MFMA SCM-PPOS
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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
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
SCM
30%
MISCELLANEOUS
20%
10%
0%
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2
3
Presentation by FMIP III team
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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
DEMAND MANAGEMENT
SCM System (Legislative environment
Needs analysis (inclusive of
SCM Function, Unit and Capacity
Building
Delegations
Annual Procurement Plan)
Acquisition process:
Specifications/ToR
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
Database of suppliers
SCM Governance:
Strategic sourcing
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
Compilation of bid documents
Receipt and opening of bids
Evaluation and adjudication of bids
Funding
Roles and responsibilities
Ethics
SCM abuse system
Complaints, disputes, enquiries and
objections mechanism
SCM related appeals
Compliance
Access to Information
LOGISTICS MANAGEMENT
Acquisition Management System
inclusive of Preferential Procurement)
Planning
ACQUISITION 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/IMMOVABLE
ASSET MANAGEMENT
[Inclusive of biological
assets/infrastructure assets]
Contract negotiation,
administration, management and
contract related risk management
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
Responsibilities
Planning
Capital projects
Internal controls
MATR
Land Disposal Policy
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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.
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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. Country ruled by LAW
2. 58 pieces of legislation governing SCM
3. Objective: To ensure effective, efficient and 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
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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
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MFMA SCM PPOS – MODULE 1
INSTITUTIONALISATION
SCM System (Legislative environment inclusive of
Preferential Procurement)
Planning
SCM Function, Unit and Capacity Building
CASE STUDY:
i.
What are the five pillars of SCM to ensure it complies with
the Constitution, section 217?
Delegations
Roles and responsibilities
ii. Why do you need to adhere to the legal prescripts?
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
iii. What is the specific legislation applicable to your area of
responsibility?
iv. What are the specific elements you as a manager want to
see in the municipal SCMP2OS?
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MODULE 2- INSTITUTIONALISATION
INSTITUTIONALISATION
1.
SCM System (Legislative environment inclusive of
AO must have an operational SCM Unit under the direct supervision of the
CFO
Preferential Procurement)
Planning
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
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
6.
•
Council, AO and CFO
•
Bid Spec Committee (roles, establishment and composition)
•
Bid Evaluation Committee (roles, establishment and composition)
•
Bid Adjudication Committee (roles, establishment and composition)
Ethics – Code of Conduct, declaration of interest, fraud and corruption and
fronting, SCM abuse, complaints and disputes, access to information
7.
Committee System
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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 strategic plan.
MODULE 2- INSTITUTIONALISATION
BID SPECIFICATION COMMITTEE
Purpose: Determine Specs/ToR
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 so
requested by BAC or AO/delegated
authority
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 authority for final award
BAC review recommendation if so
requested by AO/delegated authority
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
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MODULE 2- PAIA
Information access
Informing the unsuccessful bidders
Disclosure of information
Refer to section 42 of
PAIA – commercial
information
Publishing of award
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MODULE 2- INSTITUTIONALISATION
INSTITUTIONALISATION
SCM System (Legislative environment inclusive of
Preferential Procurement)
i.
Planning
CASE STUDY:
May a member of the Bid Evaluation Committee, be a member of
the Bid Adjudication Committee?
SCM Function, Unit and Capacity Building
Delegations
ii.
Roles and responsibilities
What are you to do if a Councilor wishes to discuss or participate
in a tender?
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
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?
v.
What is different with a construction/infrastructure tender?
