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TITLE: Policy – Supply Chain ManagementPolicy Number / 0005
Effective Date / January 2006
Revision Date / January 2009
Approved By / January 2007
In terms of the Public Finance Management Act, 1999 (Act 1 of 1999 as amended by Act 29 of 1999) (PFMA), College Management Policy of Waterberg FET College.
- PURPOSE:
1.1.The policy is intended to facilitate a general understanding to the SCM practices, and assist in the smooth implementation of the process.
1.2.This policy applies when WaterbergFETCollege: Procures goods and services and disposes goods no longer needed.
1.3.This policy is informed by:
1.3.1.Section 217 of the constitution
1.3.2.The preferential Procurement Policy Framework Act, 200 (Act No.5 of 200)
1.3.3.The Broad – Based Black Economic Empowerment Act,2003 (Act No.53 of 2003)
1.3.4.State information Technology Agency (SITA) Act,(Act No.88 of 1998, as amended by Act No.38 of 20020
1.3.5.WaterbergFETCollegeVision, Mission, Values and Strategic Objectives
- POLICY OBJECTIVES:
- To outline required process to be taken and followed in procurement as guided by the Supply Chain Management, and clarify roles and responsibilities.
- To transform the colleges procurement and provisioning practices into an integrated SCM function
- To promote the consistent application of “best practices” throughout the supply chain process.
- DELEGATION OF SUPPLY CHAIN MANAGEMENT POWERS AND DUTIES:
3.1.The college council hereby delegates all powers and duties to the accounting officer which are necessary to enable the accounting officer:
3.1.1.To discharge the supply chain management responsibilities as directed in terms of section 44 of the PFMA
3.1.2.To maximize administrative and operational efficiency in the implementation of this policy
3.1.3.To enforce reasonable cost effective measures for the prevention of fraud, corruption, favoritism and unfair and irregular practices in the implementation of this policy
3.1.4.To comply with his or her responsibility in terms of section of the PFMA. Section 44 and 56 of the PFMA allows the accounting officer to sub delegate powers and duties to an official or committee members employed by the college
- SUPPLY CHAIN MANAGEMENT UNIT
- A supply chain management unit is hereby established to implement this policy.
- The supply chain management unit operates under the direct supervision of the chief financial officer or an official to whom this duty has been delegated in terms of section 44 and 56 of the PFMA. The training of officials involved in implementing this policy should be in accordance with any treasury regulations and guidelines on the supply chain management training.
- SUPPLY CHAIN MANAGEMENT SYSTEM
The supply chain management system provides for:
Demand Management
Acquisition Management
Logistics Management
Disposal Management
Risk Management
Performance Management
5.1.System of Demand Management
5.1.1.The accounting officer must establish and implement an appropriate demand management system in order to ensure that the resources required by the college supports its operational commitments and its strategic goals as outlined in the college strategic plan.
5.1.2.The demand management system must:
5.1.2.1.Include timely planning and management processes to ensure that all goods and services required by college are quantified, budgeted for and timely and effectively delivered at the right locations and at the critical delivery dates, and are of the appropriate quality and quantity at a fair cost.
5.1.2.2.Take into account any benefits of economies that may be derived in case of acquisitions of a repetitive nature, and
5.1.2.3.Provide for the compilation of the required specification to ensure that its needs are met
5.1.2.4.To undertake appropriate industry analysis and research to ensure that innovations and technological benefits
5.2.Acquisition Management
5.2.1.The accounting officer must implement a system of acquisition management in order to ensure:
5.2.1.1.That goods and services are procured by the college in accordance with authorised processes only.
5.2.1.2.That expenditure on goods and services is incurred in terms of an approved budget
5.2.1.3.That the threshold values for the different procurement processes are complied with;
5.2.1.4.That bid documentation ,evaluation and adjudication criteria and general conditions of a contract are in accordance with any applicable legislation,
5.2.1.5.That any treasury regulations and guidelines on acquisition management are properly taken into account.
5.2.2.In accordance with the Framework for Supply Chain Management [Section 76 (4) (c) of the PFMA goods and services may only be procured by way of threshold values.
