supply chain management policy - west coast district

Council resolution: ITEM 19/03/27/9.1.2.1

WEST COAST DISTRICT MUNICIPALITY

MUNICIPAL SUPPLY CHAIN MANAGEMENT POLICY

LOCAL GOVERNMENT: MUNICIPAL FINANCE MANAGEMENT ACT, 2003

Date of adoption: 14 December 2005 Date of implementation: 1 January 2006 The Council resolves in terms of section 111 of the Municipal Finance Management Act, 2003 (Act No. 56 of 2003), to adopt the following proposal as Supply Chain Management Policy of the West Coast District Municipality. Amendment: 23 November 2011 2nd Amendment: 5 December 2012 3rd Amendment: 27 August 2014 4th Amendment: 25 May 2016 5th Amendment: 29 March 2017 and 31 May 2017 6th Amendment: 23 May 2018 7th Amendment: May 2019


TABLE OF CONTENTS

1. Definitions CHAPTER 1 ESTABLISHMENT AND IMPLEMENTATION OF SUPPLY CHAIN MANAGEMENT POLICY 2. Supply chain management policy 3. Adoption and amendment of supply chain management policy 4. Delegation of supply chain management powers and duties 5. Sub delegations 6. Oversight role of council 7. Supply chain management units 8. Training of supply chain management officials CHAPTER 2 FRAMEWORK FOR SUPPLY CHAIN MANAGEMENT 9. Format of supply chain management Part 1: Demand management 10. System of demand management Part 2: Acquisition management 11. System of acquisition management 12. Range of procurement processes 13. General preconditions for consideration of written quotations or bids


14. Lists of accredited prospective providers 15. Direct purchases 16. Written or verbal quotations 17. Formal written price quotations 18. Procedures for procuring goods or services through written or verbal quotations

and formal written price quotations 19. Competitive bidding process 20. Process for competitive bidding 21. Bid documentation for competitive bids 22. Public invitation for competitive bids 23. Procedure for handling, opening and recording of bids 24. Negotiations with preferred bidders 25. Two-stage bidding process 26. Committee system for competitive bids 27. Bid specification committees 28. Bid evaluation committees 29. Bid adjudication committees 30. Procurement of banking services 31. Procurement of IT related goods or services 32. Procurement of goods and services under contracts secured by other organs of

state 33. Procurement of goods necessitating special safety arrangements 34. Proudly SA Campaign 35. Appointment of consultants 36. Deviation from, and ratification of minor breaches of, procurement processes 37. Unsolicited bids 38. Combating of abuse of supply chain management system Part 3: Logistics, Disposal, Risk and Performance Management 39. Logistics management 40. Disposal management 41. Risk management 42. Performance management Part 4: Other matters 43. Prohibition on awards to persons whose tax matters are not in order 44. Prohibition on awards to persons in the service of the state 45. Awards to close family members of persons in the service of the state 46. Ethical standards 47. Inducements, rewards, gifts and favours 48. Sponsorships 49. Objections and complaints 50. Resolution of disputes, objections, complaints and queries 51. Contracts providing for compensation based on turnover


52. Expansion or variation of orders against original contract values 53. Contract management 54. Commencement ANNEXURES: ANNEXURE A - The Code of Conduct for Supply Chain

Management Practitioners and Other Role Players ANNEXURE B - Guidelines on the implementation of Demand Management ANNEXURE C - Procurement Plan Template ANNEXURE D - Augmented Municipal Bidding Document

(MBD 4) – Declaration of Interest ANNEXURE E - Preferential Procurement Policy ANNEXURE F - Gift Policy ANNEXURE G - Code of conduct for Bid Adjudication Members ANNEXURE H - Listing criteria for accredited prospective providers ANNEXURE I - Designated Sectors – Local Content ANNEXURE J - Infrastructure Procurement and Delivery Management ANNEXURE K - Appointment of Consultants Policy


Definitions 1. In this policy, unless the context otherwise indicates, a word or expression to which

a meaning has been assigned in the Act has the same meaning as in the Act, and – “Advertisement” means the publishing of a tender on the ePortal, in news-papers commonly circulating locally, but not limited there to;

“competitive bidding process” means a competitive bidding process referred to in paragraph 12 (1) (d) of this policy; “competitive bid” means a bid in terms of a competitive bidding process; “Central Supplier Database” means a single database that serves as the source of all supplier information for all spheres of government. A municipality or municipal entity must keep a list of prospective suppliers in terms of Regulation 14 of the Supply Chain Management Regulations. The CSD are verifying the following information: (a) Business registration; including details of directorship and membership; (b) Bank account holder information; (c) In service of the state status (Persal); (d) Tax compliance status; (e) Identity numbers; (f) B-BBEE status level; (g) Tender defaulting and restriction status; Note: (b) Bank account information is verified for ease of transacting and compliant financial

management and not as a mandatory requirement for sourcing and procurement processes.

(c) In the service of the state: Please note this check is currently done on state employees who have a PERSAL number, but will also be verified for municipalities, municipal entities and public entities from 1 October 2016.

(f) B-BEEE will only be verified from 1 October 2016; “ePortal” means an electronic web portal is one specially designed web site that brings information together from diverse sources in a uniform way. The electronic portal is administrated by National Treasury and will be used to advertise bids, publish opening results of bids and awards; “final award”, in relation to bids or quotations submitted for a contract, means the final decision on which bid or quote is accepted; “formal written price quotation” means quotations referred to in paragraph 12 (1) (c) of this policy; “in the service of the state” means to be –


(a) a member of – (i) any municipal council; (ii) any provincial legislature; or (iii) the National Assembly or the National Council of Provinces;

(b) a member of the board of directors of any municipal entity; (c) an official of any municipality or municipal entity; (d) an employee of any national or provincial department, national or provincial

public entity or constitutional institution within the meaning of the Public Finance Management Act, 1999 (Act No.1 of 1999);

(e) an executive member of the accounting authority of any national or provincial

public entity; or (f) an employee of Parliament or a provincial legislature; “long term contract” means a contract with a duration period exceeding one year; “other applicable legislation” means any other legislation applicable to municipal supply chain management, including but not limited to the following – (a) the Preferential Procurement Policy Framework Act, 2000 (Act No. 5 of 2000)

and revised Preferential Procurement Regulations promulgated in Government Gazette 34350 on 8 June 2011; Amendment of Preferential Procurement Regulations promulgated in Government Gazette 40553 on 20 January 2017;

(b) the Broad-Based Black Economic Empowerment Act, 2003 (Act No. 53 of 2003); and

(c) the Construction Industry Development Board Act, 2000 (Act No.38 of 2000); (d) the Local Government: Municipal Finance Management Act, 2003 (Act No 56 of

2003); (e) the Local Government: Municipal Systems Act, 2000 (Act No 32 of 2000); (f) the Local Government: Municipal Structures Act, 1998 (Act No 117 of 1998); (g) the Prevention and Combating of Corrupt Activities Act, 2000(Act No 12 of 2004); “Regulations” means the Local Government: Municipal Supply Chain Management Regulations promulgated in Government Gazette 27636 on 30 May 2005; “Treasury guidelines” means any guidelines on supply chain management issued by the Minister in terms of section 168 of the Act, including all National Treasury, MFMA Circulars relating to Supply Chain Management;


“the Act” means the Local Government: Municipal Finance Management Act, 2003 (Act No. 56 of 2003); “written or verbal quotations” means quotations referred to in paragraph 12(1) (b) of this policy. “Imported content” means that portion of the bidding price represented by the cost of components, parts or materials which have been or are still to be imported (whether by the supplier or his subcontractors) and which costs are inclusive of the costs abroad, plus freight and other direct importation costs such as landing costs, dock dues, import duty, sales duty or other similar tax or duty at the South African place of entry as well as transportation and handling charges to the factory in the Republic where the goods covered by the bid will be manufactured. “Local content” means that portion of the bidding price, which is not included in the imported content provided that local manufacturing does take place. CHAPTER 1 ESTABLISHMENT AND IMPLEMENTATION OF SUPPLY CHAIN MANAGEMENT POLICY Supply chain management policy 2. (1) All officials and other role players in the supply chain management system

of the West Coast District Municipality must implement this Policy in the way that –

(a) gives effect to – (i) Section 217 of the Constitution; and (ii) Part 1 of Chapter 11 and other applicable provisions of the

Act;

(b) is fair, equitable, transparent, competitive and cost effective;

(c) complies with – (i) the Regulations; and (ii) any minimum norms and standards that may be prescribed

in terms of section 168 of the Act;

(d) is consistent with other applicable legislation;

(e) does not undermine the objective for uniformity in supply chain management systems between organs of state in all spheres; and


(f) is consistent with national economic policy concerning the promotion of investments and doing business with the public sector.

(2) The Policy applies when the West Coast District Municipality –

(a) procures goods or services; (b) disposes goods no longer needed; (c) selects contractors to provide assistance in the provision of

municipal services otherwise than in circumstances where Chapter 8 of the Municipal Systems Act applies; or

(d) selects external mechanisms referred to in section 80 (1) (b) of the Municipal Systems Act for the provision of municipal services in circumstances contemplated in section 83 of that Act.

(3) This Policy, except where provided otherwise, does not apply in respect of the

procurement of goods and services contemplated in section 110(2) of the Act, including –

(a) water from the Department of Water Affairs or a public entity, another

municipality or a municipal entity; and (b) electricity from Eskom or another public entity, another municipality or a

municipal entity; Amendment of the supply chain management policy 3. (1) the accounting officer must –

(a) at least annually review the implementation of this policy; and (b) when the accounting officer considers it necessary, submit

proposals for the amendment of this policy to the council.

(2) If the accounting officer submits a proposed amendment to the council that differs from the model policy issued by the National Treasury, the accounting officer must –

(a) ensure that such amendments comply with the Regulations; and (b) report any deviation from the model policy to the National

Treasury and the relevant provincial treasury.

(3) When amending this supply chain management policy, the need for uniformity in supply chain practices, procedures and forms between organs of state in all spheres, particularly to promote accessibility of supply chain management systems for small businesses must be taken into account.


(4) The accounting officer of a municipality must in terms of section 62(1) (f) (IV) of the Act, take all reasonable steps to ensure that the municipality has and implements this supply chain management policy.

Delegation of supply chain management powers and duties 4. (1) The council hereby delegates all powers and duties to the accounting

officer which are necessary to enable the accounting officer –

(a) to discharge the supply chain management responsibilities conferred on accounting officers in terms of –

(i) Chapter 8 or 10 of the Act; and (ii) this Policy;

(b) to maximise administrative and operational efficiency in the

implementation of this Policy;

(c) to enforce reasonable cost-effective measures for the prevention of fraud, corruption, favouritism and unfair and irregular practices in the implementation of the supply chain management policy; and

(d) to comply with his or her responsibilities in terms of section 115 and

other applicable provisions of the Act.

(2) Sections 79 and 106 of the Act apply to the sub delegation of powers and duties delegated to an accounting officer in terms of sub paragraph (1).

(3) The accounting officer may not sub delegate any supply chain

management powers or duties to a person who is not an official of the West Coast District Municipality or to a committee which is not exclusively composed of officials of the West Coast District Municipality;

(4) This paragraph may not be read as permitting an official to whom the

power to make final awards has been delegated, to make a final award in a competitive bidding process otherwise than through the committee system provided for in paragraph 26 of this Policy.


Sub - delegations 5.(1) The accounting officer may in terms of section 79 or 106 of the Act sub -

delegate any supply chain management powers and duties, including those delegated to the accounting officer in terms of this policy, but any such sub - delegation must be consistent with subparagraph (2) of this paragraph and paragraph 4 of this Policy.

(2) The power to make a final award –

(a) above R10 million (VAT included) may not be sub - delegated by

the accounting officer;

(b) above R2 million (VAT included), but not exceeding R10 million (VAT included), may be sub - delegated but only to –

(i) the Chief Financial Officer; (ii) a senior manager; or (iii) a bid adjudication committee of which the chief financial

officer or a senior manager is a member; or

(c) not exceeding R2 million (VAT included) may be sub delegated but only to –

(i) the Chief Financial Officer; (ii) a senior manager; (iii) a manager directly accountable to the Chief Financial Officer

or a senior manager; or (iv) a bid adjudication committee.

(3) An official or bid adjudication committee to which the power to make final

awards has been sub delegated in accordance with subparagraph (2) must within five days of the end of each month submit to the official referred to in subparagraph (4) of this policy a written report containing particulars of each final award made by such official or committee during that month, including–

(a) the amount of the award; (b) the name of the person to whom the award was made; and (c) proper motivation why the award was made to that person.

(4) A written report referred to in subparagraph (3) must be submitted –

(a) to the Accounting Officer, in the case of an award by –

(i) the Chief Financial Officer; (ii) a senior manager; or


(Iii) a Bid Adjudication Committee of which the Chief Financial Officer or a senior manager is a member; or

(b) to the Chief Financial Officer or the senior manager responsible for

the relevant bid, in the case of an award by – (i) a manager referred to in subparagraph (2) (c) (iii) of this

policy; or (ii) a Bid Adjudication Committee of which the Chief Financial

Officer or a senior manager is not a member.

(5) Subparagraphs (3) and (4) of this policy do not apply to direct purchases.

(6) This paragraph may not be interpreted as permitting an official to whom the power to make final awards has been sub - delegated, to make a final award in a competitive bidding process otherwise than through the committee system provided for in paragraph 26 of this Policy.

(7) No supply chain management decision-making powers may be delegated

to an advisor or consultant. Oversight role of council 6. (1) the council reserves its right to maintain oversight over the implementation

of this supply chain management policy.

(2) For the purposes of such oversight the accounting officer must –

(a)(i) within 30 days of the end of each financial year, submit a report on the implementation of the supply chain management policy of the municipality and of any municipal entity under its sole or shared control, to the council of the municipality, and

(ii) whenever there are serious and material problems in the implementation of the supply chain management policy, immediately submit a report to the council,

(3) The accounting officer must, within 10 days of the end of each quarter,

submit a report on the implementation of the supply chain management policy to the mayor.

(4) The reports must be made public in accordance with section 21A of the

Municipal Systems Act.


Supply Chain Management Unit 7. (1) A supply chain management unit is hereby established to implement this

supply chain management policy.

(2) The supply chain management unit operates under the direct supervision of the chief financial officer or an official to whom this duty has been delegated in terms of section 82 of the Act.

Training of Supply Chain Management officials

8. (1) The training of officials involved in implementing the Supply Chain Management Policy should be in accordance with any

Treasury guidelines on supply chain management training;

(2) Training to be done in accordance to the skills development plan of the West Coast District Municipality;

CHAPTER 2 FRAMEWORK FOR SUPPLY CHAIN MANAGEMENT Format of supply chain management 9. This supply chain management policy provides systems for –

(i) demand management; (ii) acquisition management; (iii) logistics management; (iv) disposal management; (v) risk management; and (vi) performance management.

Part 1: Demand management System of demand management 10. (1) The accounting officer must establish and implement, through operational

procedures, an appropriate and effective system of demand management in order to ensure that the resources required by West Coast District Municipality support its operational commitments and its strategic goals outlined in the Integrated Development Plan (IDP).

(2) The demand management system must –


(a) include timely planning and management processes to ensure that all goods and services required by the West Coast District Municipality are quantified, budgeted for and timely and effectively delivered at the right locations and at the critical delivery dates, and are of the appropriate quality and quantity at a fair cost;

(b) take into account any benefits of economies of scale that may be derived in the

case of acquisitions of a repetitive nature; and (c) provide for the compilation of the required specifications to ensure that its needs

are met; (d) To undertake appropriate industry analysis and research to ensure that

innovations and technological benefits are maximized;

(e) take into account the guidelines on the implementation of demand management and the submission of procurement plans in respect of advertised competitive bids as per National Treasury, MFMA Circular No.62, Municipal Finance Management Act No.56 of 2003, Supply Chain Management: Enhancing compliance and accountability as per Annexures B and C;

Part 2: Acquisition management System of acquisition management 11. (1) the accounting officer must establish and implement, through operational

procedures, an effective system of acquisition management in order to ensure –

(a) that goods and services are procured by West Coast District

Municipality in accordance with authorised processes only; (b) that expenditure on goods and services is incurred in terms of an

approved budget in terms of section 15 of the Act; (c) that the threshold values for the different procurement processes

are complied with; (d) that bid documentation, evaluation and adjudication criteria, and

general conditions of a contract, are in accordance with any applicable legislation; and

(e) that any Treasury guidelines on acquisition management are properly taken into account.

(2) When procuring goods or services contemplated in section 110(2) of the

Act, the accounting officer must make public the fact that such goods or services are procured otherwise than through the municipality’s supply chain management system, including - (a) the kind of goods or services; and (b) the name of the supplier.


(3) The accounting officer may on motivation of an Director extend the bid

closing date, if circumstances justify the action, provided that the closing date may not be extended unless a notice is published in the same newspapers as the original advertisement as well as the municipal website and municipal notice boards, prior to the original bid closing date. All prospective bidders must be informed in writing by the relevant Director of the extension of the bid closing date.

(4) Unless otherwise indicated in the bid documents, the municipality shall not

be liable for any expenses incurred by prospective bidders in the preparation and / or submission of a bid or quotation.

Range of procurement processes 12. (1) The procurement of goods and services through this policy is provided by

way of –

(a) direct purchases, up to a transaction value of R2 000 (VAT included);

(b) written or verbal quotations for procurements of a transaction value over R2 000 up to R10 000 (VAT included);

(c) formal written price quotations for procurements of a transaction value over R10 000 up to R200 000 (VAT included); and

(d) a competitive bidding process for–

(i) procurements above a transaction value of R200 000 (VAT included); and

(ii) the procurement of long term contracts.

(2) The accounting officer may, in writing –

(a) lower, but not increase, the different threshold values specified in subparagraph (1); or

(b) direct that –

(i) written or verbal quotations be obtained for any specific procurement of a transaction value lower than R2 000;

(ii) formal written price quotations be obtained for any specific procurement of a transaction value lower than R10 000; or

(iii) a competitive bidding process be followed for any specific procurement of a transaction value lower than R200 000.

(3) Goods or services may not deliberately be split into parts or items of a

lesser value merely to avoid complying with the requirements of the policy. When determining transaction values, a requirement for goods or services


consisting of different parts or items must as far as possible be treated and dealt with as a single transaction.

General preconditions for consideration of formal written quotations or bids 13. A formal written quotation or bid may not be considered unless the provider who

submitted the quotation or bid –

(a) has furnished that provider’s – (i) full name; (ii) identification number or company or other registration number; and (iii) tax reference number and VAT registration number, if any;

(b) has authorised the municipality to verify any of the documentation referred

to in sub –clause (a) above; and

(c) has indicated –

(i) whether he or she is in the service of the state, or has been in the service of the state in the previous twelve months;

(ii) if the provider is not a natural person, whether any of its directors,

managers, principal shareholders, stakeholders or trustees is in the service of the state, or has been in the service of the state in the previous twelve months; or

(iii) whether a spouse, child or parent of the provider or of a director,

manager, shareholder or stakeholder referred to in subparagraph (ii) is in the service of the state, or has been in the service of the state in the previous twelve months;

(iv) their individual identity numbers, personal tax reference numbers

and employee numbers of those who are in the service of the state; Central Supplier Database 14. (1) the accounting officer must –

(a) keep a list of accredited prospective providers (Central Supplier Database) of goods and services that must be used for the procurement requirements of the West Coast District Municipality through written or verbal quotations and formal written price quotations; and

(b) at least once a year through newspapers commonly circulating locally, the website and any other appropriate ways, invite


prospective providers of goods or services to apply for evaluation and listing as accredited prospective providers;

(c) specify the listing criteria for accredited prospective providers as per attached Annexure H; and

(d) disallow the listing of any prospective provider whose name appears on the National Treasury’s database as a person prohibited from doing business with the public sector.

(2) The list must be updated at least quarterly to include any additional

prospective providers and any new commodities or types of services. Prospective providers must be allowed to submit applications for listing at any time.

(3) The list must be compiled per commodity and per type of service.

Direct purchases 15. The accounting officer must establish the conditions for the procurement of

goods by means of direct purchases referred to in paragraph 12 (1) (a) of this policy, which must include conditions –

(a) at least one (1) quotation is needed up to a transaction value of R2 000

(VAT included); (b) an official order number to be obtained and an invoice to be submitted for

payment; Written or verbal quotations 16. The conditions for the procurement of goods or services through written or verbal

quotations are as follows –

(a) quotations must be obtained from at least three different providers preferably from, but not limited to, providers whose names appear on the list of accredited prospective providers (Central Supplier Database) of the municipality, provided that if quotations are obtained from providers who are not listed, such providers must meet the listing criteria in the supply chain management policy required by 14(1)(b) and (c) of this policy;

(b) that, to the extent feasible, providers must be requested to submit such quotations in writing;

(c) that if it is not possible to obtain at least three quotations, the reasons must be recorded and reported quarterly to the accounting officer or another official designated by the accounting officer;

(d) that the accounting officer must record the names of the potential providers requested to provide such quotations with their quoted prices; and


(e) that if a quotation was submitted verbally, the order may be placed only against written confirmation by the selected provider.

Formal written price quotations 17. (1) the conditions for the procurement of goods or services through formal

written price quotations, are as follows –

(a) quotations must be obtained in writing from at least three different providers whose names appear on the list of accredited prospective providers (Central Supplier Database) of the municipality;

(b) quotations may be obtained from providers who are not listed; provided that such providers meet the listing criteria in the supply chain management policy required by paragraph 14(1) (b) and (c);

(c) that if it is not possible to obtain at least three quotations, the reasons must be recorded and approved by the chief financial officer or an official designated by the chief financial officer, and

(d) the accounting officer must record the names of the potential providers and their written quotations;

(2) A designated official referred to in subparagraph (1)(c) must within three

days of the end of each month report to the chief financial officer on any approvals given during that month by that official in terms of that subparagraph.

Procedures for procuring goods or services through written and formal written price quotations 18. (1) The operational procedure for the procurement of goods or services

through written and formal written price quotations, are as follows – (a) that when using the list of accredited prospective providers

(Central Supplier Database) the accounting officer must promote ongoing competition amongst providers, including by inviting providers to submit quotations on a rotation basis;

(b) that all requirements in excess of R30 000 (VAT included) that are to be

procured by means of formal written price quotations must, in addition to the requirements of paragraph 17, be advertised for at least seven days on the website and an official notice board of the municipality;

(c) Offers received must be evaluated on a comparative basis taking into account unconditional discounts;

(d) that the accounting officer or chief financial officer must on a monthly basis be notified in writing of all written or verbal quotations and formal


written price quotations accepted by an official acting in terms of a sub delegation;

(e) Offers below R30 000 (VAT included) must be awarded based on

compliance to specifications and conditions of contract, ability and capability to deliver the goods and services and lowest price;

(f) Acceptable offers, which are subject to the preference points system (PPPFA

and associated regulations), must be awarded to the bidder who scored the highest points;

(g) all reasonable steps must be taken to ensure that the procurement of goods

and services through written quotations or formal written price quotations is not abused;

(h) the supply chain management unit is responsible for proper record keeping;

(2) O original / legal copies of written or formal written price quotations should be

kept in a secure place for reference purposes.

(3) Notwithstanding the above requirements for consideration, written and formal written quotations not to specification may not be accepted;

(4) Where no written or formal written quotation complies with the specification

there must be a recall for quotations;

(5) Only quotations complying with the set specifications will be considered to accepted, provided that there are sufficient funds within the appropriate budget;

Competitive bidding process 19. (1) Goods or services above a transaction value of R200 000 (VAT included)

and long term contracts may only be procured through a competitive bidding process, subject to paragraph 11(2) of this policy; and

(2) No requirement for goods or services above an estimated transaction

value of R200 000 (VAT included), may deliberately be split into parts or items of lesser value merely for the sake of procuring the goods or services otherwise than through a competitive bidding process.


Process for competitive bidding 20. The procedures for the following stages of a competitive bidding process are as

follows:

(a) compilation of bidding documentation as detailed in paragraph 21;

(b) public invitation of bids as detailed in paragraph 22; (c) site meetings or briefing sessions as detailed in paragraph 22; (d) handling of bids submitted in response to public invitation as detailed in

paragraph 23; (e) evaluation of bids as detailed in paragraph 28; (f) the award of contracts as detailed in paragraph29; (g) the administration of contracts;

(h) After approval of a bid, the accounting officer and the bidder must enter into a

written agreement;

(i) proper record keeping; and

(j) Original / legal copies of written contracts agreements should be kept in a secure place for reference purposes.

Bid documentation for competitive bids 21. The criteria to which bid documentation for a competitive bidding process must

comply, must –

(a) take into account –

(i) the general conditions of contract (GCC) as augmented in July 2010 and any special conditions of contract (SCC), if specified;

(ii) any Treasury guidelines on bid documentation; and (iii) the requirements of the Construction Industry Development Board

(CIDB) , in the case of a bid relating to construction, upgrading or refurbishment of buildings or infrastructure; and the general conditions of contract (GCC) issued by the CIDB should be utilised in cases of bids relating to the construction industry;

(b) include the preference point system to be used, as contemplated in the Preferential Procurement Regulations of 2017 and the evaluation and adjudication criteria, including any criteria required by other applicable legislation;


(c) compel bidders to declare any conflict of interest they (directors / trustees / shareholders) may have in the transaction for which the bid is submitted as per Annexure D;

(d) the special conditions of contract (SCC) to be used to cover specific

goods, services and works; (e) where the special conditions of contract (SCC) is in conflict with the

general conditions of contract the special conditions of contract (SCC) will prevail;

(f) compel bidders to complete a certificate of independent bid determination to ensure that when bids are considered all reasonable steps are taken to deter any form of bid rigging or collusive bidding;

(g) if the value of the transaction is expected to exceed R10 million (VAT

included), require bidders to furnish–

(i) if the bidder is required by law to prepare annual financial statements for auditing, their audited annual financial statements –

(aa) for the past three years; or (bb) since their establishment if established during the past three

years; (ii) a certificate signed by the bidder certifying that the bidder has no

undisputed commitments for municipal services towards a municipality or other service provider in respect of which payment is overdue for more than 30 days;

(iii) particulars of any contracts awarded to the bidder by an organ of state during the past five years, including particulars of any material non-compliance or dispute concerning the execution of such contract;

(iv) a statement indicating whether any portion of the goods or services are expected to be sourced from outside the Republic, and, if so, what portion and whether any portion of payment from the municipality is expected to be transferred out of the Republic; and

(h) stipulate that disputes must be settled by means of mutual consultation, mediation (with or without legal representation), or, when unsuccessful,

in a South African court of law;

(i) the period for which bids are to remain valid and binding must be indicated in the bid documents;

(j) ensure that a valid original tax clearance certificate accompany the bid documents unless the bidder is registered on the accredited supplier database (Central Supplier Database) of the municipality and the municipality has a valid original tax clearance certificate of the bidder on


record; the onus is on the bidder to ensure that the municipality has an original tax clearance certificate on record;

(k) ensure that in the case of designated sectors, where in the award of bids

local production and content is of critical importance, such bids be advertised with the specific bidding condition that only locally produced goods, services or works or locally manufactured goods, with a stipulated minimum threshold for local production and content will be considered;

(l) stipulate that bidders are required to submit original and valid B-BBEE Status Level Verification Certificate or certified copies thereof together with their bids, to substantiate their B-BBEE rating claims;

(m) stipulate that the responsibility for registration and verification on the

Central Supplier Database rests solely with the bidder.