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MODULE 3– DEMAND MANAGEMENT
DEMAND MANAGEMENT
Needs analysis (inclusive of Annual
Procurement Plan)
Funding
System of Demand Management
•Establishment of a cross-functional team
•SDBIP
Specifications/ToR
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
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MODULE 3 – DEMAND MANAGEMENT
DEMAND MANAGEMENT
Needs analysis (inclusive of Annual
Procurement Plan)
Funding
Specifications/ToR
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
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MODULE 3– DEMAND MANAGEMENT
DEMAND MANAGEMENT
Needs analysis (inclusive of Annual
Procurement Plan)
Funding
Specifications/ToR
Database of suppliers
Strategic sourcing
Specification for
goods
ToR for services
•Needs analysis
•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
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MODULE 3 – DEMAND MANAGEMENT
DEMAND MANAGEMENT
Needs analysis (inclusive of Annual
Procurement Plan)
ASSIGNMENT
Funding
Specifications/ToR
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
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MODULE 4– ACQUISITION MANAGEMENT
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
Hierarchy of satisfying requirements:
STEP 1 – Internal resources
STEP 2 – Pre-established sources, e.g.

Pre-established municipal contracts

Redundant or obsolete items

Other government institutions

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.:
Petty cash = R 200
Verbal quotes = R 2 000
Written quotes = R 30 000
Formal written quotes = R 30 000 – R 200 000
Open or limited bidding = R 200 000 and more
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MODULE 4– ACQUISITION MANAGEMENT
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:
Two-stage bidding
Pre-qualifying bidders
Rotation basis of pre-approved bidders
Limited (deviations) bidding:
No appropriate bids received through open bidding process
Exceptionally advantageous conditions
Change of provider would result in incompatible equipment
Specified designer
No reasonable alternative or substitute exist
Legal or technological or safety reasons
Urgency
Emergency
Provision of legal advice
NOTE: reasons for
limited bidding
must be recorded
and approved
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MODULE 4 – ACQUISITION MANAGEMENT
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
Language of Quotation/Bid documents
Calling for Bids
Advertising of Bids
Closing time of Bids
Determining the closing period
Determining the validity period
Availability of Bid documents
Sale of Bid documents
Responses received
Elements for inclusion in Bid documents
SCM Unit responsibility
User division responsibility
Quotation/bid documentation pack
Standard bid documentation
Elements to take into account when compiling pack
Pre-bid information meetings
Particulars of information sessions
Particulars of presentation meetings
Changing information before closing time
Postponement of closing date
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MODULE 4 – ACQUISITION MANAGEMENT
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



















Procedures for quotations up to R 2 000
Receiving and opening procedure for quotations up to R30 000
Receiving and opening procedure for Bids above R30 000
Admission of bids
Confidentiality
Bids received late
Dealing with unsolicited Bids
Reason for rejection
Compliance check procedures
Signing of Bids
Authority to sign bid documents
Tax Clearance Certificates
Submission and signing of declaration or certificate
Declaration of interest
Non responsive
Providers own conditions
tenders – See
Evaluation from R30 000 and up to R200 000
notes on
Bid evaluation committee for procurement above R200Municipal
000
taxes
and Tax
Format of the recommendation report
clearance
Information that must be supplied
certificates
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MODULE 4 – ACQUISITION MANAGEMENT
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



















Consideration of additional information
Cancellation of Quotation Bids
Discussion with bidders
Verifying Preferences
Amendment of prices prior to lapse of validity
Extension of validity period
New and unproven products
Country of origin
Deviations from specifications
Alternative offers
Improvement on specifications
Equal offers
Additional Quantities
Samples
Comparison of Quoted prices
Comparative prices: Bids for contracts of more than three years
Confidentiality
Subcontracting and joint ventures
Clearance of providers prior to the award of a contract
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MODULE 4 – ACQUISITION MANAGEMENT
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
Award structures
Powers of Award structure up to R200 000 –
delegated authority
Powers of Award structure above R200 000
 Evaluation and Adjudication Committees
 Accounting Officer (MFMA section 114)
Refer to templates for
committee minutes and
resolutions + meeting
procedures
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MODULE 4 – ACQUISITION MANAGEMENT
ACQUISITION MANAGEMENT
Disagreements
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
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:
Firstly returned to the Bid Evaluation Committee for reconsideration, then
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.
