procurement policy as part of supply chain management

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Procurement Policy as Part of Supply Chain Management

PROCUREMENT POLICY

AS PART OF SUPPLY CHAIN MANAGEMENT

Document number

Custodian/responsi-

ble executive

Executive Director: Expenditure

Responsible

department

Office of the Executive Director: Expenditure

Status For Approval

Approved by Management Executive Committee

Date of approval March 2016

Amendments Whole document

Dates of

amendments

2016

Review date 15 March 2017

Related documents

Other documents:

(e.g. Legislation, DoE and HEQC

directives and guidelines)

Refer to paragraph 2.1 for list

Stakeholders affected by this

document (units and divisions that

should be familiar with it):

UJ community

Website address of this document: \Governance & Policies\Finance

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CONTENTS

1. TERMINOLOGY ........................................................................................ 5 1.1 Abbreviations ............................................................................................. 5 1.2 Definitions .................................................................................................. 6 2. REGULATORY AND POLICY DIRECTION .............................................. 8 2.1 Regulatory environment ............................................................................. 8 2.2 Policy statement ......................................................................................... 9 2.3 Policy objectives......................................................................................... 9 2.4 Scope of application ................................................................................. 10 3. ELEMENTS OF THE SCM SYSTEM ...................................................... 10 3.1 General .................................................................................................... 10 3.2 SCM diagram ........................................................................................... 11 4. SCM GOVERNANCE STRUCTURE ....................................................... 12 4.1 Introduction .............................................................................................. 12 4.2 University Council .................................................................................... 12 4.3 Management Executive Committee ......................................................... 12 4.4 Bid Committees ........................................................................................ 12 4.5 Bid Specification Committee .................................................................... 14 4.6 Bid Evaluation Committee ........................................................................ 14 4.7 Adjudication Committees ......................................................................... 15 4.7.1 Tender Committee ................................................................................... 15 4.7.2 Procurement Tender Committee .............................................................. 15 4.8 Procurement department ......................................................................... 15 4.9 Internal requestors ................................................................................... 16 5. RISK MANAGEMENT ............................................................................. 17 5.1 Application of risk management in SCM .................................................. 17 6. PREFERENTIAL PROCUREMENT ......................................................... 18 6.1 General .................................................................................................... 18 6.2 B-BBEE Act .............................................................................................. 18 6.3 Access to requirements ............................................................................ 18 6.4 Preferential scoring .................................................................................. 18 6.5 Supplier development and Enterprise development ................................. 19 6.6 Monitoring and performance measurement ............................................. 19 6.7 Calculation of points for B-BBEE preference and final score ................... 19 7. DEMAND PLANNING .............................................................................. 20 7.1 Annual demand planning ......................................................................... 20 7.2 SCM annual purchasing plan ................................................................... 21 8. UNIVERSITY SUPPLIER DATABASE .................................................... 26 8.1 General .................................................................................................... 26

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8.2 Supplier applications ................................................................................ 27 8.3 Supplier evaluation criteria ....................................................................... 27 8.4 Supplier approval ..................................................................................... 27 8.5 Capturing and maintaining information on the University Supplier

Database .................................................................................................. 28 8.6 Supplier database development ............................................................... 28 8.7 Supplier performance management ......................................................... 28 8.8 Removal of suppliers from the database .................................................. 28 9. PROCUREMENT MANAGEMENT .......................................................... 29 9.1 Directives for specific types of requirements ............................................ 29 9.1.1 Preferred-source procurement .................................................................. 29 9.1.2 International purchasing ............................................................................ 30 9.1.3 Urgent procurement .................................................................................. 30 9.1.4 Emergency procurement ........................................................................... 31 9.1.5 Unsolicited proposals ................................................................................ 31 9.1.6 Purchasing card ........................................................................................ 31 9.2 Procurement by means of grants from donors ......................................... 34 9.3 Authorised procurement methods ............................................................ 34 9.3.1 Petty cash ................................................................................................. 35 9.3.2 Electronic Requisitions (I-Proc) ................................................................. 35 9.3.3 Request for quotation ................................................................................ 35 9.3.4 Sealed quotations ..................................................................................... 35 9.3.5 Quotation thresholds ................................................................................. 36 9.3.6 The appointment of consultants ................................................................ 37

10. TENDER POLICY .................................................................................... 37 10.1 Request for information ............................................................................ 38 10.2 Request for proposal ................................................................................ 38 10.3 Request for tender ................................................................................... 38 10.4 Number of suppliers per tender/Request for proposal.............................. 38 10.5 URC tender request for specific equipment ............................................. 38 10.6 Quotation/tender compilation ................................................................... 39 10.6.1 General ..................................................................................................... 39 10.6.2 Elements for inclusion in tender documents .............................................. 39 10.6.3 Specifications/terms of reference .............................................................. 39 10.7 Issuing of quotations/tenders ................................................................... 40 10.7.1 Requests for quotations/invitations ........................................................... 40 10.7.2 Closing time of tenders/quotations ............................................................ 40 10.7.3 Availability of tender documents ............................................................... 40 10.7.4 Sale of tender documents ......................................................................... 40 10.7.5 Tender register .......................................................................................... 40 10.7.6 Tender briefing sessions ........................................................................... 40 10.7.7 Changing of information before tender closing date and time ................... 41 10.7.8 Postponement of closing date .................................................................. 41 10.7.9 Cost of advertising of Tenders .................................................................. 41 10.8 Receiving and opening of tenders ............................................................ 41

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10.8.1 General guidelines .................................................................................... 41 10.8.2 Confidentiality ........................................................................................... 42 10.9 Evaluation of tenders or quotes ............................................................... 42 10.9.1 Reasons for disqualifications of tenders or quotes .................................... 42 10.9.2 The evaluators .......................................................................................... 43 10.9.3 Evaluation of tenders ................................................................................ 43 10.9.4 Determination of final score ...................................................................... 44 10.9.5 Samples .................................................................................................... 45 10.10 Award and contractual commitments ....................................................... 45 10.10.1 Award based on final combined score ...................................................... 45 10.10.2 Award to tenderer not scoring the highest points ...................................... 45 10.10.3 Communication of award to successful tenderer ...................................... 45 10.10.4 Cancellation of quotations/tenders ............................................................ 46 10.10.5 Specification changes ............................................................................... 46 10.11 Access to tender information .................................................................... 46 10.12 Conclusion of contracts ............................................................................ 47 10.13 Service-level agreement .......................................................................... 47 10.14 Retention .................................................................................................. 48 10.15 Performance guarantee ........................................................................... 48 10.16 Variation orders ........................................................................................ 48 11. CONTRACT AND SUPPLIER PERFORMANCE MANAGEMENT ......... 48 11.1 Contract management .............................................................................. 48 11.2 Correction of an incorrect acceptance of contract .................................... 49 11.3 Trademark/brand name ............................................................................ 49 11.4 Payments ................................................................................................. 49 11.5 Insolvency, liquidation, death, sequestration or judicial management of

contractors ............................................................................................... 49 11.6 Transfer and cession of contracts ............................................................ 49 11.7 Contract variations/amendments.............................................................. 50 11.8 Extension of contract periods ................................................................... 50 11.9 Amendment of specifications ................................................................... 50 11.10 Contractual price adjustments .................................................................. 50 11.11 Reduction of prices .................................................................................. 51 11.12 Unsatisfactory performance ..................................................................... 51 11.13 Warranties ................................................................................................. 53 11.14 Contract termination ................................................................................. 53

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PROCUREMENT POLICY

AS PART OF SUPPLY CHAIN MANAGEMENT

1. TERMINOLOGY 1.1 Abbreviations

B-BBEE Broad-Based Black Economic Empowerment

ELG Executive Leadership Group

EME Exempted micro enterprise Exempted micro enterprise with a turnover of less than R10 million

GRV Goods received voucher

ICS Information and Communication Services

MEC Management Executive Committee

PURCO Purchasing Consortium Southern Africa

QSE Qualifying Small Enterprise Qualifying small enterprise with a turnover between R10 million and R50 million

RFI Request for Information

RFP Request for Proposal

RFQ Request for Quotation

SARS South African Revenue Services

SCM Supply Chain Management

SMME Small, Medium and Micro Enterprises

UJ or “the University”

University of Johannesburg

URC University Research Committee

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1.2 Definitions

Black persons A generic term that includes Africans, Coloureds, Indians and the Chinese.

Broad-Based Black Economic Empowerment

The economic empowerment of all black persons, including women, workers, youth, persons with disabilities and persons living in rural areas, through diverse but integrated socio-economic strategies that include, but are not limited to:

(i) increasing the number of black persons who manage, own and control enterprises and productive assets;

(ii) facilitating ownership and management of enterprises and productive assets by communities, workers, cooperatives and other collective enterprises;

(iii) human resource and skills development;

(iv) achieving equitable representation in all occupational categories and levels in the workforce;

(v) preferential procurement; and

(vi) investment in enterprises that are owned or managed by black persons.

Close family member

The spouse/partner, children, brothers and sisters or parents of a person.

Closing time The last date and hour specified in tender documents for the submission of tenders.

Corruption Performing duties in an improper way, to the detriment of the University.

End-user A person who requests any goods/services in the procurement process.

Final award In relation to tenders or quotations submitted for a contract, the final decision on which specific tender or quote to accept.

Fraud Knowingly lying or practising deception to obtain a benefit or advantage.