Public invitation for competitive bids 22. The procedure for the invitation of competitive bids, are as follows:

(1)(a) Any invitation to prospective providers to submit bids must be by means of a public advertisement on the ePortal, in newspapers commonly circulating locally, the website of the municipality the website of the CIDB for construction related bids or any other appropriate ways (which may include an advertisement in the Government Tender Bulletin) ; and

(b) the information contained in a public advertisement, must include –

(i) the closure date for the submission of bids, which may not

be less than 30 days in the case of transactions over R10 million (VAT included), or which are of a long term nature, or 14 days in any other case, from the date on which the advertisement is placed in a newspaper, subject to subparagraph (2) of this policy; and

(ii) a statement that bids may only be submitted on the bid documentation provided by the municipality.

(iii) date, time and venue of any proposed site meetings or briefing sessions;

(2) The accounting officer may determine a closure date for the submission of

bids which is less than the 30 or 14 days’ requirement, but only if such shorter period can be justified on the grounds of urgency or emergency or any exceptional case where it is impractical or impossible to follow the official procurement process.


(3) Bids submitted must be sealed.

(4) Where bids are requested in electronic format, such bids must be supplemented by sealed hard copies.

(6) The municipality may charge a non – refundable deposit for the provision of

bid documents. The deposit is subject to annual review and will be determined by the official list of tariffs;

(7) For bids above R 10 million the Chief Financial Officer (CFO) must prior to advertisement verify in writing that budgetary provision exists for the commencement of the particular project.

(8) When inviting bids, the municipality must indicate –

(i) whether the bids will be evaluated on functionality; (ii) the evaluation criteria for measuring functionality; (iii) the weight of each criterion; and (iv) the applicable values as well as the minimum threshold for functionality; (v) whether the bids will be evaluated on local content, if applicable (vi) the minimum threshold for local content, if applicable; (vii) Whether the bids will be evaluated on subcontracting requirements; (viii) the subcontracting requirements for interested tenderers to identify and

negotiate with possible subcontractors;

Procedure for handling, opening and recording of bids 23. (1) the procedures for the handling, opening and recording of bids, are as follows:

(a) Bids– (i) must be opened only in public; and (ii) must be opened at the same time and as soon as possible after the

period for the submission of bids has expired; (iii) received after the closing time should not be considered and should

be returned unopened immediately;

(b) Any bidder or member of the public has the right to request that the names of the bidders who submitted bids in time must be read out and, if practical, also each bidder’s total bidding price;

(c) No information, except the provisions in subparagraph (b), relating to the

bid should be disclosed to bidders at the opening of the specific bid; (d) The accounting officer must –

(i) record in a register all bids received in time;


(ii) make the register available for public inspection; and (iii) publish the reference number of the bid, the description of the

goods, services or infrastructure project, names of all bidders, the B-BBEE status level contribution of all bidders, where applicable, the local content percentages of the goods offered and where practical, total price of the bids, by all bidders that submitted bids in relation to that particular advertisement on the municipal website;

(iv) copies of information in (iii) should be made available at municipal offices within ten (10) working days after closure of the bid and it must remain on the municipal website for at least thirty (30) days;

(v) with regard to successful bids, publish the contract number and description of the goods, services or infrastructure project, names of successful bidders and B-BBEE level of contribution claimed, contract price, brand names and dates for completion of contracts on the municipal website;

(vi) ensure that prior to the award of contracts above the value of R 10

million the Chief Financial Officer (CFO) must verify in writing that budgetary provision exist for the acquisition and that it is consistent with the Integrated Development Plan (IDP);

(2) The accounting officer to ensure compliance to

the following minimum requirements of the Construction Industry Development Board (CIDB) for construction related bids and procurement: -

(a) the verification of contractor registration and grading on the CIDB website;

(b) utilisation of contractors registered with the CIDB; (c) ensuring that the prescribed CIDB bid documents for construction

related bids are utilised; (d) assessing bidding documents against the prescribed CIDB contractor

requirements; (e) registration of every project approved by the West Coast District

Municipality, consisting of construction works contracts with the CIDB; (f) the advertising of construction contracts on the CIDB i-tender system; (g) the updating and completion of contracts registered on the CIDB i-

tender system; (h) issuing of dates in respect of completion certificates, renewals,

terminations or cancellations, the settlement of all amounts owing to contractors in accordance with contracts and the submission of status reports to the CIDB;


(i) the placing of registered contractors or any principals of that contractor under any restriction to participate in public procurement as contemplated in the CIDB regulations;

(j) suspension and deregistration of contractors as contemplated in the CIDB regulations;

(k) complaints and grievances by actions taken in terms of the CIDB regulations;

(l) failure to comply with the CIDB regulations; (m) construction contracts arranged by consultants to adhere to all of the

abovementioned requirements and CIDB regulations; (n) consultant’s remuneration is aligned to the CIDB’s guidance; (o) consultants providing consulting services for construction related

contracts and any of their affiliates to be disqualified from subsequently providing goods or works or services related to the project;

(p) subcontracting arrangements and joint – venture (JV) initiatives to be aligned to CIDB guidelines and requirements;

Negotiations with preferred bidders 24. (1) the accounting officer may negotiate the final terms of a contract with

bidders identified through a competitive bidding process as preferred bidders, provided that such negotiation –

(a) does not allow any preferred bidder a second or unfair opportunity; (b) is not to the detriment of any other bidder; and (c) does not lead to a higher price than the bid as submitted.

(2) Minutes of such negotiations must be kept for record purposes.

Two-stage bidding process 25. (1) a two-stage bidding process is allowed for –

(a) large complex projects; (b) projects where it may be undesirable to prepare complete detailed

technical specifications; or (c) long term projects with a duration period exceeding three years.

(2) In the first stage technical proposals on conceptual design or performance

specifications should be invited, subject to technical as well as commercial clarifications and adjustments.

(3) In the second stage final technical proposals and priced bids should be

invited.


Committee system for competitive bids 26. (1) the accounting officer hereby –

establish a committee system for competitive bids consisting of the following committees for each procurement or cluster of procurements –

(a) a bid specification committee; (b) a bid evaluation committee; and (c) a bid adjudication committee;

(2) appoints the members of each committee, taking into account section 117

of the Act; and

(3) provide for an attendance or oversight process by a neutral or independent observer, appointed by the accounting officer, when this is appropriate for ensuring fairness and promoting transparency.

(4) The committee system must be consistent with –

(a) paragraph 27, 28 and 29 of this policy; and (b) any other applicable legislation.

(5) The accounting officer may apply the committee system to formal written

price quotations.

Bid specification committees 27. (1) the bid specification committee must compile the specifications for each

procurement of goods or services by the municipality.

(2) Specifications –

(a) must be drafted in an unbiased manner to allow all potential suppliers to offer their goods or services;

(b) must take account of any accepted standards such as those issued by Standards South Africa, the International Standards Organisation, or an authority accredited or recognised by the South African National Accreditation System with which the equipment or material or workmanship should comply;

(c) must, where possible, be described in terms of performance required rather than in terms of descriptive characteristics for design;

(d) may not create trade barriers in contract requirements in the forms of specifications, plans, drawings, designs, testing and test methods, packaging, marking or labelling of conformity certification;


(e) may not make reference to any particular trade mark, name, patent, design, type, specific origin or producer unless there is no other sufficiently precise or intelligible way of describing the characteristics of the work, in which case such reference must be accompanied by the words “equivalent”;

(f) must indicate the points system set out in the Preferential Procurement Regulations 2017; and

(g) must be approved by the accounting officer prior to publication of the invitation for bids in terms of paragraph 22 of this policy.

(3) The bid specification committee must be composed of one or more

officials of the municipality, preferably the manager responsible for the function involved, and may, when appropriate, include external specialist advisors.

(4) No person, advisor or corporate entity involved with the bid specification committee, or director of such a corporate entity, may bid for any resulting contracts.

Bid evaluation committees 28. (1) the bid evaluation committee must –

(a) evaluate bids in accordance with – (i) the specifications for a specific procurement; and (ii) the points system set out in terms of paragraph 27(2) (f).

(b) evaluate each bidder’s ability to execute the contract; (c) check in respect of the recommended bidder whether municipal

rates and taxes and municipal service charges are not in arrears, and;

(d) check in respect of the recommended bidder whether not listed on the national Treasury website on the list of restricted suppliers and register of tender defaulters, and;

(e) submit to the adjudication committee a report and recommendations regarding the award of the bid or any other related matter.

(2) The bid evaluation committee must as far as possible be composed of –

(a) officials from departments requiring the goods or services; and (b) at least one supply chain management practitioner of the

municipality.


Bid adjudication committees 29. (1) the bid adjudication committee must –

(a) consider the report and recommendations of the bid evaluation committee; and

(b) either – (i) depending on its delegations, make a final award or a

recommendation to the accounting officer to make the final award; or

(ii) make another recommendation to the accounting officer how to proceed with the relevant procurement.

(2) The bid adjudication committee must consist of at least four senior managers of the municipality which must include – (i) the chief financial officer or, if the chief financial officer is not

available, another manager in the budget and treasury office reporting directly to the chief financial officer and designated by the chief financial officer; and

(ii) at least one senior supply chain management practitioner who is an official of the municipality; and

(iii) a technical expert in the relevant field who is an official, if such an expert exists.

(3) The accounting officer must appoint the chairperson of the committee. If the chairperson is absent from a meeting, the members of the committee who are present must elect one of them to preside at the meeting.

(4) Neither a member of a bid evaluation committee, nor an advisor or person assisting the evaluation committee, may be a member of a bid adjudication committee.

(5) (a) If the bid adjudication committee decides to award a bid other than

the one recommended by the bid evaluation committee, the bid adjudication committee must prior to awarding the bid – (i) check in respect of the preferred bidder whether that bidder’s

municipal rates and taxes and municipal service charges are not in arrears, and;

(ii) notify the accounting officer. (b) The accounting officer may –

(i) after due consideration of the reasons for the deviation, ratify or reject the decision of the bid adjudication committee referred to in paragraph (a); and

(ii) if the decision of the bid adjudication committee is rejected, refer the decision of the adjudication committee back to that committee for reconsideration.

(6) The accounting officer may at any stage of a bidding process, refer any recommendation made by the evaluation committee or the adjudication committee back to that committee for reconsideration of the recommendation.


(7) The accounting officer must comply with section 114 of the Act within 10 working days

Procurement of banking services 30. (1) Banking services –

(a) must be procured through competitive bids; (b) must be consistent with section 7 or 85 of the Act; and (c) may not be for a period of more than five years at a time.

(2) The process for procuring a contract for banking services must commence

at least nine months before the end of an existing contract. (3) The closure date for the submission of bids may not be less than 60 days

from the date on which the advertisement is placed on ePortal and in a newspaper in terms of paragraph 22(1). Bids must be restricted to banks registered in terms of the Banks Act, 1990 (Act No. 94 of 1990).

Procurement of IT related goods or services 31. (1) the accounting officer may request the State Information Technology

Agency (SITA) to assist with the acquisition of IT related goods or services through a competitive bidding process.

(2) Both parties must enter into a written agreement to regulate the services rendered by, and the payments to be made to, SITA.

(3) The accounting officer must notify SITA together with a motivation of the

IT needs if – (a) the transaction value of IT related goods or services required in any

financial year will exceed R50 million (VAT included); or (b) the transaction value of a contract to be procured whether for one

or more years exceeds R50 million (VAT included). (4) If SITA comments on the submission and the municipality disagree with

such comments, the comments and the reasons for rejecting or not following such comments must be submitted to the council, the National Treasury, the relevant provincial treasury and the Auditor General.

Procurement of goods and services under contracts secured by other organs of state 32. (1) the accounting officer may procure goods or services under a contract

secured by another organ of state, but only if – (a) the contract has been secured by that other organ of state by

means of a competitive bidding process applicable to that organ of state;

(b) there is no reason to believe that such contract was not validly procured;


(c) there are demonstrable discounts or benefits to do so; and (d) that other organ of state and the provider have consented to such

procurement in writing. (2) Subparagraph (1) (c) and (d) do not apply if –

(a) a municipal entity procures goods or services through a contract secured by its parent municipality; or

(b) a municipality procures goods or services through a contract secured by a municipal entity of which it is the parent municipality.

Procurement of goods necessitating special safety arrangements 33. (1) The acquisition and storage of goods in bulk (other than water) which

necessitate special safety arrangements, including gasses and fuel, should be avoided where ever possible.

(2) Where the storage of goods in bulk is justified, such justification must be based on sound reasons, including the total cost of ownership, cost advantages and environmental impact and must be approved by the accounting officer.

Proudly SA Campaign 34. The accounting officer supports the Proudly SA Campaign. Preference to be

given to the application of local content and production as per paragraph 7 of Annexure E (Preferential Procurement Policy).

Appointment of consultants 35. (1) the accounting officer may procure consulting services provided that any

Treasury guidelines in respect of consulting services are taken into account when such procurements are made.

(2) Consultancy services must be procured through competitive bids if – (a) the value of the contract exceeds R200 000 (VAT included); or (b) the duration period of the contract exceeds one year.

(3) In addition to any requirements prescribed by this policy for competitive bids, bidders must furnish particulars of – (a) all consultancy services provided to an organ of state in the last five

years; and (b) any similar consultancy services provided to an organ of state in

the last five years.

(4) The accounting officer must ensure that copyright in any document produced, and the patent rights or ownership in any plant, machinery, thing, system or process designed or devised, by a consultant in the course of the consultancy service is vested in the municipality;

(5) no consultant or adviser will take part in the final decision – making process;


(6) no decision – making authority may be delegated to a consultant or adviser;

Deviation from and ratification of minor breaches of, procurement processes 36. (1) the accounting officer may –

(a) dispense with the official procurement processes established by this policy and to procure any required goods or services through any convenient process, which may include direct negotiations, but only – (i) in an emergency; (ii) if such goods or services are produced or available from a

single provider only; (iii) for the acquisition of special works of art or historical objects

where specifications are difficult to compile; (iv) acquisition of animals for zoos and/or nature and game

reserves; or (v) in any other exceptional case where it is impractical or

impossible to follow the official procurement processes; (vi) if ssuch goods or services have already been acquired by

the Municipality from a specific supplier or service provider and subsequent maintenance, amendments, or modifications by other suppliers or service providers are prohibited, restricted or impossible because of guarantee, legal, licensing or such other requirements, or it will be impractical or uneconomical to acquire additional similar goods or services from another supplier or service provider; and

(b) ratify any minor breaches of the procurement processes by an official or committee acting in terms of delegated powers or duties which are purely of a technical nature.

(2) The accounting officer must record the reasons for any deviations in terms of subparagraphs (1) (a) and (b) of this policy and report them to the next meeting of the council and include as a note to the annual financial statements.

(3) Subparagraph (2) does not apply to the procurement of goods and services contemplated in paragraph 11(2) of this policy.

Unsolicited bids 37. (1) In accordance with section 113 of the Act there is no obligation to consider

unsolicited bids received outside a normal bidding process. (2) The accounting officer may decide in terms of section 113(2) of the Act to

consider an unsolicited bid, only if –


(a) the product or service offered in terms of the bid is a demonstrably or proven unique innovative concept;

(b) the product or service will be exceptionally beneficial to, or have exceptional cost advantages;

(c) the person who made the bid is the sole provider of the product or service; and

(d) the reasons for not going through the normal bidding processes are found to be sound by the accounting officer.

(3) If the accounting officer decides to consider an unsolicited bid that complies with subparagraph (2) of this policy, the decision must be made public in accordance with section 21A of the Municipal Systems Act, together with – (a) reasons as to why the bid should not be open to other competitors; (b) an explanation of the potential benefits if the unsolicited bid were

accepted; and (c) an invitation to the public or other potential suppliers to submit their

comments within 30 days of the notice. (4) All written comments received pursuant to subparagraph (3), including any

responses from the unsolicited bidder, must be submitted to the National Treasury and the relevant provincial treasury for comment.

(5) The adjudication committee must consider the unsolicited bid and may award the bid or make a recommendation to the accounting officer, depending on its delegations.

(6) A meeting of the adjudication committee to consider an unsolicited bid must be open to the public.

(7) When considering the matter, the adjudication committee must take into account –

(a) any comments submitted by the public; and (b) any written comments and recommendations of the National

Treasury or the relevant provincial treasury. (8) If any recommendations of the National Treasury or provincial treasury are

rejected or not followed, the accounting officer must submit to the Auditor General, the relevant provincial treasury and the National Treasury the reasons for rejecting or not following those recommendations.

(9) Such submission must be made within seven days after the decision on the award of the unsolicited bid is taken, but no contract committing the municipality to the bid may be entered into or signed within 30 days of the submission.

Combating of abuse of supply chain management system 38. The accounting officer must establish measures for the combating of abuse of

the supply chain management system, which must stipulate the following: (1) The accounting officer must–


(a) take all reasonable steps to prevent abuse of the supply chain management system;

(b) investigate any allegations against an official or other role player of fraud, corruption, favouritism, unfair or irregular practices or failure to comply with this supply chain management policy, and when justified – (i) take appropriate steps against such official or other role

player; or (ii) report any alleged criminal conduct to the South African

Police Service; (c) check the National Treasury’s database prior to awarding any

contract to ensure that no recommended bidder, or any of its directors, is listed as a person prohibited from doing business with the public sector;

(d) reject any bid from a bidder– (i) if any municipal rates and taxes or municipal service charges

owed by that bidder or any of its directors to the municipality, or to any other municipality or municipal entity, are in arrears for more than three months; or

(ii) who during the last five years has failed to perform satisfactorily on a previous contract with the municipality or any other organ of state after written notice was given to that bidder that performance was unsatisfactory;

(e) reject a recommendation for the award of a contract if the recommended bidder, or any of its directors, has committed a corrupt or fraudulent act in competing for the particular contract;

(f) cancel a contract awarded to a person if – (i) the person committed any corrupt or fraudulent act during

the bidding process or the execution of the contract; or (ii) an official or other role player committed any corrupt or

fraudulent act during the bidding process or the execution of the contract that benefited that person; and

(g) reject the bid of any bidder if that bidder or any of its directors – (i) has abused the supply chain management system of the

municipality or has committed any improper conduct in relation to such system;

(ii) has been convicted for fraud or corruption during the past five years;

(iii) has will fully neglected, reneged on or failed to comply with any government, municipal or other public sector contract during the past five years; or

(iv) has been listed in the Register for Tender Defaulters In terms section 29 of the Prevention and Combating of Corrupt Activities Act (No 12 of 2004).

(h) ensure that all written contracts or service level agreements (SLA’s) that are entered into by the municipality are legally sound and are


actively managed in order to ensure that both parties meet their respective obligations;

(i) ensure that orders are not deliberately placed and arranged with suppliers for goods, services and infrastructure projects to be invoiced and paid in another financial year;

(2) The accounting officer must inform the National Treasury and relevant

provincial treasury in writing of any actions taken in terms of subparagraphs (1)(b)(ii), (e) or (f) of this policy.

Part 3: Logistics, Disposal, Risk and Performance Management Logistics management 39. The accounting officer must establish an effective system of logistics

management, which must include – (a) the monitoring of spending patterns on types or classes of goods and services

incorporating, where practical, the coding of items to ensure that each item has a unique number;

(b) the setting of inventory levels that includes minimum and maximum levels and lead times wherever goods are placed in stock;

(c) the placing of manual or electronic orders for all acquisitions inclusive of direct purchases;

(d) before payment is approved, certification by the responsible officer that the goods and services are received or rendered on time and is in accordance with the order, the general conditions of contract and specifications where applicable and that the price charged is as quoted in terms of a contract;

(e) appropriate standards of internal control and warehouse management to ensure that goods placed in stores are secure and only used for the purpose for which they were purchased;

(f) regular checking to ensure that all assets including official vehicles are properly managed, appropriately maintained and only used for official purposes; and

(g) monitoring and review of the supply vendor performance to ensure compliance with specifications and contract conditions for particular goods or services.

Disposal management 40.(1) The accounting officer must establish an effective system of disposal

management for the disposal or letting of assets, including unserviceable, redundant or obsolete assets, subject to sections 14 and 90 of the Act, which must stipulate the following:

(2) Assets may be disposed of by –


(i) transferring the asset to another organ of state in terms of a provision of the Act enabling the transfer of assets;

(ii) transferring the asset to another organ of state at market related value or, when appropriate, free of charge;

(iii) selling the asset; or (iv) destroying the asset; (3) The accounting officer must ensure that – (a) immovable property may be sold only at market related prices

except when the public interest or the plight of the poor demands otherwise;

(b) movable assets may be sold either by way of written price quotations, a competitive bidding process, auction or at market related prices, whichever is the most advantageous;

(c) in the case of the disposal of firearms, the National Conventional Arms Control Committee has approved any sale or donation of firearms to any person or institution within or outside the Republic;

(d) immovable property is let at market related rates except when the public interest or the plight of the poor demands otherwise; and;

(e) all fees, charges, rates, tariffs, scales of fees or other charges relating to the letting of immovable property are annually reviewed; and

(f) ensure that where assets are traded in for other assets, the highest possible trade-in price is negotiated; and

(g) in the case of the free disposal of computer equipment, the

provincial department of education must first be approached to indicate within 30 days whether any of the local schools are interested in the equipment.

Risk management 41. (1) The accounting officer must establish an effective system of risk

management for the identification, consideration and avoidance of potential risks in the supply chain management system.

(2) Risk management must include –

(a) the identification of risks on a case-by-case basis; (b) the allocation of risks to the party best suited to manage such risks; (c) acceptance of the cost of the risk where the cost of transferring the

risk is greater than that of retaining it; (d) the management of risks in a pro-active manner and the provision

of adequate cover for residual risks; and (e) the assignment of relative risks to the contracting parties through

clear and unambiguous contract documentation.


Performance management 42. The accounting officer must establish and implement an effective internal

monitoring system in order to determine, on the basis of a retrospective analysis, whether the authorised supply chain management processes were followed and whether the desired objectives of this Policy were achieved.

Part 4: Other matters Prohibition on awards to persons whose tax matters are not in order 43. (1) The accounting officer must ensure that, irrespective of the procurement

process followed, no award above R 30 000 is given to a person whose tax matters have not been declared by the South African Revenue Service to be in order.

(2) A Master Registration Number or tax compliance status PIN must accompany the bid documents to enable the municipality to verify the bidder’s tax compliance status. The municipality must print the tax compliance status screen view or letter with the result of the bidder’s status at the date and time of verification to file with the bidder’s bid documents for audit purposes;

(3) The CSD and tax compliance status Pin are the approved methods to be

used to prove tax compliance as SARS no longer issues Tax Clearance Certificates but has made provision online, via e- Filing, for bidders to print their own tax clearance certificates which they can submit with their bids or price quotations;

(4) Accounting Officers may accept printed or copies of Tax Clearance certificates submitted by bidders and verify them on e –Filing. The verification result should be filed for audit purposes;

(5) Where a supplier does not submit a tax compliance status PIN But

provides a CDS number, the accounting officer should utilize the CSD number via its website www.csd.gov.za to access the supplier records and verify tax compliance status. A printed screen view at the time of verification should then be attached to the supplier’s records for audit purposes;

Prohibition on awards to persons in the service of the state 44. (1) the accounting officer must ensure that irrespective of the procurement process followed, no award may be given to a person –

(a) who is in the service of the state; or

http://www.csd.gov.za/


(b) if that person is not a natural person, of which any director, manager, principal shareholder, trustee or stakeholder is a person in the service of the state; or

(c) a person who is an advisor or consultant contracted with the municipality. (2) In the case of false declaration of interest the –

(a) contract must be immediately suspended and payments made, recovered;

(b) criminal charges must be laid with the South African Police Services for further investigation;

(c) details to be reported to Council at its next meeting and information contained in the Annual Report of the municipality;

Awards to close family members of persons in the service of the state 45. The notes to the annual financial statements must disclose particulars of any

award of more than R2000 to a person who is a spouse, child or parent of a person in the service of the state, or has been in the service of the state in the previous twelve months, including – (a) the name of that person; (b) the capacity in which that person is in the service of the state; and (c) the amount of the award.

Ethical standards

46. (1) A code of ethical standards as set out in the “National Treasury’s code of conduct for supply chain management practitioners and other role players involved in supply chain management is hereby established for officials and other role players in the supply chain management system of the West Coast District Municipality in order to promote – (a) mutual trust and respect; and (b) an environment where business can be conducted with integrity

and in a fair and reasonable manner.

(2) A breach of the code of conduct (Annexure A) as adopted by the West Coast District Municipality must be dealt with as follows -

(a) in the case of an employee, in terms of the disciplinary

procedures of the West Coast District Municipality envisaged in section 67(1) (h) of the Municipal Systems Act;

(b) in the case a role player who is not an employee, through other appropriate means in recognition of the severity of the breach; (c) In all cases, financial misconduct must be dealt with in terms of chapter 15 of the Act.


Inducements, rewards, gifts and favours to municipalities, officials and other role players 47. (1) No person who is a provider or prospective provider of goods or services,

or a recipient or prospective recipient of goods disposed or to be disposed of may either directly or through a representative or intermediary promise, offer or grant – (a) any inducement or reward to the municipality for or in connection

with the award of a contract; or (b) any reward, gift, favour or hospitality to –

(i) any official; or (ii) any other role player involved in the implementation of the

supply chain management policy. (2) The accounting officer must promptly report any alleged contravention of

subparagraph (1) to the National Treasury for considering whether the offending person, and any representative or intermediary through which such person is alleged to have acted, should be listed in the National Treasury’s database of persons prohibited from doing business with the public sector.

(3) Subparagraph (1) does not apply to gifts less than R350 in value. Sponsorships 48. The accounting officer must promptly disclose to the National Treasury and the

relevant provincial treasury any sponsorship promised, offered or granted, whether directly or through a representative or intermediary, by any person who is –

(a) a provider or prospective provider of goods or services; or (b) a recipient or prospective recipient of goods disposed or to be disposed.