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MODULE 4 – ACQUISITION MANAGEMENT
ACQUISITION MANAGEMENT
ACCEPTANCE
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
The SCM Unit must finalise the adjudication by issuing the letter of intention to
award o preferred bidder.
14 day period to lodge complaint.
SCM TR 24 negotiations
Issue letter of acceptance
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.
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.
The municipality’s contract documents shall promote uniformity across the entity.
Both parties to the contract shall sign the contract form or formal contract.
Legal copies shall be kept in a safe place for judicial reference.
28
MODULE 4 – ACQUISITION MANAGEMENT
ACQUISITION MANAGEMENT
Acquisition Management System
OBJECTION
Refer SCM TR 21(e) & 50
Compilation of bid documents
Receipt and opening of bids
Evaluation and adjudication of
bids
This process does not constitute an APPEAL and the provisions of
Acquisition process:
SCM TR 50 must be adhered to in order to respond to objections or
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
complaints received in this regard.
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
Acquisition Management System
Compilation of bid documents
Receipt and opening of bids
Evaluation and adjudication of
bids
Appeal process
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
In strict legal terms the nature of an appeal has a specific meaning in relation to
administrative actions.
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
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.
If an application for appeal is upheld, the only sanction could be that the tender
evaluation and/or adjudication process must be re-constituted following due process.
Since the Accounting Officer and members of the Adjudication Committee are
involved in the final decision making they cannot be an Appeal Authority.
NOTE: Appeals may thus only be considered through a court of law process or as
per SCM TR 50(1).
30
MODULE 4 – ACQUISITION MANAGEMENT
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
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
Refer to different types for:
•SLA
•GCC
•Consortium Agreement
•Sale of Land Agreement
•Services Agreement
•Service Delivery Agreement
BID-CLOSE
OUT
POST -BID
AWARD
BIDDELIVERY &
PAYMENT• CONTRACT MANAGER & CONTRACT
ADMINISTRATOR
• 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
MFMA CIRCULAR
62/2012
General Responsibility
Managing the contract
Correction of an incorrect acceptance
Placing orders
Placing orders near the end of the contract period
Contract monitoring
Non-contractual purchases
Payments
Over/under deliveries
Discount on invoices
Insolvency, Liquidation, death, sequestration or judicial management
of contractors
Transfer of cession of contracts
Transfer of contract payments
Contract variations/amendments
Unsatisfactory performance
Mechanism for SCM System Abuse
Restriction
33
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
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
23.
24.
25.
26.
27.
28.
29.
TOPIC
Cover page
Index page
Complete copy of bid document with all attachments to the involved parties.
Signed contract ,attachments and addendums
Key departmental staff and supplier personnel contacts, their responsibilities and authority.
Internal policies and procedures specific to the contract.
Contract reporting requirements between the contract administrator, contract manager and/or the supplier.
Contract payment process, including review time and processing time requirements to avoid payment
penalties.
Acceptance criteria and review processes as required by the contract.
‘Special conditions’ to contract
Amendments, variations or extensions.
Resolving disputes or any other contractual issues.
Reporting requirements for the bid document performance monitoring, audit files and retention.
Health and Safety clearances and notices
Public notices (general day to day notices to the public)
Logistical requirements (assessment of equipment and human resources)
Logistics plan
Logistical clearances (copies of permits, vehicle licences, access control of staff and contractors)
Tax clearances
Declarations of interest
Guarantees or warrantees (if applicable)
Clearances for quarantine goods
International transport and compliance documents, permits, licenses and clearances
Compliance notices (all related Government programs)
Contractor feedback
Legal matters (if applicable)
Contract termination
Project closure
File closure
Ref
CONTRACT ADMIN
1.
TOPIC
Cover page
Ref
2.
Index page
3.
Copy of signed contract
4.
Amendments and supplementary agreements
5.
Subcontract arrangements
6.
Confidentiality and disclosure arrangements
7.
Project plan
8.
Project charter/Terms of Reference
9.
Record of protected information
10.
Project team contact details and roles and responsibilities of each
11.