Fronting Practice Means a transaction, arrangement or other act or conduct that directly or indirectly undermines or frustrates the achievement of the objectives of this Act or the implementation of any of the provisions of this Act, including but not limited to practices in connection with a B-BBEE initiative –

(i) in terms of which black persons who are appointed to an enterprise are discouraged or

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inhibited from substantially participating in the core activities of that enterprise;

(ii) in terms of which the economic benefits received as a result of the broad-based black economic empowerment status of an enterprise do not flow to black people in the ratio specified in the relevant legal documentation;

(iii) involving the conclusion of a legal relationship with a black person for the purpose of that enterprise achieving a certain level of broad-based black economic empowerment compliance without granting that black person the economic benefits that would reasonably be expected to be associated with the status or position held by that black person; or

(iv) involving the conclusion of an agreement with another enterprise in order to achieve or enhance broad-based black economic empowerment status in circumstances in which -

(a) there are significant limitations, whether implicit or explicit, on the identity of suppliers, service providers, clients or customers;

(b) the maintenance of business operations is reasonably considered to be improbable, having regard to the resources available;

(c) the terms and conditions were not negotiated at arm’s length and on a fair and reasonable basis.

Issue voucher An approved voucher for recording all issues.

Long-term contract A contract with a duration exceeding one year.

Middleman supplier Intermediary supplier who provides little value in the supply chain, perhaps only playing matchmaker, but building in a margin.

Obsolete No longer produced or used; out of date; to become obsolete by replacing it with something new.

Official An employee of the University; a person contracted to work as a member of staff.

Redundant items No longer needed or useful; superfluous (unnecessary).

Requisition An approved voucher that is completed in order to record all internal and external requests for goods/services.

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Senior Manager: Procurement Services

The official to whom appropriate powers have been delegated by the Deputy Vice-Chancellor: Finance to be responsible for the organisational function of SCM at the University; he/she is to delegate responsibilities to his/her subordinates in terms of the functions of SCM.

Supply Chain Management

SCM is an integral part of financial management. This function is the collaborative strategy that integrates the planning, procurement and provisioning processes in order to eliminate non-value-adding cost infrastructure, time and activities, and seeks to introduce international best practices. Six phases are distinguished in the SCM processes, namely, demand planning, acquisition management, logistics management, disposal management, risk management and performance measurement.

Total cost of ownership

The sum of direct spend, related spend, process spend and opportunity cost associated with a specific commodity and service

2. REGULATORY AND POLICY DIRECTION 2.1 Regulatory environment 2.1.1 The University, as a public higher education institution under the Higher

Education Act No. 101 of 1997, applies the principles of the following to its supply chain management environment:

(i) The Constitution of the Republic of South Africa of 1996; (ii) The Broad-Based Black Economic Empowerment Act No. 53 of

2003 (B-BBEE Act); (iii) Broad-Based Black Economic Empowerment Amendment Act No

46 of 2013; (iv) The King III Report on Corporate Governance for South Africa of

2012; (v) The Prevention and Combating of Corrupt Activities Act No. 12 of

2004; (vi) Promotion of Administrative Justice Act No. 3 of 2000; (vii) Promotion of Access to Information Act (PAIA) No. 2 of 2000; (viii) The Competition Act No. 89 of 1998.

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(ix) The Preferential Procurement Policy Framework Act No.5 of 2000

2.2 Policy statement 2.2.1 It is the University’s policy to promote – through a centralised Procurement

department – efficient, effective, ethical, legal and uniform planning for and procurement of all goods, services, consultants and works required for the University’s continued proper functioning.

2.2.2 Supply chain management (SCM) at the University must be executed in a

manner that conforms to best-practice supply chain principles. The SCM system must further continually be reviewed and improved to ensure conformity with the above principles, while supporting and promoting black economic empowerment goals in South Africa.

2.3 Policy objectives 2.3.1 The objectives of the implementation of this policy is to:

(i) create, maintain and continually improve a fair, equitable, transparent, competitive and cost-effective supply chain management system at the University;

(ii) ensure that decisions will be made within a framework of value for

money and in support of socio-economic imperatives in South Africa;

(iii) deploy a uniform SCM policy to manage all of the University’s

purchasing transactions effectively; (iv) negotiate for the correct item at the right time, in the right quantities,

of the right quality and at the right price, from the best source and to the best overall benefit of the University;

(v) award business on the basis of merit within the ambit of criteria set

out in this policy and procedure document; (vi) set annual targets for and continually promote, accelerate and

support the procurement of goods and services from B-BBEE suppliers in line with the B-BBEE Act and the Codes of Good Practice.

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2.4 Scope of application This policy governs the procurement of all goods, general and professional

services, as well as construction and refurbishment projects that the University requires.

3. ELEMENTS OF THE SCM SYSTEM 3.1 General 3.1.1 In order to give effect to the above policy and principles, the University elects

to apply the following elements of its SCM system:

(i) Procurement management that consists of methodologies employed to procure goods and services in a fair, ethical, legal, transparent, competitive and cost-effective manner to the best benefit of the University;

(ii) Logistics management that provides for an effective system of,

inventory management, (iii) Disposal management, which is covered in the Asset Management

Policy; (iv) Preferential procurement that will give effect to the principles of the

B-BBEE Act and the Codes of Good Practice; (v) Risk management for identifying, considering and avoiding potential

risks in the SCM system and for determining the University’s supply chain risk tolerance in accordance with the Risk Policy of the University;

(vi) Ethics through which the University commits itself to a policy of fair

dealing and integrity in conducting its SCM activities which is covered in the Ethics Policy;

(vii) Contract and supplier performance through which the University will

closely manage its contractual relationships with its contracted suppliers in a structured and focused supplier performance management programme;

(viii) Recordkeeping, reporting and performance measurement that must

be used to enhance the effectiveness and visibility of SCM operational activities, as well as the achievement of strategic objectives.

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3.2 SCM diagram 3.2.1 The table below shows how the above SCM elements support the overall

University SCM strategy and cascade down into operational management and execution of the SCM function.

UJ ENVIRONMENT SCM ELEMENTS

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University Strategy and Planning

Demand Planning

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Spend and commodity analysis

Understand user demand needs

Conduct supply industry analysis

Develop sourcing strategy

Supply Management

Procurement Management

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Supplier Database/Ezee-Dex/PURCO

Total cost of ownership

Develop quotation and tender documents and evaluation criteria

Conduct quotation and tender process

Select supplier(s)

Supplier Management

Contract management and administration

Product quality and supplier management expertise and operational efficiency

Goods/Services/Provision Logistics Management

EX

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Stores management

Inventory Management

Receiving and dispatch

Stores accounting

Coding of Items

Replenishment of stock items

Stocktaking

Handover and takeover

Discrepancies

Voucher registration

Disposal Disposal Management

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4. SCM GOVERNANCE STRUCTURE 4.1 Introduction The structures set out below must give strategic direction and execution

authority to the SCM Policy. 4.2 University Council 4.2.1 The University Council oversees and has overall accountability for the

implementation of and adherence to all SCM policies and procedures, as well as all SCM activities performed under these policies.

4.2.2 Through the SCM Policy, the Council delegates its functions in terms of

overseeing, planning and executing SCM in the University to the Audit and Risk Committee, the Management Executive Committee (MEC), procurement subcommittees of the MEC (the Tender Committee and the Procurement Committee are collectively referred to as the procurement subcommittees), the Procurement department and all other University departments referred to in this document. Any concerns relating to SCM should be referred to the Financial Sustainability Committee of Council by the Audit and Risk Committee.

4.2.3 The Council of the University is the highest authority to which SCM disputes

may be escalated at the University. 4.3 Management Executive Committee 4.3.1 The MEC must constitute two SCM subcommittees, namely the Tender

Committee and the Procurement Committee, to plan and execute SCM activities for tenders.

4.3.2 Disputes of any nature arising within SCM must be escalated to the MEC by

the Chairperson of the Tender Committee. 4.3.3 These procurement committees must provide annual SCM management

reports, via the Tender Committee, to the MEC for consideration and onward transmission to the Financial Sustainability Committee of Council and the Council.

4.4 Bid Committees

4.4.1 The University will function with a three bid committee system in order to

ensure that the tender process is fair, equitable, transparent, competitive and cost-effective.

4.4.2 These committees will be named a bid specification, bid evaluation and bid

adjudication committee. The Bid Adjudication committee will consist of the

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Tender Committee and the Procurement Tender Committee with their respective thresholds of awarding tenders.

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4.5 Bid Specification Committee

4.5.1 The committee is responsible for compiling bid specifications/terms of reference in an unbiased manner to allow all potential bidders to offer their goods and/or services without favour or prejudice. The specifications and evaluation committee to comprise of:

(i) Senior manager Procurement (Chairperson);

(ii) Project leader and or end user; (iii) One tender administrator officer;

(iv) Executive Director: Expenditure and the respective Executive Director/Dean or representative of the environment if request is above R10 million;

(v) One or more suitably qualified specialist; or

(vi) An external consultant if necessary.

4.5.2 The Bid Specification Committee will consider and approve:

(i) Technical and functional specifications submitted by end user departments;

(ii) Terms of Reference submitted by end user departments; (iii) The evaluation criteria to be included in the bid; (iv) The preference point system and appropriate goals identified and

points allocated for these goals, consistent with the requirements of the Preferential Procurement Regulations; and

(v) Special Conditions of Contracting applicable to a particular good or

service or works in addition to General Conditions of Contracting or contracting documentations for Engineering, construction and building works.