Objections and complaints 49. Persons aggrieved by decisions or actions taken in the implementation of this

supply chain management system, may lodge within 14 days of the decision or action, a written objection or complaint against the decision or action. All objections or complaints to be referred to the Municipal Manager of the West Coast District Municipality.

Resolution of disputes, objections, complaints and queries 50. (1) The accounting officer must appoint an independent and impartial person,

not directly involved in the supply chain management processes – (a) to assist in the resolution of disputes between the municipality and

other persons regarding –


(i) any decisions or actions taken in the implementation of the supply chain management system; or

(ii) any matter arising from a contract awarded in the course of the supply chain management system; or

(b) to deal with objections, complaints or queries regarding any such decisions or actions or any matters arising from such contract.

(2) The accounting officer, or another official designated by the accounting

officer, is responsible for assisting the appointed person to perform his or her functions effectively.

(3) The person appointed must –

(a) strive to resolve promptly all disputes, objections, complaints or queries received; and

(b) submit monthly reports to the accounting officer on all disputes, objections, complaints or queries received, attended to or resolved.

(4) A dispute, objection, complaint or query may be referred to the relevant provincial treasury if – (a) the dispute, objection, complaint or query is not resolved within 60

days; or (b) no response is forthcoming within 60 days.

(5) If the provincial treasury does not or cannot resolve the matter, the dispute, objection, complaint or query may be referred to the National Treasury for resolution.

(6) This paragraph must not be read as affecting a person’s rights to approach a court at any time.

Contracts providing for compensation based on turnover 51. If a service provider acts on behalf of a municipality to provide any service or act

as a collector of fees, service charges or taxes and the compensation payable to the service provider is fixed as an agreed percentage of turnover for the service or the amount collected, the contract between the service provider and the municipality must stipulate – (a) a cap on the compensation payable to the service provider; and (b) that such compensation must be performance based.

Expansion or variation of orders against original contract values 52. (a) Contracts may be expanded or varied by not

more than 20 % for construction related goods, services and / or infrastructure projects and 15 % for all other goods and / or services of the original value of the contract;

(b) Anything beyond the abovementioned thresholds must be reported to Council and dealt with in terms of the provisions of section 116(3) of the MFMA which will


be regarded as an amendment to the contract. Contract management 53. (a) the accounting officer must ensure that all written contracts or service

level agreements that are entered into by their respective institutions are legally sound and those such contracts and agreements must be actively managed in order to ensure that both parties meet their respective obligations.

(b) Contracts to be managed in terms the general conditions of contract

issued by National Treasury, in July 2010 and the provisions of section 116 of the MFMA.

(c) Measures to be put in place to avoid potential litigation and to minimize possible fraud and corruption.

Commencement 54. This revised SCM policy with attached annexures take effect on the date on

which it is adopted by the Council.


WEST COAST DISTRICT MUNICIPALITY SCM POLICY

ANNEXURE A

CODE OF CONDUCT FOR SUPPLY CHAIN MANAGEMENT PRACTITIONERS AND OTHER ROLE PLAYERS The purpose of this Code of Conduct is to promote mutual trust and respect and an environment where business can be conducted with integrity and in a fair and reasonable manner. General Principles The West Coast District Municipality commits itself to a policy of fair dealing and

integrity in the conducting of its business. Officials and other role players involved in supply chain management (SCM) are in a position of trust, implying a duty to act in the public interest. Officials and other role players should not perform their duties to unlawfully gain any form of compensation, payment or gratuities from any person, or provider/contractor for themselves, their family or their friends.

1.1 Officials and other role players involved in SCM should ensure that they perform

their duties efficiently, effectively and with integrity, in accordance with the relevant legislation, policies and guidelines. They should ensure that public resources are administered responsibly.

1.2 Officials and other role players involved in SCM should be fair and impartial in

the performance of their functions. They should at no time afford any undue preferential treatment to any group or individual or unfairly discriminate against any group or individual. They should not abuse the power and authority vested in them.

2 Conflict of interest An official or other role player involved with supply chain management –

(a) must treat all providers and potential providers equitably; (b) may not use his or her position for private gain or to improperly benefit

another person;


(c) may not accept any reward, gift, favour, hospitality or other benefit directly or indirectly, including to any close family member, partner or associate of that person, of a value more than R350;

(d) must declare to the accounting officer details of any reward, gift, favour, hospitality or other benefit promised, offered or granted to that person or to any close family member, partner or associate of that person;

(e) must declare to the accounting officer details of any private or business interest which that person, or any close family member, partner or associate, may have in any proposed procurement or disposal process, or in any award of a contract by the West Coast District Municipality;

(f) must immediately withdraw from participating in any manner whatsoever in a procurement or disposal process or in the award of a contract in which that person, or any close family member, partner or associate, has any private or business interest;

(g) must declare any business, commercial and financial interests or activities undertaken for financial gain that may raise a possible conflict of interest;

(h) should not place him/herself under any financial or other obligation to outside individuals or organizations that might seek to influence them in the performance of their official duties; and

(i) should not take improper advantage of their previous office after leaving their official position.

3 Accountability 3.1 Practitioners are accountable for their decisions and actions to the public. 3.2 Practitioners should use public property scrupulously. 3.3 Only accounting officers or their delegates have the authority to commit the West

Coast District Municipality to any transaction for the procurement of goods and / or services.

3.4 All transactions conducted by a practitioner should be recorded and accounted

for in an appropriate accounting system. Practitioners should not make any false or misleading entries into such a system for any reason whatsoever.

Practitioners must assist the accounting officer in combating fraud, corruption,

favouritism and unfair and irregular practices in the supply chain management system.

Practitioners must report to the accounting officer any alleged irregular conduct in

the supply chain management system which that person may become aware of, including

(i) any alleged fraud, corruption, favouritism or unfair conduct;


(ii) any alleged contravention of the policy on inducements, rewards, gifts and favours to municipalities or municipal entities, officials or other role players; and

(iii) any alleged breach of this code of conduct. Any declarations made must be recorded in a register which the accounting

officer must keep for this purpose. Any declarations made by the accounting officer must be made to the mayor who must ensure that such declaration is recorded in the register.

4 Openness Practitioners should be as open as possible about all the decisions and actions

that they take. They should give reasons for their decisions and restrict information only if it is in the public interest to do so.

5 Confidentiality Any information that is the property of the West Coast District Municipality or its

providers should be protected at all times. No information regarding any bid / contract / bidder / contractor may be revealed if such an action will infringe on the relevant bidder’s / contractors personal rights.

Matters of confidential nature in the possession of officials and other role players

involved in SCM should be kept confidential unless legislation, the performance of duty or the provisions of law requires otherwise. Such restrictions also apply to officials and other role players involved in SCM after separation from service.

Bid Specification / Evaluation / Adjudication Committees 6.1 Bid specification, evaluation and adjudication committees should implement

supply chain management on behalf of the West Coast District Municipality in an honest, fair, impartial, transparent, cost-effective and accountable manner.

6.2. Bid evaluation / adjudication committees should be familiar with and adhere to

the prescribed legislation, directives and procedures in respect of supply chain management in order to perform effectively and efficiently.

6.3 All members of bid adjudication committees should be cleared by the accounting

officer at the level of "CONFIDENTIAL" and should be required to declare their financial interest annually.

6.4 No person should- 6.4.1 interfere with the supply chain management system of the West Coast District

Municipality or


6.4.2 amend or tamper with any price quotation / bid after its submission. (j) Combative Practices Combative practices are unethical and illegal and should be avoided at all cost. They

include but are not limited to:

(i) Suggestions to fictitious lower quotations; (ii) Reference to non-existent competition; (iii) Exploiting errors in price quotations / bids; (iv) Soliciting price quotations / bids from bidders / contractors whose names

appear on the Register for Tender Defaulters.



SCM POLICY

ANNEXURE B

GUIDELINES ON THE IMPLEMENTATION OF DEMAND MANAGEMENT 1. PURPOSE 1.1 This guide aims to provide accounting officers of municipalities and municipal

entities with a general understanding of the procedures to be followed when implementing demand management (DM) and the compilation of procurement plans.

2. OBJECTIVE 2.1 The objective of this guide is to assist municipalities and municipal entities

(hereinafter referred to as “the institution”) with the planning for the procurement of goods, works or services in a pro-active manner and to move away from merely reacting to purchasing requests.

3. INTRODCUTION 3.1 Supply Chain Management (SCM) could be described as a business process

that ensures that goods, works or services are delivered to the right place, in the right quantity, with the right quality, at the right cost and at the right time.

3.2 Demand Management is the first element of the SCM function. The objective is to ensure that the resources required to fulfil the needs identified in the Integrated Development Plan (IDP) of the institution are delivered at the right time, price and place and that the quantity and quality will satisfy those needs of the user (ultimately the provision of services to the community). As part of this element of SCM, a total needs analysis must be undertaken. This analysis must be included as part of the strategic planning process of the institution and will, therefore, incorporate future needs.

3.3 It is vital for managers to understand and utilize sound good practice techniques to assist them in their planning, implementation and control activities. As part of the strategic plan of the institution, resources required for the fulfilment of its obligations should be clearly analysed. This entails a detailed analysis of the goods, works or services required, including how much can be accomplished, how quickly and with what materials, equipment, resources, etc.


3.4 When implemented correctly, demand management within SCM forms an integral part of a series of activities that will contribute to achieving the measured goals of the institution by ensuring that goods, works or services are delivered as originally envisaged; with a reliable standard of quality and to the satisfaction of end-users. Correct implementation also ensures that, controls exist for management to detect variances early and rectify them in a planned and orderly manner and to foster a culture of compliance, thereby assisting management achieve its goals and satisfy the executive and general public.

4. STEPS TO BE IMPLEMENTED FOR DEMAND MANAGEMENT 4.1 Participation in the strategic planning process 4.1.1 As part of the strategic planning exercise of an institution, the various functions to

be executed must be identified. Pursuant thereto, it is necessary to determine the different resources required to execute the identified functions, i.e. water services, sanitation, refuse removal, electrical, etc. These resources must be budgeted for. It is of vital importance to know, even at this stage, the estimated costs of the required resources, including the estimated costs of the required goods, works or services.

4.1.2 Demand management must be co-ordinated by SCM officials of the institution in

consultation with end-users. This includes a detailed analysis of the goods, works or services required, such as:- the scope of the work to be executed; the time required to complete the project; and the material, resources, equipment required to execute the project. The outcome of this activity should be a detailed planning document that outlines what goods, works or services should be procured, the manner in which they should be procured as well as the timelines to execute the procurement functions.

4.2 Procurement planning 4.2.1 Procurement planning should take place at the beginning of the financial year

when the institution’s IDP, Service Delivery and Budget Implementation Plan (SDBIP) and annual budget have been approved. Procurement plans cannot be developed in isolation; it should instead form part of the institution’s and other functional strategies. The SCM Unit must perform hand-in-hand with user departments / directorates in the formulation of procurement plans.


4.3 Analysis of the goods, works or services required 4.3.1 During the strategic planning phase of the institution, the goods, works or

services or required to execute the identified functions are determined. The SCM Unit should assist the process in ensuring that the identified goods, works or services are the optimum resources required to achieve the goals and objectives of the institution.

4.3.2 The SCM unit of the institution must analyse the goods, works or services required and execute, among others, the following: (a) List the functions to be executed by the institution; (b) Conduct an analysis of the past expenditure as this exercise may, among

others, contribute in determining the manner in which the institution fulfilled its needs in the past; and

(c) Compile as detailed list of the goods, works or services required to execute the functions listed as per sub-paragraph (a) above.

4.4 Planning to obtain the required goods, works or services 4.4.1 Together with the end-user, the SCM Unit should apply strategic sourcing

principles to determine the optimum manner in which to acquire the required goods, works or services. This entails, among others, the following: a) Conducting an industry and market analysis of the goods, works or services

to be obtained. This must include the determination of a reasonable price for the required goods, works or services;

b) Confirmation that sufficient funds have been allocated for the procurement of the required goods, works or services. If this is not so, the end-user must be informed accordingly. The procurement process should not proceed if funds are not available. Documentary proof must be obtained to substantiate availability of budgetary provisions;

c) Considering the optimum method to satisfy the need, for example whether the procurement should be by means of price quotation, advertised competitive bids; limited bids; procuring the goods, works or services from other institutions, or on transversal term contracts nor ad hoc contracts;

d) The frequency of the requirement(s) must be established in order to determine whether it would cost-effective to arrange a specific term contract for the goods, works or service;

e) Establishing whether it would be cost-effective to have the goods available as a store item within the institution. Should this be the case, the minimum and maximum storage levels of these items should be determined and managed; and

f) Establishing the lead time required by the potential suppliers to deliver the required goods, works or services after receipt of an official order.


4.5 Compilation of Procurement Plan 4.5.1 Completion of the above-mentioned activities should result in the compilation of

the procurement plan to be implemented by the SCM Unit. This plan should indicate: - a) a description of the goods, works or service; b) the end-user; c) the contact person representing the end-user; d) estimated value: e) date of submission of specifications; f) date of advertisement of the bid; g) closing date of the advertised bid; h) estimated evaluation time; i) envisaged date of the Bid Adjudication Committee meeting; j) envisaged date of Accounting Officer approval (for all procurement above R

10 million); and k) envisaged date of issuance of an official order, etc.

4.5.2 An example explaining the procedures to be followed to establish the timeframes when dealing with advertised competitive bids is contained herein.

4.6 Compilation of a bid register 4.6.1 The SCM Unit should compile a bid register that will manage the procurement

process for each requirement. This should be used as a tool to monitor and evaluate the procurement process. For all bids in excess of R 200 000, relevant information must be captured in the template reflecting the schedule of the procurement plan in respect of advertised competitive bids.

4.7 Governance, Risk and Compliance Management 4.7.1 The SCM Unit should on a continuous basis monitors and assess the validity and

accuracy of, and compliance to the procurement plan.


EXAMPLE OF THE PROCEDURES TO BE FOLLOWED TO ESTABLISH TIMEFRAMES WHEN DEALING WITH ADVERTISED COMPETITIVE BIDS Requirement The Institution is a municipality, mandated, amongst others, to render water services to residents located in the Eastern Cape Province. The scope of work involves new mixing channels, modifications to the settling tank, new filters, building work and the construction of two sludge ponds. Due to the specialized nature of this infrastructure project, relevant experience and expertise is required in the following areas: -

Construction of Water Treatment Plants

Re-enforced concrete structures

Filter bed construction Background information

This project is funded by the Institution’s own fund amounting to R69 million.

The project is estimated to be completed within 30 weeks after the start date.

The Bid Adjudication Committee (BAC) meetings are scheduled for the third Thursday of every month.

The Bid Evaluation Committee (BEC) meetings are scheduled for every first Thursday of the month.

Reports containing recommendations for awards must be submitted to the secretariat of the BAC six (6) working days prior to the specific BAC meeting.

The closure date for the submission of bids may not be less than 30 days.

The project requires a compulsory 1-day site meeting / briefing session. The following is Sequence of Activities by Accounting Officers of Municipalities and Municipal Entities, reflecting SCM Regulation 10 issued May 2005 in terms of the MFMA, 2004


The results regarding the envisaged dates of advertisement of each bid should thereafter be captured on the Schedule of Procurement Plan in respect of advertised competitive bids (Annexure C) as stipulated.

PROCUREMENT PLAN

Project Name:

Prepared by:

Bid Number:

Date (MM/DD/YYYY):

Project Initiation Phase – This portion of the Procurement Plan document is used to provide the Bid Specification Committee with general information about the need to purchase of goods and services. No approval signatures are required.

1. Procurement Statement Describe, in general terms, what products, works or services are being considered for procurement:

2. Estimated Cost Provide an estimated total cost of all procurements in this project. Example:

R1,567,000

3. Supplier / Service Provider Selection Describe what approach the project team will take to select a product or vendor (e.g. RFI, RFP,).

Project Planning Phase – This portion of the Procurement Plan document provides detailed information about how vendors, products and services will be chosen, what kind(s) of contract(s) will be used, how vendors will be managed and who will be involved at each stage of the process. This document should be approved by appropriate individuals before the actual procurement process begins.

1. Procurement Definition Describe, in specific terms, what items will be procured and under what conditions:

2. Selection Process & Criteria Describe the selection process. List selection criteria. Describe any analytical selection tool that you will use.


3. Project Procurement Team List all stakeholders who are involved in the Procurement Process, along with contact information and a description of their Procurement Role. Enter an [ X ] next to each project team member who is authorized to enter into contract agreements or purchase for the Team (insert rows as needed):

X here

Name: Phone / email: Procurement Role:

[ ]

[ ]

[ ]

[ ]

4. Contract Type Document which types of contract(s) will be used and the actions required to initiate the contract.

5. Conditions of Contract Provide the standards for documentation that will be used for each contract (e.g. General Conditions of Contract, Special Conditions of Contract)

6. Service Provider / Supplier Management Describe what steps the project team will take to ensure that the vendor provides all of the products and/or services (and only the products and/or services) that were agreed upon, and that appropriate levels of quality are maintained.

7. Links to related planning documents Provide hyperlinks to related documents, such as the Change Request Management Plan, Vendor Payment Plan, etc., or attach as addenda.

8. Project Procurement Plan / Signatures Project Name: Project Manager: Bid Number I have reviewed the information contained in this Project Procurement Plan and agree:

Name Role Signature Date (MM/DD/YYYY)


8. Project Procurement Plan / Signatures

The signatures above indicate an understanding of the purpose and content of this document by those signing it. By signing this document, they agree to this as the formal Project Procurement Plan.

SCHEDULE OF PROCUREMENT PLANS IN RESPECT OF ADVERTISED COMPETITIVE BIDS (GOODS, INFRASTRUCTURE PROJECTS OR SERVICES IN EXCESS OF R200 000 INCLUDING ALL APPLICABLE TAXES)

FOR THE …………………………………. FINANCIAL YEAR

Name of Municipality or Municipal Entity

Name of Accounting Officer / Delegated Official

Signature of Accounting Officer / Delegated Official

Telephone Number and email address

Bid Number

Project Name & Brief

Description

Estimated value

(including all

applicable taxes)

Envisaged date of

advertisement in the website, newspapers or

other media

Envisaged closing date

of bid

Envisaged date of award

Responsible department within municipality


ANNEXURE C

SCHEDULE OF PROCUREMENT PLAN IN RESPECT OF ADVERTISED COMPETITIVE BIDS

(GOODS, INFRASTRUCTURE PROJECTS OR SERVICES IN EXCESS OF R200 000 INCLUDING ALL APPLICABLE TAXES) FOR THE …………………………………. FINANCIAL YEAR

Name of Municipality or Municipal Entity

Name of Accounting Officer / Delegated Official

Signature of Accounting Officer / Delegated Official

Telephone Number and e-mail address

Description of goods / services / Infrastructure project

Estimated value (including all applicable taxes)

Envisaged date of advertisement in the website, newspapers or other media

Envisaged closing date of bid

Envisaged date of award

Responsible office

3


ANNEXURE D

DECLARATION OF INTEREST

1. No bid will be accepted from persons in the service of the state¹. 2. Any person, having a kinship with persons in the service of the state, including a

blood relationship, may make an offer or offers in terms of this invitation to bid. In view of possible allegations of favouritism, should the resulting bid, or part thereof, be awarded to persons connected with or related to persons in service of the state, it is required that the bidder or their authorised representative declare their position in relation to the evaluating/adjudicating authority.

3 In order to give effect to the above, the following questionnaire must be

completed and submitted with the bid.

3.1 Full Name of bidder or his or her representative:

3.2 Identity Number: ………………………………………………………………………………….

3.3 Position occupied in the Company (director, trustee, hareholder²):

3.4 Company Registration Number: ……………………………………………………………….

3.5 Tax Reference Number:

3.6 VAT Registration Number:

3.7 The names of all directors / trustees / shareholder’s members, their individual

identity numbers and state employee numbers must be indicated in paragraph 4 below.

3.8 Are you presently in the service of the state? YES / NO

3.8.1 If yes, furnish particulars. ….………………………………………………………………………

…………………………………………………………………………………..

¹MSCM Regulations: “in the service of the state” means to be –

(a) a member of – (i) any municipal council; (ii) any provincial legislature; or (iii) the national Assembly or the national Council of provinces;

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(b) a member of the board of directors of any municipal entity; (c) an official of any municipality or municipal entity; (d) an employee of any national or provincial department, national or provincial public

entity or constitutional institution within the meaning of the Public Finance Management Act, 1999 (Act No.1 of 1999);

(e) a executive member of the accounting authority of any national or provincial public entity; or

(f) An employee of Parliament or a provincial legislature.

² Shareholder” means a person who owns shares in the company and is actively involved in the management of the company or business and exercises control over the company.

3.9 Have you been in the service of the state for the past twelve months?

………YES / NO 3.9.1 If yes, furnish particulars .………………………...………………………………………………………………

…………………………………………………………………………………………

3.10 Do you have any relationship (family, friend, other) with persons In the service of the state and who may be involved with the evaluation and or adjudication of this bid? …………………………………

YES / NO

3.10.1 If yes, furnish particulars. ……………………………………………………………………………… ……………………………………………………………………………… 3.11 Are you, aware of any relationship (family, friend, other) between any other bidder

and any persons in the service of the state who may be involved with the evaluation and or adjudication of this bid? YES / NO

3.11.1 If yes, furnish particulars

………………………………………………………………………………… ………………………………………………………………………………..

3.12 Are any of the company’s directors, trustees, managers, principle shareholders or stakeholders in service of the state? YES / NO

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3.12.1 If yes, furnish particulars. ………………………………………………………………………………. ……………………………………………………………………………….

3.13 Are any spouse, child or parent of the company’s directors? Trustees, managers, principle shareholders or stakeholders

in service of the state? YES / NO

3.13.1 If yes, furnish particulars.

………………………………………………………………………………. …………………………………………………………………………………

3.14 Do you or any of the directors, trustees, managers,

Principle shareholders or stakeholders of this company Have any interest in any other related companies or Business whether or not they are bidding for this contract.

YES / NO

3.14.1 If yes, furnish particulars: …………………………………………………………………………….. …………………………………………………………………………….

4. Full details of directors / trustees / members / shareholders.

Full Name Identity Number State Employee Number

6

………………………………….. ……………………………………..

Signature Date

…………………………………. ……………………………………… Capacity Name of Bidder

7

ANNEXURE E


SCM POLICY

PREFERENTIAL PROCUREMENT POLICY

In terms of Section 5 of the Preferential Procurement Policy Framework Act, No. 5

of 200 and the Preferential Procurement Regulations, 2017

TABLE OF CONTENTS

GENERAL

1. ACRONYMS AND ABBREVIATIONS 2. PURPOSE 3. APPLICABILITY 4. INVITATION TO TENDER / REQUESTS FOR QUOTATION 5. APPLICATION OF PRE-QUALIFICATION CRITERIA 6. TENDERS BASED ON FUNCTIONALITY AS A CRITERION 7. APPLICATION OF PREFERENCE POINT SYSTEMS 8. IDENTIFICATION OF APPLICABLE PREFERENCE POINT SYSTEM 9. BROAD-BASED BLACK ECONOMIC EMPOWERMENT (B-BBEE)

STATUS LEVEL CERTIFICATES 10. VALIDITY OF B-BBEE STATUS LEVEL VERIFICATION CERTIFICATES 11. VERIFICATION OF B-BBEE LEVELS IN RESPECT OF EMES 12. ELIGIBILITY AS QUALIFYING SMALL ENTERPRISES (QSE) 13. LOCAL PRODUCTION AND CONTENT 14. SUB-CONTRACTING AS A CONDITION OF TENDER FOR

PROCUREMENT ABOVER 30 MILLION 15. EVALUATION OF TENDERS BASED ON FUNCTIONALITY AS A

CRITERION 16. EVALUATION OF TENDERS BASED ON A STIPULATED MINIMUM

THRESHOLD FORLOCAL PRODUCTION AND CONTENT

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17. EVALUATION IN TERMS OF PRICE AND PREFERENCE POINT SYSTEMS

18. CRITERIA FOR BREAKING DEADLOCK IN SCORING 19. NEGOTIATING A FAIR MARKET RELATED PRICE 20. CANCELLATION OF TENDERS 21. AWARD OF CONTRACTS TO TENDERER NOT SCORING THE

HIGHEST TOTAL POINTS 22. REMEDIES 23. TAX CLEARANCE 24. BIDDING DOCUMENTS 25. TRANSITIONAL ARRANGEMENTS

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GENERAL 1. ACRONYMS AND ABBREVIATIONS

AO /AA Accounting Officer / Accounting Authority B-BBEEA Broad Based Black Economic Empowerment Act, Act No 53 of 2003 as amended. BVA BEE Verification Agency CIPC Companies and Intellectual Property Commission EMEs Exempted Micro Enterprises IRBA Independent Regulatory Board of Auditors MFMA Municipal Finance Management Act, Act No 56 of 2003 PFMA Public Finance Management Act, Act No. 1 of 1999 (as amended by Act 29 of 1999) PPPFA Preferential Procurement Policy Framework Act, No 5 of 2000 QSE Qualifying Small Enterprise SANAS South African National Accreditation System SARB South African Reserve Bank SARS South African Revenue Services SCM Supply Chain Management *For the purposes of this Policy the term “bid” has the same meaning assigned to the term“tender”. Furthermore, the term “tender”/ “bid’ also includes price quotations, unless specifically excluded.

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2. PURPOSE This Guide is intended to assist Accounting Officers and Accounting Authorities with the implementation of the Preferential Procurement Regulations, 2017 issued in terms of Section 5 of the Preferential Procurement Policy Framework Act, Act Number 5 of 2000 (PPPFA). The Policy should be read and utilized in conjunction with other relevant SCM related prescripts,instructions, circulars and guidelines. 3. APPLICABILITY

3.1 Institutions

3.1.1 The Preferential Procurement Regulations, 2017 are applicable to organs of state as contemplated in section 1 (iii) of the PPPFA and all public entities listed in Schedules 2, 3A, 3B, 3C and 3D to the PFMA, municipalities and municipal entities. 3.1.2 These organs of state and entities referred to in 3.1.1 above are hereafter referred to as institutions in this Policy.

4. INVITATION TO TENDER/ REQUESTS FOR QUOTATION

4.1. PLANNING, STIPULATION OF PREFERENCE POINT SYSTEM TO BE UTILISED AND THE DETERMINATION OF DESIGNATED SECTORS

Prior to the invitation of tenders, AOs/AAs are required to: 4.1.1. Properly plan for the provision of goods and services, to ensure that the procurement plan is aligned to the needs identified in the strategic plan of the institution and that goods and services are delivered at the right time, right price, right place and that the quantity and quality will satisfy those needs.