Payment schedule, invoice, substantiating evidence and certified payment advices (Develop spreadsheets
for tracking expenditures, invoices and/or timekeeping for the life of the transaction)
12.
Agreed service levels and penalty arrangement (if applicable)
13.
Acceptance criteria, quality and compliance reviews
14.
Risk management
15.
Contract administrators’ communique
16.
Meeting notes/minutes/general communication
17.
Deliverables
18.
Variations or Extensions
19.
Disputes or Complaints
20.
General (cession, insolvency, force majeure/etc.)
21.
Contract termination
22.
Project closure
23.
File closure
35
MFMA SCM PPOS – LOGSITICS MANAGEMENT
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)
CFO Office to issue
logistics management
and inventory SOP
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 SCMP
As per LDP 12.5 - notice
Council
As per LDP 12.5 – final
recommendation
LDC
BAC
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
MFMA SCM PPOS – ASSET MANAGEMENT
IMMOVABLE ASSET
MANAGEMENT
•Responsibilities
•Planning
•Capital projects
•Internal controls
•MATR
•Land Disposal Policy
You are the Manager in the Waste Management 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
STEP 2(a)
MM decision to
consider bid
the product 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 3 (a)
STEP 4(a)
STEP 5(a)
MM to inform public in
accordance with MFMA
33 and MSA 21A,
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.
“... it must submit such
comments, including any
responses from the
unsolicited bidder, to the
National Treasury and
the relevant provincial
treasury for comment”
any
comments
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
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)
PT
STEP 1(b) – service
provider appt by MM
MSA section 77(b) – (f) &
78(a) – (b) assessment to be
conducted
STEP 2(b)
Council decision
to continue with
MSA 78 –
external
mechanism
STEP 3 (b)
STEP 4(b) & STEP 5 (b) – service provider appt by MM
Conduct MSA section 78(3)(b) & (c) study and compile report
MM to inform local
community as per MSA
section 78(3)(a) of intention
41
MFMA SCM PPOS – DISPOSAL MANAGEMENT
DISPOSAL
MANAGEMENT
•Inventory disposal
•Preparation
Obsolescence planning
•Process
•Control of documentation
Renewal Planning
•Immovable Asset disposal
•Advertisement
•Application
•Approval
•Negotiation
Disposal decision
Disposal strategy
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
Application of Risk
(i) Tender Risk:
Pre-Bid Factors
(ii) Bidder Risk:
Mid-Bid
Factors
(iii) Contract
Risk: Post-Bid
Factors
Management
7-Step
process +
contractual
issues
44
MFMA SCM PPOS – RISK AND PERFORMANCE MANAGEMENT
Risk and Performance
Management
SCM performance review
Supplier performance
Defining performance management
Reporting of SCM
Record keeping
Management information/
Performance management
FOR
Internal and External
reporting
information
Optimal system utilisation
Safeguarding of SCM
Reporting
Contracts reporting questionnaire: National Treasury
information
Assessment/Measurement of Supply Chain Performance
Defining Contractor and SCM performance measurement
Types of
records to be
kept is listed
45
MFMA SCM PPOS – RISK AND PERFORMANCE MANAGEMENT
Risk and Performance
Management
SCM performance review
Management information/
Performance management
FOR
Internal and External
reporting
Supplier performance
Reporting of SCM
information
Optimal system utilisation
Safeguarding of SCM
OPTIMAL SYSTEM UTILISATION –
MINIMUM USER-SPECIFICATIONS
information
Types of
records to be
kept is listed
46
MFMA SCM PPOS – RISK AND PERFORMANCE MANAGEMENT
Risk and Performance
Management
SCM performance review
Management information/
Performance management
FOR
Internal and External
reporting
Supplier performance
Reporting of SCM
information
Optimal system utilisation
Safeguarding of SCM
SAFEGUARDING OF INFORMATION
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
ASSIGNMENT
information
Optimal system utilisation
Safeguarding of SCM
information
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.
Types of
records to be
kept is listed
48
MFMA SCM PPOS - ANSWER
49