4.6 Bid Evaluation Committee 4.6.1 The Bid Evaluation Committee will -

(i) evaluate all bids and quotations submitted in accordance with the

evaluation criteria approved by the Bid Specification Committee; and

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(ii) recommend to the Bid Adjudication Committee, the bidder scoring highest points in terms of the approved evaluation criteria

4.7 Adjudication Committees

4.7.1 Tender Committee This is a subcommittee of the MEC, and is appointed to ensure that

procurement above R1 000 001 and up to R10 000 000 per transaction in value is carried out in accordance with the policies and procedures set out in this document. The Financial Sustainability Committee of Council and the Projects and Resourcing Committee of Council will be responsible for awarding tenders above a value of R10 million, upon recommendation of the MEC.

4.7.2 Procurement Tender Committee This is a subcommittee of the MEC, and is appointed to ensure that

procurement above R250 000 and up to R1 000 000 per transaction in value is carried out in accordance with the policies and procedures set out in this document which will also award the tenders within the above range.

4.8 Procurement department

The following is the responsibilities that can only be performed by or through the Procurement department staff:

4.8.1 Issuing and administration of all requests for information (RFIs), requests for

proposal (RFPs), requests for quotation (RFQs), requests for sealed quotation and tenders.

4.8.2 Sourcing/making of commitments (for example letters of intent, orders, and

memorandums of understanding with suppliers, interim supply agreements and formal supply agreements/contracts) with any supplier.

4.8.3 Place orders on behalf of the University. 4.8.4 Only designated procurement officials may place orders in terms of the set

threshold values. 4.8.5 An official order for any goods or services may only be issued if the

contracted amount is provided for in the relevant budget. 4.8.6 Order cancellations in cases of errors must be authorised by the

Procurement supervisor or manager. 4.8.7 Once an order has been finally approved and issued to a supplier, it may

not be changed. Should the need for amendments occur, a new order may

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be raised for the amendment, or the original order cancelled and a new order generated to substitute the cancelled order.

4.8.8 Assist with all negotiations with suppliers on procurement matters. 4.8.9 To arrange meetings with suppliers and end users to address non-

compliance issues. 4.8.10 To ensure corrective steps are taken in accordance with governance

compliance. 4.8.11 All orders must be approved as per the following breakdown:

(i) Buyers – Up to R20 000; (ii) Procurement supervisor – R20 001 to R100 000; (iii) Procurement manager – R100 001 to R250 000; (iv) Tenders manager – R250 001 to R1 000 000; (v) Senior manager: Procurement Services – R1 000 001 to R5 000 000; (vi) Director: Expenditure – R5 000 001 and above.

NO PAYMENT WILL BE MADE TO ANY SUPPLIER WITHOUT AN APPROVED UJ ORDER AS PER ABOVE DELEGATIONS.

4.9 Internal requestors

Internal requestors have the following obligations: 4.9.1 Users who intend to purchase goods or services must accurately complete

an I-proc, provide proper specifications and submit for approval in accordance with the delegations of authority. Only specifications must be provided as quotations will be obtained by the procurement department.

4.9.2 Requestors should ensure that they have sufficient funds prior to submitting

the request for an acquisition. 4.9.3 Provide a written motivation with the electronic requisition (see Section 11,

Preferred source procurement) when single suppliers are requested to be used.

4.9.4 Where any equipment is purchased that will have an impact on infrastructure

or Operations’ requirements, obtain approval from the Operations department in order to ensure that sufficient electrical power consumption, space and suitability of area is considered. This approval must accompany the I-Proc.

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4.9.5 Where any changes/alterations are to be made to existing buildings, offices or new buildings, obtain prior approval from the Operations department. This signed approval must accompany the I-Proc.

4.9.6 For the purchase of any hazardous material, including radioactive

materials/items, obtain prior approval via the Health and Safety department from the relevant authorities (for example, the Department of Health). This approval from the appropriate authority must accompany the I-Proc.

Note: Refer to the Health and Safety Policy to determine which hazardous

materials are approved and requirements for exceptions. 4.9.7 For the purchase of all items related to Information and Communication

Services (ICS), be it computers, network or telephone cabling or points, servers, software, printers or any telephone exchange-related items, obtain appropriate approval from ICS. This approval must accompany the I-Proc.

Note: ICS will provide a checklist of specific requirements as far as

compliance with the various acts is concerned. 5. RISK MANAGEMENT 5.1 Application of risk management in SCM

5.1.1 Risk management is about proactively identifying and understanding the potential threats, actions or events that will adversely or positively affect an organization’s ability to achieve its objectives, then managing, monitoring and reporting on these risks.

5.1.2 Good risk management is not about eliminating or avoiding risks, but rather identifying risks and managing them as per the risk management policy of the University.

5.1.3 Below are some aspects that are to be considered in managing risk in the SCM environment.

(i) Project leaders will be responsible for developing a risk register for

each project and managing and monitoring of the risk.

(ii) Risks must be identified in advance, according to each case.

(iii) Risks must be allocated to the party or authorised official best suited to managing them.

(iv) The University will accept the cost of risks if the cost of transferring

the risk is greater than that of retaining such risk, but must transfer the risk where this is not the case.

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(v) The University will proactively manage risks and provide for

adequate cover for residual risks.

6. PREFERENTIAL PROCUREMENT 6.1 General 6.1.1 The University will promote, accelerate and support the procurement of

goods and services from B-BBEE suppliers in line with the appropriate legislation and the University’s preferential procurement policy.

6.1.2 The University will, each financial year, strive to achieve a percentage of

recognisable B-BBEE procurement spend as recommended by the Director: Expenditure and as approved by the MEC.

6.2 B-BBEE Act 6.2.1 The University will take into account as far as possible, the B-BBEE Act and

the University will not tolerate any form of abuse to the preferential procurement system and will take strong action (legal) against any perpetrators of such abuse.

6.3 Access to requirements Where feasible, the University will, in tender documents, allow

subcontracting and joint ventures with small, medium and micro enterprises (SMMEs) and B-BBEE enterprises where the B-BBEE enterprise or SMME may be unable to fulfil all tender requirements due to the size or nature of the requirement. The main contractor will remain the principal contractor and will be accountable for the joint party or subcontracting party regarding all aspects of the contract.

6.4 Preferential scoring 6.4.1 The University will, in tender/quotation documents, stipulate the preference

point system to be applied in adjudication and will include criteria for the evaluation, for example, price, B-BBEE rating, warranties.

6.4.2 The contract must be awarded to the tenderer who scores the highest points,

unless objective criteria justify the award to another tenderer. 6.4.3 However, when any donor funds are accepted and utilised for procuring

goods or services, the donor’s rules will apply. 6.4.4 All adjudication documents will be kept on file as per the legal requirements.

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6.5 Supplier development and Enterprise development 6.5.1 The University will endeavour to promote supplier development and

enterprise development in line with the Codes of Good Practice and the B-BBEE amendment Act of 2013.

6.5.2 (EMEs) with a turnover of up to R10 million, and qualifying small enterprises

(QSEs) with a turnover between R10 million and R50 million and at least 51% black owned may be allowed earlier payment terms after receipt of a valid original invoice and supportive documentation. This applies in instances where early payment terms were part of the contract or where the facility was agreed at the time when the supplier was included on the supplier database to promote supplier development. Supplier development might also include development and coaching in various aspects of managing and running a business.

6.5.3 To promote enterprise development, the University will identify suppliers that are not approved suppliers of the University, which is either Exempted Micro Enterprises or Qualifying Small Enterprises and that are at least 51% black owned that could possibly supply the University with a product or service in the future to develop. This supplier may be included in the approved supplier database of the University in the future. These developments might include development and coaching in various aspects of managing and running a business.

6.6 Monitoring and performance measurement The University will record its procurement spend and report annually to the

MEC on its preferential procurement spend. 6.7 Calculation of points for B-BBEE preference and final score 6.7.1 A preference point system will be followed:

(i) For contracts with a Rand value above a prescribed amount a maximum of 10 points may be allocated for specific goals as contemplated in paragraph (iv), provided that the lowest acceptable tender scores 90 points for price;

(ii) For contracts with a Rand value equal to or below a prescribed

amount a maximum of 20 points may be allocated for specific goals, provided that the lowest acceptable tender scores 80 points for price;

(iii) Other acceptable tenders which are higher in price must score fewer

points, on a pro rata basis, calculated on their tender prices in relation to the Iowest acceptable tender, in accordance with a prescribed formula.

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(iv) The specific goals may include contracting with persons, or categories of persons, historically disadvantaged by unfair discrimination on the basis of race, gender or disability.

(v) Implementing the programmes of the Reconstruction and Development Programme as published in Government Gazette No. 16085 dated 23 November 1994.

(vi) Any specific goal for which a point may be awarded must be clearly specified in the invitation to submit a tender -

(a) the contract must be awarded to the complying tenderer who scores the highest points, unless objective criteria in addition to those contemplated in paragraphs (v) and (vi) justify the award to another tenderer;

(b) any contract awarded on account of false information furnished by the tenderer in order to secure preference in terms of this Act, maybe cancelled at the sole discretion of the institution without prejudice to any other remedies the institution may have.

