EXPRESSION OF INTEREST AND REQUEST FOR
INFORMATION
RFI NUMBER RT15-2015
THE SUPPLY OF MOBILE COMMUNICATION SERVICES TO
THE STATE
CLOSING DATE FOR SUBMISSION OF INFORMATION:
27 OCTOBER 2015
AT 11h00 am
CONTENTS
1.
INTRODUCTION ..................................................................................................................................... 3
2.
OBJECTIVES ........................................................................................................................................... 4
3.
BACKGROUND ....................................................................................................................................... 4
4.
SERVICES CURRENTLY PROCURED ........................................................................................................ 6
5.
POTENTIAL SOLUTIONS AND OPPORTUNITIES ..................................................................................... 7
5.1.
RATIONALISE CURRENT REQUIREMENTS.......................................................................................... 7
5.2.
IMPLEMENT NEW CORPORATE REQUIREMENTS.............................................................................. 8
5.3.
COMPETITIVE BIDDING ................................................................................................................... 10
5.4.
REDUCE PROCUREMENT, ADMIN AND LABOUR COSTS ................................................................. 10
6.
FORMAT FOR THE EOI/RFI .................................................................................................................. 12
7.
PROCUREMENT PROCESS TIMELINE ................................................................................................... 13
8.
BRIEFING AND INFORMATION SESSION ............................................................................................. 14
9.
CONTACT DETAILS ............................................................................................................................... 14
9.1.
General............................................................................................................................................ 14
9.2.
Enquiries ......................................................................................................................................... 14
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1. INTRODUCTION
The National Treasury has embarked on a process to modernise the state procurement system.
In addition to other interventions, numerous projects have been identified, together with key
stakeholders, such as communications, medical equipment, travel and accommodation,
information communication technologies, waste management, medical linen and laundry, etc.
that would be approached using differentiated procurement mechanisms to reduce the
Government total cost of ownership on these categories of procurement.
The Office of the Chief Procurement Officer (OCPO), within the National Treasury has
recognised the need to conduct an assessment of the current exorbitant communications
spend category and the outcome of this investigation identified various improvement
opportunities and specific benefits to be achieved through the development and
implementation of specific commodity strategies within the communications spend category.
The demand for mobile communication services at a national and provincial level is currently
estimated in excess of R 800 million per annum (FY 2014). A project team was established for
the Communications category in order to identify meaningful cost savings opportunities as well
as creating efficiency in its procurement processes. A cross functional sourcing team has been
established to proceed with the project and to develop and implement a sound category
solution for Government.
It is against this background that expressions of interest and request for information are invited
from interested service providers that have the relevant expertise and experience in the mobile
telecommunications industry.
Bidders should note that a parallel process is underway for the review of fixed line
communication spend. With converged communications these two projects will potentially
overlap each other, however due to the scope and scale of the State operations these are being
issued as separate expressions of interest/ request for information and in the medium to long
term the successful provider/s would be required to provide technological convergence.
The process will be two fold, the first stage being invitations to express interest and to provide
information based on the State’s requirements and the second stage will entail more detailed
requirements involving package options, pricing, BEE and negotiations. These processes will
ultimately lead to the appointment of suitable service provider/s who will be responsible for
providing a complete mobile communications service covering voice and data for all
Government Departments. The National Treasury would ultimately reserve the right to split the
contract between two or more service providers or to do any portion of the work
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departmentally or regionally to ensure that the supply market has a fair split of Government
business where solid value propositions are received.
Ultimately, these processes would emanate into 2 mechanisms that the State will utilize, the
first being a common policy framework for Departments to adopt and secondly a transversal
contractual agreement in which all Departments will participate in.
2. OBJECTIVES
The key objectives of this initiative are as follows:
-
Leverage the mobile communication spend across Government
Realise targeted savings based on the current spend portfolio
Create alignment in the policy instruments applied by Government in the allocation of
mobile communication services to personnel within Departments
Provide Government users quality services
Improve the utilisation of the technology within the State environment
Create efficiency in how Government procures the common transversal service
Lower the cost to service providers in doing business with Government that provide mobile
communication services to the State
A performance partnership relationship which includes a significant level of supplier
relationship management, reflecting that value will be driven by continuous development
and improvement throughout the relationship
-
Lower the internal administrative and back office processing costs for communication
services at Departments
3. BACKGROUND
Government is one of the single largest buyers of mobile communications services. National
and Provincial Departments spend a considerable amount on mobile communications annually.
Mobile communications includes cell phone voice and data subscriptions. This includes handset
and device purchases, repairs, maintenance and insurance and other services/ charges such as
short messaging service (SMS), caller line identification, itemised billing and sim card activation
fees. Spend on the commodity was R773m (FY 2012/13) and R806m (FY2013/14) respectively.
This amounts to a 4 % Increase on spend which is equivalent to R 33m over a one year period.
Refer to figure 1 below.
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Government is receiving poor value for money due to the fragmented nature and manner with
which this category is procured through Government Departments.
Fig. 1 Mobile Communications for 2012/13 and 2013/14 for Provincial and National
Departments Spend Increase
Problems currently experienced with this category include the fragmented manner in which the
service is procured from the supply market as well as the wide variations in policies regarding
allocations of these services and how they are applied within Departments.
Departments currently are bidding requirements to the open market. The Local Government
and Public Entities spend is yet to be calculated and possibly included in future. The South
African market has 4 core service providers and various intermediary providers and each of
these providers differentiates their packages by mixing voice, data and handsets. The cost and
administrative burden to service providers due to the current fragmented tendering practices is
absurd.
Refer figure 2 below which indicates the various package variables. Each public sector
organisation contracts and negotiates varied (in some cases) and sometimes similar deals as the
market has standard packages. In excess of 723 public organisations are contracting the service
which results in duplicate tender processes, duplicate contracts, duplicate administration and
management. These public institutions have different discount structures that are individually
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negotiated using individual competitive bidding mechanisms, for the same service from a
handful of service providers.
Fig. 2 Mobile communications MNO Packaging Variants
4. SERVICES CURRENTLY PROCURED
In the main Departments procure voice and data services which translates into the following
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Various blended contracts for voice and data which includes the provision of a device
Various data bundles with the provision of modem devices
Pay as you go airtime
Pay as you go data
Tablet devices with data bundles
Machine to machine communication devices
SMS
Voice Mail
Instant Messaging Services
Caller Line Identification
Insurance
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
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Itemised billing
Account Management Services
Repairs of devices
Sim Card Replacements
Bulk messaging (SMS) services
International roaming facilities for users that travel abroad
Number portability between service providers into and out of the accounts
5. POTENTIAL SOLUTIONS AND OPPORTUNITIES
Based on the research conducted on various high spend Departments and the supply market,
potential solutions and opportunities presented themselves, which include demand and supply
side opportunities, and these have been grouped into 4 themes as documented below which
include rationalizing the current State requirements, innovating with new corporatized
requirements, combining and competitively bidding the States requirements and reducing the
procurement, labour and administrative processing costs.
5.1. RATIONALISE CURRENT REQUIREMENTS