4.1.2. As far as possible, accurately estimate the costs for the provision of the

required goods or services. This is in order to determine and stipulate the appropriate preference point system to be utilized in the evaluation and adjudication of the tenders and to also ensure that the prices paid for the services, works and goods are market related.

4.1.3. Estimated costs can be determined by conducting an industry and

commodity analysis to obtain indicative market related prices that may be utilized for benchmarking purposes. Based on the findings, the relevant preference point system (80/20 or 90/10) to be utilized for the evaluation of the tender must be stipulated in the tender documents;

4.1.4. Determine whether the sector, sub-sector, industry or products for which an invitation is to be made have been designated for local production and

content in terms of Regulation 8 of the Preferential Procurement Regulations. If designated, institutions must include a specific condition in the tender documents that

11

only locally produced goods or locally manufactured goods with a stipulated minimumt hreshold for local production and content will be considered. This will subsequently have a direct impact on the evaluation of the tender.

4.1.5. Must identify procurement opportunities where pre-qualification criteria as

provided for in Regulation 4 must be applied by following the process specified in paragraph 5 below.

4.1.6. Must identify procurement opportunities where subcontracting as condition of tender for procurement above R 30 million must be applied by following the process specified in paragraph 14 below.

5. APPLICATION OF PRE-QUALIFICATION CRITERIA (Regulation 4)

5.1. Institutions must at procurement and tender planning stage identify procurement opportunities to advance designated groups and apply the

pre-qualification criteria stipulated in Regulation 4 for this purpose. 5.2. Institutions must conduct market research or industry analysis to identify procurement opportunities, level of transformation in a particular sector or commodity, supply market, their B-BBEE status level and availability of EMEs or QSEs who may be eligible to tender. 5.3. The market research and Industry analysis must identify sectors and

industries that are not transformed where pre-qualification provisions could be applied to transform such sectors and industries for the benefit and advancement of designated groups.

5.4. Prequalification must be used in identified tenders to advance designated

groups on the basis of B-BBEE Status Level of contributor, EME or QSE or on the basis of subcontracting with EMEs or QSEs which are 51% owned by either of the following:

Blacks; Black Youth; Black Women; Black people with disabilities; Black people living in rural or underdeveloped areas or townships; cooperatives owned by Black people;

Black people who are Military Veterans.

5.5. Where procurement opportunities for designated groups have been identified, tenders must be advertised with a clear tendering condition that tenderers will be prequalified on the basis of one or more of the criteria mentioned in paragraph 4.4.above.

5.6. Tenderers that do not meet the pre-qualification criteria stipulated in the tender document should be disqualified from further evaluation.

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5.7. Tenderers who meet the prequalification criteria are evaluated further in terms of any evaluation criteria stipulated in the tender including any technical specification, functionality and preference point system in terms of regulation 6 and 7 of the Preferential Procurement Regulations 2017.

5.8. Where a tender is advertised with a specific condition that only locally produced services or goods or locally manufactured goods may be procured, such tender must first be evaluated in terms of pre-qualification criteria, the local content and production requirements for that tender before being evaluated further in terms of other specified criteria. 5.9. Tenderers must, where subcontracting is a prequalification requirement, submit proof of subcontracting arrangement between the main tenderer and the subcontractor. Proof of subcontracting arrangement may include a subcontracting agreement between main tenderer and subcontractor.

5.10. Where no tenderer meets prequalification criteria, the institution must cancel the tender; and must investigate the reasons for tenderers failing to meet prequalification criteria. 5.11. Where an Institution elects to use prequalification criteria for preferential

procurement to advance or protect categories of enterprises as a condition of tender or price quotations,the following procedure must be followed:

5.11.1. An industry and commodity analysis to determine availability of the category of enterprises that the organ of state seeks to advance and level

of transformation in the sector, sector charter and codes may be considered.

5.11.2. Verify the number of enterprises in the sector to determine if there will be sufficient competition.

5.11.3. Determine which category of enterprises will be advanced in terms of Regulation 4.

5.11.4. When an organ of state decides to apply the sub-contracting provision as

specified in Regulation 4(c) all tenders above the prescribed maximum threshold for quotations must be advertised through an open competitive bidding process subject to potential tenderers meeting the 30% minimum subcontracting requirement to EMEs or QSEs that are 51% owned by the following enterprises:

(i) Black people (ii) Black people who are youth (iii) Black people who are women (iv) Black people with disabilities (v) Black people living in rural or underdeveloped areas or townships (vi) Cooperatives which are 51% owned by Black people (vii) Black people who are military veterans

5.12. Any combination of designated groups stipulated in Regulation 4 (c) may be applied in a tender or request for quotation.

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5.13. Where an organ of state elects to apply subcontracting as a

prequalification, tenders or requests for quotation must be advertised with a clear condition that potential tenderers would be prequalified based on meeting subcontracting condition of tender or request for quotation.

A tender must be advertised with a clear condition for prequalification.

5.14. Conditions of tender must clearly specify that it is the responsibility of the tenderer to select competent subcontractors that meet all requirements of the tender so that their tender is not jeopardized by the subcontractor when evaluated. Tenderers are responsible for all due diligence on their subcontractors. 5.15. Tenders or requests for quotation must be evaluated in terms of the evaluation criteria stipulated in the tender or request for quotation documentation:

(a) Prequalification criteria (b) Evaluation for mandatory criteria (c) Evaluation in terms of local production and content if part of the tender (d) Evaluation for Prequalification criteria (e) Evaluation in terms of Functionality if part of the tender (f) Evaluation in terms of 80/20 or 90/10 preference point system.

5.16. Note that all tender evaluations must form part of the report of the Bid Evaluation Committee to Bid Adjudication Committee and Accounting Officer/ Accounting Authority. (Whichever is applicable)

5.17. Institutions may not subcontract in such a way that there is no incentive for contractors and subcontractors to conduct business. 6. TENDERS BASED ON FUNCTIONALITY AS A CRITERION

6.1. Not all tenders should necessarily be invited on the basis of functionality as a criterion.

The need to invite tenders on the basis of functionality as a criterion depends on the nature of specific commodity or service taking into account quality, reliability, viability and durability of a service and the tenderer’s technical capacity and capability to execute a contract.

6.2. When an institution invites a tender or request for quotation that will also be evaluated on functionality as a criterion, the AO/ AA must clearly specify the following aspects in the tender documents:

Evaluation criteria for measuring functionality

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6.3. The evaluation criteria may include criteria such as the consultant’s relevant experience for the assignment, the quality of methodology; the qualifications of key personnel; transfer of knowledge etc. Points for each criterion 6.4. The points allocated to each criterion should not be generic but should be determined Separately for each tender on a case by case basis.

Points for each sub-criterion 6.5. The applicable points that will be utilized when scoring each sub-criterion should be objective.

Minimum qualifying score for functionality 6.6. The minimum qualifying score that must be obtained for functionality in

order for a tender to be considered further should not be generic. It should be determined separately for each tender on a case by case basis. The minimum qualifying score must not be prescribed so low that it may jeopardize the quality of the service required nor so high that it may be restrictive to the extent that it jeopardizes the fairness of the SCM system.

7. APPLICATION OF PREFERENCE POINT SYSTEMS¹

7.1. The 80/20 preference point system is applicable to price quotations and

tenders with a rand value equal to, or above R30 000 and up to a Rand value of R50 million (all applicable taxes included).

Institutions may apply the 80/20 preference point system to price quotations with a value less than R30 000 if and when appropriate.

7.2. The 90/10 preference point system is applicable to bids with a Rand value

above R50 million(all applicable taxes included).

7.3. The threshold value referred to in paragraphs 6.1 and 6.2 distinguishing the 80/20 and 90/10 preference point systems has been increased in the Preferential Procurement Regulations, 2017 from maximum R1 million to R50 million.

8. IDENTIFICATION OF APPLICABLE PREFERENCE POINT SYSTEM (Regulation 3)

8.1. In terms of Regulation 3 Institutions must stipulate the preference point

system applicable to a tender or price quotation. There are, however, instances where it is uncertain to determine the preference point system applicable during preparation of invitation of a tender.

8.2. If there is uncertainty on the preference point system to be applied,

institutions must advertise the tender indicating that the tender will be

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evaluated on either the 80/20 or 90/10 preference point system. Once a tender is received, the lowest acceptable tender must be used to determine the preference point system to be used for the evaluation of tenders.

8.3. Where the lowest acceptable tender is below R50 million, the 80/20

preference pointsystem must be used.

8.4. If the lowest acceptable tender is above R50 million, the 90/10 preference point system must be used.

8.5. If pre-qualification criteria are applicable to the tender or price quotation as

envisaged in regulation 4; the institution must state this clearly in the invitation totender.

1 The thresholds for preferential procurement do not affect the threshold values for procurement issued in terms of Instruction Note 7 of 2007/2008 or threshold values for procurement in terms of MFMA Supply Chain Management prescripts or threshold values for procurement issued by accounting authorities of schedule 2, 3B and 3D public entities. 8.6. Institutions must state clearly in the tender documents:-

8.6.1. If goods or services for which a tender is to be invited, are in a designated

sector for local production and content as envisaged in regulation 8;

8.6.2. If compulsory subcontracting is applicable to the tender as envisaged in regulation 9; and .6.3. If objective criteria are applicable to the tender as envisaged in regulation 11.

8.7. It must be pointed out that the prescribed threshold values within which

AOs /Aas may procure services, or goods by means of petty cash, verbal / written price quotations or advertised competitive bids are not affected by the Preferential Procurement Regulations, 2017.

9. BROAD-BASED BLACK ECONOMIC EMPOWERMENT (B-BBEE)

STATUS LEVEL CERTIFICATES

9.1. Tenderers2 are required to submit proof of B-BBEE Status Level of contributor. Proof includes original and valid B-BBEE Status Level Verification Certificates or certified copies thereof togethe with their tenders or price quotations, to substantiate their B-BBEE rating claims.

9.2. Tenderers who do not submit B-BBEE Status Level Verification Certificates

or who are non-compliant contributors to B-BBEE do not qualify for preference points for B-BBEE but should not be disqualified from the tendering process. They will score points out of 90 or 80 for price only and zero (0) points out of 10 or 20 for B-BBEE.

9.3. However, should institutions stipulate a specific B-BBEE Status Level as

prequalification criteria in terms of Regulation 4 and the tenderer does not

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meet this requirement; institutions must disqualify such tenderer as having submitted an unacceptable tender.

9.4. A trust, consortium or joint venture (including unincorporated consortia and

joint ventures) must submit a consolidated B-BBEE Status Level Verification Certificatefor every separate tender.

9.5. Public entities and tertiary institutions must also submit B-BBEE Status

Level Verification Certificates together with their tenders.

9.6. If an institution is already in possession of a valid and original or certified copy of a tenderer’s B-BBEE Status Level Verification Certificate that was obtained for the purpose of establishing the database of possible suppliers for price quotations or that was submitted together with another tender, it is not necessary to obtain a new B-BBEE Status Level Verification Certificate each time a tender is submitted from the specific tenderer.

2With the exception of EMEs and QSEs who are required to submit sworn affidavit in terms of Codes of good practice. Institutions must acquaint themselves with proof of B-BBEE as may be issued by the DTI from time to time

9.7. Such a certificate may be used to substantiate B-BBEE rating claims provided that the closing date of the tender falls within the expiry date of the certificate that is in the institution’s possession.

9.8. Each time this provision is applied, cross-reference must be made to the

B-BBEE Status Level Verification Certificate already in possession for audit purposes.

9.9. AOs / AAs must ensure that the B-BBEE Status Level Verification

Certificates submitted are issued by the following agencies3:

9.9.1. Tenderers other than EMEs (i) Verification agencies accredited by SANAS; or

9.9.2. Tenderers who qualify as EMEs (i) Sworn affidavit signed by the EME representative and attested by a

Commissioner of oaths.

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10. VALIDITY OF B-BBEE STATUS LEVEL VERIFICATION CERTIFICATES 10.1 Verification agencies accredited by SANAS 10.1.1. These certificates are identifiable by a SANAS logo and a unique BVA

number.

10.1.2. Confirmation of the validity of a B-BBEE Status Level Verification Certificate can be done by tracing the name of the issuing Verification Agency to the list of all SANAS accredited agencies. The list is accessible on http://www.sanas.co.za/directory/bbee_default.php 10.1.3. The relevant BVA may be contacted to confirm whether such a certificate is valid. 10.1.4. As a minimum requirement, all valid B-BBEE Status Level Verification Certificates should have the following information detailed on the face of the certificate:

al location of the measured entity;

entity;

(for example QSE, Specialized or Generic);

and -BBEE Status Level of Contribution obtained by the measured entity.

Certificates issued by IRBA and Accounting Officers have been discontinued; however valid certificates already issued before 1 January 2017 may be used until they phase out completely by December 2017. 11. VERIFICATION OF B-BBEE LEVELS IN RESPECT OF EMEs 11.1. In terms of the Generic Codes of Good Practice, an enterprise including a sole propriety with annual total revenue of R10 million or less qualifies as an EME. 11.2. In instances where Sector Charters are developed to address the transformation challenges of specific sectors or industries, the threshold for qualification as an EME may be different from the generic threshold of R10 million. In such instances, the relevant Sector Charter thresholds will therefore be used as a basis for a potential bidder to qualify as an EME. (For example the approved thresholds for EMEs for the Tourism and Construction Sector Charters are R2.5 million and R1.5 million respectively). 11.3. An EME automatically qualifies as a level 4 contributor with B-BBEE recognition level of 100% in terms of the Codes of Good Practice. 11.4. An EME with at least 51% black ownership qualifies as Level 2 Contributor with B-BBEE level of 125% in terms of the Codes of Good Practice.

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11.5. An EME with 100% black ownership qualifies as a Level 1 contributor with B-BBEE level of 135% in terms of the Codes of Good Practice. 11.6. An EME that is regarded as a specialized enterprise with at least 75% black beneficiaries qualifies as Level 1 contributor with B-BBEE level of 135% in terms of Codes of Good Practice. 11.7. An EME that is regarded as a specialized enterprise with at least 51% black beneficiaries qualifies as a Level 2 contributor with B-BBEE level of 125% in terms of the Codes of Good Practice. 11.8. An EME is required to submit a sworn affidavit confirming their annual total revenue of R10 million or less and level of black ownership to claim points as prescribed by regulation 6 and 7 of the Preferential Procurement Regulations 2017. 11.9. An EME that is regarded as a Specialized Enterprise is required to submit a sworn affidavit confirming their annual turnover/ allocated budget/ gross receipt of R10 million or less and level of percentage of black beneficiaries to claim points as prescribed by regulation 6 and 7 of the Preferential Procurement Regulations 2017. 11.10. An EME may be measured in terms of the QSE scorecard should they wish to maximize their points and move to a higher B-BBEE recognition level. It is in this context that an EME may submit a B-BBEE verification certificate. 12. ELIGIBILITY AS QUALIFYING SMALL ENTERPRISES (QSE) 12.1. The Codes define a QSE as any enterprise with annual total revenue of between R10 million and R50 million. 12.2. A QSE with at least 51% black ownership qualifies as a Level 2 contributor. 12.3. A QSE with 100% black ownership qualifies as a Level 1 Contributor. 12.4. A QSE that is regarded as a specialized enterprise with at least 75% black beneficiaries qualifies as a Level 1 contributor with B-BBEE level of 135% in terms of the Codes of Good Practice. 12.5. A QSE that is regarded as a specialized enterprise with at least 51% black beneficiaries qualifies as a Level 2 contributor with B-BBEE level of 125% in terms of the Codes of Good Practice. 12.6. A QSE is required to submit a sworn affidavit confirming their annual total revenue of between R10 million and R50 million and level of black ownership or a B-BBEE level verification certificate to claim points as prescribed by regulation 6 and 7 of the Preferential Procurement Regulations 2017. 12.7. A QSE that is regarded as a specialized enterprise is required to submit a sworn affidavit confirming their annual turnover/ budget/ gross receipt of R50 million or less and level of percentage of black beneficiaries or a B-BBEE level verification certificate to claim points as prescribed by regulation 6 and 7 of the Preferential Procurement Regulations 2017.

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12.8. Any enquiries in respect of B-BBEE Status Level Verification Certificates may be directed to the Department of Trade and Industry (dti) as follows: Ms Lumka Kemele Trade and Industry Advisor B-BBEE Unit Department of Trade and Industry Tel: (012) 394 5469 Fax: (012) 394 6469 E-mail: [email protected] 13. LOCAL PRODUCTION AND CONTENT 13.1. Designated Sectors 13.1.1. Tenders in respect of goods or services that have been designated for local production and content, must contain a specific bidding condition that only locally produced goods or services with a stipulated minimum threshold for local production and content will be considered. 13.1.2. AOs / AAs must stipulate in tender invitations that the exchange rate to be used for the calculation of local content (local content and local production are used interchangeably) must be the exchange rate published by the SARB at 12:00 on the date, one week (7 calendar days) prior to the closing date of the bid. 13.1.3. Only the South African Bureau of Standards (SABS) approved technical specification number SATS 1286:201x must be used to calculate local content. The formula to calculate local content must be disclosed in the bid documentation 13.1.4. The local content (LC) as a percentage of the bid price must be calculated in accordance with the SABS approved technical specification number SATS 1286: 201x as follows:

LC = 1 x 100 Where x imported content y bid price excluding value added tax (VAT) Prices referred to in the determination of x must be converted to Rand (ZAR) by using the exchange rate published by the SARB at 12:00 on the date, one week (7 calendar days) prior to the closing date of the tender. 13.1.5. For the purpose of paragraphs 13.1.1, 13.1.2 and 13.1.3 above, the SBD / MBD 6.2 (Declaration Certificate for Local Content) must form part of the bid documentation. 13.1.6. The Declaration Certificate for Local Content (SBD / MBD 6.2) must be completed and duly signed. AOs / AAs are required to verify the accuracy of the rates of exchange quoted by the bidder in paragraph 13.1.2 of this implementation guide. 13.1.7. In relation to a designated sector, a contractor must not be allowed to sub-contract in such a manner that the local production and content of the overall value of the contract is reduced to below the stipulated minimum threshold.

mailto:[email protected]

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13.2. Non-Designated Sectors 13.2.1. Where there is no designated sector, institutions may decide to include a specific bidding condition that only locally produced goods or services with a stipulated minimum threshold for local production and content, will be considered, on condition that such prescript and threshold(s) are in accordance with the specific standards determined by the dti in consultation with the National Treasury. 13.2.2. Institutions must stipulate in bid invitations that the exchange rate to be used for the calculation of local content must be the exchange rate published by the SARB at 12:00 on the date, one week (7 calendar days) prior to the date of closure of the bid. 13.2.3. Only the South African Bureau of Standards approved technical specification number SATS 1286:201x as indicated in paragraph 13.1.3 above must be used to calculate local content. 13.2.4. For the purpose of paragraphs 13.2.1, 13.2.2 and 13.2.3 above, the SBD / MBD 6.2 (Declaration Certificate for Local Content) must form part of the bid documentation. 13.2.5. The Declaration Certificate for Local Content (SBD / MBD 6.2) must be completed and duly signed. Institutions are required to verify the accuracy of the rate(s) of exchange quoted by the bidder in paragraph 13.2.2 of this implementation guide. 13.2.6. Any enquiries in respect of Local Production and Content must be directed to the Department of Trade and Industry (dti) as follows: Dr. Tebogo Makube Chief Director: Industrial Procurement Tel: (012) 394 3927 Fax: (012) 394 4927 E-mail: [email protected] 14. SUBCONTRACTING AS A CONDITION OF TENDER FOR PROCUREMENT ABOVE R 30 MILLION (Regulation 9) 14.1. “The regulation states that if feasible to contract above R 30 million, an organ of state must apply subcontracting to advance designated groups”. 14.2. The term “feasible” is used in recognition of the fact that it may not always be possible to subcontract in all tenders due to the nature of some tenders. (For instance it may not be possible to sub-contract one piece of machinery that is above R 30 million) 14.3. Institutions must therefore identify procurement opportunities for designated groups where compulsory sub-contracting must be applied to all contracts/ projects above R30 million. 14.4. The responsibility to determine whether it is feasible or not rests with the institution preparing the tender. Institutions must ensure participation of EMEs and QSEs in contracts or projects and not just dismiss this provision on the basis that it is not feasible without providing facts and objective analysis to substantiate their decision.

mailto:[email protected]

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14.5. Notwithstanding the minimum 30% compulsory sub-contracting provision, institutions may identify procurement opportunities for participation of designated groups in contracts or projects below R30 million. 14.6. Tenders must be advertised with a condition that tenderers who fail to comply with this requirement would be disqualified. 14.7. Institutions must conduct market or industry research to identify level of transformation in the sector or commodity, role players and their B-BBEE status level and availability of EMEs or QSEs who may be eligible for subcontracting. 14.8. The Central Supplier Database (CSD) has been upgraded to allow bidders/ contractors/ suppliers access to CSD for identification of potential sub-contractors from the pool of EMEs or QSEs to advance designated groups. 14.9. In the case of construction and built environment sectors, nothing prevents bidders/ contractors/ suppliers to select sub-contractors from the CIDB database who are registered on the CSD for the purposes of compliance with the minimum 30% compulsory sub-contracting provisions. 14.10. Tenderers or contractors must submit proof of subcontracting arrangement between the main tenderer and the subcontractor. Proof of subcontracting arrangement may include a subcontracting agreement between main tenderer and the subcontractor. 14.11. The responsibility for inclusion of compulsory subcontracting clause in the tender rests with the institution. 14.12. The responsibility to sub-contract with competent and capable subcontractors rests with the main contractor/ supplier. 14.13. The contract will be concluded between the main contractor and the institution, therefore, the main contractor and not the sub-contractor would be held liable for performance in terms of its contractual obligations. 14.14. Main contractors/ suppliers are discouraged from subcontracting with their subsidiary companies as this may be interpreted as subcontracting with themselves and / or using their subsidiaries for fronting. Where primary contractor subcontracts with a subsidiary this must be declared in tender documents. 14.15. Tenders that do not meet subcontracting requirements are considered as being not acceptable tenders and must be disqualified and may not be considered for further evaluation or award. 14.16. The report containing the list of potential subcontractors may be drawn by accessing the following link: www.csd.gov.za 14.17. The Central Supplier Database (CSD) was enhanced to enable Institutions to search for suppliers based on the criteria as per Preferential Procurement Regulations, 2017. The following steps can be followed: 14.17.1.1. Step 1: Complete the basic search elements. The Institution’s CSD user will be required to complete basic search elements like supplier, commodity and B-BBEE

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status level. Once the institution’s CSD user clicks on the Search button, the matching records for the search input provided will be displayed. The multiple matching records resulting from the search will enable the additional filters and Preferential Procurement Regulations, 2017 filters options to further refine the search. 14.17.1.2. Step 2: Refine the search using additional filters. The additional filters will enable the Institution’s CSD user to refine commodities and locations, if required. Once commodities and/or locations are selected from the filter results, the institution’s CSD user may click on the “Apply” button. Results will be refined based on the additional criteria that were applied. 14.17.1.3. Step 3: Refine the search using Preferential Procurement Regulations 2017 filters. The filters will enable the institution’s CSD user to refine the search for potential suppliers based on: a) B-BBEE status level of contributor; or b) Enterprise type (Exempted Micro Enterprise (EME) and/or Qualifying Small Enterprise (QSE)); and/or c) Designated groups which are at least 51% owned by: (i) black people (ii) black people who are youth (iii) black people who are women (iv) black people with disabilities (v) black people who are military veterans (vi) black people that formed a cooperative (primary, secondary or tertiary cooperative) (vii) black people living in rural areas or underdeveloped area or townships. (viii) EME or QSE 14.18. The Institution must make available the list of suppliers registered on the CSD to provide the required goods or services in respect of the applicable designated groups mentioned in the relevant tender from which the tenderer must select a supplier. 14.19. Practitioners are encouraged to frequently visit the CSD website to familiarize themselves with developments on the steps mentioned in paragraph 14.17.1.1 to 14.17.1.3. as more information on developments around this provision will be shared through the CSD. 14.20. Where no tenderer meets sub-contracting criteria, institutions must cancel the tender and investigate reasons for tenderers failing to meet compulsory sub-contracting. 14.21. In the event of uncertainty with regard to information provided by the tenderer and the CSD is unable to verify such information at that stage, the institution may request necessary proof to substantiate the information provided.

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EVALUATION OF TENDERS 15. EVALUATION OF TENDERS BASED ON FUNCTIONALITY AS A CRITERION Tenders invited on the basis of functionality as a criterion must be evaluated in two stages – first functionality must be assessed and then in accordance with the 80/20 or 90/10 preference point systems prescribed in Preferential Procurement Regulations 6 and 7. The evaluation must be done according to Procurement Regulations 2017 as follows: 15.1. First stage – Evaluation of functionality 15.1.1. Tenders must be evaluated in terms of the provisions contained in paragraph 5 of this implementation guide. 15.1.2. A tender will be considered further if it achieves the prescribed minimum qualifying score for functionality. 15.1.3. If the minimum qualifying score for functionality is indicated as a percentage in the bid documents, the percentage scored for functionality may be calculated as follows: a) The scores for each criterion (and, where relevant, each sub-criterion) should be added to obtain the total score; and b) The following formula should be used to convert the total score converted to a percentage for functionality: Ps

So

X 100

Ms where: Ps = percentage scored for functionality by bid under consideration So = total score of bid under consideration Ms = maximum possible score 15.1.4. The percentage of each panel member should be added and divided by the number of panel members to establish the average percentage obtained by each bidder for functionality. 15.2. Second stage – Evaluation in terms of the 80/20 or 90/10 preference point systems 15.2.1. Only bids that achieve the minimum qualifying score / percentage for functionality must be evaluated further in accordance with the 80/20 or 90/10 preference point systems prescribed in Preferential Procurement Regulations 6 and 7. [Guidance on the evaluation of bids in terms of the 80/20 or 90/10 preference points systems is provided in paragraph 17 of this Policy].