(c) Any goals contemplated in paragraph (v) must be measurable, quantifiable and monitored for compliance.

(vii) The Members of the Executive Committee may, on request, exempt

the University from all the above provisions if –

(a) The likely tenderers are international suppliers;

(b) It is in the University’s interest. 6.7.2 The generic scorecard of the Amended codes of Good Practice will be

utilised for scoring all measured entities. 7. DEMAND PLANNING 7.1 Annual demand planning Demand planning is the first phase of SCM. The objective is to ensure that

the resources required to fulfil the needs identified in the strategic plan of the department are delivered at the correct time, price, quantity and quality and place. The Procurement department will utilise the approved annual budget and an analysis of the past expenditure in order to compile an annual procurement plan.

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7.2 SCM annual purchasing plan The Procurement department will use the demand plan and the procurement

spend analyses in order to develop a sourcing strategy plan per commodity. Standardisation of goods will be considered wherever possible in order to create economies of scale to increase savings for the University.

7.2.1 Procurement spend analyses

The Procurement department would utilise the Kralijic portfolio purchasing model in order analyse the previous year’s spend, and classify it according to the risk to the University and the value of the commodity. (i) The Kralijic Portfolio purchasing model plots categories as:

(a) Strategic (low supply market competitiveness, high business

impact): These are high value goods which are critical to service

delivery, have complex and/or rigid specifications and for which there are few qualified suppliers.

The strategy should be to form long term partnerships with suppliers.

(b) Leverage (high supply market competitiveness, low business

impact): These are high value goods which are market or price

sensitive because of competition in the market.

There are many suppliers and many product choices.

The strategy should maximise UJ’s buying power and maintain market competition.

(c) Bottleneck (low supply market competitiveness, high

business impact):

These are lower value good with complex specifications, that have a substantial impact on service delivery, have few qualified suppliers and not many alternative substitute products.

The strategy in this case should be to manage the supply risk by ensuring continuity of supply through firm and longer term contracts and routine (high supply market competitiveness, low business impact).

These are small, low value individual transactions and every day, products and services.

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There are many suppliers and many alternative products.

The strategy here should be to simplify the acquisition process, and reduce the administration of transactions, by far as possible automating the purchasing process.

7.2.2 Expenditure Analysis

High BOTTLENECK STRATEGIC Secure continuity of supply (Performance-based partnerships

NON-CRITICAL LEVERAGE

Low Simplify procurement process Competitive Bidding

High Value of the commodity

(i) The above analysis will be utilised in order to show the impact on the institution and to develop a sourcing strategy per commodity through the following steps -

(a) Fully understand the spend category - Total historic

expenditure and volumes; analyse the expenditure per department, user and supplier; calculate total cost of ownership; and future demand projections.

(b) Supplier market assessment - Determine level of competition in the market and investigate alternative products.

(c) Prepare a supplier survey - Evaluate the supplier capabilities and capacity.

7.2.3 Framework for developing a construction procurement strategy

The following framework will be followed for all feasible construction projects. The Campus Master Plan will inform developments in the construction area of procurement needs within the University.

(i) Develop a delivery management strategy

(a) Gather and analyse information (conduct spend organisational

and market analysis). (b) Formulate primary and secondary procurement objectives.

(c) Make strategic delivery management decisions - (leasing; purchasing power parity; implementing agent development manager; own resources or own procurement systems).

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(d) Decide on delivery mode (project or programme). (e) Package works into contracts and package orders linked to a

framework agreement.

(ii) Decide on the contracting arrangements

(a) Allocate risk for packages Options – construction; construction and maintenance;

maintenance; construction, maintenance and operation; design; supply and install/supply.

Contracting strategy

Design by employer

Develop and construct

Design and construct

Construction management

Management contractor

Pricing strategy

Lump sum

Price list

Activity schedules

Bill of quantities

Cost reimbursable

Target cost

Cost plus

(b) Establish requirements for outsourced professional services.

(c) Package professional service contracts.

(d) Allocate risks for professional service contracts

Discipline specific or multidisciplinary service Package specific, programme related or framework

agreement Priced contract, percentage of cost of construction, cost

reimbursable or target cost

(e) Select suitable standard form of contract.

(f) Decide on the procurement arrangements

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Quality strategy Procurement procedure Targeted procurement strategy Tender evaluation method

(iii) Construction procurement strategy is the combination of the delivery

management strategy, contracting arrangements and procedure arrangements for a particular construction and engineering works. It necessitates that a number of choices be made from the available options and can be used to translate a programme or portfolio of projects into a series of packages for delivery under a single contract or package order issued in terms of a framework agreement. Paragraphs (iv) to (viii) provide detailed explanations of the various options available which will be included in the construction procurement strategy.

(iv) Packaging strategy

(a) The Campus Master Plan will be utilised to organise work

packages into contracts.

(b) Work packages can either be linked to contracts or to a series of package orders in terms of a framework agreement which is typically between 3 and 5 years.

(c) A package accordingly works relating to one or more projects which can be linked to one or more programmes, which have been grouped together for delivery under a single contract or a package order.

(d) The number of packages within a portfolio of projects establishes the number of relationships which the University has to manage and administer, and also the number of procurement transactions to be processed.

(v) Pricing strategy

(a) Two types of pricing strategies are encountered in the NEC 3

(New Engineering Contract Series 3) and FIDIC (Federation Internationale Des Ingenieurs Consceils, known as the International Federation of Consulting Engineers) contracts which is price-based and cost-based.

(b) Cost-based pricing, such as cost reimbursable and target cost, will be pursued wherever possible, in order to achieve value for money.

(vi) Targeting strategy

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(a) A targeted procurement procedure will be followed when

executing building contracts, in order to secure primary and secondary procurement objectives.

(b) Primary objectives will include construction deliverables, and secondary objectives could include aspects such as issues related to redressing racial, gender, ethnic or age imbalances within society.

(vii) Framework agreements

(a) Framework agreements have the purpose to establish the

terms governing contracts to be awarded during a specified period, in particular with regard to price and, where appropriate, the quantity envisaged.

(b) Framework agreements entered into by the University, after a competitive selection process, will allow the University to procure work on an as-instructed (call off) basis, over a set term, without necessarily committing to any quantum of work.

(c) Framework agreements will be utilised wherever possible as advised by the Campus Master Plan.

(viii) Procurement procedure for construction and engineering works

(a) A procurement procedure is a selected procedure for a specific

procurement.

(b) Combinations of procurement procedures with or without eligibility criteria will be used in engineering and construction works.

(c) The above construction and engineering works strategy will be

utilised in all construction and engineering works needed by the University.

7.2.4 Procurement of IT related goods and services

(i) All IT related goods and services will be acquired against the ICS strategy.

(ii) The purpose of the ICS procurement strategy is to address mainly

the cost factors of computing devices, and to provide a roadmap on how computing device costs can be reduced and brought to acceptable levels.

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(iii) This strategy will be executed as per the Desktop and Mobile Device Strategy Document in conjunction with ICS

8. UNIVERSITY SUPPLIER DATABASE 8.1 General 8.1.1 The University will avoid middleman suppliers and will always endeavour to

procure as close to the manufacturer as possible. 8.1.2 Any supplier who approaches the University to supply goods or services will

be afforded the opportunity to apply for inclusion in the Potential Supplier Database or the Approved Supplier Database, whichever is appropriate.

8.1.3 The Potential Supplier Database will be consulted periodically to determine

which suppliers should be added to the University-approved Supplier Database, based on criteria such as the quantity of suppliers within the commodity, the B-BBEE level of the supplier, the past experience, capacity and market-related pricing of the supplier.

8.1.4 If the approved Oracle Supplier Database does not contain sufficient

suppliers per commodity or if new commodity categories arise where no approved suppliers are available on the database, departments may recommend possible suppliers. Recommendations must be forwarded to the Supplier Evaluator for processing.

8.1.5 All new requests for suppliers to be added to the Approved Supplier Database must be fully motivated as to why an existing approved supplier cannot be utilised. The motivation and application will be processed by the supplier evaluator.

8.1.6 Every supplier application must be measured against University-approved

evaluation criteria. 8.1.7 Approved suppliers will be categorised on the Oracle Supplier Database

according to the University’s commodity categories. Supplier categories are to be reviewed annually with regard to supplier performance. The Oracle Supplier Database will be reviewed in order to manage the Oracle Supplier Database effectively.

8.1.8 Selected PURCO suppliers of contracts where the University elected to

participate within the PURCO contracts will be deemed as preferred approved suppliers and will not have to be evaluated again, but simply be added to the approved Oracle Supplier Database. The Supplier Evaluator will submit the Purco suppliers to the Procurement Tender Committee for notification.

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8.1.9 The University will also source prospective suppliers from industry databases such as Ezee-Dex, Shanduka Black Umbrella and any other reliable sources like the ABSA supplier base.

8.2 Supplier applications 8.2.1 The University supplier application forms and supplier evaluation criteria will

be available on the University’s website or from the University’s Procurement offices.

8.2.2 All supplier applications will be duly evaluated and considered for approval. 8.3 Supplier evaluation criteria 8.3.1 The following basic parameters for evaluation will be used as guidelines in

approving a supplier for use: (i) Verify VAT number;

(ii) Verify if B-BBEE accreditation agency is SANAS (South African

National Accreditation System) approved;

(iii) B-BBEE Certificate verification and to determine level;

(iv) Validate Tax clearance certificate

(v) Perform a Procure Check to verify the following:

The company status;

The owners/directors of the company; and

If the owners/directors are UJ employees.