Develop standard and flexible (build your own) packages. Based on observations,
Departments are procuring various data plans ranging from 100 Mb, 250 Mb, 500 Mb, 1
Gb, 2 Gb, etc. and voice plans ranging from75, 100, 120, 150, 180, 200, 250, etc.
minutes. This initiative may look at streamlining packages for State requirements.

Potentially also look at setting standards for devices for voice, data and modem services
as well as device operating systems and protocols.

Implementation of limitless packages. In some Departments allowances are unlimited
and packages are open ended. With new packages in the market a limit can be placed
on the top end by procuring virtually limitless packages for less than R2000 especially on
executive levels.
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
Pay as you use for pool phones. Departments will be encouraged to procure pool
phones that are paid per usage rather than having fixed contracts that incur monthly
costs that are much more expensive.

Reduce short messaging service (SMS) in favour of instant messaging service (IMS)
applications. SMS is observed as an additional perk that MNO’s offer and add in as much
as possible to increase the attractiveness of package offerings. The mode of
communication is fast becoming out dated, excluding bulk message carriers. Mobile
Network Operators will be requested to include an instant messaging service such as
“What’s App”, “WeChat”, etc. that offer much reduced cost to traditional SMS. SMS will
be used but very minimally and will be positioned more as a free service within deals.

Reduction in buying out of contracts. The current procurement places a burden on
supplier when switching occurs between service providers and this increases the cost of
the service. This option would explore the length of contracting with MNO’s versus the
standard cellphone period contracts. This could potentially mean that we contract for a
longer period e.g. 4 years with subscriptions running for 2 years at a time.