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16. EVALUATION OF TENDERS BASED ON A STIPULATED MINIMUM THRESHOLD FOR LOCAL PRODUCTION AND CONTENT Bids that were invited on the basis of local production and content should be evaluated by following a two-stage bidding process: 16.1. First stage – Evaluation in terms of the stipulated minimum threshold for local production and content 16.1.1. Tenders must be evaluated in terms of the evaluation criteria stipulated in the bid documents. The amendment of the stipulated minimum threshold for local production and content after the closure of bids is not allowed as this may compromise the fairness of the process. 16.1.2. A tender will be disqualified if: The tender fails to achieve the stipulated minimum threshold for local production and content; and the Declaration Certificate for Local Content (SBD / MBD 6.2) referred to in paragraphs 13.1.6 and 13.2.5 is not submitted as part of the bid documentation. 16.1.3. Calculation of Local Content: 16.1.3.1. The local content (LC) as a percentage of the bid price must be calculated in accordance with the SABS approved technical specification number SATS 1286: 201x as indicated in paragraph 13.1.4 above. 16.1.4. AOs / AAs must verify the accuracy of the rates of exchange quoted by the tenderer in the Declaration Certificate for Local Content (SBD / MBD 6.2) in terms of paragraph 13.1.6. 16.2. Second stage - Evaluation in terms of the 80/20 or 90/10 preference point systems 16.2.1. Only bids that achieve the minimum stipulated threshold for local production and content must be evaluated further in accordance with the 80/20 or 90/10 preference point systems prescribed in Preferential Procurement Regulations 6 and 7. [Guidance on the evaluation of bids in terms of the 80/20 or 90/10 preference points systems is provided in paragraph 15 of this Guide]. 17. EVALUATION IN TERMS OF PRICE AND PREFERENCE POINT SYSTEMS 17.1. Step 1: Calculation of points for price 17.1.1. The PPPFA prescribes that the lowest acceptable bid will score 80 or 90 points for price. Bidders that quoted higher prices will score lower points for price on a pro-rata basis. 17.1.2. When calculating prices: 17.1.2.1. Unconditional discounts must be taken into account for evaluation purposes; and 17.1.2.2. Conditional discounts must not be taken into account for evaluation purposes but should be implemented when payment is affected. 17.1.3. The formulae to be utilized in calculating points scored for price are as follows:

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80/20 Preference point system [(for acquisition of goods or services for a Rand value equal to or above R30 000 and up to R50 million) (all applicable taxes included)]

Where Ps = Points scored for price of tender under consideration Pt = Price of tender under consideration Pmin = Price of lowest acceptable tender. 90/10 Preference point system [(for acquisition of goods or services with a Rand value above R50 million) (all applicable taxes included)]

Where Ps = Points scored for price of tender under consideration Pt = Price of tender under consideration Pmin = Price of lowest acceptable tender. 17.1.4. Points scored must be rounded off to the nearest 2 decimal places. 17.2. Step 2: Calculation of points for B-BBEE status level of contributor 17.2.1. Points must be awarded to a bidder for attaining the B-BBEE status level Points for B-BBEE Status level of contributor must be awarded in accordance with the table below:

B-BBEE STATUS LEVEL OF CONTRIBUTOR

NUMBER OF POINTS (90/10 SYSTEM)


1 10 20

2 9 18

3 6 14

4 5 12

5 4 8

6 3 6

7 2 4

8 1 2

Non-compliant 0 0

17.3. Calculation of total points scored for price and B-BBEE status level of contributor The points scored for price must be added to the points scored for B-BBEE status level of contrbutor to abtain the bidder’s total points scored out of 100.

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18. CRITERIA FOR BREAKING DEADLOCK IN SCORING 18.1. In the event that two or more tenderers have scored equal total points, the successful tenderer must be the one that scored the highest points for B-BBEE. 18.2. If two or more tenderers have equal points, including equal preference points for B-BBEE, the successful tenderer must be the one scoring the highest score for functionality, if functionality is part of the evaluation process. 18.3. In the event that two or more tenderers are equal in all respects, the award must be decided by the drawing of lots. 19. NEGOTIATING A FAIR MARKET RELATED PRICE 19.1. Institutions may include in their SCM policies a process for negotiating with preferred bidders after a competitive bidding process or price quotations. The policy may include amongst others the following principles: (a) Delegations and threshold values for negotiating by the accounting officer (b) Negotiating may not allow any preferred tenderer a second or unfair opportunity (c) Is not to the detriment of any other tenderer (d) Does not lead to higher price than the bid as submitted. 19.2. Institutions must include in the tender documents a condition stating clearly that the award of the tender may be subjected to price negotiation with the preferred tenderers. 19.3. The Bid Evaluation Committee may indicate in its report to the Bid Adjudication Committee that based on the evaluation the prices offered are above market related prices after factoring the premium to be paid in terms of the 80/20 or 90/10 preference point system and the findings of an objective market analysis conducted. 19.4. When the Bid Adjudication Committee considers the Evaluation report it must express itself on whether it agrees or disagrees with the Bid Evaluation Committee; if it disagrees, the decision must be recorded and reasons provided as part of the Bid Adjudication Committee report. 19.5. Where the Bid Adjudication Committee agrees with the BEC or on its own assessment is of the view that the tenderer is charging prices higher than the fair market price, the Bid Adjudication Committee may request from the AO/AA or delegated authority to subject the tender to price negotiations with the three preferred tenderers scoring the highest points (from first highest to third highest) before award is made. 19.6. Upon approval to negotiate, the AO/AA or delegated authority must appoint a cross functional negotiation team, with one member appointed to be team leader. 19.7. The negotiating team leader must ensure that all members of the negotiating team are clear on the negotiation strategy and desired outcomes. 19.8. Negotiations must be fair and objective and may not be used to unfairly prejudice the highest scoring / preferred tenderer or any other tenderer.

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19.9. Members of the negotiating team must behave ethically at all material times during and after negotiations, may not divulge any information related to negotiations to third parties without prior consent from the accounting officer/ authority. 19.10. All negotiations must be officially closed with a decision communicated and agreed between parties before moving to negotiate with the next preferred tenderer. 20. CANCELLATION OF TENDERS 20.1. An AO / AA may, prior to the award of a tender, cancel the tender if: 20.1.1. Due to changed circumstances, there is no longer a need for the goods or services requested. [AOs / AAs must ensure that only goods or services that are required to fulfill the needs of the institution are procured]; or 20.1.2. Funds are no longer available to cover the total envisaged expenditure. [AOs / AAs must ensure that the budgetary provisions exist]; or 20.1.3. No acceptable tenders are received. [If all bids received are rejected, the institution must review the reasons justifying the rejection and consider making revisions to the specific conditions of contract, design and specifications, scope of the contract, or a combination of these, before inviting new bids]. 20.1.4. Due to material irregularities in the tender process. If there are material irregularities that are committed during the tender process such that it renders the entire process unfair, the accounting officer or accounting authority may cancel the tender process and start afresh. 20.1.5. Institutions may only with the prior approval of the relevant treasury cancel the tender for the second time. An organ of state must make representation to the relevant treasury stating reasons for cancellation for the second time. 20.1.6. Cancellation mentioned in paragraph 20.1.5 does not refer to price quotations in terms of threshold for procurement but tenders that have been advertised for open competitive tendering process. 21. AWARD OF CONTRACTS TO TENDERER NOT SCORING THE HIGHEST TOTAL POINTS 21.1. A tender must be awarded to the tenderer who scored the highest total number of points in terms of the preference point systems (price and B-BBEE points), unless objective criteria in terms of section 2(1)(f) of the Act justify the award of the tender to another tenderer. 21.2. If an institution intends to apply objective criteria in terms of section 2(1)(f) of the Act, the institution must state what those objective criteria are in the tender documents. 21.3. Functionality and any element of the B-BBEE scorecard may not be used as objective criteria.

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22. REMEDIES 22.1. AOs / AAs must when acting against the tenderer or person awarded the contract on a fraudulent basis, consider the following over and above the provisions of Regulation 14: 22.1.1. Report the tenderer to the B-BBEE Commission 22.1.2. Forward the matter for criminal prosecution. 22.1.3. Involve their legal services when any of the remedies are applied. 22.2. The remedies provided for in Preferential Procurement Regulations 2017 do not prevent an institution from instituting remedies arising from any other prescripts or contract. 22.3. Institutions will recommend the restriction of suppliers to the National Treasury, who after considering representation from all parties may impose a restriction or penalty and publish on its official website the list of restricted suppliers. 23. TAX CLEARANCE No tender may be awarded to any tenderer whose tax matters have not been declared by the SARS to be in order. 24. BIDDING DOCUMENTS 24.1. The Bidding Documents affected by the Preferential Procurement Regulations, 2017 are: a) SBD 6.1 and MBD 6.1. b) SBD 6.2.and MBD 6.2. 24.2. AOs / AAs should customize and utilize the bidding documents (SBDs or MBDs) by incorporating the institutions name, logo and contact details. 24.3. The relevant SBDs or MBDs must be utilized for procurement by means of written price quotations, advertised competitive bids or proposals. 24.4. Although these SBDs or MBDs have not been formally issued to Public Entities listed in Schedules 2, 3B and 3D to the PFMA, nothing prohibits these institutions from customizing and utilizing these bidding documents as well. 24.5. The bidding documents can be accessed on OCPO website as follows: http://ocpo.treasury.gov.za/Buyers_Area/Pages/Standard-Bidding-Forms.aspx 25. TRANSITIONAL ARRANGEMENTS 25.1. If a tender was advertised / invited in terms of the evaluation criteria prescribed in the Preferential Procurement Regulations, 2011 (prior to the date of coming into effect of the Preferential Procurement Regulations, 2017) but will only be evaluated and awarded after the date of coming into effect of the Preferential Procurement Regulations, 2017, the tender must be evaluated and awarded in terms of the evaluation criteria prescribed in the Preferential Procurement Regulations, 2011 and in terms of the conditions contained in the bid documents.

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25.2. Such a tender must be evaluated and awarded as soon as possible but not later than the initial expiry of the validity period of the tender. The extension of the validity period of such a bid must not be allowed. 26. SHORT TITLE This part of the SCM Policy is called the Preferentail Procurement Policy of the West Coast District Municipality (Annexure E)

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ANNEXURE F

GIFT POLICY

The Code of Conduct for Supply Chain Management practitioners and other role players stipulates that no employee may accept any reward, gift, favour, hospitality or other benefit directly or indirectly, including to any close family member, partner or associate of that person, of a value more than R350. If they obtain or accept any private gifts, benefits or items of monetary value in excess of R350.00 from any person for him or himself during the performance of duties, these may be construed as bribes. National Treasury Regulations stipulate that no person who is a provider or prospective provider of goods or services to a department or public entity or municipality, or a recipient or prospective recipient of goods disposed of by a department or public entity or municipality, may offer or grant either directly, or through a representative or intermediary promise, any reward, gift, favour or hospitality to an official of the department or public entity or municipality, or to any other role-player involved in the implementation of the Supply Chain Management Policy of the department or public entity or municipality. What are gifts and benefits? A gift or benefit is anything of value an employee is offered or any item or service other than your normal salary and employment entitlement. Gifts and benefits may be tangible or intangible. Tangible gifts include consumer goods, entertainment and hospitality (such as wining-and-dining and accommodation). Intangible gifts and benefits are those that have no lasting value for accounting purposes such as a personal service or preferential treatment. Although intangible gifts and benefits cannot be seen or touched, its benefits have the same impact as tangible ones.

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When can an employee accept, declare and keep a gift? Where the giving or receiving of gifts or other payments or hospitalities does not constitute an inducement to obtain an improper advantage over another, the gift can be accepted. Should I declare a gift? A small gift (such as a pen and cap) that is received at expositions, conferences and open days that are open to all employees or the public need not be declared. If you are in any doubt whether a gift may be received or not, please liaise with your manager or SCM Unit. Where must I declare a gift? All other gifts should be declared in the Municipality’s gift register.The gift register is available at the secretary of the Municipal Manager.

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ANNEXURE G

CODE OF CONDUCT FOR BID ADJUDICATION MEMBERS

The purpose of this Code of Conduct is to promote mutual trust and respect and an environment where business can be conducted with integrity and in a fair and reasonable manner. Rights and responsibilities of committee members A member’s conduct at the meeting must not infringe on the rights of others. The rules of conduct are based on mutual respect for the rights of each other and respect for the purpose of the meeting. Members must accept that –

(a) the chairperson must be respected;

(b) the chairperson has the right to interrupt and ask a member to stop speaking if the address is repetitive or irrelevant to the matter under discussion;

(c) a member must stop speaking if ruled out of order by the chairperson;

(d) decisions are taken by general consensus or by a majority show of hands when a matter is decided upon by voting;

(e) once a decision has been taken it is final and not open for discussion unless additional information which was not available at the time of decision making can be produced;

(f) information and documentation are confidential;

(g) a member (including the chairperson or vice-chairperson) shall beforehand declare his/her interest regarding any matter serving before the Committee and the member will then excuse her/himself and vacate the meeting room during the discussion of that matter. No discussion by the member concerned will be allowed prior to the serving of that submission/report and such a member may not retain that specific submission/report. Any personal interest that may infringe, or might reasonably be deemed to infringe on a member’s impartiality in any matter relevant to their duties must be recorded;

(h) outvoted members must abide by the majority decision of the Committee; and

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(i) no communication should be made with a bidder/contractor by any member prior to or after any meeting.

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ANNEXURE H

LISTING CRITERIA FOR ACCREDITED PROSPECTIVE PROVIDERS (CENTRAL SUPPLIER DATABASE)

All suppliers will be required to complete the required information on list of accredited prospective providers (Central Supplier Database) and ensure that it is complete, accurate and comprehensive. The following would be amongst the required information: A valid email address, identity number, cell phone number Supplier information i.e. supplier type, identification number, supplier name, trading name and country of origin Supplier contact i.e. preferred contact person, preferred communication method, email address, cell phone number, telephone number, etc Supplier address i.e. country, province, municipality, city, suburb, ward and postal code; Bank account information; Supplier tax information; Ownership information, i.e. name and identification number of directors, members etc.; Association to any other suppliers i.e. branch, consortium member etc.; Commodities the supplier can supply; and B-BBEE information.

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ANNEXURE I

DESIGNATED SECTORS – LOCAL CONTENT The Minister of Trade and Industry has designated the following sectors/sub – sectors / industries to which the minimum thresholds for local content: Sector/Sub-sector/Industries Minimum threshold for local content Buses (Bus body) 80% Textiles, clothing,leather and footwear 100% Steel Power Pylons 100% - Effective 27 July 2016 Monopole Pylons 100% Steel Substation Structures 100% Powerline Hardware 100% Street Lighting Steel Poles 100% Steel Lattice Towers and Masts 100% Canned/processed vegetables 80% Rail Rolling Stock - Effective 27 July 2016 Diesel Locomotives 55% Electric Locomotives 60% Electric Multiple Units (EMU) 65% Wagons 80% Set Top Boxes (STB) 30% Furniture Products - Effective 27 July 2016 Office Furniture 85% School Furniture 100% Base and Mattress 90% Solar Water Heater Components - Effective 27 July 2016 Storage tanks/geysers 70 % Solar collectors 70 % Electrical cable products - Effective 27 July 2016 Power cables 90 % Telecom Cables 90 % Valve Products and Actuators 70% - Effective 12 July 2016 Pharmaceutical Products 50% to 70% Working Vessels (Boats) - Effective 27 July 2016 Propellers 30% Search and rescue transonder (SART) 100% Navigational instruments 20% Pumps 30%

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Electronic control 10% Electrival 220 – 440 v 30% Air compressors 30% Galley equipment 55% Cabin outfitting 30% Specialist and towing equipment 35% Working Vessels (Boats) - Effective 11 June 2018 - Amendment Complete Working Vessel 60% Steel/Aluminioum 100% Search and rescue lights 100% Radars 100% Naval Combat Management System 100% Naval Command and Control 100% Communication Transceivers 100% Dredging equipment 100% Fire fighting equipment 100% Manoeuvring system 100% Ventilation equipment 100% Air conditioning equipment 100% Environmental protection 100% Refrigeration equipment 100% Presevation and coverings 100% Cabin outfitting 100% Insulation 100% Galley equipment 100% Mooring systems 100% Davits and Cranes 100% Air Whistle CIF 100% Hydrofoils 100% Hydraulics 100 % Water tight doors 100% Water tight windows 100% Fire doors 100% Valves 100% Two – way radio terminals and associated equipment - Effective 1 January 2018 Portable radio 60 % (total minimum) Mobile radio 60 % (total minimum) Repeater 60 % (total minimum) Solar photovoltaic system and components -

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Effective 15 July 2016 Laminated PV Modules 15 % (minimum) Module Frame 65 % (minimum) DC Combiner Boxes 65 % (minimum) Mounting Structure 90 % (minimum) Inverter 40 % (minimum) Large bore spiral submerged arc welded steel - Effective 18 February 2018 conveyance pipes: 500mm to 3 500mm Bare 100% Galvinized 100% Lined and coated 80% Galvanized, lined and coated 80% Steel pipe fittings and scpecials - Effective 18 February 2018 Bare 100% Galvinized 100% Lined and coated 80% Galvanized, lined and coated 80% Forged fittings (flanges) 100% Rail signalling system and associated components - Effective 27 July 2016 Centralised Traffic Control (CTC) Equipment 40% Cabinets (Apparatus cases) 100% LED Light Signal 95% Level Crossing Components 90% Auxiliary Power Supplies 90% Point Machines 90% Cables & Wire 90% Axle Counter 75% Track Circuits 90% Electronic Interlocking 50% Relay Interlocking 90% Assembly and testing of fully-built units 100% - 65%(total minimum) Transformers , shunt reactors and associated equipment - Effective 25 August 2016 Class 0 90% Class 1 70% Class 2 70% Class 3 45% Class 4 10% Components and manufacturing – Class 0 100% Components and manufacturing – Class 1 100% Components and manufacturing – Class 2 100% Components and manufacturing – Class 3 100% Components and manufacturing – Class 4 100% Transformers , shunt reactors and associated equipment - Effective 01 January 2018 Class 1 80% Class 2 80% Class 3 60% Class 4 20% Transformers , shunt reactors and associated equipment - Effective 01 January 2020

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Class 3 80% Class 4 20% Plastic wheelie bins 100%- Effective 19 September 2016 Fire Fighting Vehicles 30% - Effective 15 December 2016 Crew Cabin 100% Super Structure 100% Assembly 100% Steel products and components for construction - Effective 1 February 2017 Fabricated Structural Steel 100% Joining/connecting Components 100% Frames 100% Roof and Cladding 100% Fasteners 100% Wire Products 100% Ducting and Structural Pipework 100% Gutters, downpipes and launders 100% Primary steel products Plates 100% Sheets 100% Galvanised and colour coated coils 100% Wire rod and drawn wire 100% Sections (channels,angles, I-beams and H – beams) 100% Reinforcing bars 100% Residential electricity meters and water meters - Effective 22 June 2017 Prepaid Electricity Meters 70% Postpaid Electricity Meters 70% SMART Meters 50% Prepaid Water Meters 40% Postpaid Water Meters 40% Rail permanent way sector - Effective 02 December 2017 Rail Permanent Way Sector 90% Rails and rail joints 100% Ballasts 100% Ballastless 100% Turnouts/switches and crossings 100% Railway sleepers 100% Rail fastening and accessories 100% Railway maintenance of way plant & equipment 70% Assembly and testing of fully built units 100% Pumps, medium voltage (MV) and associated accessories - Effective 10 January 2018 End Suction Centrifugal 70% Multistage Centrifugal 70% Horizontal split casing pumps 70% Vertical turbine pumpsl 70% Positive displacement 70% Self Primimg Centrifugal pumps 70% End Suction Centrifugal 70% Slurry pumps 70% Vacuum pumps 70%

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Centriful process pumps 70% MV – casting and frame fabrication 100% MV – fabrication and winding of stator core 100% MV – fabrication and winding of rotor core 100% MV – accessories 100% MV – assembly and testing of fully-built unit 100% Total minimum local content (per unit) 70%

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ANNEXURE J


SUPPLY CHAIN MANAGEMENT POLICY FOR INFRASTRUCTURE PROCUREMENT AND

DELIVERY MANAGEMENT

LOCAL GOVERNMENT: MUNICIPAL FINANCE MANAGEMENT ACT, 2003

Date of adoption: 31 May 2017 Date of implementation: 1 July 2017 The Council resolves in terms of section 168 of the Municipal Finance Management Act, 2003 (Act No. 56 of 2003), in reference to SCM Regulation 3(2), this Policy prescribes the standards and gateways system requirements and principles which municipalities must adhere to when procuring infrastructure related services linking to CIDB and ISO standards and ethos, therefore to adopt the following proposal as the SCM Policy for Infrastructure Procurement and Delivery Management of the West Coast District Municipality.

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Scope 1 Terms, definitions and abbreviations 1 2.1 Terms and definitions 1 2.2 Abbreviations 2 General requirements 2 3.1 Delegations 2 3.2 Implementation of the Standard for Infrastructure Procurement and Delivery Management 3 3.3 Supervision of the infrastructure delivery management unit 3 3.4 Objections and complaints 3 3.5 Resolution of disputes, objections, complaints and queries 4 Control framework for infrastructure delivery management 4 4.1 Assignment of responsibilities for approving or accepting end of stage deliverables 4 4.2 Additional gates 4 4.3 Additional requirements 5 4.4 Gateway reviews 5

4.4.1 Gateway reviews for major capital projects above a threshold 5 Control framework for infrastructure procurement 6

Infrastructure delivery management requirements 6 6.1 Institutional arrangements 6

6.1.1 Committee system for procurement 6 6.1.2 Actions of an authorised person relating to the award of a contract or an order 12 6.1.3 Conduct of those engaged in infrastructure delivery 13 6.1.4 Measures to prevent abuse of the infrastructure delivery system 16 6.1.5 Awards to persons in the service of the state 16 6.1.6 Collusive tendering 17 6.1.7 Placing of contractors under restrictions 17 6.1.8 Complaints 18

6.2 Acquisition management 18 6.2.1 Unsolicited proposal 18 6.2.2 Tax and rates compliance 19 6.2.3 Declarations of interest 20 6.2.4 Invitations to submit expressions of interest or tender offers 20 6.2.5 Publication of submissions received and the award of contracts 20 6.2.6 Disposal committee 21

6.3 Reporting of infrastructure delivery management information 21 Infrastructure procurement 21 7.1 Usage of procurement procedures 22 7.2 Procurement documents 22 7.3 Developmental procurement policy 22 7.4 Payment of contractors 22 7.5 Approval to utilise specific procurement procedures 22 7.6 Receipt and safeguarding of submissions 23 7.7 Opening of submissions 23 7.8 Use of another organ of state’s framework agreement 24

West Coast District Municipality’s SCM Policy for Infrastructure Procurement and Delivery Management

Contents

7.9 Insurances 24 7.9.1 Contractors shall be required to take out all insurances required in terms of the contract. 24 7.10 Written reasons for actions taken 25 7.11 Request for access to information 25

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1 Scope

This policy establishes the West Coast District Municipality ’s policy for infrastructure procurement and delivery management in accordance with the provisions of the regulatory frameworks for procurement and supply chain management. It includes the procurement of goods and services necessary for a new facility to be occupied and used as a functional entity but excludes:

a) the storage of goods and equipment following their delivery to West Coast

Distr ict Municipal i ty which are stored and issued to contractors or to employees;

b) the disposal or letting of land; c) the conclusion of any form of land availability agreement; d) the leasing or rental of moveable assets; and e) public private partnerships.

2 Terms, definitions and abbreviations

2.1 Terms and definitions

For the purposes of this document, the definitions and terms given in the standard and the following apply:

agent: person or organization that is not an employee of the West Coast District Municipality that acts on the West Coast District Municipality’s behalf in the application of this document

authorised person: the municipal manager or chief executive or the appropriately delegated authority to award, cancel, amend, extend or transfer a contract or order

conflict of interest: any situation in which:

a) someone in a position of trust has competing professional or personal interests

which make it difficult for him to fulfil his duties impartially, b) an individual or organization is in a position to exploit a professional or official

capacity in some way for his personal or for corporate benefit, or c) incompatibility or contradictory interests exist between an employee and the

organization which employs that employee contract manager: person responsible for administering a package on behalf of the employer and performing duties relating to the overall management of such contract from the implementer’s point of view

family member: a person’s spouse, whether in a marriage or in a customary union according to indigenous law, domestic partner in a civil union, or child, parent, brother, sister, whether such a relationship results from birth, marriage or adoption

framework agreement: an agreement between an organ of state and one or more contractors, the purpose of which is to establish the terms governing orders to be

http://en.wikipedia.org/wiki/Duty

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awarded during a given period, in particular with regard to price and, where appropriate, the quantity envisaged

gate: a control point at the end of a process where a decision is required before proceeding to the next process or activity

gateway review: an independent review of the available information at a gate upon which a decision to proceed or not to the next process is based gratification: an inducement to perform an improper act

infrastructure delivery: the combination of all planning, technical, administrative and managerial actions associated with the construction, supply, renovation, rehabilitation, alteration, maintenance, operation or disposal of infrastructure

infrastructure procurement: the procurement of goods or services including any combination thereof associated with the acquisition, renovation, rehabilitation, alteration, maintenance, operation or disposal of infrastructure maintenance: the combination of all technical and associated administrative actions during an item's service life to retain it in a state in which it can satisfactorily perform its required function

operation: combination of all technical, administrative and managerial actions, other than maintenance actions, that results in the item being in use

order: an instruction to provide goods, services or any combination thereof under a framework agreement

organ of state: an organ of state as defined in section 239 of the Constitution of the Republic of South Africa

procurement document: documentation used to initiate or conclude (or both) a contract or the issuing of an order

principal: a natural person who is a partner in a partnership, a sole proprietor, a director a company established in terms of the Companies Act of 2008 (Act No. 71 of 2008) or a member of a close corporation registered in terms of the Close Corporation Act, 1984, (Act No. 69 of 1984)

standard: the latest edition of the Standard for Infrastructure Procurement and Delivery Management as published by National Treasury

working day: any day of a week on which is not a Sunday, Saturday or public holiday

2.2 Abbreviations

For the purposes of this document, the following abbreviations apply

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CIDB: Construction Industry Development Board SARS: South African Revenue Services

3 General requirements 3.1 Delegations

3.1.1 The Council of West Coast District Municipality hereby delegates all powers and duties to the municipal manager which are necessary to enable the municipal manager to:

a) discharge the supply chain management responsibilities conferred on accounting

officers in terms of Chapter 8 or 10 of the Local Government Municipal Finance Management Act of 2003 and this document;

b) maximise administrative and operational efficiency in the implementation of this document;

c) enforce reasonable cost-effective measures for the prevention of fraud, corruption,

favouritism and unfair and irregular practices in the implementation of this document; and

d) comply with his or her responsibilities in terms of section 115 and other

applicable provisions of the Local Government Municipal Finance Management Act of 2003 Act.

3.1.2 No departure shall be made from the provisions of this policy without the approval of the municipal manager of West Coast District Municipality.