(vi) The potential supplier’s financial liquidity and capacity will be analysed.

(vii) Reference checks to determine track record of prior service-

delivery.

(viii) A site visit will be conducted if it the potential supplier performs manufacturing, construction and/or supply of equipment which requires warehousing

(ix) Any other relevant aspects, for example, minimum wages, affiliation to professional bodies or councils, will be verified where applicable.

8.4 Supplier approval

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The Procurement Committee will consider recommended suppliers for approval. All qualifying applications from suppliers will either be placed on the Approved Oracle Supplier Database or Potential Supplier Database, which, when the need arises, will be used as a source for supplementing the Approved Supplier Database.

8.5 Capturing and maintaining information on the University Supplier

Database

8.5.1 Supplier information will be captured and maintained on the Oracle Supplier Database.

8.5.2 Suppliers will only be added to the Oracle Supplier Database after a fully

completed application is received, evaluation was performed by the Supplier Evaluator and the Procurement Committee approved the application.

8.6 Supplier database development The University will develop its Supplier Database in a manner that promotes

the inclusion of B-BBEE enterprises and SMME in all commodity categories 8.7 Supplier performance management 8.7.1 As a matter of good procurement practice, suppliers will be evaluated

periodically in terms of actual performance, promised delivery dates, ability to meet the University’s requirements, the number of returns due to poor quality or incorrect delivery and adherence to purchase order prices.

8.7.2 On completion of the new supplier’s first three work completions at UJ, the

SPR form must be filled in to determine if the performance of the supplier is acceptable. After three acceptable supplier performance reports, the supplier will be deemed to be satisfactory for normal use and will be evaluated annually.

8.7.3 The level of the supplier in terms of the EME, QSE & LE status as well as

the outcome of the financial ratios used to vet the supplier, will be used to determine the monetary level threshold. This threshold will not be exceeded in order to mitigate the risk that the supplier cannot perform larger jobs as with supplier financial capacity allow.

8.7.4 The supplier financial statement will be reviewed annually in order to adjust

the threshold level. 8.8 Removal of suppliers from the database 8.8.1 Suppliers may be taken off the approved supplier list for any of the

following reasons:

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(i) Being placed in liquidation or declared insolvent; (ii) Acting unethically; (iii) Making a false declaration to the University; (iv) Fronting; (v) Poor/sub-standard quality of goods or services; (vi) Not quoting or tendering competitively on a number of occasions; (vii) Failing to perform (non-performance) in terms of the contract; (viii) Failure to submit valid tax clearance certificates and valid B-BBEE

certificate; and (ix) Any fraudulent activity.

The removal of suppliers will be done in accordance with the Promotion of Administrative Justice Act 3 of 2000.

9. PROCUREMENT MANAGEMENT 9.1 Directives for specific types of requirements 9.1.1 Preferred-source procurement The University acknowledges that there are occasions when

products/services must be purchased from a specific preferred source. Requests for purchases from these sources must meet at least one of the criteria below and such justifications will only be accepted with proper supporting documentation that has been approved by the executive director/dean of the department.

(i) Compatibility with existing equipment

The products have to be purchased to interface directly with or attach to equipment of the same manufacturer, since no other manufacturer’s product will correctly interface with existing equipment. (Dedicated product services may also be involved.)

(ii) Compatibility for instructional purposes

Products have to be purchased to supplement existing equipment in a classroom/laboratory/office.

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(iii) Compatibility for research

The main purpose of acquiring equipment or supplies is to replicate specific experiments, using the exact same products that produced the original results.

(iv) Single supplier

Only one supplier can be identified to supply a compliant product or service. Proof of this must be attached.

The Procurement department will make a final determination to use a preferred supplier in consultation with the requester provided the value is below tender value. For tender value transactions, the respective tender committees will need to consider the request.

9.1.2 International purchasing The University may procure from abroad after the following has been

considered: (i) If it is established that the product/service required cannot be

sourced locally or through local representatives; (ii) If no other similar local product will serve the purpose; (iii) If the prices of the locally available supply/service are exorbitant

compared to the import at the landed cost inclusive of all duties and taxes; and

(iv) All foreign exchange purchases will be regulated by the Foreign Exchange Policy in order to minimise market and exchange rate risks.

9.1.3 Urgent procurement

(i) Urgent procurement refers to instances where urgent delivery is of critical importance, and the invitation of competitive requests/tenders is either impossible or impractical. However, a lack of proper planning does not qualify as an urgent case.

(ii) A requisition and motivation for urgency must be submitted by the

requestor and approved by Senior Manager: Procurement Services or the Director Expenditure.

(iii) Where tender thresholds are applicable, above R250 000.00

including VAT, a requisition and motivation for overriding policy must

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be approved by the Executive Director Expenditure, and above R1 million by the Deputy Vice-Chancellor: Finance.

9.1.4 Emergency procurement

(i) Emergency procurement refers to instances whereby goods and/ or services must be procured to satisfy needs in times of crisis, and the normal procurement processes cannot, therefore, be followed.

(ii) Verbal budget, process and award approval will be obtained from

the relevant authorised person in cases of emergency. However, all appropriate documentation must be completed and submitted, together with a report on the nature of the emergency, to Procurement within 48 hours after the emergency has passed. This will normally constitute events such as disaster (e.g. damage to assets, flood, fire, etc.) and essential services’ system failures (including support systems that could affect the system).

9.1.5 Unsolicited proposals

(i) An unsolicited proposal/concept means any proposal received outside the normal procurement process that is not an unsolicited bid (a submission that must be innovative, unique and provided by a sole supplier). The University is not obliged to consider an unsolicited proposal but may consider such a proposal only if it meets the following requirements:

A comprehensive and relevant project feasibility study has

established a clear business case; and The product or service involves an innovative design; or The product or services involves an innovative approach to

project development and management; or The product or service presents a new and cost effective

method of service delivery. 9.1.6 Purchasing card 9.1.6.1 Introduction

(i) The University has entered into an agreement with Nedbank to use their Visa Card corporate purchasing card facility. The purpose of the card is to offer an alternative method of acquiring and payment for lower value purchases.

(ii) The Financial Governance and Revenue department (Cash

Management) coordinates card administration, monitors transactions and liaises with the Nedbank Purchasing Card Division.

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(iii) With the approval of the line manager and ELG member, a purchasing card is allocated to a nominated staff member of the department. Final approval is granted by the Director: Cash Management, Planning and Reporting or his/her delegate.

9.1.6.2 Conditions A purchasing card may be used, subject to the applicable conditions set out

below:

(i) The staff member completes and signs a collection of Purchasing Card form and a copy of the Procurement Card Policy.

(ii) The University reserves the right to cancel the card and its use at any time. In such an event, the cardholder is required to return the card immediately to the relevant line manager.

(iii) The purchasing card is the property of the University and may be

used only for University purchases. (iv) All purchases must remain within the limits of the budget, in

accordance with the University’s Financial Policy. 9.1.6.3 Responsibilities of line managers

(i) Identifying potential cardholders and applying to the Executive Director: Financial Governance and Revenue.

(ii) Stipulating daily, monthly and transaction limits on expenditure. (iii) Monitoring, approving and signing off expenditure transacted on the

purchasing card. The line manager and the ELG member are ultimately responsible for all expenses on the purchasing card.

(iv) Reporting the misuse of a purchasing card immediately to the

Deputy Vice-Chancellor: Finance and requesting an enquiry.

9.1.6.4 Responsibilities of cardholders

(i) The cardholder is responsible for the safekeeping of the card and its security number (CVC), as well as for card transactions.

(ii) Use of the card by a staff member after it has been reported lost or

stolen will be regarded as fraud and the University will take legal action.

(iii) The cardholder must sign the card immediately upon receipt.

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(iv) The cardholder must return the card to the line manager immediately upon termination of employment. Cards are non-transferable and new staff members should apply for new cards.

(v) Expired cards must be destroyed. (vi) The cardholder is responsible for monitoring the relevant electronic

bank statements received from Nedbank and also for reconciliation of statements with receipts.

(vii) The cardholder is responsible for allocating expenses to the relevant

expense accounts, as per the chart of accounts, on a monthly basis. (viii) All original receipts and invoices must be attached to the monthly

statement and forwarded to the Purchasing Card Administrator. (ix) Duplicate slips/receipts must be obtained for any lost slips/receipts. (x) Disputes about expenditures must be followed up immediately with

the bank and finance department be notified thereof. 9.1.6.5 Lost or stolen cards

The loss or theft of cards must be reported and the following steps should be taken immediately: (i) Immediately report the stolen card to Nedbank’s helpline on the toll-

free number 0800 110 929. (ii) Inform the relevant dean, chairperson, executive director or head of

department. (iii) Alert the Purchasing Card Administrator to monitor any further

purchases and supply proof that the card has been stopped with the Nedbank Helpline.

9.1.6.6 Use of the card (i) Failure to use the card in accordance with University policy may -

constitute a breach of policy, but is not limited to it, and may result in the withdrawal of the card and disciplinary action being taken.

(ii) Transgressions include, but are not limited to:

Purchase of items for personal use;

Failure to supply all supporting transaction documents within the prescribed period to the Finance department;

34


Failure to report a lost card;

Illegal use of the card by unauthorised users.

