monthly admnistration report office of the chief...
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BRIEFING REPORT
STANDING COMMITTEE ON APPROPRIATIONS OFFICE OF THE CHIEF PROCUREMENT OFFICER
24 APRIL 2018
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TABLE OF CONTENT
1. Introduction
2. Reforms /Major work under way:
2.1 Public Procurement Bill
2.2 Development of Contract Framework
2.3 Enhancement of Technological Reforms
2.4 Health and Technological Reforms
2.5 Property and Leasing
2.6 SCM Curriculum Reform & Supplier Practitioner Development
3. Other information
3.1 Major Deviations and Procurement
3.2 Procurement Plans
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1. INTRODUCTION
Cabinet, in reference to its Cabinet Resolution of 10 December 2014, resolved that
the Office of the Chief Procurement Officer (OCPO) accelerates Supply Chain
Management Reforms by modernising the SCM function in the public sector.
The Resolution focused on the following:
• Finalise the legal framework governing the OCPO and SCM function in
government;
• Simplifying, standardizing and automating procurement activities across all
spheres of government;
• Modernise SCM technology and upscale the intelligent use thereof;
• Develop SCM capacity of government.
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2.1 PROCUREMENT BILL
Public Procurement Bill
The Public Procurement Bill aims to amongst others deal with
elimination or standardization of fragmentation in the procurement
legislative environment.
Currently, the draft Bill is with the Office of the Chief State Law Advisor.
Once received, Cabinet approval will be sought so that the Bill is
released for Public Comments.
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2.2 DEVELOPMENT OF CONTRACT FRAMEWORK
Development of Contract Management Framework (CFM) • Improved contract management within the sphere of government.
• The contract will address irregular expenditure as well as wasteful expenditure.
• Draft CMF is being finalized for circulation to users for inputs.
Development of State Owned Construction Contracts • To provide a standardised contracts on State owned construction.
• This initiative will enable the State to be able to have an influence on the content
of the contracts as well as to bring the contracts in line with our regulatory
framework including the PFMA, MFMA PPPFA, and other relevant legislation as
well as to align it to SA’s current socio-economic requirements.
• Currently stakeholder engagements are being conducted.
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2.3 ENHANCEMENT OF TECHOLOGICAL REFORMS
Central Supplier Database
• The enhancement aims at facilitating inclusive growth and enabling the
doubling of suppliers and transformation in terms of reporting in terms of
PPPFA.
• The system has 656 000 users, 468 017 registered suppliers, 829
Organs of State on boarded, 17 000 practitioners, approximately 30 000
reports generated daily, enabled reporting on procurement spent, PPPFA
reporting, employees doing business with State etc,integration with CIDB
Supplier database finalised.
• Barriers to entry: Absence of procurement systems result in government
forfeiting opportunities to invite more than 3 quotations. Adoption of
common classification and codification convention across all spheres of
government prohibit identification of local content.
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2.3 ENHANCEMENT OF TECHOLOGICAL REFORMS
(CONTINUED)
eTENDER PORTAL
• The enhancements aims to establish data analytical and reporting
capability. To date, 35 000+ tenders published on eTenders ,7500+ visits
per day, 626 Organs of State on boarded. Functionality has also been
done but not implemented and it will also look at enabling of the
procurement plans.
• A data warehouse was established consolidating information from:
168 departments, 157 municipalities, 4 Entities,eTenders, Contract
register application, Central Supplier Database.
• Not all entities have uploaded their information. Tender awards are not
published by procuring entities soon enough. Employee data not
available through electronic systems.SCM spent information at granular
level not submitted by all organs of state
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2.4 HEALTH & EDUCATION INITIATIVES
HEALTH INITIATIVES
Five Health Sourcing Strategies developed and implemented and they include:
• Medical Equipment, Medical waste Mngt, Laundry & Linen, Hospital Cleaning
Serv and Hospital Food Services.
• The reforms will address procurement efficiency, health facilities and local
economic development across all departments of health. Currently being
implemented by Provincial Depts of Health under the guidance of NDOH.
LTSM SOURCING
• The reform aims to improve timely delivery of LTSM to schools.
• Possible savings if correctly implemented by Provincial Education Departments
(PEDs)
• Better planning for LTSM at school level
• Currently being managed and implemented as Transversal Contracts
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STRATEGIC AWARENESS AND TRAVEL
INITIATIVES
STRATEGIC PROCUREMENT AWARENESS
• The purpose of the initiative is to provide awareness to on strategic
procurement reforms to National, Provincial and Public Entities.
• To date, 25 awareness sessions have been completed and 560 officials
were reached.
• Three additional sessions are to be held which will reach an additional
90 officials.