PRICE / PROCEDURER 0 - R 5,000(VAT included) / Accounting Officers may procure requirements without inviting competitive bids or price quotations by obtaining at least three (3) verbal quotations from, where applicable, a list of prospective suppliers. The order should, however, be place against written confirmation from the selected supplier.
R 5,000 – R30,000 (VAT included) / At least three (3) quotations.
R 30,000 – R 500,000 (VAT included) / As many suppliers as possible with price quotations
R 500,000 and above / Competitive biding process (open tender)
The type and content of controls applied to Suppliers is defined within the Supply Chain Management Policy and Procedures.
Goods or services must not deliberately be split into parts or items of a lesser value merely to avoid complying with requirements of the policy.
If it is not possible to obtain at least three quotations, the reasons must be recorded and approved by the Chief Financial Officer or an official designated to perform the task. The accounting officer must record the names of the potential providers and their written quotations.
A written quotation or bid may not be considered unless the provider who submitted the quotations or bids – has furnished that provider’s full name, company registration number, and tax reference number and VAT registration number, if any, and tax clearance certificates and the provider’s tax matters must be in order.
5.2.2.1.Petty cash Purchases (0 to R1,000 VAT included)
The conditions for the procurement of goods by means of petty cash are as follows:
The finance manager authorizes all petty cash purchases up to a maximum of R1, 000 per month.
The purchases and expenditure may not exceed R200.00 per transaction.
Only items that are in Store stock item may be incurred from petty cash in cases of urgency.
A monthly reconciliation report from each centre must be provided to the central finance office including the total amount of petty cash purchases for that month, and receipts and appropriate documents for each purchase.
5.2.2.2.UP TO A TRANSACTION VALUE OF R 5,000 (VAT INCLUDED)
The conditions for the procurement of goods or services through written quotations are as follows:
Quotations must be obtained from at least three different providers preferably from, but not limited to providers of WaterbergFETCollege.
If it is not possible to obtain at least three quotations, the reasons must be recorded and reported to the accounting officer or an official delegated for such.
When using the list of accredited prospective providers the accounting officer must promote ongoing competition amongst providers by inviting
5.2.2.3.ABOVE THE TRANSACTION VALUE OF R 5,000 BUT NOT EXCEEDING R 30,000 (VAT INCLUDED)
Accounting officers/authorities may procure requirements by obtaining at least three (3) verbal or written quotations from, where applicable, a list of prospective suppliers. The order, however, be placed against written confirmation from the selected supplier if the quotation was submitted verbally.
5.2.2.4.ABOVE THE TRANSACTION VALUE OF R 30,000 BUT NOT EXCEEDING R 500,000 (VAT INCLUDED)
Accounting officer/authorities should invite and accept written price quotations for requirements up to an estimated value of R500 000 from as many suppliers as possible, that are registered on the list of prospective suppliers.
Where no suitable suppliers are available from the list of prospective suppliers, written price quotations may be obtained from other possible suppliers.
If it is not possible to obtain at least three (3) written price quotations, the reason should be recorded and approved by the accounting officer/authority or his/her delegate.
5.2.2.5.ABOVE THE TRANSACTION VALUE OF R 500,000 (VAT included)
Accounting officer/authorities should invite competitive bids for all procurement above R 500,000 subject that the expenditure on goods and services is incurred in terms of an approved budget. The process should entail the following:
5.2.2.5.1.Bid documents:
The criteria to which bid documentation for a competitive bidding process must comply, should take into account:
The general conditions of contract and any special conditions of contract, if specified
Any treasury guidelines on bid documentation
The requirements of the construction industry
Development Board in the case of a bid relating to construction, upgrading or refurbishment of buildings or infrastructure
Include the preference points system to be used, goals as contemplated in the preferential procurement regulation and evaluation and adjudication criteria including any criteria required by other applicable legislation
Compel bidders to declare any conflict of interest they may have in the transaction of which the bid is submitted
5.2.2.5.2.Public Invitation For Competitive Bids
Any invitation to prospective providers to submit bids must be by means of a public advertisement in newspaper commonly circulating locally, and the information contained in a public advertisement must include
The closure date for the submission of bids,
A statement that bids may only be submitted on the bid documentation provided WaterbergFETCollege
Date, time and venue of any proposed site meetings or briefing sessions
Bids must be sealed
5.2.2.5.3.Procedure for handing, opening and recording of bids
Bids must be opened and recording of bids
Must be opened at the same time and as soon as possible after the period for the submission of bids has expired
Bids received after the closing time should not be considered and should be returned unopened immediately
No information relating to the bid should disclosed to bidders or other persons until the successful bidder is notified of the award
The accounting officer must in a register all bids received in time
Competitive bids should be advertised in at least an appropriate media should an accounting officer/authority deem it necessary to ensure greater exposure to potential bidders. The responsibility for advertisement costs will be that of the relevant accounting officer/authority.
