Strategic Sourcing and Procurement Mechanisms in Municipalities
Various procurement mechanisms are utilized in Municipalities, governed by legislation to ensure fairness, transparency, and cost-effectiveness. These include petty cash purchases, written quotations, and competitive bidding processes, with applicable legislation such as the Constitution and the Municipal Finance Management Act.
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Presentation Transcript
FORMS OF STRATEGIC SOURCING FORMS OF STRATEGIC SOURCING AND PROCURING IN MUNICIPALITIES AND PROCURING IN MUNICIPALITIES Short Description
BRIEF SUMMARY BRIEF SUMMARY There are a number of procurement mechanisms in Municipalities, some require a formal supply chain management (SCM) procurement process, however some may be utilized by the departments within the City without the need to go through normal SCM processes. It is important to note that all procurement mechanisms are governed by legislation, i.e Acts, Regulations, Circulars or Policy. This is to ensure that the process is fair, equitable, transparent, competitive and cost effective, in terms of Section 217 of the Constitution.
APPLICABLE LEGISLATION, not limited to: APPLICABLE LEGISLATION, not limited to: THE CONSTITUTION; MUNICIPAL FINANCE MANAGEMENT ACT (MFMA); THE MUNICIPAL SUPPLY CHAIN MANAGEMENT REGULATION; PREFERENTIAL PROCREMENT POLICY FRAMEWORK ACT (PPPFA) REGULATION; SUPPLY CHAIN MANAGEMENT POLICY FOR COJ; COST CONTAINMENT REGULATION; AND NATIONAL TREASURY CIRCULARS
PROCUREMENT MECHANISIMS PROCUREMENT MECHANISIMS PETTY CASH PURCHASES R NIL TO R2000 (VAT INCLUSIVE) WRITTEN QUOTATIONS - ABOVE R2000 TO R30 000 (VAT INCL.) (DEPARTMENTAL) - ABOVE R30 000 TO R200 000 (VAT INCL.) (SCM PURCHASING) COMPETETIVE BIDDING PROCESS ABOVE R200 000 (VAT INCL.) QUOTATIONS SOLICITED FROM ESTABLISEHED PANELS SECTION 110 OR REGULATION 32 SOLE SUPPLIERS UNSOLICITED BIDS
PROCUREMENT MECHANISIMS PROCUREMENT MECHANISIMS PETTY CASH Each department can process petty cash not more that R2000, without going through SCM procurement process. WRITTEN QUOTATIONS ABOVE R2000 TO R30 000 (VAT INCL.) (DEPARTMENTAL) Although departments can process any procurement up to R30 000 without going through SCM procurement processes, they are required to obtain at least 3 quotations from bidder on the City s database.
PROCUREMENT MECHANISIMS PROCUREMENT MECHANISIMS WRITTEN QUOTATIONS - ABOVE R30 000 TO R200 000 (VAT INCL.) (SCM PURCHASING) Any procurement of goods above R30 000 up R200 000 are sourced through a quotation process through SCM processes. Departments submit their requirement to SCM SCM creates the advert to be placed on the SCM Notice Board and COJ Website SCM receives the submitted quotations and evaluates the applications on behalf of the Department and recommends the highest scoring bidder in terms of the 80/20 preferential point system. Department compiles report for approval by Group Head of SCM
PROCUREMENT MECHANISIMS PROCUREMENT MECHANISIMS COMPETETIVE BIDDING PROCESS ABOVE R200 000 (VAT INCL.) Procurement of goods and services above R200 00 are done through a competitive bidding process that requires the process to be an open tender process. Subjected to the committees process, i.e Bid Specification Committee (BSC), Bid Evaluation Committee (BEC) and Bid Adjudication Committee of either, Central Adjudication Committee (CAC) for tender up to R50 Million or Executive Adjudication Committee (EAC) for tenders above R50 million. However, open tenders are further subjected to an internal Probity Audit process for all tenders above R5 million. Open Tenders are advert advertised on the City s Notice Board, National Treasury s Website, and four national newspapers, namely: The Citizen, The Business Day, The Sowetan and The Beeld
PROCUREMENT MECHANISIMS PROCUREMENT MECHANISIMS COMPETETIVE BIDDING PROCESS : BSC: Function - Compiles technical specifications incorporating set criteria for the City s requirements to be acquired Composition - At least three officials from the user department; and representatives from Group Strategic Supply Chain Management and Group Legal and Contracts Department; and where necessary external specialist advisors. BEC: Function - Evaluation of bids, compilation of comprehensive reports & making recommendations for consideration by the respective adjudication committees. Composition - At least three officials from the user department; and representatives from Group Strategic Supply Chain Management and Group Legal and Contracts Department; and where necessary external specialist advisors. For bids in excess of R5m shall be subjected to probity before award. BAC: Function - Consideration of the recommendations, making final awards and /or referring back the proposed recommendations back to the Bid Evaluation Committee for further analyses where necessary; All bids with a value above R10m shall be approved by the Accounting Officer Composition - At least four senior managers of the municipality or municipal entity as regulated; and, where necessary, co-opted members as appointed by the City Manager.
PROCUREMENT MECHANISIMS PROCUREMENT MECHANISIMS QUOTATIONS SOLICITED FROM ESTABLISEHED PANELS Theses Panels are established though a competitive bidding process. Bidders are only appointed solely on their capacity to deliver the goods and services Bidders are categorized through various categories based on either, size of bidder or bidder specialty of services provided etc. Once bidders are in a Panel, the procuring department(s) can utilize the panel to procure specific types of good or services through a quotation process, where the highest scoring bidder in terms of the 80/20 preferential point system is appointed from the Panel Procurement through a Panel is limited to up R5 million.
PROCUREMENT MECHANISIMS PROCUREMENT MECHANISIMS SECTION 110 Permits a municipality to enter into contracts for goods or services with another organ of state, i.e academic institutions Requires prior approval from the accounting officer REGULATION 32 The supply chain management policy may allow the accounting officer to procure goods or services for the municipality or municipal entity under a contract secured by another organ of state Not utilized as mush due to current circular from National Treasury
PROCUREMENT MECHANISIMS PROCUREMENT MECHANISIMS SOLE SUPPLIERS Procuring goods and services from sole suppliers occur when: Only one service provider manufactures or renders goods and services due to the unique nature of the requirements; Gods and services already in the City s value chain / employ are only supplied by an Original Equipment Manufacturer (OEM) UNSOLICITED BIDS Pre-emptively submitted by the prospective service provider(s) to the City without any requirements being identified and advertised by the City. This arises when the service provider(s) identify an opportunity to render services or supply products not ordinarily required by the City, or where the need for such services or goods have not yet been identified by the City.
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