TRAVEL INITIATIVES
• Travel Technology Business Case has been developed that will provide
government with one platform from which travel bookings will be made
and provide more visibility on travel spend and behavior. Travel policy
rules and budget built-in the solution. Promote competition in the market.
• Business Case was approved.
• RFP to be issued in 2018/19 to solicit proposals for a “Procure-Finance-
Operate-Transfer” model from the market.
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2.5 PROPERTY AND LEASING
PROPERTY AND LEASING
• The purpose of this reform is to create an investment opportunities to the
value of R40 billion in conjunction National Department of Public Works
in state owned properties by 2021. (Coastal properties)
• The project is divided into revenue and investment as well as savings.
• Currently, in terms of investment and revenue, the project is at advance
stage awaiting approval of the framework. While in terms of savings, the
project is at initiation stage as a result of structural changes that affect
the proceeding of the project.
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2.6 CURRICULUM REFORMS &
SUPPLIER/PRACTITIONER DEVELOPMENT
SCM CURRICULUM
• Ready for Internship or employment students,
• Support to lecturers since the content is new to HLIs
• Expand to access TVET colleges
SUPPLIER /PRACTITIONER DEVELOPMENT
• Partnerships with conferencing service providers – to ensure standing
engagement platforms and accuracy of information.
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OTHER INFORMATION
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3.1 MAJOR DEVIATIONS AND PROCUREMENT
PRASA
• Moloto Rail project
The project is estimated at R60 billion.
PRASA wanted to appoint China Communication and
Construction Company (CCCC) to fund and build Moloto rail
corridor through deviation.
OCPO advised not to deviate.
Deviation request was not submitted.
• Lease of 10 locomotive for a period of 24 months
Estimated R40 million (15 December – 30 April 2018).
PRASA was advised to advertise a bid for a shorter period.
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3.1 MAJOR DEVIATIONS AND PROCUREMENT
SABC
• Appointment of three labour broker to provide specialised skills
Estimated amount of R19 680 000.00
It was not supported.
TRANSNET
• Expansion of physical security contracts
Estimated amount of R196 913 044.16 for a period of 7 months
It was not supported instead they were granted only 2 months.
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3.1 MAJOR DEVIATIONS AND PROCUREMENT
Procurement of ICT system
Bid initially awarded to T-systems and Board reverse its decision
Estimated contract amount R1.3 billion for 5 years
Dispute between legal Transnet and T-system in court
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3.1 MAJOR DEVIATIONS AND PROCUREMENT
Eskom
Kusile & Medupi Power Stations
Eskom paying huge penalties for delaying access to sites
Major expansions due to poor planning
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3.1 MAJOR DEVIATIONS AND PROCUREMENT
Department of Energy (DOE)
Nuclear Building Programme Procurement
Estimated at R1 trillion
It was not supported.
Department of Water and Sanitation
Mzimvubu Water Project
Department wanted to appoint China Communication and
construction Company (CCCC) to fund and build Mzimvubu dam
Estimated at R20 billion
It was not supported.
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3.1 MAJOR DEVIATIONS AND PROCUREMENT
Department of Water and Sanitation - Lepelle Water Board
Appointment of MSW as principal agent
For the upgrade of Olifantspoort and Ebenezer
Budget was R20 million but appointment was for R40 million
Invoices paid as at 07 July 2017 amounted to R75 459 673. 60
Invoices not paid yet as at 03 July 2017 R128 205 606.85
Appointment of LTE
Appointed LTE through deviation (emergency)
Estimated at R96 407 000.00
Estimated over R2 billion
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3.1 MEASURES TO ADDRESS CONFINEMENTS/
DEVIATION
Director General of National Treasury established a task to review
current procedures and processes.
Provision to deviate from competitive bidding contained in 2005 Treasury
Regulations.
Abuse of this provision noticed during 2006.
Two practice notes issued in 2007 to address the abuse of this provision
and introduced the reporting to National Treasury and Auditor General.
Further instruction notes issued in 2011 and 2016 to address the same
abuse and introduce the publication of deviations on quarterly basis.
Current measures not reducing the number of deviations.
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3.2 PROCUREMENT PLANS
Submission date is 31 March of each financial year.
Procurement opportunities published on website quarterly to give equal
opportunity to potential suppliers.
No online system to track the implementation of procurement plans.
Received 35 procurement plans from the voted entities by deadline for
2018/19 financial year. One plan does not comply with the template.
Received 3 procurement plans from voted entities between 4-6 April
2018.
Eskom submitted procurement plan on 27 March 2018.
TRANSNET to submit its plan after Board meeting scheduled for the 25
April 2018.
SABC, DENEL and PRASA did not submit procurement plans.
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The End
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