3.1.3 The municipal manager shall for oversight purposes:

a) within 30 days of the end of each financial year, submit a report on the

implementation of this policy, to the council of the West Coast District Municipality;

b) whenever there are serious and material problems in the implementation of this

policy, immediately submit a report to the council of West Coast District Municipality;

c) within 10 days of the end of each quarter, submit a report on the implementation

of the policy to the mayor; and d) make the reports public in accordance with section 21A of the Municipal Systems Act of 2000.

3.2 Implementation of the Standard for Infrastructure Procurement and Delivery

Management 3.2.1 Infrastructure procurement and delivery management shall be undertaken in accordance with the all applicable legislation and the relevant requirements of the latest edition of the National Treasury Standard for Infrastructure Procurement and

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Delivery Management. Any deviation to the provisions of this standard must be reported to National Treasury and the relevant treasury. 3.2.2 Pre-feasibility and feasibility reports are required as end – of – stage deliverables for stages 3 and 4, respectively, where one or more of the following applies: a) The major capital projects is required for:

1) a major public enterprise where the total expenditure exceeds R 1.5 billion,

or 2) an organ of state to the Municipal Finance Management Act other than a

major public enterprise where the total project capital expenditure exceeds R1.0 billion including VAT, or where the expenditure per year for a minimum of three years exceeds R 250 million per annum including VAT;

b) the project is not:

1) a building project with or without related site works; or

2) a process – based , somewhat repetitive or relatively standardised project where the risk of failing to achieve time , cost and quality objectives is relatively low;

3.2.3 Stage 3 to 9 are required for where the works does not involve the provision of new infrastructure or the rehabilitation, refurbishment, alteration of existing infrastructure. Stages 5 and 6 to be omitted where there is sufficient information to proceed to stage 7 is contained in the stage 4 deliverable.

3.3 Supervision of the infrastructure delivery management unit

The Infrastructure Delivery Management Unit shall be directly supervised by the chief financial officer / person delegated in terms of section 82 of the MFMA.

3.4 Objections and complaints

Persons aggrieved by decisions or actions taken in the implementation of this policy, may lodge within 14 days of the decision or action, a written objection or complaint against the decision or action.

3.5 Resolution of disputes, objections, complaints and queries

3.5.1 The municipal manager shall appoint an independent and impartial person, not directly involved in the infrastructure delivery management processes to assist in the resolution of disputes between the West Coast District Municipality and other persons regarding:

a) any decisions or actions taken in the implementation of the supply chain management system;

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b) any matter arising from a contract awarded within the West Coast District Municipality’s infrastructure delivery management system; or

c) to deal with objections, complaints or queries regarding any such decisions or

actions or any matters arising from such contract. 3.5.2 The Sen io r SCM Manager o r the re levan t Depar tment shall assist the person appointed in terms of 3.5.1 to perform his or her functions effectively.

3.5.3 The person appointed in terms of 3.5.1 shall:

a) strive to resolve promptly all disputes, objections, complaints or queries received; and

b) Submit monthly reports to the municipal manager on all disputes, objections,

complaints or queries received, attended to or resolved; 3.5.4 A dispute, objection, complaint or query may be referred to the Western Cape Provincial Treasury if:

a) The dispute, objection, complaint or query is not resolved within 60 days; or b) no response is forthcoming within 60 days. 3.5.5 If the Western Cape Provincial Treasury does not or cannot resolve the matter, the dispute, objection, complaint or query may be referred to the National Treasury for resolution.

4 Control framework for infrastructure delivery management

4.1 Assignment of responsibilities for approving or accepting end of stage

deliverables The responsibilities for approving or accepting end of stage deliverables shall be as stated in Table 1.

4.2 Additional gates

Additional gates may be added only on approval by the municipal manager.

4.3 Additional requirements

Additional requirements may be added only on approval by the municipal manager as

the need arises.

4.4 Gateway reviews

4.4.1 Gateway reviews for major capital projects above R 50 million (VAT inclusive) 4.4.1.1 The municipal manager shall appoint a gateway review team in accordance with the provisions of clause 4.1.13.1.2 of the standard to undertake gateway reviews for

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major capital projects above R 50 million (VAT inclusive) for review of the stages 1 to 4 deliverable prior to acceptance of the deliverable;

4.4.1.2 The review teams shall comprise of not less than three persons who are not involved in the project associated with the works covered by the end of the stage 4 deliverable, and who are familiar with the various aspects of the subject matter of the deliverable at the end of the stage under review. 4.4.1.3 The review team shall be led by a person who has at least six years post-graduate experience in the planning of infrastructure projects and is registered either as a professional engineer in terms of the Engineering Profession Act, a professional quantity surveyor in terms of the Quantity Surveying Profession Act or a professional architect in terms of the Architectural Profession Act. The members of the team shall, as relevant, have expertise in key technical areas, cost estimating, scheduling and implementation of similar projects. 4.4.1.4 The relevant treasury may nominate additional persons to serve on the review team.

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Table 1: Responsibilities for approving or accepting end of stage deliverables in the control framework for the management of infrastructure delivery

Stage Person assigned the responsibility for approving or accepting end of stage deliverables

No Name

0 Project initiation Relevant Director accepts the initiation report:

1 Infrastructure planning Council / Municipal Manager approves the infrastructure plan 2 Strategic resourcing Municipal Manager and the relevant Director approves the delivery and / or procurement strategy

3 Pre-feasibility Director Technical Services and responsible division accepts the pre-feasibility report

Preparation and briefing Director Technical Services and responsible division accepts the strategic brief 4 Feasibility Municipal Manager and the relevant Director accepts the feasibility report

Concept and viability

Director Technical Services and responsible division accepts the concept report

5 Design development Relevant Senior Manager (professional) accepts the design development report.

6 Design documentation

6A Production information

Relevant Senior Manager (professional) accepts the parts of the production information which are identified when the design development report is accepted as requiring acceptance.

6B Manufacture, fabrication and construction information

The project manager accepts the manufacture, fabrication and construction information.

7 Works The contract manager certifies completion of the works or the delivery of goods and associated services. 8 Handover The owner or end user accepts liability for the works.

9

Package completion / Close out

The project manager or supervising agent certifies the defects certificate in accordance with the provisions of the contract. The project manager certifies final completion in accordance with the provisions of the contract. Project manager accepts the close out report.

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5 Control framework for infrastructure procurement

5.1 The responsibilities for taking the key actions associated with the formation and conclusion of contracts including framework agreements above the quotation threshold shall be as stated in Table 2.

5.2 The responsibilities for taking the key actions associated with the quotation procedure and the negotiation procedure where the value of the contract is less than the threshold set for the quotation procedure shall be as follows:

a) Procurement documentation committee shall grant approval for the issuing of the

procurement documents, based on the contents of a documentation review report developed in accordance with the provisions of the standard;

b) The tender committee may award the contract if satisfied with the

recommendations contained in the evaluation report prepared in accordance with the provisions of the standard.

5.3 The responsibilities for taking the key actions associated with the issuing of an order in terms of a framework agreement shall be as stated in Table 3.

6 Infrastructure delivery management requirements

6.1 Institutional arrangements

6.1.1 Committee system for procurement

6.1.1.1 General The committee system will be assumed to be same committees as the current supply chain management committees. Members, functions and reporting to be the same as in current/existing supply chain management committees.

6.1.1.1.1 A committee system comprising the documentation committee, evaluation committee and tender committee shall be applied to all procurement procedures where the estimated value of the procurement exceeds the financial threshold for quotations and to the putting in place of framework agreements.

6.1.1.1.2 The evaluation committee shall, where competition for the issuing of an order amongst framework contractors takes place and the value of the order exceeds the financial threshold for quotations, evaluate the quotations received. 6.1.1.1.3 The persons appointed in writing as technical advisors and subject matter experts may attend any committee meeting.

6.1.1.1.4 No person who is a political officer bearer, a public office bearer including any councillor of a municipality, a political advisor or a person appointed in terms of section 12A of the Public Service Act of 1994 or who has a conflict of interest shall be appointed to a procurement documentation, evaluation or tender committee.

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6.1.1.1.5 Committee decisions shall as far as possible be based on the consensus principle i.e. the general agreement characterised by the lack of sustained opposition to substantial issues. Committees shall record their decisions in writing. Such decisions shall be kept in a secured environment for a period of not less than five years after the completion or cancellation of the contract unless otherwise determined in terms of the National Archives and Record Services Act of 1996.

6.1.1.1.6 Committees may make decisions at meetings or, subject to the committee chairperson’s approval, on the basis of responses to documents circulated to committee members provided that not less than sixty percent of the members are present or respond to the request for responses. Where the committee chairperson is absent from the meeting, the members of the committee who are present shall elect a chairperson from one of them to preside at the meeting.

6.1.1.2 Procurement documentation committee

6.1.1.2.1 The municipal manager shall appoint in writing on a procurement by procurement basis:

a) The persons to review the procurement documents and to develop a

procurement documentation review report in accordance with clause 4.2.2.1 of the standard; and

b) The members of the procurement documentation committee.

6.1.1.2.2 The procurement documentation committee shall comprise one or more persons. The chairperson shall be an employee of West Coast District Municipality with requisite skills. Other members shall, where relevant, include a representative of the end user or the department requiring infrastructure delivery.

6.1.1.2.3 No member of, or technical adviser or subject matter expert who participates in the work of the any of the procurement committees or a family member or associate of such a member, may tender for any work associated with the tender which is considered by these committees.

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Table 2: Procurement activities and gates associated with the formation and conclusion of contracts above the quotation threshold

Activity

Sub-Activity (see Table 3 of the standard)

Key action

Person assigned responsibility to perform key action

1* Establish what is to be procured

1.3 PG1

Obtain permission to start with the procurement process

Make a decision to proceed / not to proceed with the procurement based on the broad scope of work and the financial estimates.

Relevant Director

2*

Decide on procurement strategy

2.5 PG2

Obtain approval for procurement strategies that are to be adopted including specific approvals to approach a confined market or the use of the negotiation procedure

Confirm selection of strategies so that tender offers can be solicited

SCM Manager in consultation with the MM, CFO and relevant Director

3

Solicit tender offers

3.2 PG3

Obtain approval for procurement documents

Grant approval for the issuing of the procurement documents

Procurement documentation committee

3.3 PG4

Confirm that budgets are in place Confirm that finance is available for the procurement to take place

Relevant Director / CFO

4

Evaluate

4.2 PG5

Obtain authorisation to proceed with next phase of tender process in the qualified, proposal or competitive negotiations procedure

Review evaluation report, ratify recommendations and authorise progression to the next stage of the tender process

Evaluation committee

9

tender offers

4.7 PG6

Confirm recommendations contained in the tender evaluation report

Review recommendations of the evaluation committee and refer back to evaluation committee for reconsideration or make recommendation for award (below R 10 m – Tender Committee and above R 10 m the Municipal Manager)

Tender committee (below and R10 mil) Municipal Manager (above R10 mil)

5

Award contract

5.3 PG7

Award contract Formally accept the tender offer in writing and issue the contractor with a signed copy of the contract

Tender committee / Municipal Manager

5.5 GF1

Upload data in financial management and payment system

Verify data and upload contractor’s particulars and data associated with the contract or order

SCM Clerks

10

Table 2 (concluded)

Activity

Sub-Activity

Key action

Person assigned responsibility to perform key action

6

Administer contracts and confirm compliance with requirements

6.4 PG8A

Obtain approval to waive penalties or low performance damages.

Approve waiver of penalties or low performance damages

Municipal Manager

6.5 PG8B

Obtain approval to notify and refer a dispute to an adjudicator

Grant permission for the referral of a dispute to an adjudicator or for final settlement to an arbitrator or court of law

Municipal Manager

6.6 PG8C

Obtain approval to increase the total of prices, excluding contingencies and price adjustment for inflation, or the time for completion at the award of a contract or the issuing of an order up to a specified percentage

Approve amount of time and cost overruns up to the threshold

0-20% CFO or Municipal Manager with proper motivation from the relevant Director 6.7

PG8D

Obtain approval to exceed the total of prices, excluding contingencies and price adjustment for inflation, or the time for completion at award of a contract or the issuing of an order by more than 15% and up to 20%, respectively

Approve amount of time and cost overruns above a the threshold (15% up to 20%)

0-20% CFO or Municipal Manager with proper motivation from the relevant Director

6.8 PG8E

Obtain approval to cancel or terminate a contract

Approve amount Recommended by the Tender Committee for approval by Municipal Manger

6.9 PG8F

Obtain approval to amend a contract Approve proposed amendment to contract

Recommended by the Tender Committee for approval by Municipal Manger

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Table 3: Procurement activities and gates associated with the issuing of an order above the quotation threshold in terms of a framework agreement

Activity

Key action

Person assigned responsibility to perform key action 1 FG1 Confirm justifiable reasons for selecting

a framework contactor where there is more than one framework agreement covering the same scope of work

Confirm reasons submitted for not requiring competition amongst framework contractors or instruct that quotations be invited

Municipal Manager or relevant Director

3 FG2 Obtain approval for procurement documents

Grant approval for the issuing of the procurement documents

Procurement documentation committee

4 FG3 Confirm that budgets are in place Confirm that finance is available so that the order may be issued

Relevant Director in conjunction with the BTO or CFO

6 FG4 Authorise the issuing of the order If applicable, review evaluation report and confirm or reject recommendations. Formally accept the offer in writing and issue the contractor with a signed copy of the order

Relevant Director

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6.1.1.3 Evaluation committee 6.1.1.3.1 The municipal manager shall appoint on a procurement by procurement basis in writing:

a) The persons to prepare the evaluation and, where applicable, the quality

evaluations, in accordance with clauses 4.2.3.2 and 4.2.3.4 of the standard, respectively; and

b) the members of the evaluation committee.

6.1.1.3.2 The evaluation committee shall comprise not less than three people. The chairperson shall be an employee of West Coast District Municipality with requisite

skills. Other members shall include a supply chain management practitioner and, where relevant, include an official from the department requiring infrastructure delivery.

6.1.1.3.3 The evaluation committee shall review the evaluation reports prepared in accordance with sub clause 4.2.3 of the standard and as a minimum verify the following in respect of the recommended tenderer:

a) the capability and capacity of a tenderer to perform the contract;

b) the tenderer’s tax and municipal rates and taxes compliance status;

c) confirm that the tenderer’s municipal rates and taxes and municipal service

charges are not in arrears; d) the Compulsory Declaration has been completed; and

e) the tenderer is not listed in the National Treasury’s Register for Tender Defaulters or the List of Restricted Suppliers.

6.1.1.3.4 No tender submitted by a member of, or technical adviser or subject matter expert who participates in the work of the procurement documentation committee or a family member or associate of such a member, may be considered by the evaluation committee. 6.1.1.3.5 The chairperson of the evaluation committee shall promptly notify the municipal manager of any respondent or tenderer who is disqualified for having engaged in fraudulent or corrupt practices during the tender process.

6.1.1.4 Tender committee

6.1.1.4.1 The tender committee shall comprise the following persons or their mandated delegate:

a) CFO who shall be the chairperson;

b) Director Technical Services c) Director: Corporate Services and Administration

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d) Senior Manager: Supply Chain Management

e) Senior Manager: Human Resources

6.1.1.4.2 No member of the evaluation committee may serve on the tender committee. A member of an evaluation committee may, however, participate in the deliberations of a tender committee as a technical advisor or a subject matter expert.

6.1.1.4.3 The tender committee shall:

a) consider the report and recommendations of the evaluation committee and:

1) verify that the procurement process which was followed complies with the

provisions of this document;

2) confirm that the report is complete and addresses all considerations necessary to make a recommendation;

3) confirm the validity and reasonableness of reasons provided for the elimination of tenderers; and

4) consider commercial risks and identify any risks that have been overlooked

or fall outside of the scope of the report which warrant investigation prior to taking a final decision; and

b) refer the report back to the evaluation committee for their

reconsideration or make a recommendation to the authorised person on the award of a tender, with or without conditions, together with reasons for such recommendation.

6.1.1.4.4 The tender committee shall consider proposals regarding the cancellation, amendment, extension or transfer of contracts that have been awarded and make a recommendation to the authorised person on the course of action which should be taken.

6.1.1.4.5 The tender committee shall consider the merits of an unsolicited offer and make a recommendation to the municipal manager;

6.1.1.4.6 The tender committee shall report to the municipal manager any recommendation made to award a contract to a tenderer other than the tenderer recommended by the evaluation committee, giving reasons for making such a recommendation.

6.1.1.4.7 The tender committee shall not make a recommendation for an award of a contract or order if the recommended tenderer or framework contractor has: a) made a misrepresentation or submitted false documents in competing for the contract or order; or b) been convicted of a corrupt or fraudulent act in competing

for any contract during the past five years. 6.1.1.4.8 The tender committee may on justifiable grounds and after following due process, disregard the submission of any tenderer if that tenderer or any of its

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directors, members or trustees or partners has abused the delivery management system or has committed fraud, corruption or any other improper conduct in relation to such system. The National Treasury and the Western Cape Provincial Treasury shall be informed where such tenderers are disregarded.

6.1.2 Actions of an authorised person relating to the award of a contract or an order

6.1.2.1 Award of a contract

6.1.2.1 The authorised person shall, if the value of the contract inclusive of VAT is within his or her delegation, consider the report(s) and recommendations of the tender committee, or in the case of the awards for contracts below the quotation threshold, the recommendation of the relevant Director, and either:

a) award the contract after confirming that the report is complete and addresses all

considerations necessary to make a recommendation and budgetary provisions are in place; or

b) decide not to proceed or to start afresh with the process. 6.1.2.2 The authorised person shall immediately notify the municipal manager if a tender other than the recommended tender is awarded, save where the recommendation is changed to rectify an irregularity. Such person shall, within 10 working days, notify in writing the Auditor-General, the National Treasury and Western Cape Provincial Treasury, and, in the case of a municipal entity, also the parent municipality, of the reasons for deviating from such recommendation.

6.1.2.3 Issuing of an order

The authorised person shall, if the value of an order issued in terms of a framework contract, is within his or her delegation, consider the recommendation of the evaluation committee or the relevant Director as relevant, and either:

a) authorise the issuing of an order in accordance with the provisions of clause 4.25 of the standard; or

b) decide not to proceed or to start afresh with the process.

6.1.3 Conduct of those engaged in infrastructure delivery

6.1.3.1 General requirements

6.1.3.1.1 All personnel and agents of West Coast District Municipality shall comply with the requirements of the CIDB Code of Conduct for all Parties engaged in Construction Procurement. They shall:

a) Behave equitably, honestly and transparently;

b) discharge duties and obligations timeously and with integrity;

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c) comply with all applicable legislation and associated regulations; d) satisfy all relevant requirements established in procurement documents;

e) avoid conflicts of interest; and

f) not maliciously or recklessly injure or attempt to injure the reputation of another party.

6.1.3.1.2 All personnel and agents engaged in West Coast District Municipality‘s infrastructure delivery management system shall:

a) not perform any duties to unlawfully gain any form of compensation, payment or

gratification from any person for themselves or a family member or an associate; b) perform their duties efficiently, effectively and with integrity and may not use

their p o s i t i o n for private gain or to improperly benefit another person; c) strive to be familiar with and abide by all statutory and other instructions applicable to their duties;

d) furnish information in the course of their duties that is complete, true and fair and

not intended to mislead; e) ensure that resources are administered responsibly;

f) be fair and impartial in the performance of their functions;

g) at no time afford any undue preferential treatment to any group or individual or

unfairly discriminate against any group or individual; h) not abuse the power vested in them;

i) not place themselves under any financial or other obligation to external

individuals or firms that might seek to influence them in the performance of their duties;

j) assist West Coast District Municipality in combating corruption and fraud within the

infrastructure procurement and delivery management system; k) not disclose information obtained in connection with a project except when

necessary to carry out assigned duties; l) not make false or misleading entries in reports or accounting systems; and

m) keep matters of a confidential nature in their possession confidential unless

legislation, the performance of duty or the provision of the law require otherwise. 6.1.3.1.2 An employee or agent may not amend or tamper with any submission, tender or contract in any manner whatsoever.

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6.1.3.2 Conflicts of interest 6.1.3.2.1 The employees and agents of West Coast District Municipality who are connected in any way to procurement and delivery management activities which are subject to this policy shall:

a) disclose in writing to the employee of the West Coast District Municipality to

whom they report, or to the person responsible for managing their contract, if they have, or a family member or associate has, any conflicts of interest; and

b) Not participate in any activities that might lead to the disclosure of West Coast District Municipality’s Proprietary information.

6.1.3.2.2 The employees and agents of West Coast District Municipality shall declare and address any perceived or known conflict of interest, indicating the nature of such conflict to whoever is responsible for overseeing the procurement process at the start of any deliberations relating to a procurement process or as soon as they become aware of such conflict, and abstain from any decisions where such conflict exists or recuse themselves from the procurement process, as appropriate.

6.1.3.2.3 Agents who prepare a part of a procurement document may in exceptional circumstances, where it is in West Coast District Municipality’s interest to do so, submit a tender for work associated with such documents provided that:

a) West Coast District Municipality states in the tender data that such an agent is a potential tenderer;

b) all the information which was made available to, and the advice provided by that

agent which is relevant to the tender, is equally made available to all potential tenderers upon request, if not already included in the scope of work; and

c) The procurement documentation committee is satisfied that the procurement

document is objective and unbiased having regard to the role and recommendations of that agent.

6.1.3.3 Evaluation of submissions received from respondents and tenderers

6.1.3.3.1 The confidentiality of the outcome of the processes associated with the calling for expressions of interest, quotations or tenders shall be preserved. Those engaged in the evaluation process shall:

a) not have any conflict between their duties as an employee or an agent and their private interest;

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b) may not be i n f l u en ce d by a gift or consideration (including acceptance of hospitality) to show favour or disfavour to any person;

c) deal with respondents and tenderers in an equitable and even-handed manner at all times; and d) not use any confidential information obtained for personal gain and may not

discuss with, or disclose to outsiders, prices which have been quoted or charged

to West Coast District Municipality . 6.1.3.3.2 The evaluation process shall be free of conflicts of interest and any perception of bias. Any connections between the employees and agents of West Coast District Municipality and a tenderer or respondent shall be disclosed and recorded in the tender evaluation report.

6.1.3.3.3 West Coast District Municipality’s personnel and their agents shall immediately withdraw from participating in any manner whatsoever in a procurement process in which they, or any close family member, partner or associate, has any private or business interest.

6.1.3.4 Non-disclosure agreements

Confidentiality agreements in the form of non-disclosure agreements shall, where appropriate, are entered into with agents and potential contractors to protect West Coast District Municipality’s confidential information and interests.

6.1.3.5 Gratifications, hospitality and gifts

6.1.3.5.1 The employees and agents of West Coast District Municipality shall not, directly or indirectly, accept or agree or offer to accept any gratification from any other person including a commission, whether for the benefit of themselves or for the benefit of another person, as an inducement to improperly influence in any way a procurement process, procedure or decision.

6.1.3.5.2 The employees and agents of West Coast District Municipality as well as their family members of associates shall not receive any of the following from any tenderer, respondent or contractor or any potential contractor:

a) money, loans, equity, personal favours, benefits or services;

b) overseas trips; or

c) any gifts or hospitality irrespective of value from tenderers or respondents prior to

the conclusion of the processes associated with a call for an expression of interest or a tender.

6.1.3.5.3 The employees and agents of West Coast District Municipality shall not purchase any items at artificially low prices from any tenderer, respondent or contractor or any potential contractor at artificially low prices which are not available to the public.

6.1.3.5.4 All employees and agents of West Coast District Municipality may for the purpose of fostering inter-personal business relations accept the following:

a) meals and entertainment, but excluding the cost of transport and accommodation;

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b) promotional material of small intrinsic value such as pens, paper-knives, diaries,

calendars, etc. c) incidental business hospitality such as business lunches or dinners, which the

employee is prepared to reciprocate; d) complimentary tickets to sports meetings and other public events, but excluding

the cost of transport and accommodation, provided that such tickets are not of a recurrent nature; and

e) gifts in kind other than those listed in a) to d) which have an intrinsic value greater

than R350 unless they have declared them to the municipal manager. 6.1.3.5.5 Under no circumstances shall gifts be accepted from prospective contractors during the evaluation of calls for expressions of interest, quotations or tenders that could be perceived as undue and improper influence of such processes.

6.1.3.5.6 Employees and agents of West Coast district Municipality shall without delay report to the municipal manager or chief financial officer any incidences of a respondent, tenderer or contractor who directly or indirectly offers a gratification to them or any other person to improperly influence in any way a procurement process, procedure or decision.

6.1.3.6 Reporting of breaches

Employees and agents of West Coast District Municipality shall promptly report to the municipal manager or chief financial officer any alleged improper conduct which they may become aware of, including any alleged fraud or corruption.

6.1.4 Measures to prevent abuse of the infrastructure delivery system

The municipal manager or chief financial officer shall investigate all allegations of corruption, improper conduct or failure to comply with the requirements of this policy against an employee or an agent, a contractor or other role player and, where justified:

a) take steps against an employee or role player and inform the National

Treasury and W e s t e r n C a p e P r o v i n c i a l T r e a s u r y of those steps; b) report to the South African Police Service any conduct that may constitute a criminal offence;

c) lodge complaints with the Construction Industry Development Board or any other

relevant statutory council where a breach of such council’s code of conduct or rules of conduct is considered to have been breached;

d) cancel a contract if:

1) it comes to light that the contractor has made a misrepresentation,

submitted falsified documents or has been convicted of a corrupt or fraudulent act in competing for a particular contract or during the execution of that contract; or

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2) an employee or other role player committed any corrupt or fraudulent act

during the tender process or during the execution of that contract. 6.1.5 Awards to persons in the service of the state

6.1.5.1 Any submissions made by a respondent or tenderer who declares in the Compulsory Declaration that a principal is one of the following shall be rejected:

a) a member of any municipal council, any provincial legislature, or t h e National Assembly or the

National Council of Provinces; b) a member of the board of directors of any municipal entity;

c) an official of any municipality or municipal entity;

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d) an employee of any national or provincial department, national or provincial public entity or constitutional institution within the meaning of the Public Finance Management Act, 1999 (Act No. 1 of 1999);

e) an executive member of the accounting authority of any national or provincial public entity; or f) an employee of Parliament or a provincial legislature. 6.1.5.2 The notes to the annual financial statements of the W e s t C o a s t D i s t r i c t M u n i c i p a l i t y shall disclose particulars of an award of more than R 2000 to a person who is a family member of a person identified in 6.1.5.1 or who has been in the previous 12 months. Such notes shall include the name of the person, the capacity in which such person served and the amount of the award.