Should it be impractical to invite competitive bids for specific procurement, e.g. in urgent or emergency cases or in case of a sole supplier, the accounting officer/authority may procure the required goods or services by other means, such as price quotations or negotiations in accordance with Treasury Regulations 16A6.4. The reason for deviating from inviting competitive bids should be recorded and approved by the accounting officer/authority or his/her delegate. Accounting officers/authorities are required to report within ten (10) working days to the relevant treasury and the Auditor-General all cases where goods and services above the value of R1 million (VAT inclusive) were procured in terms of Treasury Regulation 16A6.4.
The report must include the description of the goods or services, the name/s of the supplier/s, the amount/s involved and the reasons for dispensing with the prescribed competitive bidding process.
5.2.3.AMENDMENT OF THE THRESHOLD VALUES
ACCOUNTING OFFICERS/AUTHORITIES MAY:
5.2.3.1.Lower, but not increase, the different threshold values specified in paragraphs 5.2.2.1 to 5.2.2.4; or
5.2.3.2.Direct that:
Verbal or written quotations be obtainable for any procurement of a transaction value lower than R5,000
Written price quotations be obtainable for any procurement of a transaction value lower than R30,000; or
A competitive bidding process be followed for any procurement of a transaction value lower than R500,000.
5.2.4.LISTS OF ACCREDITED PROSPECTIVE PROVIDERS
The accounting officer must:
5.2.4.1.Make sure prospective providers/suppliers are registered on the College Supplier Database.
5.2.4.2.At least once a quarter through newspaper commonly circulating locally or any other appropriate way invite prospective providers of goods and services to apply for evaluation and listing as accredited prospective providers,
5.2.4.3.Disallow the listing of any prospective provider whose name appears on the National Treasury’s database as a person prohibited from doing business with the public sector.
5.2.4.4.The list must be compiled per commodity and per type of service
5.2.5.ESTABLISHMENT OF PROCUREMENT COMMITTEES
A committee system shall be established consisting of the following committees for each procurement as the accounting officer may determine:
5.2.5.1.A bid specification committee
5.2.5.1.1.Must compile the specification for each procurement of goods or services
5.2.5.1.2.Specifications must be drafted in an unbiased manner to allow all potential suppliers to offer their goods or services.
5.2.5.1.3.Where possible specifications must be described in terms of performance required rather than in terms of descriptive characteristics for designA bid specification committee must be composed of one or more officials in the college preferably a member responsible for the function involved, and may, when appropriate, include external specialist advisors.
5.2.5.2.A bid evaluation committee
5.2.5.2.1.Is responsible for the evaluation of bids received,
5.2.5.2.2.The committee should evaluate bids in accordance with the specifications for a specific procurement, and the points system out in terms of preference point system
5.2.5.2.3.Evaluate each bidders ability to execute the contract
5.2.5.2.4.Submit to the adjudication committee a report and recommendations regarding the award of the bid or any other related matter
5.2.5.2.5.The committee must as far as possible be comprised of officials from the user departments requiring the goods and /services and staff from supply chain unit
5.2.5.3.A bid adjudication committee
5.2.5.3.1.The bid adjudication committee must consider the report and recommendations of the bid evaluation committee and make a final award or recommendation to the accounting officer, how to proceed with the relevant procurement
5.2.5.3.2.The committee must consist of a least senior managers of the college, the chief financial officer or a senior member in the finance office and at least one senior official in the supply chain unit
5.2.5.3.3.All the members should be by the accounting officer in writing.