(iii) Original supporting documentation should be forwarded to the Purchasing Card Administrator’s office within 30 days of the transaction. Failure to do so will result in cost recovery from the cardholder’s salary.

(iv) The card may not be used for:

Fuel/parking costs;

Purchasing capital items (e.g. printers, cell phones);

Donations;

Payment of fines;

Cash withdrawals;

Travelling expenses (e.g. conference-related payments);

Equipment repairs;

Store items (e.g. printer cartridges). 9.1.6.7 The card may only be used for the following payments:

(i) Office stationery (not store items); (ii) Consumables; (iii) Membership fees (with credit card facilities); (iv) Departmental catering and smaller functions, with pre-approval of

an ELG member. 9.2 Procurement by means of grants from donors

The University will use donor funds in accordance with donors’ procurement procedures in cases where donor agreements prescribe that the University should procure according to donor procedures. The University will adhere to its own policies and procedures where donors do not instruct it to procure according to donor procedures.

9.3 Authorised procurement methods

Authorisation for procurement should be aligned with the Financial Delegation of

Authority for each transaction executed.

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9.3.1 Petty cash

(i) Petty cash is the first procurement channel and will be limited to a

threshold per transaction as stipulated by the Finance Policy, without inviting quotations or competitive tenders.

9.3.2 Electronic Requisitions (I-Proc)

(i) I-Procs must be used in all cases for obtaining goods held in stock and for requesting quotations, sealed quotations or tenders.

(ii) I Procs are not required for petty cash purchases or purchasing card

transactions.

9.3.3 Request for quotation

(i) The RFQ process must be followed for all requirements within the quotation threshold.

(ii) The Procurement department is to obtain quotations as per the specifications of requestors. Quotations for goods and services must generally be obtained from suppliers on the approved list of suppliers. Quotations may only be obtained from unlisted suppliers if there are insufficient or no suppliers for the specific product or service on the UJ supplier database. In such cases, the reasons for obtaining quotations from suppliers not on the database must be clearly stated and attached to order documentation for auditing purposes.

9.3.4 Sealed quotations

(i) The request for sealed quotation process applies to all transactions from R100 000 to R249 999 inclusive of VAT. The sealed quotation process is similar to the tender process and is administered by the Procurement department.

(ii) The Project Leader must submit detail specifications or Bills of

Quantities (for construction related transaction). The specifications must be approved (signed) by the relative HOD and be attached to the I Proc.

(iii) Procurement will schedule a consultation session with the project

leader in order to determine possible suppliers and project timelines. (iv) At least three written, sealed quotations will be requested from

suppliers by the Procurement department.

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(v) If a site visit is required, Procurement will include the requirement in the Request for Quotation and attend and record.

(vi) The evaluation and award will be made in consultation with the

project leader and will include Preferential Procurement scoring. (vii) All disputes regarding the award of a sealed quotation process will

be escalated to the Procurement Committee for a final decision.

9.3.5 Quotation thresholds

(i) Threshold and processes

Threshold Process

Up to R500 Petty cash

Up to R10 000 Obtain at least one written quotation from a supplier on the approved Oracle Supplier Database

Above R10 000 and up to R20 000

Obtain at least two written quotations from suppliers on the approved Oracle Supplier Database


Obtain at least three written quotations from suppliers on the approved Oracle Supplier Database


Sealed quotation process administered by Procurement and awarded by Procurement Committee

Above R250 000 up to R1 million

Tender process awarded by Procurement Committee

Above R1 million up to R10 million

Tender process awarded by Tender Committee

Above R10 million Tender process recommended by the Tender Committee and MEC awarded by the Financial Sustainability Committee of Council

(ii) Thresholds PURCO suppliers

Where suppliers are PURCO suppliers, it will not be necessary to obtain additional quotes, as the suppliers would already have been subject to the PURCO tender procedures. The University will simply purchase off these PURCO contracts where item lists have been included in contracts concluded with PURCO suppliers. Where items are not listed in PURCO contracts, the normal quote thresholds will apply.

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9.3.6 The appointment of consultants

(i) Consultants should only be appointed when the necessary skills are not available within the University and where the project leader cannot recruit or train persons in the available timeframe.

(ii) The competitive, transparent procurement process should always

be followed in the appointment of consultants, taking into consideration the type of skills that is needed and the quality relating to the project.

(iii) Consultants should always be appointed on the premise of a

supplier-delivering-a-service relationship and not of an employer-employee relationship. It is therefore essential that there should be a scope of work, a predetermined timeframe and specific deliverables as outcomes. This should be contained in a contract that must be concluded with the consultant before any work starts.

(iv) Appointment of individuals as consultants should only be

considered then consulting teams or team resources are not required and where a distinct and clear advantage to the University can be demonstrated.

(v) All exceptions are to be justified in a motivation for consideration

and approval by the Deputy Vice-Chancellor: Finance (for amounts above R100 000); or the relevant Executive Dean or Executive Director for amounts below R100 000).

10. TENDER POLICY

(i) The Tender Policy is based on the approach that all tenders are dealt with in the same manner and that all procedures are formalised as far as possible.

(ii) All parties relating to tenders will sign a declaration of confidentiality

and a conflict of interest declaration. This includes project leaders, consultants and approvers.

(iii) The general rule is that the University will not publish tenders in any

print or electronic media, but will select suppliers from its Oracle Supplier Database and request quotations or tenders from these suppliers.

(iv) The University may elect to publish tender notices in either local or

national print media in instances where such an approach is deemed beneficial to the University.

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10.1 Request for information 10.1.1 A RFI (Request for Information) process may be followed to gather market

information relating to: (i) products; (ii) alternatives; and/or (iii) suppliers.

10.1.2 RFIs may be used to pre-select suppliers based on specific criteria and only those meeting the criteria may be allowed to participate in a subsequent RFP or tender.

10.2 Request for proposal

10.2.1 This method (RFP) should be followed for the specified thresholds, as

below, where selection is based on the quality of the proposal and not price alone. An RFP will be awarded as per the proposal evaluation criteria and an award made to a supplier.

10.3 Request for tender

10.3.1 This method should be followed for the specified thresholds, as below,

where tender specifications are clear and precise and the tender is only subject to the evaluation of specification compliance, price and preferential procurement scoring. An award will be made by the relevant tender committee.

10.4 Number of suppliers per tender/Request for proposal

Threshold Process

All tenders or RFPs above R250 000

Request a minimum of five suppliers to tender, unless there are fewer than five

Request a minimum of five suppliers to tender, unless there are fewer than five suppliers on the Supplier Database or in the market.

All tenders or RFPs above R1 000 000

Request a minimum of seven suppliers to tender, unless there are fewer than seven suppliers on the Supplier Database or in the market.

If there are insufficient or no appropriate suppliers on the approved list of suppliers or if there is an insufficient number of tenderers identified the Tender Committee must decide if the open tender process must be utilised.

10.5 URC tender request for specific equipment 10.5.1 When a need to purchase specialised equipment (sole or preferred supplier)

for research purposes arises, the request will be submitted to the University

39


Research Committee (URC). A panel of experts will decide if the request is supported to process. A subcommittee of the URC (the Research Committee) will issue a single-page motivation and provide any relevant documentary evidence as to the reason for deviation from policy.

10.5.2 This motivation, plus other documents, as well as the signed standard one-

pager to proceed, will be submitted to the relevant SCM committee in order to formalise the process.

10.6 Quotation/tender compilation

10.6.1 General

(i) The University will compile all documentation in English. (ii) Tenders will be open for a minimum of 14 days before the closing

date and time, unless the relevant SCM committee decides otherwise. In all cases, tenderers must be allowed sufficient time to prepare comprehensive responses.

(iii) The validity period should allow the University sufficient time to

finalise the evaluation and award process. Quotations must be binding for acceptance for at least two calendar weeks after the closing date. Tenders must be valid for at least 60 to 90 days from the closing date or for such a longer period as the relevant SCM committee may approve. The University must request an extension of validity in writing from all tenderers before the expiry date, if necessary.

10.6.2 Elements for inclusion in tender documents

(i) Tender documentation must include at least terms of reference or specification, evaluation and award criteria and the relevant conditions and forms.

(ii) The evaluation criteria, the weights and the percentage for

functionality, as well as the percentage split between price and functionality, must be determined before the tender document is published.

(iii) All tenderers must receive the same information in their

documentation and must be provided with an equal opportunity to obtain timely additional information in order to ensure fairness.

10.6.3 Specifications/terms of reference

(i) Specifications and/or terms of reference must be compiled by subject matter experts – either internal or external to the University.

40


The specifications must be comprehensive and clear in order to allow tenderers the opportunity to address the requirement in detail.

(ii) The tender process may not be initiated if:

specifications are incomplete or unsigned by Project Leader and HOD;

the appropriate approvals, such as from Operations and ICS, are not submitted.

10.7 Issuing of quotations/tenders 10.7.1 Requests for quotations/invitations Requests for quotations or invitation of tenders may be sent to the supplier

electronically or by fax or post, or the supplier may be requested to collect hard copies at the Tender department.

10.7.2 Closing time of tenders/quotations No quotations or tenders will be accepted after the closing date and time. 10.7.3 Availability of tender documents Tender documents must be ready and available before the requirement is

communicated to the selected suppliers. 10.7.4 Sale of tender documents

(i) The University will normally make tender documents available without any costs to the tenderer.