6.1.6 Collusive tendering

Any submissions made by a respondent or tenderer who fails to declare in the Compulsory Declaration that the tendering entity:

a) is not associated, linked or involved with any other tendering entity submitting tender offers; or

b) has not engaged in any prohibited restrictive horizontal practices including

consultation, communication, agreement, or arrangement with any competing or potential tendering entity regarding prices, geographical areas in which goods and services will be rendered, approaches to determining prices or pricing parameters, intentions to submit a tender or not, the content of the submission (specification, timing, conditions of contract etc.) or intention to not win a tender shall be rejected.

6.1.7 Placing of contractors under restrictions

6.1.7.1 If any tenderer which has submitted a tender offer or a contractor which has concluded a contract has, as relevant:

a) withdrawn such tender or quotation after the advertised closing date and time for

the receipt of submissions; b) after having been notified of the acceptance of his tender, failed or refused to

commence the contract; c) had their contract terminated for reasons within their control without reasonable cause;

d) offered, promised or given a bribe in relation to the obtaining or the execution of such contract;

e) acted in a fraudulent, collusive or anti-competitive or improper manner or in bad faith

towards West Coast District Municipality; or f) made any incorrect statement in any affidavit or declaration with regard to a

preference claimed and is unable to prove to the satisfaction of West Coast District Municipality that the statement was made in good faith or reasonable

21

steps were taken to confirm the correctness of the statements, The relevant Director shall prepare a report on the matter and make a recommendation to the municipal manager for placing the contractor or any of its principals under restrictions from doing business with the West Coast District Municipality.

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6.1.7.2 The municipal manager may, as appropriate, upon the receipt of a recommendation made in terms of 6.1.7.1 and after notifying the contractor of such intention in writing and giving written reasons for such action, suspend a contractor or any principal of that contractor from submitting a tender offer to West Coast District Municipality for a period of time.

6.1.7.3 The Senior Supply Chain Manager shall:

a) record the names of those placed under restrictions in an internal register which

shall be accessible to employees and agents of West Coast District Municipality who are engaged in procurement processes; and

b) notify the National Treasury and Western Cape Provincial Treasury and, if relevant,

the Construction Industry Development Board, of such decision and provide them with the details associated therewith.

6.1.8 Complaints

6.1.8.1 All complaints regarding the West Coast District Municipality’s infrastructure delivery management system shall be addressed to the municipal manager. Such complaints shall be in writing.

6.1.8.2 The relevant Director shall investigate all complaints regarding the infrastructure procurement and delivery management system and report on actions taken to the municipal manager who will decide on what action to take.

6.2 Acquisition management

6.2.1 Unsolicited proposal

6.2.1.1 The West Coast District Municipality is not obliged to consider unsolicited offers received outside a normal procurement process but may consider such an offer only if:

a) the goods, services or any combination thereof that is offered is a demonstrably

or proven unique innovative concept; b) proof of ownership of design, manufacturing, intellectual property, copyright

or any other proprietary right of ownership or entitlement is vested in the person who made the offer;

c) the offer presents a value proposition which demonstrates a clear, measurable

and foreseeable benefit for West Coast District Municipality; d) the offer is in writing and clearly sets out the proposed cost;

e) the person who made the offer is the sole provider of the goods or service; and

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f) the mun i c i pa l man a ge r finds the reasons for not going through normal tender processes to be sound.

6.2.1.2 The municipal manager may only accept an unsolicited offer and enter into a contract after considering the recommendations of the tender committee if:

a) the intention to consider an unsolicited proposal has been made known in accordance with Section

21A of the Municipal Systems Act of 2000 together with the reasons why such a proposal should not be open to other competitors, an explanation of the potential benefits for the West Coast District Municipality and an invitation to the public or other potential suppliers and providers to submit their comments within 30 days after the notice;

24

b) the West Coast District Municipality has obtained comments and recommendations on the offer

from the National Treasury and the Western Cape Provincial Treasury; c) the tender committee meeting which makes recommendations to accept an

unsolicited proposal was open to the public and took into account any public comments that were received and any comments and recommendations received from the National Treasury and the Western Cape Provincial Treasury ; and

d) the provisions of 6.2.1.3 are complied with.

6.2.1.3 The municipal manager shall, within 7 working days after the decision to award the unsolicited offer is taken, submit the reasons for rejecting or not following the recommendations to the National Treasury, the Western Cape Provincial Treasury and Auditor General. A contract shall in such circumstances not be entered into or signed within 30 days of such submission.

6.2.2 Tax and rates compliance

6.2.2.1 S A R S tax clearance

6.2.2.1.1 No contract may be awarded or an order issued where the value of such transaction exceeds R 30 000, unless a tenderer or contractor is in possession of an original valid Tax Clearance Certificate issued by SARS provided that the tenderer is not domiciled in the Republic of South Africa and the SARS has confirmed that such a tenderer is not required to prove their tax compliance status.

If the bidders applied for a Tax Clearance Certificate after 18 April 2016, than the bidder should provide the PIN that can be shared with third parties to enable third parties to verify or confirm the tax compliance status of the bidder to whom the PIN belongs. The onus is on the bidder to ensure that their tax status is compliant at SARS. 6.2.2.1.2 In the case of a partnership, each partner shall comply with the requirements of 6.2.2.1.1.

6.2.2.1.3 No payment shall be made to a contractor who does not satisfy the requirements of 6.2.2.1.2. An employee of West Coast District Municipality shall upon detecting that a tenderer or contractor is not tax compliant, immediately notify such person of such status.

6.2.2.1.4 Notwithstanding the requirements of 6.2.2.1.1 and 6.2.2.1.3 the following shall apply, unless a person who is not tax compliant indicates to chief financial officer that it intends challenging its tax compliance status with SARS,

a) a contract may be awarded to a non-compliant tenderer if such a tenderer is

able to remedy its tax compliance status within a period not exceeding 10

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working days after being duly notified of its non-compliant status; b) an order may be awarded to a non-compliant contractor if such a contractor is

able to remedy its tax compliance status within a period not exceeding 10 working days after being duly notified of its non-compliant status;

c) a non-compliant contractor shall be issued with a first warning that payments in

future amounts due in terms of the contract may be withheld, before the authorising of any payment due to such contractor;

d) before authorising a further payment due to a non-compliant contractor who has

failed to remedy its tax compliance status after receiving a first warning, a second and final warning shall be issued to such contractor;

e) no payments may be released for any amounts due in terms of the contract

due to a non- compliant contractor if, after a period of 30 calendar days have lapsed since the second warning was issued, the non-compliant contractor has failed to remedy its tax compliance status.

6.2.2.1.5 The West Coast District Municipality may cancel a contract with a non-compliant contractor if such a contractor fails to remedy its tax compliance status after a period of 30 calendar days have lapsed since the second warning was issued in terms of 6.2.2.1.4 e).

6.2.2.2 Municipal rates and taxes

No contract may be awarded to a tenderer who, of the principals of that tenderer, owes municipal rates and taxes or municipal service charges to any municipality or a municipal entity and are in arrears for more than 3 months.

6.2.3 Declarations of interest

Tenders and respondents making submissions in response to an invitation to submit a tender or a call for an expression of interest, respectively shall declare in the Compulsory Declaration whether or not any of the principals:

a) are an employee of the West Coast District Municipality or in the employ of the state; or

b) have a family member or a business relation with a person who is in the employ of the state.

6.2.4 Invitations to submit expressions of interest or tender offers

6.2.4.1 All invitations to submit tenders where the estimated value of the contract exceeds R200 000 including VAT, except where a confined tender process is followed, and expressions of interest shall be advertised on the West Coast District Municipality’s website and on the National Treasury eTender Publication Portal.

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Advertisements shall be placed by the Supply Chain Management Unit. 6.2.4.2 Advertisements relating to construction works which are subject to the Construction Industry Development Regulations issued in terms of the Construction Industry Development Act of 2000 shall in addition to the requirements of 6.2.4.1 are advertised on the CIDB website. Advertisements shall be placed by the Supply Chain Management Unit.

6.2.4.3 Where deemed appropriate by West Coast District Municipality an invitation to tender and a call for an expression of interest shall be advertised in suitable local and national newspapers and the Government Tender Bulletin as directed by such person. Advertisements shall be placed by Supply Chain Management Unit.

6.2.4.4 Such advertisements shall be advertised for a period of at least 30 days before closure, except in urgent cases when the advertisement period may be shortened as determined by the municipal manager.

6.2.4.5 Invitations to submit expressions of interest or tender offers shall be issued not less than 10 working days before the closing date for tenders and at least 5 working days before any compulsory clarification meeting. Procurement documents shall be made available not less than 7 days before the closing time for submissions.

6.2.5 Publication of submissions received and the award of contracts

6.2.5.1 The Supply Chain Management Unit shall publish within 10 working days of the closure of any advertised call for an expression of interest or an invitation to tender where the estimated value of the contract exceeds R200 000 including VAT on the municipality’s or municipal entity’s website, the names of all tenderers that made submissions to that advertisement, and if practical or applicable, the total of the prices and the preferences claimed. Such information shall remain on the website for at least 30 days. 6.2.5.2 The Supply Chain Management Unit shall publish within 7 working days of the award of a contract the following on the West Coast District Municipality’s website

a) the contract number;

b) contract title; c) brief description of the goods, services or works; d) the total of the prices, if practical;

e) the names of successful tenderers and their B-BBEE status level of contribution;

f) Duration of the contract; and g) brand names, if applicable.

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6.2.5.3 The Supply Chain Management Unit shall submit within 7 working days of the award of a contract the information required by National Treasury on the National Treasury eTender Publication Portal regarding the successful and unsuccessful tenders. Submissions shall be made by Supply Chain Management Unit.

6.2.5.4 The award of contracts relating to construction works which are subject to the Construction Industry Development Regulations issued in terms of the Construction Industry Development Act of 2000 shall in addition to the requirements of 6.2.5.3 be notified on the CIDB website. The notification shall be made and placed by Supply Chain Management Unit.

6.2.6 Disposal committee

6.2.6.1 The municipal manager shall appoint on a disposal by disposal basis in writing the members of the disposal committee to decide on how best to undertake disposals in accordance with the provisions of clause 10 of the standard.

6.2.6.2 The disposal panel shall comprise not less than three people. The chairperson shall be an employee of West Coast District Municipality.

6.2.6.3 The disposal committee shall make recommendations to municipal manager who shall approve the recommendations, refer the disposal strategy back to the disposal committee for their reconsideration, deciding not to proceed or to start afresh with the process.

6.3 Reporting of infrastructure delivery management information

The Senior Supply Chain Manager shall submit any reports required in terms of the standard to the National Treasury or Western Cape Provincial Treasury. 6.3.1 The Supply Chain Management Unit shall report to the relevant treasury within one month of the award of a contract or the issuing of an order, all engineering and construction, supply, service and professional service contracts that are awarded , or orders that are issued, should the total of prices including VAT exceed the following thresholds;

Value of contract or order including VAT

Services contract

Professional

services

Supply

Engineering and

construction works

R 25 million

R 25 million

R 50 million

R 50 million

7 Infrastructure procurement

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7.1 Usage of procurement procedures The West Coast District Municipality shall use all applicable Supply Chain Management / procurement administrative and compliance procedures that may be applicable to infrastructure procurement and delivery management. 7.2 Procurement documents

7.2.1 The forms of contract that may be used are as follows:

Applicable contracts listed in Table 10 of Standard for Infrastructure Procurement and Delivery Management (SIPDM) may be made use of. 7.2.2 The West Coast District Municipality’s preapproved templates for Part C1 (Agreements and contract data) of procurement documents shall be utilised to obviate the need for legal review prior to the awarding of a contract. All modifications to the standard templates shall be approved by relevant Director prior to being issued for tender purposes.

7.2.3 Disputes arising from the performance of a contract shall be finally settled in a South African court of law.

7.2.4 Additional requirement not stated or included in the standard templates, if any must be added; e.g. use of standard access specifications and health, safety specifications, etc.

7.2.5 The Municipal Declaration and returnable documents contained in the standard shall be included in all tenders for:

a) consultancy services;

and b) goods and services or any combination thereof where the total of the prices is expected to exceed

R10 m including VAT. 7.3 Developmental procurement policy

If the contract qualifies for any goals that have been set in West Coast District Municipality’s approved Integrated Development Plan (IDP), it must be stated upfront in the specifications for that specific contract.

7.4 Payment of contractors

The West Coast District Municipality shall settle all accounts within 30 days of invoice or statement as provided for in the contract.

7.5 Approval to utilise specific procurement procedures

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7.5.1 Prior approval shall be obtained for the following procurement procedures from the following persons, unless such a procedure is already provided for in the approved procurement strategy:

a) Municipal Manager or Evaluation Committee shall authorise the use of the

negotiated procedure above the thresholds provided in the standard. b) Municipal Manager or Evaluation Committee shall authorise the approaching of a

confined market except where a rapid response is required in the presence of, or the imminent risk of, an extreme or emergency situation arising from the conditions set out in the standard and which can be dealt with or the risks relating thereto arrested within 48 hours; and

c) the proposal procedure using the two-envelope system, the proposal procedure

using the two- stage system or the competitive negotiations procedure.

7.5.2 The municipal manager must nominate and authorise person to pursue a negotiated procedure in an emergency.

7.6 Receipt and safeguarding of submissions

7.6.1 A dedicated and clearly marked tender box shall be made available to receive all submissions made.

7.6.2 The tender box shall remain locked at all times and the keys shall be under control of the Archive Department. Such personnel shall be present when the box is opened on the stipulated closing date for submissions.

7.7 Opening of submissions

7.7.1 Submissions shall be opened by an opening panel comprising two people nominated by Chief financial officer who have declared their interest or confirmed that they have no interest in the submissions that are to be opened.

7.7.2 The opening panel shall open the tender box at the stipulated closing time and:

a) sort through the submissions and return those submissions to the box that are

not yet due to be opened including those whose closing date has been extended; b) return submissions unopened and suitably annotated where:

1) submissions are received late, unless otherwise permitted in terms of the submission data;

30

2) submissions were submitted by a method other than the stated method,

3) submissions were withdrawn in accordance with the procedures contained in SANS 10845-

3; and.

4) only one tender submission is received and it is decided not to open it and to call for fresh tender submissions;

c) record in the register submissions that were returned unopened;

d) open submissions if received in sealed envelopes and annotated with the

required particulars and read out the name of and record in the register the name of the tenderer or respondent and, if relevant, the total of prices including VAT where this is possible;

e) record in the register the name of any submissions that is returned with the reasons for doing so;

f) record the names of the tenderer’s representatives that attend the public opening;

g) sign the entries into the register; and

h) stamp each returnable document in each tender submission.

7.7.3 Each member of the opening panel shall initial the front cover of the submission and all pages that are stamped in accordance with the requirements of 7.7.3 h).

7.7.4 Respondents and tenderers whose submissions are to be returned shall be afforded the opportunity to collect their submissions.

7.7.5 Submissions shall be safeguarded from the time of receipt until the conclusion of the procurement process.

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7.8 Use of another organ of state’s framework agreement The West Coast District Municipality may make use of another organ of state’s framework contract which has been put in place by means of a competitive tender process and there are demonstrable benefits for doing so. The municipal manager shall make the necessary application to that organ of state to do so.

7.9 Insurances

7.9.1 Contractors shall be required to take out all insurances required in terms of the contract.

7.9.2 The insurance cover in engineering and construction contracts for loss of or damage to property (except the works, Plant and Materials and Equipment) and liability for bodily injury to or death of a person (not an employee of the Contractor) caused by activity in connection with a contract shall in general not be less than the value stated in Table 4, unless otherwise directed by the Chief financial officer.

7.9.3 Lateral earth support insurance in addition to such insurance shall be taken out on a case by case basis.

Table 4: Minimum insurance cover

Type of insurance Value

Engineering and construction contracts - loss of or damage to property (except the works, Plant and Materials and Equipment) and liability for bodily injury to or death of a person (not an employee of the Contractor) caused by activity in connection with a contract

Not less than R20 million

Professional services and service contracts - death of or bodily injury to employees of the Contractor arising out of and in the course of their employment in connection with a contract or damage to property

Not less than R10 million

Professional indemnity insurance geotechnical, civil and structural engineering: R5,0 million electrical, mechanical and engineering: R3,0 million architectural: R5,0 million other R3,0 million

7.9.4 The insurance cover in professional services and service contracts for damage to property or death of or bodily injury to employees of the Contractor arising out of and in the course of their employment in connection with a contract shall not be less than the value stated in Table 4 for any one event unless otherwise directed by Chief financial officer.

7.9.5 SASRIA Special Risk Insurance in respect of riot and associated risk of damage to the works, Plant and Materials shall be taken out on all engineering and construction works.

7.9.5 Professional service appointments shall as a general rule be subject to proof of

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current professional indemnity insurance being submitted by the contractor in an amount not less than the value stated in Table 4 in respect of each claim, without limit to the number of claims, unless otherwise directed by the Chief financial officer in relation to the nature of the service that they provide.

7.9.6 West Coast District Municipality shall take out professional indemnity insurance cover where it is deemed necessary to have such insurance at a level higher than the levels of insurance commonly carried by contractors.

7.9.7 Where payment is to be made in multiple currencies, either the contractor or West Coast District Municipality should be required to take out forward cover. Alternatively, the prices for the imported content should be fixed as soon as possible after the starting date for the contract.

7.10 W r i t t e n reasons for actions taken

7.10.1 W r i t t e n reasons for actions taken shall be provided by a the relevant Director

7.10.2 The written reasons for actions taken shall be as brief as possible and shall as far as is possible, and where relevant, be framed around the clauses in the:

a) SANS 10845-3, Construction procurement - Part 3: Standard conditions of tender,

and, giving rise to the reason why a respondent was not short listed, prequalified or admitted to a data base; or

b) SANS 10845-4, Construction procurement - Part 4: Standard conditions for the

calling for expressions of interest; as to why a tenderer was not considered for the award of a contract or not awarded a contract.

7.10.3 Requests for written reasons for actions taken need to be brief and to the point and may not divulge information which is not in the public interest or any information which is considered to prejudice the legitimate commercial interests of others or might prejudice fair competition between tenderers.

7.11 Request for access to information

7.11.1 Should an application be received in terms of Promotion of Access to Information Act of 2000 (Act2 of 2000), the “requestor” should be referred to the West Coast District Municipality’s Information Manual which establishes the procedures to be followed and the criteria that have to be met for the “requester” to request access to records in the possession or under the control of West Coast District Municipality.

7.11.2 Access to technical and commercial information such as a comprehensive programme which links resources and prices to such programme should be refused as such information provides the order and timing of operations, provisions for time risk allowances and statements as to how the contractor plans to do the work which identifies principal equipment and other resources which he plans to use. Access to a bill of quantities and rates should be provided in terms of the Act.


SCM POLICY

ANNEXURE K

APPOINMENT OF CONSULTANTS POLICY

1.1 Introduction 1.1.1 The purpose of this Policy is to explain the procedures for selecting, contracting, and monitoring consultants required for projects. Only the peculiarities of appointing consultants are dealt with herein, as the services to which these procedures apply are of an intellectual and advisory nature. These procedures do not apply to general services such as construction works,manufacture of goods, operation and maintenance of facilities or plants, surveys, exploratory drilling, aerial photography, satellite imagery, catering, cleaning and security in which the physical aspects of the activity predominate. Appointment of consultants for projects related to the construction industry must be in accordance with the prescripts of the Construction Industry Development Board (CIDB). 1.1.2 It must be clearly pointed out that the appointment of Transaction Advisors in respect of public-private partnerships or part thereof, should be done in terms of the provisions of section 120 of the MFMA and the municipal PPP Regulations. 1.1.3 For the purpose of this Policy, the term consultant includes,among others, consulting firms, management firms, procurement agents, inspection agents, auditors, other multinational organisations, investment and merchant banks, universities,research agencies, government agencies, non-governmental organisations (NGOs) and individuals. 1.1.4 Accounting officers may use these organisations as consultants to assist in a wide range of activities such as policy advice,accounting officer’s reform management, financial services,procurement services, social and environmental studies and identification, preparation and implementation of projects to complement accounting officers’ capabilities in these areas. 1.1.5 Consultants should only be engaged when the necessary skills and/or resources to perform a project/duty/study are not available and the

accounting officer cannot be reasonably expected either to train or to recruit people in the time available. 1.1.6 The relationship between the accounting officer and the consultant should be one of purchaser/supplier and not employer/employee. The work undertaken by a consultant should be regulated by a contract. The accounting officer is, however, responsible for monitoring and evaluating contractor performance and outputs against project specifications and targets and should take remedial action if performance is below standard. 1.2 Applicability of Procedures 1.2.1 The procedures outlined herein apply to all contracts for consulting services. In procuring consulting services, the accounting officer should satisfy himself/herself that:

have the necessary professional qualifications;

schedule, and

1.3 General Approach 1.3.1 The accounting officer should be responsible for preparing and implementing the project, for selecting the consultant, awarding and subsequently administering the contract. While the specific rules and procedures to be followed for selecting consultants depend on the circumstances of the particular case, at least the following four major considerations should guide the accounting officer’s policy on the selection process:

-quality services;

the services; and

1.3.2 In the majority of cases, these considerations can best be addressed through competition among firms in which the selection is based both on the quality of the services to be rendered and on the cost of the services to be provided (Quality- and Cost-Based Selection [QCBS]) as described in section 1.8.3. However, there are cases when QCBS is not the most appropriate method of selection. For complex or highly specialized assignments or those that invite innovations, selection based on the quality of the proposal alone (Quality-Based Selection [QBS]), would be more appropriate. Other methods of selection and the circumstances in which they are appropriate are outlined in section 1.9.

1.3.3 The particular method to be followed for the selection of consultants for any given project should be selected by the accounting officer in accordance with the criteria outlined in this guide. 1.3.4 When appropriate, the accounting officer may include under the special conditions of contract, the following or similar condition: “A service supplier may not recruit or shall not attempt to recruit an employee of the principal for purposes of preparation of the bid or for the duration of the execution of this contract or any part thereof”. 1.4 Conflict of Interest 1.4.1 Consultants are required to provide professional, objective and impartial advice and at all times hold the client’s interests paramount, without any consideration for future work and strictly avoid conflicts with other assignments or their own corporate interests. Consultants should not be hired for any assignment that would be in conflict with their prior or current obligations to other clients, or that may place them in a position of not being able to carry out the assignment in the best interest of the State. Without limitation on the generality of this rule, consultants should not be hired under the following circumstances:

a project and any of its affiliates, should be disqualified from providing consulting services for the same project. Similarly, a firm hired to provide consulting services for the preparation or implementation of a project and any of its affiliates, should be disqualified from subsequently providing goods or works or services related to the initial assignment (other than a continuation of the firm’s earlier consulting services as described below) for the same project, unless the various firms (consultants, contractors, or suppliers) are performing the contractor’s obligations under a turnkey or design-and-build contract; Consultants or any of their affiliates should not be hired for any assignment that, by its nature, may be in conflict with another assignment of the consultants. As an example, consultants hired to prepare an engineering design for an infrastructure project should not be engaged to prepare an independent environmental assessment for the same project, and consultants assisting a client in the privatization of public assets should not purchase, nor advise purchasers of such assets. 1.5 Associations between Consultants 1.5.1 Consultants may associate with each other to complement their respective areas of expertise, or for other reasons. Such an association may be for the long term (independent of any particular assignment) or for a specific assignment. The “association” may take the form of a joint venture or a subconsultancy.

In case of a joint venture, all members of the joint venture should sign the contract and are jointly and severally liable for the entire assignment. Once the bids or Requests for Proposals (RFPs) from service suppliers are issued, any association in the form of joint venture or sub-consultancy among firms should be permissible only with the approval of the accounting officer or his/her delegate. Accounting officers should not compel consultants to form associations with any specific firm or group of firms, but may encourage associations with the aim to enhance transfer of skills. 1.6 Promoting Government’s Preferential Policies 1.6.1 When consultants are appointed, the prescripts of the Preferential Procurement Regulations, 2017, must be adhered to. 1.7 Training or Transfer of Knowledge and Skills 1.7.1 If the assignment includes an important component for training or transfer of knowledge and skills, the Terms of Reference (TOR) should indicate the objectives, nature, scope and goals of the training programme, including details of trainers and trainees, skills to be transferred, time frames and monitoring and evaluation arrangements. The cost for the training programme should be included in the consultant’s contract and in the budget for the assignment. 1.8 Steps to follow when selecting consultants 1.8.1 The four stages of selection 1.8.1.1 There are essentially four distinct stages in the recommended selection process:

e responses; and

1.8.1.2 Other aspects of appointment (such as advertising, opening of proposals) are no different from those set out in the SCM Policy of this Municipality. 1.8.1.3 Each of the four stages above is described in the sections below. 1.8.2 Identify the Approach 1.8.2.1 Various approaches may be followed in selecting consultants. As stated earlier, in most instances, ‘Quality and cost based selection’ (QCBS) is recommended. However, other possibilities are:

based selection;

1.8.2.2 In determining the most appropriate approach, it may be useful to ask: What sort of Consultancy do I require? Is it for: - An assignment that is not complex or Use ‘Quality and Cost Specialised Based Selection’ (QCBS) A complex or highly specialized assignment, or which consultants are expected to demonstrate innovation in their proposals (for example, financial sector reforms) Use ‘Quality-Based Selection’ (QBS) An assignment that has a high downstream impact and requires the best available experts (for example, management studies of large government agencies) Use QBS An assignment that could be carried out in substantially different ways, hence proposals will not be comparable (for example, sector and policy studies in which the value of the services depends on the quality of the analysis) Use QBS A simple assignment, which is precisely defined and the budget fixed Use ‘Selection under a fixed budget’, but evaluate technical proposals first as in QCBS A standard or routine assignment (e.g. an audit, engineering design of noncomplex works) Use ‘Least-cost selection’ Potential suppliers may be obtained from the list of approved service suppliers. A very small assignment, which does not justify the preparation and evaluation of competitive proposals. Selection based on consultant’s qualifications as detailed in paragraph 1.9.4. Potential suppliers may be obtained from the list of pre-qualified firms. A task that represents a natural continuation of previous work carried out by the firm Use ‘Single-source selection An emergency operation You MAY use ‘Single source selection.’ An assignment where only one firm is qualified or has experience of exceptional worth for the assignment Use ‘Single-source selection’ Any other situation: Quality and Cost Based Selection (QCBS) Use ‘Quality and Cost Based Selection’, either by requesting a “BID” or a “PROPOSAL” 1.8.3 Invite bids/proposals, using QCBS 1.8.3.1 Request for bids

1.8.3.1.1 The following steps would generally be followed in appointing consultants where a clear Terms of Reference (TOR), including a detailed task directive has been compiled and the objectives, goals and scope of the assignment are clearly defined: Preparation of the “Terms of Reference” (TOR) The accounting officer should prepare the TOR. The scope of the services described should be compatible with the available budget. The TOR should define clearly the task directive (methodology), objectives, goals and scope of the assignment and provide background information, including a list of existing relevant studies and basic data, to facilitate the consultants’ preparation of their bids. Time frames linked to various tasks should be specified, as well as the frequency of monitoring actions. The respective responsibilities of the accounting officer and the consultant should be clearly defined. The evaluation criteria, their respective weights, the minimum qualifying score for functionality and the values that will be applied for evaluation should be clearly indicated. The evaluation criteria should include at least the following:

In more complicated projects, provision may also be made for pre-bid briefing sessions or presentations by bidders as part of the evaluation process. A clear indication should be given of which preference point system in terms of the PPPFA and its associated Regulations will be applicable. Detailed information on the evaluation process should be provided by firstly indicating the ratio of percentage between functionality and price. The percentage for price should be determined taking into account the complexity of the assignment and the relative importance of functionality. The percentage for price should normally be determined and approved by the accounting officer or his/her delegate prior to finalising the TOR. If transfer of knowledge or training is an objective, it should be specifically outlined along with details of number of staff to be trained, etc.,to enable consultants to estimate the required resources. The TOR should list the services and surveys necessary to carry out the assignment and the expected outputs (for example reports, data, maps, surveys, etc), where applicable. Evaluation criteria could be divided into subcriteria. Preparation of a well-thought-through cost estimate is essential if realistic budgetary resources are to be earmarked. The cost estimate should be based on the accounting officer’s assessment of the resources needed to carry out the assignment such as staff time, logistical support and physical inputs (i.e. vehicles, laboratory equipment, etc). The cost of staff time should be estimated on a realistic basis for foreign and local personnel. The TOR should specify the validity period (normally 60 – 90 days).