Joint data/ voice contracts - Reduce unnecessary standalone data contracts. The
practice of users carrying dual contracts for data and voice separately is an out-dated
practice. It may be needed in some instances, however these should be minimum as
voice contracts now carry data as well, with interconnectivity using “wifi”, “hotspot”,
“tethering”, “Bluetooth” which has converged the technology.
5.2. IMPLEMENT NEW CORPORATE REQUIREMENTS

Implementation of Closed User Groups (CUGs). A CUG allows users within a group to call
each other at no cost. There is a monthly cost applicable however in a group of
members that require to call each other frequently this would reduce call costs. The
groups that frequently call each other will require exploratory work in order to set this
mechanism in motion. A hybrid approach could be taken where the State could
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potentially look at CUG’s with low flat rate calls and this will depend on the various
caller communities that is identified.

Data reconfiguration. This would entail the bulk buying of data and management of data
centrally, and the management of Departmental data availability such as WIFI facilities
together with mobile data. Firstly, Departments could potentially buy data in bulk which
would mean that data is excluded from individual subscriptions. Secondly, data would
be allocated through an access point network (APN) which would entail reduction in
data costs as well as monitoring and management of data costs through a central point.
The IT impact would be considered as well as the long term changing nature of data in
the country. With data becoming a “utility” in the country in the next few years, there
would be a mass entrance of data access availability through service providers, local
municipalities and Departments which would mean that the costs of such services
would drastically reduce over time. Secondly consideration would be given to users
switching between their day to day office location wifi networks and the service
providers network based on movement and availability of data services within the
organization.

Implementation of smarter voice and data requirements such as push to talk capabilities
as well as voice calling over data infrastructure using instant messaging technology.

Implementation of tariff optimiser. The State could set up periodic tariff and package
reviews within the contractual period to analyse tariffs and packages. This would mean
that instead of being boxed in for the 2 years, Departments could, on a 3 to 6 months
basis, analyse organisation spend to check whether individuals are on the most optimal
usage packages and whether they are receiving the cost reduction benefits.

Implementation of market and user innovations within the contract period wherein
Government can refresh its solutions packages with the latest market trends instead of
being boxed in long term contracts. The Government is aware that communications
technology and innovations are turning at a rapid rate. The State will also look at how to
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work with service providers to incorporate promotions into state requirements into the
subscription base during the contractual period.
5.3. COMPETITIVE BIDDING

Centralise Core Procurement framework contract - the National Treasury will bid out the
entire public sector account using a framework contract that covers the various
requirements of the Departments and creates a basket of options that Departments can
choose from at reduced rates. Rates can be reduced through the bulk requirement and
negotiations around fees that are required to be paid for, e.g. caller line identification,
itemised billing, etc. as well as negotiated settlements on payment term arrangements.

A common policy framework for Government - The policy will set in motion usage and
reduction targets for Departments to engage in and to manage contracts. The policy will
be set in motion to give Departments guidance on the allocation of mobile
communications services to users within Departments.
5.4. REDUCE PROCUREMENT, ADMIN AND LABOUR COSTS
A conservative estimate places the administrative processing costs at as much as 20% of
their expenses for back office processing costs for mobile accounts. This includes account
management and processing costs within a Department. The internal analysis conducted
included the following activities which was used to cost the internal process and effort
required –
Scan & upload invoices and itemised bills, scan documents for certification, distribute
documents for certification, receive documents for user certification, distribute accounts,
print documents for user certification, prepare for certification, pay private calls with cash,
receive cash payment, issue receipt, receive receipt, certify account, submit certified
account for approval, approve certified account, receive approved certified accounts,
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submit approved certified accounts, receive certification ,update certification record, send
certifications for deduction.
This could be as much as R200 million within the National and Provincial Departments.
These have not been added to the main savings target as these are hidden internal
processing costs. Interventions to reduce these costs would include:

Re-configuration of the billing hierarchy to reduce costs via fixed allowance or fixed
account management.
o Allowance - This would entail either movement of costs to an allowance scheme
where the employee participates on the framework contract but contracts
directly with the service provider of their choice. Also discussion would take
place on whether mobile communications services should be provided as tools
of the trade rather than the current system where there is large scale policing of
accounts to check for abuse and whether devices are being used for official
purposes.
o Fixed Account Management – The department would create main accounts and
sub accounts. Main accounts which would be the bulk of users would be located
on a main fixed account with fixed subscriptions paid by the Department. Any
value outside the subscription would be paid via split billing by the user or user
soft barring. The main account should not require aggressive management as
this would entail a fixed monthly bill. For variable users that are identified a subaccount can be created and these can be actively managed to ensure that no
abuse takes place and this would restrict administration to approximately less
than 10% of all subscriptions that require to be managed.