5.3.Logistics management
5.3.1.The accounting officer must establish and implement an effective system of logistics management which must include:
5.3.2.The monitoring of spending patterns on types or classes of goods and services incoperating where practical the coding of items to ensure that each item has a unique number,
5.3.3.The setting of inventory levels whenever goods are placed in stock,
5.3.4.The placing of manual orders or electronic orders for al acquisitions other than those from petty cash
5.3.5.Before payment is approved, the certification by the responsible officer that the goods and services are received or rendered on time and is in accordance with the order, the general conditions of contract
5.3.6.Appropriate standard of internal control and warehouse management to ensure that goods placed in stores are secure and that only used for the purpose for which the were purchased
5.3.7.Regular checking to ensure that all assets including official vehicles are properly managed, appropriately maintained and only used for official purposes and
5.3.8.Monitoring and review of the supply vendor performance to ensure compliance with specifications and contract conditions for particular goods and services.
5.4.Disposal management
5.5.The criteria for the disposal or letting of assets including unserviceable, redundant or obsolete asset are as follows:
5.6.Every centre manager shall report to the chief financial officer or a delegated person on any fixed assets which should be written off stating in full the reasons for such recommendation.
5.7.The chief financial officer shall consolidate all such report and submit a recommendationto the council on the fixed assets to be written off.
5.8.Assets may only be disposed as approved by council
5.9.Assets stolen or damaged beyond repair and replaced by the broker or from the insurance fund may be written off as approved by the insurance and reported to council
5.10.Assets may be disposed of by:
5.10.1.Transferring the asset to another organ of state at market related value or when appropriate free of charge
5.10.2.Selling the asset through tendering
5.10.3.Destroying the asset
5.10.4.Donation of the asset as approved by council.
5.10.5.The accounting officer must ensure that immovable property is sold only at market related prices
5.10.6.Movable assets are sold either by way of written price quotations, a competitive bidding process, auction or market related prices which ever is the most advantageous
5.10.7.Where assets are traded in for other assets the highest possible trade in price is negotiated
5.11.Risk Management
5.11.1.The criteria for the identification consideration and avoidance of potential risk in the supply chain management system should be fully detailed and specified in the service level agreements entered into with the individual suppliers/service providers
5.11.2.Risk management must include the identification of risk on a case by case basis.
- COMBATING OF ABUSING OF SUPPLY CHAIN MANAGEMENT SYSTEM
- The accounting officer must take all reasonable steps to prevent abuse of the supply chain management system
- Investigate any allegation against an official or other role player of fraud, corruption, favoritism, unfair of irregular practices or failure to comply with this policy and when justified
- Take appropriate steps against such officials or other role players
- Report any alleged criminal conduct to the South African Police
- Check the national treasury’s database prior to awarding any directors is listed as a person prohibited from doing business with the public sector.
- Reject any bid from bidder if that bidder has abused the supply chain management system of WaterbergFETCollege or has committed any improper conduct in relation to such system.
6.2.Ethical Standards
6.2.1.A code of ethical standard as set out in the National Treasury’s code of conduct for supply chain management practitioners and other role players involved in the supply chain management is hereby established for officials and other role players in the supply chain management system of WaterbergFETCollege to promote:
6.2.2.Mutual trust and respect
6.2.3.An environment where business can be conducted with integrity and in a fair and reasonable manner
6.2.4.A breach of code of ethics must be dealt with in the following manner:
6.2.5.In the case of Waterberg FET employee, in terms of the disciplinary procedures of WaterbergFETCollege
6.2.6.In case of role players not employed by the college, through other appropriate means in recognition of the severity of the breach
6.2.7.No person who is a provider or prospective provider of goods or services or a recipient of goods disposed or to be disposed of may either directly or through a representative or intermediary promise, offer or grant any reward, gift,favours or hospitality to any official or any other role player involved in the implementation of this policy