs At this stage the MSA s 78 & MATR 41(2)(a) process is complete if the asset is related to a municipal service or the MATR 41(2)(b) process is complete if the asset is related to a commercial service Application form is completed and processed through corporate services as per LDP 12. 3 CONSIDERATION As per LDP 12. 2 AO Council As per LDP 12. 2/MFMA s 14(2)/MATR 13(2)/MATR 34(1) & (3)/ MATR 36 & MATR 40 DIRECT NEGOTIATION APPROVAL PUBLIC PARTICIPATION As per LDP 10. 1. 8/LDP 12. 6/ MATR 12(3)/MATR 40/ MATR 42 As per LDP 10. 1. 8 /MATR 34(3) SCM PROCESS LDC As per LDP 12. 4. 3/ MFMA s 16(5)/ SCM TR 40/SCMP Convert to BSC/ As per LDP 12. 2. 1(iii) AO BEC As per LDP 12. 5 - notice Council As per LDP 12. 5 – final recommendation LDC BAC As per SCMP AO AWARD As per LDP 12. 6/SCMP/SCM TR 49 & 50/MSA 62/MSA 84 NEGOTIATION LDC AO SIGN CONTRACT As per MATR 18 & 46 Council PUBLIC 39

are– ASSET the Manager in the Waste Management MFMA SCMYou PPOS MANAGEMENT IMMOVABLE ASSET MANAGEMENT • Responsibilities • Planning • Capital projects • Internal controls • MATR • Land Disposal Policy Department of the Municipality and you have been approached by a service provider with an unsolicited bid to take over the Waste Management Services of the Municipality and render such services within a green city business management concept (an international company guarantees the technological solutions as well as the financial backing to the service provider). The service provider will also provide a waste farming project (piggery) for the unemployed in the municipal area and convert the waste into agricultural water as well as energy/electricity conversion. In return the service provider wants to be reimbursed for the electricity and water consumed and access for a period of 25 years to lease the waste management plant property and surrounding land belonging to the Municipality. You regard the project proposal as viable and want to instruct the SCM Unit to support you to realise the unsolicited bid. What do you have to consider and what are all the requirements you have to adhere to achieve the above? 40

MFMA SCM PPOS – ASSET MANAGEMENT STEP 1 (a) Supplier to submit proposal motivating ·the product STEP 2(a) MM decision to consider bid or service offered is a demonstrably or proven unique innovative concept; ·the product or service will be exceptionally beneficial to, or have exceptional cost advantages for, the municipality; ·the person who made the bid is the sole supplier of the product or service; and ·the reasons why it would be impractical to follow the normal bidding processes. STEP 1(b) – service provider appt by MM MSA section 77(b) – (f) & 78(a) – (b) assessment to be conducted STEP 3 (a) STEP 4(a) STEP 5(a) MM to inform public in accordance with MFMA 33 and MSA 21 A, together with: MM to inform treasury in accordance with MFMA SCM TR 37(4) & MFMA 33 Adj Comm to consider and advise MM: ·its reasons as to why the bid should not be open to other competitors; ·an explanation of the potential benefits for the municipality or entity were it to accept the unsolicited bid; and ·an invitation to the public or other potential suppliers to submit their comments within 30 days of the notice. STEP 2(b) STEP 3 (b) Council decision to continue with MSA 78 – external mechanism MM to inform local community as per MSA section 78(3)(a) of intention “. . . it must submit such comments, including any responses from the unsolicited bidder, to the National Treasury and the relevant provincial treasury for comment” ·any comment s submitted by the public; and ·any written comments and recommendations of the National Treasury or the relevant provincial treasury. NOTE MM decision not in line with Treasury comments, adhere to MFMA SCM TR 37 within 7 days – inform AGSA and PT STEP 4(b) & STEP 5 (b) – service provider appt by MM STEP 6 STEP 7 Council decision as per MSA 78 and to note content of agreement as per MFMA 33 MM to conclude contract 30 days after Step 6, as per MFMA SCM TR 37 (9) Conduct MSA section 78(3)(b) & (c) study and compile report 41

MFMA SCM PPOS – DISPOSAL MANAGEMENT • Inventory disposal • Preparation q. Obsolescence planning • Process • Control of documentation • Immovable Asset disposal • Advertisement • Application • Approval • Negotiation q. Renewal Planning q. Disposal decision q. Disposal strategy q. Alternatives to disposal, e. g. letting 42

MFMA SCM PPOS – DISPOSAL MANAGEMENT CASE STUDY USER What do you as user need to prepare before submitting an asset for disposal? PRACTITIONER Prepare a checklist for the SCM practitioner responsible for disposals of all requirements to ensure a sound disposal process. SENIOR MANAGER What do you as manager need to consider before submitting an asset for disposal? 43

MFMA SCM PPOS – RISK AND PERFORMANCE MANAGEMENT Risk and Performance Management ·Risk management ·Responsibility for Risk Management ·Elements of Risk Management (i) Tender Risk: Pre. Bid Factors (ii) Bidder Risk: Mid. Bid Factors (iii) Contract Risk: Post. Bid Factors ·Application of Risk Management 7 -Step process + contractual issues 44

MFMA SCM PPOS – RISK AND PERFORMANCE MANAGEMENT ·SCM performance Management information/ Performance Defining performance management FOR Record keeping Internal and External reporting review Reporting Risk and Performance Management ·Supplier performance ·Reporting of SCM information ·Optimal system utilisation ·Safeguarding of SCM information Contracts reporting questionnaire: National Treasury Assessment/Measurement of Supply Chain Performance Defining Contractor measurement and SCM performance Types of records to be kept is listed 45

MFMA SCM PPOS – RISK AND PERFORMANCE MANAGEMENT Risk and Performance Management ·SCM performance Management information/ Performance management FOR Internal and External reporting review ·Supplier performance ·Reporting of SCM information ·Optimal system OPTIMAL SYSTEM UTILISATION – MINIMUM USER-SPECIFICATIONS utilisation ·Safeguarding of SCM information Types of records to be kept is listed 46

MFMA SCM PPOS – RISK AND PERFORMANCE MANAGEMENT Risk and Performance Management ·SCM performance Management information/ Performance management FOR Internal and External reporting review ·Supplier performance ·Reporting of SCM information SAFEGUARDING OF INFORMATION ·Optimal system utilisation ·Safeguarding of SCM information Types of records to be kept is listed 47

MFMA SCM PPOS – RISK AND PERFORMANCE MANAGEMENT Management information/ Performance management FOR Internal and External reporting Risk and Performance Management ·SCM performance review ·Supplier performance ·Reporting of SCM information ·Optimal system utilisation ASSIGNMENT Use the Specification/Terms of Reference developed by you in MODULE 3 and as a manager/member/SCM adviser of the Bid Specification Committee conduct a risk assessment as per the template at Annexure E. ·Safeguarding of SCM information Types of records to be kept is listed 48

MFMA SCM PPOS - ANSWER 49