Asset Management - A rigorous debate needs to take place on mobile ownership and
asset management within the State and disclosure requirements for the financial
statements as well as the treatment of the devices. This seems to be a grey area within
Government that’s the cause for administrative burdens. Investigation also needs to be
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done on the appetite for employees to bring your own device to work (BYOD) which
would entail the state only contracting for voice and data services excluding the device.

3 Party contracting – the State accumulates wasteful expenses when staff leave the
employ of the state and leave their subscription contracts behind. Potential exists to
implement 3 party contracting wherein the Department, employee and service provider
enters into a 3 way agreement. When the employee leaves the service of the state
he/she takes over the subscription contract on a private basis.

A common policy framework needs to be implemented with Government wherein
minimum standards could be set for usage in order to curb private usage/ abuse of
mobile communications services.

Contract/ SLA development to enforce supplier spend management. A key to reducing
cost within the state would be to contract this and to implement this as a target within
the service level agreement that Departments sign off with service providers. Clear
parameters require to be set for cost variances to be managed aggressively. Service
providers would require committing to cost reduction strategies and to regularly report
to the National Treasury. This arrangement will also look at the service providers
propensity to work with Government over the contractual period where the NT from
time to time will require to procure mobile communications technology services that
become available at a later stage as additional to the requirements outlined above.
Bidders that are successful will be given preference to submit bids for such
requirements that are over and above the main requirement outlined above. However,
the NT will not be bound to source this exclusively from this contract but may allow
itself to procure outside the contract dependent on whichever of the options may be in
State’s best interests.
6. FORMAT FOR THE EOI/RFI
-
Covering Memorandum Expression of Interest to participate in the process – Note that
service providers whom do not express an interest to participate in this process will not
be considered in the request for bid process.
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Detailed Company Profile
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Proposals and recommendations and Innovations regarding the proposed solutions to meet
objectives and requirements for the State as mentioned in the 4 themes of:
o
o
o
o
rationalizing the current State requirements,
innovating with new corporatized requirements,
combining and competitively bidding the States requirements
reducing the procurement, labour and administrative processing costs
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Licensing: All bidders must have valid IECS & IECNS licenses issued in the bidders name and
this will be verified with ICASA. For this purpose, certified copies of the licenses must be
provided.
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Footprint: All bidders must have a national footprint covering all towns and cities with a
WCDMA network or later generation mobile network. For this purpose bidders must
provide a coverage map and a declaration that their network meets this criterion. Service
quality levels must be provided for all towns and cities that are serviced.
7. PROCUREMENT PROCESS TIMELINE
RFI/EOI Issued
25th September 2015
Information Session
7th October 2015
RFI/EOI closed
27th October 2015
Presentations and interactions with bidders
October/November 2015
RFP Issued to Bidders that Expressed Interest
November 2015
RFP closed
November 2015
Short listing of Bidders
December 2015
Negotiations with preferred bidder/s
January 2016
RFP Awarded
January 2016
Contracts/ SLA Sign Off
February 2016
Implementation
March 2016
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The above timelines are estimated and are subject to change at the discretion of the National
Treasury.
8. BRIEFING AND INFORMATION SESSION
Bidders must please note that there will be a briefing session scheduled as follows:
Venue:
1st Floor Boardroom, 240 Madiba Street, cnr. Thabo Sehume and Madiba Streets,
Pretoria
Date:
7th October 2015
Time:
10:00 am
9. SUBMISSION OF DOCUMENTS
Expression of Interest/ Request for Information must be submitted to the Tender Information Centre
details as follows - Tender Box, 240 Madiba Street, cnr. Thabo Sehume and Madiba Streets, Pretoria, by
the 27 October 2015 at 11h00 am.
All service providers must submit their documents in 5 hardcopies and 2 soft copies (cd format) by
closing date and time.
10. CONTACT DETAILS
10.1.
General
Chief Directorate: Strategic Procurement, National Treasury, Private Bag x115, Pretoria,
0001
Physical address: 240 Madiba Street, cnr. Thabo Sehume and Madiba Streets, Pretoria
10.2.
Enquiries
Ms. Balekile Ngalo
Tel: +27 (0)12 395 6533 / E-mail: balekile.ngalo@treasury.gov.za
Ms. Mapule Qhena
Tel: +27 (0)12 315 5328 / E-mail: mapule.qhena@treasury.gov.za
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