(ii) However, the University reserves the right to make its tender

documents available to potential suppliers at a predetermined fee, in order to cover administrative costs.

(iii) This fee will not be constructed in a manner that prejudices

participation by certain suppliers, but should, however, cover at least the production and distribution costs of tender documents.

10.7.5 Tender register

The University will maintain a tender register to record information on all tenders documents issued and responses received from suppliers invited to tender.

10.7.6 Tender briefing sessions

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In some cases, tender briefing sessions are arranged in order to furnish

tenderers with opportunity for clarification. These briefing sessions and site visits might be required in order for tenderers to measure distances or clarify complex specification details. In these cases, it will be compulsory for tenderers to attend the briefing session and site visit. Details of tender briefing sessions must be furnished in the tender documents, indicating whether the sessions are compulsory or not and specifying the date, time and venue of these sessions.

(i) Minutes of the briefing meeting must be kept and must be supplied

to tenderers on request. (ii) All tender briefing sessions will be chaired by an official of the

Tender Office. 10.7.7 Changing of information before tender closing date and time Any additional information clarification, correction and/or modification to the

specification and/or tender document must be conveyed to the participating tenderers in writing, allowing sufficient time to solicit adequate response.

10.7.8 Postponement of closing date The closing date may be postponed only if all prospective tenderers can be

notified of the postponement in writing before the original closing date. 10.7.9 Cost of advertising of Tenders All costs associated with any advertising of a Tender where the open tender

process is utilised in any form will be for the account of the relevant department who requested the tender.

10.8 Receiving and opening of tenders 10.8.1 General guidelines

(i) A fair and transparent process will be followed for the closing, receiving, opening and processing of quotations/tenders.

(ii) Tenderers will be allowed to submit tenders by courier or by hand,

provided that tenders are deposited in the secured tender box before the closing time.

At least two procurement officers must be present when opening the tender box.

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If tenders are received by post, the date on which they reach the Tender department must be recorded in the tender register and signed for by at least two procurement officials and the tenders must immediately be placed in the tender box.

(iii) Tenders removed from the tender box must be recorded in the

tender register. (iv) The relevant tender officials must initial the pages of the tenderer

declaration and undertaking, as well as the pricing schedule. (v) The full set of original tender documents must be held for

safekeeping at the Procurement department.

10.8.2 Confidentiality

After the opening of tenders, no information relating to any tenders will be disclosed to tenderers or other persons not officially concerned with the process.

10.9 Evaluation of tenders or quotes

The University will evaluate a tender or quote based on the content of the documentation and the evaluation criteria stipulated, which must cover the areas of finance, functionality (technical) and preferential procurement, as well as any other criteria set by the relevant SCM committee on the tender documents.

10.9.1 Reasons for disqualifications of tenders or quotes

(i) Fraudulent action The University will reject a proposal for the award of a tender or

contract if the recommended supplier has committed a corrupt or fraudulent act in competing for the particular contract.

(ii) Late tenders

Tenders are late if they are received at the stipulated address after the closing date and time specified in the tender documents. Tenders received late will not be accepted and will be returned unopened to the tenderers.

(iii) Compliance check The SCM Unit will carry out a compliance check to ensure that the

quotation/tender documentation complies with the predetermined conditions and that all required forms and information are

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submitted, completed in full, legible and do not warrant the tender/quote being rejected.

(iv) Tax clearance certificates The University will reject any tender from a supplier that, at the time

of tender submission fails to provide written proof from SARS that the supplier either has no outstanding tax obligations or has made arrangements to meet outstanding tax obligations. A valid tax clearance certificate is therefore required with each tender submission which will be verified as a valid certificate on the SARS E-filing system.

10.9.2 The evaluators

(i) All evaluators who are involved in the evaluation and recommendation process, or who are in any way involved with the procurement process, must declare any possible conflict of interest and certify that they comply with the Prevention and Combating of Corrupt Activities Act.

(ii) Relevant technical, financial and procurement expertise will be

applied in the evaluation. (iii) Technical/functional evaluation must be done by more than one

evaluator. The evaluation must include a Procurement Officer at all times to facilitate the process.

10.9.3 Evaluation of tenders

(i) A responsiveness check must be done on each tender. If a tender,

in line with the requirements in the tender document, is regarded as non-responsive, it will not be evaluated further.

(ii) The information to be presented to the relevant SCM committee for

award must include the following:

Supplier/company/individual invited for the tender;

Supplier/company/individual who submitted tender documents;

Evaluation criteria and process, evaluation summary covering price, functionality and B-BBEE;

Recommendation of the Evaluation Committee/project leader, which has been signed off by the head of department and the relevant MEC member.

(iii) If members of the Procurement or Tender Committee have any

association with a tenderer, whether it is a family association or otherwise, the Committee must be notified of this association at the

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start of a meeting and it must be recorded in the minutes. Such Committee members may attend the meeting, except for the portion of the meeting during which a decision is made on the specific tender, unless the other members of the Committee decide otherwise.

10.9.4 Determination of final score

(i) A final score per responsive tenderer is determined by adding the percentages for price, preferential procurement and functionality together to result in a final score.

(ii) Should no functionality be evaluated, compliance with the

specification is determined and then the score for price and preferential procurement is added together to result in a final score.

(iii) The functionality score is determined by each evaluator awarding

scores for each individual criterion. All the scores of all evaluators are then added together and divided by the number of evaluators to determine the average score for the tenderer for functionality.

(iv) Tenders that score less than a predetermined percentage for

functionality may be eliminated, should this have been stipulated as a precondition in the tender.

(v) The percentage for price must be determined by the application of

the following formula: Ps = Pmin/Pt x PW (PS = percentage price; Pmin = lowest acceptable tender price; Pt = price of individual tender; PW = price weight as per tender criteria). The price used will be the total net price to the University. (Eg where a supplier is VAT registered it will be VAT inclusive and where a supplier is exempted from VAT it will be the total price which will exclude VAT.)

(vi) The percentage obtained for functionality will be added to the

percentage obtained for price to obtain a score out of 100. (vii) Equal offers

When offers are equal in all respects on a comparative basis, thus scoring equal total points after the price, functionality and preferential procurement scores have been totalled, the successful supplier must be decided by the best past track record.

(viii) Deviations from specifications

Quotations/tenders with deviations from specification will be considered non-responsive and disqualified.

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(ix) Alternative offers and improvement on specifications

Regardless of whether the tenderer submits offers that conform strictly to specification, alternative offers or an improvement on the specification may be considered and accepted, provided that the other tenderers are also given the same opportunity to better the specifications or provide alternatives.

10.9.5 Samples

(i) Should sample testing be required, the party carrying the cost of testing must be stated in the tender document.

(ii) Samples submitted by unsuccessful tenderers may be collected if

the tenderers request to do so. Unsuccessful tenderers must collect their samples within 60 days after the acceptance date of the tender. Samples not collected will be auctioned or destroyed at the end of the financial year. Proceeds will go the University.

10.10 Award and contractual commitments 10.10.1 Award based on final combined score

(i) A successful tenderer must be responsive to satisfactorily perform the contract.

(ii) The final scores will be ranked in order of the highest to the lowest

and, unless justifiable grounds exist, the contract should be awarded to the highest scorer.

(iii) If the successful supplier cannot deliver the goods or services in

terms of the tender, the relevant SCM committee may award the tender ex post facto to the next highest ranked tenderer from the original list of tenderers, instead of initiating the tender process again.

10.10.2 Award to tenderer not scoring the highest points

(i) A tender may be awarded to the tenderer not scoring the highest points if justifiable grounds exist for such award. This entails careful consideration being given to the justification for selecting a lower-scoring tenderer and that legal advice must be sought before such a selection takes place. Reasons for such an award must be clearly documented and filed for recording purposes.

10.10.3 Communication of award to successful tenderer

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(i) The University’s acceptance of a successful quote or tender must be in writing by the Procurement department and there must be a mechanism of proof of delivery to the supplier. On submission of an official purchase order, the contractual relationship is established.

(ii) The project leader should ensure that the SLA or contract which

was part of the tender documents is duly signed in accordance with the delegations of authority. The signed agreement to be provided to the tender office before placing the order.

10.10.4 Cancellation of quotations/tenders Should no acceptable quotations/tenders be received, approval to cancel

the quotation/tender must be requested by the Project Leader (with reasons being provided) from the relevant SCM committee.

If quotations/tenders have to be cancelled, all tenderers must be informed

in writing of the cancellation by the Tenders department. 10.10.5 Specification changes

If specifications change, all tenderers must be informed of these changes. 10.11 Access to tender information 10.11.1 All tender information remains strictly confidential and will not be disclosed

to any other tenderer. 10.11.2 The successful tenderer will be notified in writing of the acceptance of the

tender 10.11.3 Tenders are not available for perusal by the public. When divulging

information, a balance must be achieved between one party’s right to access of information and the other’s right to confidentiality.

10.11.4 The University can withhold information if the release or publication of the

information will:

(i) impede law enforcement; (ii) be contrary to public interest; (iii) harm the University’s legitimate interests; (iv) hinder fair competition between providers by revealing any

proprietary information of any tenderer. 10.11.5 A complaint/appeal received before an award is made must be dealt with to

the satisfaction of the relevant SCM committee. Legal advice should be sought if necessary. The process followed must be beyond reproach and

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must be responded to in writing before a final award is made to minimise the risk to the University.

10.11.6 A complaint or appeal lodged after an award has been made must be

received within three weeks of the decision being made known. The policy on access to information must be followed and complaints or appeals must be responded to in writing within a reasonable time. Legal advice should be sought if necessary.

10.12 Conclusion of contracts 10.12.1 Formal contracts are concluded only if this is stated as a requirement in

the quotation/tender document. All contracts should be drafted by the project leader with the specifications and cleared with Corporate Governance before the tender process is initiated. A copy of the contract must be included in the tender document in order for suppliers to accept and sign the contract agreement. This will ensure that contracts are duly signed when the tender is awarded before an order is issued.

10.12.2 In the event suppliers request a change in conditions of the formal

agreement Corporate Governance must approve before signature. 10.12.3 If a formal contract is concluded, an order must still be placed with the

successful provider. 10.12.3 The relevant construction [JBCC, NEC, FIDIC (Joint Building Contracts

Committee, New Engineering Contract, Fédération Internationale Des Ingénieurs-Conseils - International Federation of Consulting Engineers)] contract will be utilised for all construction-related purposes.

10.13 Service-level agreement 10.13.1 A service-level agreement, which could be a supplement to a formal

contract, further defines the relationship between the contracting parties and spells out services and activities to be executed, due dates and turnaround times.

10.13.2 Service level agreements should be compiled with the tender specifications

in order to ensure that tenderers accept conditions applicable in the tender process. This will avoid complex legal clarification and timeframe delays of signing of service level agreements when tenders have been awarded.

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10.14 Retention 10.14.1 Retention as determined by the relevant construction contract will be held

by the University on all progress payments made and will be paid out as per the contract.

10.15 Performance guarantee 10.15.1 A performance guarantee equal to the value of the project is required on all

building contracts in the form of a financial security provided by the contractor to secure the performance of the contractual obligations.

10.15.2 It usually provides for a monetary amount that may be called upon by the

beneficiary of the guarantee in the event of a contractor’s failure to perform its obligations under the contract.

10.16 Variation orders 10.16.1 Only the funds provided for contingencies for a particular project may be

used for variation orders. 10.16.2 For new buildings a maximum of 5% contingency. 10.16.3 For renovation to buildings a maximum of 10% contingency. 10.16.4 Any variation order more than 5% of the contingency amount must be

approved by MEC and due process must be followed prior to work starting. 10.16.5 A full motivation from the project leader as to the reasons of the variation

must be submitted to the MEC and the tender Committee must be notified of variation orders.

10.16.6 The original costs of tender, the variation costs and the updated total costs

must be clearly demonstrated. 11. CONTRACT AND SUPPLIER PERFORMANCE MANAGEMENT 11.1 Contract management

11.1.1 All contracts entered into on behalf of the University, except for employment contracts, as well as orders must be signed/authorised only by the authorised officials, in accordance with the Financial Delegation of Authority framework.

11.1.2 Contracts must be administered in accordance with the actual contract

terms and conditions governing the relationship between the University and the supplier.

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11.1.3 The relevant user department takes responsibility for the day-to-day

management and monitoring of a contract, in line with the contractual conditions, and must notify the Procurement department of any deviations.

11.1.4 The relevant user department must ensure that all reasonable steps are

taken to enforce a contract. 11.1.5 The Procurement department will also review some of the University’s high

value contracts in terms of pricing versus goods/services delivered in order to ensure that there are no financial losses to the University and that the contracts are maintained as to the agreement and no contract increases are effected over time without the necessary authority.

11.2 Correction of an incorrect acceptance of contract 11.2.1 Incorrect letter of acceptance must be reported immediately to the Tender

Manager. 11.3 Trademark/brand name 11.3.1 If a tender or quote is requested for a particular trademark/brand name,

substitute products must not be accepted. 11.4 Payments 11.4.1 Payments are made to suppliers, in accordance with the contract conditions,

only after the goods or services have been delivered and, where applicable, installed and in good working order.

11.4.2 If a contractor requires an advance payment or a progress payment and this

is not a contract condition, payment may be made only with the prior approval of the Director: Expenditure. The conditions for advance payment must include a pro-forma invoice and a guarantee if necessary, as a counter-commitment to the advance.

11.5 Insolvency, liquidation, death, sequestration or judicial management

of contractors 11.5.1 If a firm is liquidated or person is sequestrated or due to any other reason

cannot honour its commitment, it is regarded as a breach of contract. The provisional liquidator or administrator is given the choice of carrying out the contract or not. If not, in consultation with legal advice, a decision must be made whether a provisional claim will be registered against the supplier.

11.6 Transfer and cession of contracts

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11.6.1 The contractual conditions should stipulate the conditions under which transfers/cessions will be considered and the process to be followed in such circumstances.

11.6.2 Applications for the transfer/cession of contracts must be completed and

signed by both the transferor and the transferee and countersigned by two witnesses.

11.7 Contract variations/amendments 11.7.1 A contract may be amended, varied or modified to achieve its original

objective bearing in mind the University’s best interest. 11.7.2 Amendments may not alter the original objective of the contract materially

and, if they do, they should form part of a new tender invitation. 11.7.3 All contractual parties must agree to the amendment in writing and the

amendment must be approved by the relevant authority who approved the initial contract.

11.8 Extension of contract periods 11.8.1 The extension of a contract must be finalised before the current expiry date

of the contract and must be in accordance with the contract stipulations. 11.8.2 If prices are amended for the extended period, the reasonableness of the

prices must be established if no provision was made for in the original contract.

11.8.3 Contract extensions must be approved by the relevant tender committee

that awarded the initial contract. The contract owner must motivate the reason for extension and the monetary impact thereof.

11.9 Amendment of specifications

11.9.1 If a binding contract has been concluded, an amendment of the

specification, whether initiated by the contractor or by the University, can be made only after negotiation between the contractor and the University and with the approval of the relevant tender committee who awarded the relevant tender.

11.9.2 In the case where the contract is not awarded by the tender committee or

the contract is a PURCO contract, the Executive Director: Finance must approve the amendment.

11.10 Contractual price adjustments

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11.10.1 The contractual conditions will stipulate the circumstances under which price adjustments will be considered, the intervals for adjustments, the base date for adjustments, as well as the price adjustment formula and the process to be followed in such circumstances.

11.10.2 The prescribed formulae must be indicated and agreed to for adjustment of

prices due to the fluctuation of the indices. Only indices compiled by Statistics South Africa should be used.

11.11 Reduction of prices 11.11.1 The University will accept price reductions after the awarding of a contract

if these are to its advantage, unless the acceptance of the price reduction amounts to breach of contract.

11.12 Unsatisfactory performance

11.12.1 The user department must immediately report unsatisfactory performance

in terms of the contract to the Procurement department through the completion of the Supplier Performance Review document.

11.12.2 The Procurement department must, in consultation with the user

department and legal assistance (if required), bring unsatisfactory performance to the attention of the contractor in writing. The audi alteram partem rule ("hear the other side too", or "hear the alternative party too") must be applied in managing unsatisfactory performance. The Procurement department will give notice to the contractor of action to be taken in terms of the contract because of non-performance or poor performance.

11.12.3 If the contractor does not remedy the performance within the agreed

timeframe, the contract should be cancelled 11.12.4 Late deliveries

(i) Penalties for late delivery must be imposed if deliveries within a

particular time period (service) were a specific contract condition and if delays caused serious damage, loss or inconvenience to the University.

(ii) All retention and penalty clauses will be pursued by the University.

11.12.5 Legal remedies in the case of incorrect information

(i) If a contractor should win a contract on the basis of incorrect information that was supplied, and it is shown later that the information is incorrect, then the University has the right to:

recover any costs or damage that the University may have suffered as a result of the conclusion of the contract; and/or

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terminate the contract and recover any loss that the University may suffer as a result of having to make less favourable arrangements; and/or

deduct from the contract price, as a penalty, a sum calculated on the delivered price of the delayed goods or unperformed services using the current prime interest rate calculated for each day of the delay until actual delivery or performance.

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11.12.6 Supplier blacklisting The University reserves the right to remove any tenderer from the Approved

Supplier Database and/or elect not to invite any tenderer for future tenders if that tenderer or any of its directors have abused the University’s SCM system, have committed fraud or any other improper conduct in relation to such system or have failed to perform on any previous contract.

11.13 Warranties If, during the warranty period, goods do not comply with the requirements

because of faulty material used during manufacture or faulty finishing or any deficiency, latent or otherwise, the contractor must be requested without delay, in writing, to replace or repair the goods, depending on the circumstances. Supplies replaced or repaired or services rendered must be warranted for the same period as the original supplies or services.

11.14 Contract termination 11.14.1 The University must cancel a contract awarded to a supplier if the supplier

committed any proven corrupt or fraudulent act during the tendering process or the execution of that contract or if any official or other role player committed any proven corrupt or fraudulent act during the tendering process or the execution of that contract.

11.14.2 Termination of a contract may be considered for a variety of reasons, such

as delayed deliveries, failure to perform any other contractual obligation or if the supplier has engaged in corrupt and fraudulent practices or has become insolvent.

11.14.3 Contract termination may be effected if allowed for in the contractual

conditions.

procurement policy as part of supply chain management

Documents