The TOR should form part of the standard bid documentation. At this stage the evaluation panel, consisting of at least three members who are demographically representative in terms of race, gender and expertise, should also be selected and finalised. 1.8.3.2 Request for Proposals 1.8.3.2.1 This method should be followed where selection is based both on the quality of a proposal and on the cost of the service through competition among firms. This method will be applicable on more complex projects where consultants are requested and encouraged to propose their own methodology and to comment on the TOR in their proposals. Preparation and issuance of ‘Request for Proposals’ (RFP) Whenever possible, accounting officers should include at least the following documents in the RFP:

Letter of invitation (LOI) The LOI should state the intention to enter into a contract for the provision of consulting services, the details of the client and the date,time and address for submission of proposals. Information to Consultants (ITC) The ITC should contain all necessary information that would assist consultants to prepare responsive proposals. It should be transparent and provide information on the evaluation process by indicating the evaluation criteria and factors and their respective weights and the minimum qualifying score for functionality. A clear indication should be given of which preference points system will be applicable in terms of the PPPFA and its Regulations. The budget is not specified (since cost is a selection criterion), but should indicate the expected input of key professionals (staff time). Consultants, however, should be free to prepare their own estimates of staff time necessary to carry out the assignment. The ITC should specify the proposal validity period (normally 60 A detailed list of the information that should be included in the ITC as given in Section 1.14. Terms of Reference A specialist in the area of the assignment should compile the TOR and the scope of services described should be compatible with the available budget. The TOR should define as clearly as possible the objectives, goals and scope of the assignment including background information to facilitate the consultant in the preparation of its proposal. The TOR should be compiled in such a manner that consultants are able to

propose their own methodology and staffing and be encouraged to comment on the TOR in their proposals. Depending on the circumstances, it may be indicated that proposals should be submitted in two separate clearly marked envelopes, one containing the technical proposal and the other the cost for the assignment. In cases where pre-qualification / shortlisting is required, the TOR should indicate the basis of pre-qualification / shortlisting, for instance the number of minimum points to be scored to prequalify. Contract Accounting officers should use the appropriate Standard Form of Contract (MBD 7.2) issued bythe National Treasury. Any changes necessary to address specific project issues should be introduced through Contract Data Sheets or through Special Conditions of Contract and not by introducing changes in the wording of the General Conditions of Contract included in the Standard Form. When these forms are not appropriate (for example, for pre-shipment inspection, training of students in universities,), accounting officers should use other acceptable contract forms. 1.8.4 Receipt of Proposals 1.8.4.1 The accounting officer should allow enough time for consultants to prepare their proposals. The time allowed should depend on the assignment, but normally should not be less than four weeks or more than three months (for example, for assignments requiring establishment of a sophisticated methodology, preparation of a multidisciplinary master plan). During this interval, the firms may request clarification about the information provided in the RFP. The accounting officer should provide clarification in writing and copy them to all firms who intend to submit proposals. If necessary, the accounting officer should extend the deadline for submission of proposals. The technical and financial proposals should be submitted at the same time. No amendments to the technical or financial proposal should be accepted after the deadline. To safeguard the integrity of the process, the technical and financial proposals should be submitted in separate sealed envelopes. The technical envelopes should be opened immediately after the closing time for submission of proposals. The financial proposals should remain sealed until they are opened publicly. Any proposal received after the closing time for submission of proposals should be returned unopened. 1.8.5 Evaluation of bids/proposals Tenders invited on the basis of functionality as a criterion must be evaluated in two stages – first functionality must be assessed and then in accordance with the 80/20 or 90/10 preference point systems prescribed in Preferential Procurement Regulations 6 and 7. The evaluation must be done according to Procurement Regulations 2017 as follows: 1.8.5.1 First stage – Evaluation of functionality

1.8.5.1.1. Tenders must be evaluated in terms of the provisions contained in paragraph 5 of this implementation guide. 1.8.5.1.2 A tender will be considered further if it achieves the prescribed minimum qualifying score for functionality. 1.8.5.1.3 If the minimum qualifying score for functionality is indicated as a percentage in the bid documents, the percentage scored for functionality may be calculated as follows: a) The scores for each criterion (and, where relevant, each sub-criterion) should be added to obtain the total score; and b) The following formula should be used to convert the total score converted to a percentage for functionality: Ps

So

X 100

Ms where: Ps = percentage scored for functionality by bid under consideration So = total score of bid under consideration Ms = maximum possible score 1.8.5.1.4 The percentage of each panel member should be added and divided by the number of panel members to establish the average percentage obtained by each bidder for functionality. 1.8.5.2. Second stage – Evaluation in terms of the 80/20 or 90/10 preference point systems 1.8.5.2.1 Only bids that achieve the minimum qualifying score / percentage for functionality must be evaluated further in accordance with the 80/20 or 90/10 preference point systems prescribed in Preferential Procurement Regulations 6 and 7. 1.8.6 EVALUATION IN TERMS OF PRICE AND PREFERENCE POINT SYSTEMS 1.8.6.1 Step 1: Calculation of points for price 1.8.6.1.1. The PPPFA prescribes that the lowest acceptable bid will score 80 or 90 points for price. Bidders that quoted higher prices will score lower points for price on a pro-rata basis. 1.8.6.1.2. When calculating prices:

1.8.6.1.2.1 Unconditional discounts must be taken into account for evaluation purposes; and 1.8.6.1.2.2 Conditional discounts must not be taken into account for evaluation purposes but should be implemented when payment is affected. 1.8.6.1.3 The formulae to be utilized in calculating points scored for price are as follows: 80/20 Preference point system [(for acquisition of goods or services for a Rand value equal to or above R30 000 and up to R50 million) (all applicable taxes included)]

Where Ps = Points scored for price of tender under consideration Pt = Price of tender under consideration Pmin = Price of lowest acceptable tender. 90/10 Preference point system [(for acquisition of goods or services with a Rand value above R50 million) (all applicable taxes included)]

Where Ps = Points scored for price of tender under consideration Pt = Price of tender under consideration Pmin = Price of lowest acceptable tender 1.8.6.1.4. Points scored must be rounded off to the nearest 2 decimal places. 1.8.6.2 Step 2: Calculation of points for B-BBEE status level of contributor 1.8.6.2.1 Points must be awarded to a bidder for attaining the B-BBEE status level Points for B-BBEE Status level of contributor must be awarded in accordance with the table below:

B-BBEE STATUS LEVEL OF CONTRIBUTOR



1 10 20

2 9 18

3 6 14

4 5 12

5 4 8

6 3 6

7 2 4

8 1 2

Non-compliant 0 0

1.8.6.3 Calculation of total points scored for price and B-BBEE status level of contributor The points scored for price must be added to the points scored for B-BBEE status level of contrbutor to abtain the bidder’s total points scored out of 100. 1.8.6.4 CRITERIA FOR BREAKING DEADLOCK IN SCORING 1.8.6.4.1 In the event that two or more tenderers have scored equal total points, the successful tenderer must be the one that scored the highest points for B-BBEE. 1.8.6.4.2. If two or more tenderers have equal points, including equal preference points for B-BBEE, the successful tenderer must be the one scoring the highest score for functionality, if functionality is part of the evaluation process. 1.8.6.4.3. In the event that two or more tenderers are equal in all respects, the award must be decided by the drawing of lots. Information relating to evaluation of bids and recommendations concerning awards should not be disclosed to the consultants who submitted bids or to other persons not officially concerned with the process until the successful consultant is notified. Evaluation of technical proposals (Functionality) The evaluation of the proposals should be carried out in two stages: first the functionality (quality) and then the price. The evaluation should be carried out in full conformity with the provisions of the RFP. When the two-envelope system is used: Evaluators of technical proposals should not have access to the financial proposals until the technical evaluation is concluded. Financial proposals should be opened only after the technical evaluation and only in respect of those proposals that achieved the minimum qualifying score for functionality. In respect of functionality, the accounting officer should evaluate each technical proposal (using an evaluation panel of three or more specialists in that field of expertise) in terms of the specified evaluation criteria that may include the following:

knowledge.

The accounting officer should normally divide these criteria into sub-criteria; for example, the sub-criteria under methodology might be innovation and level of detail. More weight should be given to the methodology in the case of more complex assignments for example multidisciplinary feasibility or management studies. Evaluation of only “key” personnel is recommended as they ultimately determine the quality of performance. More weight should be assigned to this criterion if the proposed assignment is complex. The accounting officer should review the qualifications and experience of proposed key personnel in their curricula vitae which should be accurate, complete and signed by an authorised official of the consultant and the individual proposed. When the assignment depends critically on the performance of key staff, such as a Project Manager in a large team of specified individuals, it may be desirable to conduct interviews. The individuals can be rated, among others, in the following sub-criteria as relevant to the assignment: General qualifications: general education and training, length of experience, positions held, time with the consulting firm staff, and experience in developing countries; Adequacy for the assignment: education, training and experience in that specific sector, field or subject relevant to the particular assignment; and Experience in the region: knowledge of the local language, culture, administrative system, government organization, etc. Accounting officers should evaluate each proposal on the basis of its response to the TOR. A proposal should be rejected at this stage if it does not respond to important aspects of the TOR or it fails to achieve the minimum qualifying score for functionality as specified in the RFP. At the end of the process, the accounting officer should prepare an evaluation report on the quality of the proposals. The report should substantiate the results of the evaluation and describe the relative strengths and weaknesses of the proposals. All records relating to the evaluation such as individual score sheets should be retained until completion of the project and its audit. Evaluation of financial proposal For the purpose of evaluation, the price shall include all local taxes and other reimbursable expenses such as travel, translation, report printing or secretarial expenses. The proposal with the lowest price will obtain the maximum percentage for price as prescribed in the RFP. Proposals with higher prices will proportionately obtain lower percentages according to the method as prescribed in the RFP. Negotiations and award of contract The Accounting Officer may negotiate the contract only with the preferred bidder identified by means of the competitive bidding process. Negotiations should include discussions of

the TOR, the methodology, staffing, accounting officer’s inputs, and special conditions of the contract. These discussions should not substantially alter the original TOR or the terms of the contract, compromise the quality of the final product, its cost, and the relevance of the initial evaluation. Major reductions in work inputs should not be made solely to meet the budget. The final TOR and the agreed methodology should be incorporated in “Description of Services,” which should form part of the contract. The selected firm should not be allowed to substitute key staff, unless both parties agree that undue delay in the selection process makes such substitution unavoidable or that such changes are critical to meet the objectives of the assignment. If this is not the case and if it is established that key staff were offered in the proposal without confirming their availability, the firm may be disqualified and the process continued with the next ranked firm. The key staff proposed for substitution should have qualifications equal to or better than the key staff initially proposed. Proposed unit rates for staff-months and reimbursables should not be negotiated, since these have already been a factor of selection in the cost of the proposal, unless there are exceptional reasons. If the negotiations fail to result in an acceptable contract, the accounting officer should terminate the negotiations and invite the next ranked firm for negotiations. The original preferred consultant should be informed of the reasons for termination of the negotiations. Once negotiations are commenced with the next ranked firm, the accounting officer should not reopen the earlier negotiations. After negotiations are successfully completed, the accounting officer should promptly notify other firms that they were unsuccessful. Contract award According to the prescripts of the PPPFA and its Regulations, a contract may only be awarded to the bidder who scored the highest number of points, unless objective criteria justify the award to another bidder. Should this be the case, the accounting officer should be able to defend the decision not to award the bid to the bidder who scored the highest number of points in any court of law. It should be emphasized that not offering any contributions toprescribed goals as contemplated in the Preferential Procurement Regulations, 2001, does not disqualify a bidder. Under these circumstances a bidder will score no points for the specified goals. The accounting officer should award the contract, within the period of the validity of bids, to the bidder who meets the appropriate standards of capability and resources and whose bid has been determined:

A bidder should not be required, as a condition of award, to undertake responsibilities for work not stipulated in the bidding documents or otherwise to modify the bid as originally submitted. Rejection of all proposals and reinvitation The accounting officer will be justified in rejecting all proposals only if all proposals are non-responsive and unsuitable, either because they present major deficiencies in complying with the TOR, or because they involve costs substantially higher than the original estimate. In the latter case, the feasibility of increasing the budget, or scaling down the scope of services with the firm should be investigated. The new process may include revising the RFP and the budget. 1.9 Other Methods of Selection 1.9.1 Quality-Based Selection (QBS) 1.9.1.1 QBS is appropriate for the following types of assignments:

efine precise TOR and the required input from the consultants and for which the client expects the consultants to demonstrate innovation in their proposals (for example,country economic or sector studies, multi-sectoral feasibility studies, design of a hazardous waste remediation plant or of an urban master plan, financial sector reforms);

the best experts (for example, feasibility and structural engineering design of such major infrastructure as large dams, policy studies of national significance, management studies of large government agencies); and

will not be comparable (for example, management advice and sector and policy studies in which the value of the services depends on the quality of the analysis). 1.9.1.2 In QBS, the RFP may request submission of a technical proposal only (without the financial proposal), or request submission of both technical and financial proposals at the same time, but in separate envelopes (two-envelope system). The RFP should not disclose the estimated budget, but it may provide the estimated number of key staff time, specifying that this information is given as an indication only and that consultants are free to propose their own estimates. 1.9.1.3 If technical proposals alone were invited, after evaluating the technical proposals using the same methodology as in QCBS, the accounting officer should request the consultant with the highest ranked technical proposal to submit a detailed financial proposal.

The accounting officer and the consultant should then negotiate the financial proposal and the contract. All other aspects of the selection process should be identical to those of QCBS. If, however, consultants were requested to provide financial proposals initially together with the technical proposals, safeguards should be built in to ensure that the price envelope of only the selected proposal is opened and the rest returned unopened, after the negotiations are successfully concluded. 1.9.2 Selection under a fixed budget 1.9.2.1 This method is appropriate only when the assignment is simple and can be precisely defined and when the budget is fixed. The RFP should indicate the available budget and request the consultants to provide their best technical and financial proposals in separate envelopes, within the budget. The TOR should be particularly well prepared to ensure that the budget is sufficient for the consultants to perform the expected tasks. Evaluation of all technical proposals should be carried out first as in the QCBS method, where after the price envelopes should be opened in public. Proposals that exceed the indicated budget should be rejected. The consultant who has submitted the highest ranked technical proposal should be selected and invited to negotiate a contract. 1.9.3 Least-cost selection 1.9.3.1 This method is more appropriate to selection of consultants for assignments of a standard or routine nature (audits, noncomplex projects, and so forth) where well-established practices and standards exist and in which the contract amount is small. Under this method, a “minimum” qualifying mark for the “functionality” is established. Proposals to be submitted in two envelopes are invited. Technical envelopes are opened first and evaluated. Those securing less than the minimum mark should be rejected and the financial envelopes of the rest are opened in public. The firm with the highest points should then be selected. Under this method, the qualifying minimum mark should be established, keeping in view that all proposals above the minimum compete only on “cost” and promotion of HDIs and RDP objectives. The minimum mark to qualify should be stated in the RFP. 1.9.4 Selection based on consultants’ qualifications 1.9.4.1 This method may be used for very small assignments for which the need for preparing and evaluating competitive proposals is not justified. In such cases, the accounting officer should prepare the TOR, request expressions of interest and information on the consultants’ experience and competence relevant to the assignment and select the firm with the most appropriate qualifications and references. The selected firm should be requested to submit a combined technical-financial proposal and then be invited to negotiate the contract. 1.9.5 Single-source selection

1.9.5.1 Single-source selection of consultants does not provide the benefits of competition in regard to quality and cost and lacks transparency in selection and could encourage unacceptable practices. Therefore, single-source selection should be used only in exceptional cases. The justification for single-source selection should be examined in the context of the overall interests of the client and the project. 1.9.5.2 Single-source selection may be appropriate only if it presents a clear advantage over competition:

gnments; or

assignment. 1.9.5.3 The reasons for a single-source selection should be recorded and approved by the accounting officer or his / her delegate prior to the conclusion of a contract. 1.9.5.4 When continuity for downstream work is essential, the initial RFP should outline this prospect and if practical, the factors used for the selection of the consultant should take the likelihood of continuation into account. Continuity in the technical approach, experience acquired and continued professional liability of the same consultant may make continuation with the initial consultant preferable to a new competition, subject to satisfactory performance in the initial assignment. For such downstream assignments, the accounting officer should ask the initially selected consultant to prepare technical and financial proposals on the basis of TOR furnished by the accounting officer, which should then be negotiated. 1.9.5.5 If the initial assignment was not awarded on a competitive basis or was awarded under tied financing or reserved procurement or if the downstream assignment is substantially larger in value, a competitive process acceptable to the accounting officer should normally be followed in which the consultant carrying out the initial work is not excluded from consideration if it expresses interest. 1.9.5.6 Where, in exceptional instances, it is impractical to appoint the required consultants through a competitive bidding process and a South African based consultant is used, the Guidelines on Hourly Fee Rates for Consultants issued by the Department of Public Service and Administration may be used as a benchmark to establish the appropriate tariffs, or to determine the reasonableness of the tariffs. 1.9.6 Selection of individual consultants 1.9.6.1 Individual consultants may normally be employed on assignments for which:

equired; and

1.9.6.2 When co-ordination, administration, or collective responsibility may become difficult because of the number of individuals, it would be advisable to employ a firm. 1.9.6.3 Individual consultants should be selected on the basis of their qualifications for the assignment. They may be selected on the basis of references or through comparison of qualifications among those expressing interest in the assignment or approached directly by the accounting officer. Individuals employed by the accounting officer should meet all relevant qualifications and should be fully capable of carrying out the assignment. Capability is judged on the basis of academic background, experience and as appropriate, knowledge of the local conditions, such as local language, culture, administrative system and government organization. 1.9.6.4 From time to time, permanent staff or associates of a consulting firm may be available as individual consultants. In such cases, the conflict of interest provisions described in these guidelines should apply to the parent firm. 1.9.7 Selection of particular types of consultants 1.9.7.1 Use of Nongovernmental Organizations (NGOs). NGOs are voluntary non-profit organizations that may be uniquely qualified to assist in the preparation, management, and implementation of projects, essentially because of their involvement and knowledge of local issues, community needs, and/or participatory approaches. NGOs may be included in the short list if they express interest and provided that the accounting officer is satisfied with their qualifications. For assignments that emphasize participation and considerable local knowledge, the short-list entirely NGOs. If so, the QCBS procedure should be followed and the evaluation criteria should reflect the unique qualifications of NGOs, such as voluntarism, non-profit status, local knowledge, scale of operation, and reputation. An accounting officer may select the NGO on a single-source basis, provided the criteria outlined for single source selection are fulfilled. 1.9.7.2 Inspection Agents. Accounting officers may wish to employ inspection agencies to inspect and certify goods prior to shipment or on arrival in the country. The inspection by such agencies usually covers the quality and quantity of the goods concerned and reasonableness of price. Inspection agencies should be registered with the South African National Accreditation System (SANAS) and the services of these inspection agents should be obtained by means of competitive bidding. 1.9.7.3 Banks. Investment and commercial banks, financial firms, and fund managers hired by accounting officers for the sale of assets, issuance of financial instruments and other corporate financial transactions, notably in the context of privatization operations, should be selected under QCBS. The RFP should specify selection criteria relevant to the activity — for example, experience in similar assignments or network of potential purchasers — and the cost of the services. In addition to the conventional remuneration (called a “retainer fee”), the compensation includes a “success fee.” This fee can be fixed, but is usually expressed as a percentage of the value of the assets or other financial instruments to be sold. The RFP should indicate that the cost evaluation will take into

account the success fee, either in combination with the retainer fee or alone. If alone, a standard retainer fee should be prescribed for all short-listed consultants and indicated in the RFP, and the financial scores should be based on the success fee as a percentage of a predisclosed notional value of the assets. For the combined evaluation (notably for large contracts), cost may be accorded a weight higher or the selection may be based on cost alone among those who secure a minimum passing mark for the quality of the proposal. The RFP should specify clearly how proposals will be presented and how they will be compared. 1.9.7.4 Auditors. Auditors typically carry out auditing tasks under welldefined TOR and professional standards. They should be selected according to QCBS, with cost as a substantial selection factor (40 -Cost Selection.” When consultants are appointed to execute an audit function on behalf of the accounting officer, the tariffs agreed by the Auditor–General and the South African Institute for Chartered Accountants (SAICA) may be used as a guideline to determine the appropriate tariff or to determine the reasonableness of the tariffs. These tariffs can be obtained from SAICA’s website under www.saica.co.za. These tariffs are captured in a circular, which can be accessed on SAICA’s webpage under publications in the media centre icon. 1.9.7.5 “Service Delivery Contractors.” Projects in the social sectors in particular may involve hiring of large numbers of individuals who deliver services on a contract basis (for example, social workers, nurses and paramedics). The job descriptions, minimum qualifications, terms of employment and selection procedures should be described in the project documentation. 1.10 Establishment of a List of Approved Service Suppliers 1.10.1 Where consultancy services are required on a recurring basis, a panel of consultants/list of approved service suppliers for the rendering of these services may be established. These panels/lists should be established through the competitive bidding process, usually for services that are of a routine or simple nature where the scope and content of the work to be done can be described in detail. 1.10.2 The intention to establish a panel/list of approved service suppliers is published in locally distributed news media and the municipality / municipal entity’s website. The closing time and date for inclusion in the panel/list of approved service suppliers should be indicated. For this purpose, a questionnaire should be made available and should make provision for the following: Full details of the service supplier, among others:

educational, engineering, computer, etc.;

Requirements for admission to the list and criteria should be linked to the numeric value in terms of which applicants will be measured, for example qualifications, experience, acceptability, facilities and resources, etc. A pre-determined standard method of awarding points should be followed. 1.10.3 The applications received should be evaluated and any rejection of applicants should be motivated and recorded. 1.10.4 Once the panel/list of service suppliers has been approved, only the successful applicants are approached, depending on the circumstances, either by obtaining quotes on a rotation basis, or according to the bid procedure when services are required, with the exception that the requirement is not advertised again. 1.10.5 This list should be updated continuously, at least quarterly. 1.11 Evaluation of the Performance of Consultants 1.11.1 Consultants should observe due diligence and prevailing standards in the performance of the assignment. The accounting officer should evaluate the performance of consultants appointed in a fair and confidential process. In the case of repeated poor performance, the firm should be notified and provided an opportunity to explain the reasons for it and the remedial action proposed. 1.11.2 Consultants should be responsible for the accuracy and suitability of their work. Although accounting officers supervise and review the consultants’ work, no modifications should be made in the final documents prepared by the consultants without mutual agreement. In the case of supervision of works, consultants may have more or less authority to supervise, from full responsibility as an independent engineer, to that of advisor to the client with little authority to make decisions, as determined by the accounting officer and captured in the contract agreement between the accounting officer and the consultant. 1.12 Types of Contracts for Consultants 1.12.1 Lump Sum (Firm Fixed Price) Contract: Lump sum contracts are used mainly for assignments in which the content and the duration of the services and the required output of the consultants are clearly defined. They are widely used for simple planning and feasibility studies, environmental studies, detailed design of standard or common structures, preparation of data processing systems, and so forth. Payments are linked to outputs (deliverables), such as reports, drawings, bills of quantities, bidding documents and software programs. Lump sum contracts are easy to administer because payments are due on clearly specified outputs. 1.12.2 Time-Based Contract: This type of contract is appropriate when it is difficult to define the scope and the length of services, either because the services are related to

activities by others for which the completion period may vary, or because the input of the consultants required to attain the objectives of the assignment is difficult to assess. This type of contract is widely used for complex studies, supervision of construction, advisory services, and most training assignments. Payments are based on agreed hourly, daily, weekly, or monthly rates for staff (who are normally named in the contract) and on reimbursable items using actual expenses and/or agreed unit prices. The rates for staff include salary, social costs, overheads, fees (or profit), and, where appropriate, special allowances. This type of contract should include a maximum amount of total payments to be made to the consultants. This ceiling amount should include a contingency allowance for unforeseen work and duration and provision for price adjustments, where appropriate. Time-based contracts need to be closely monitored and administered by the client to ensure that the assignment is progressing satisfactorily and payments claimed by the consultants are appropriate. Again the Guidelines on fees for Consultants issued by the Department of Public Service and Administration should be used as a benchmark to establish the appropriate tariffs, or to determine the reasonableness of the tariffs. 1.12.3 Retainer and/or Contingency (Success) Fee Contract: Retainer and contingency fee contracts are widely used when consultants (banks or financial firms) are preparing companies for sales or mergers of firms, notably in privatization operations. The remuneration of the consultant includes a retainer and a success fee, the latter being normally expressed as a percentage of the sale price of the assets. 1.12.4 Percentage Contract: These contracts are commonly used for architectural services. They may be also used for procurement and inspection agents. Percentage contracts directly relate the fees paid to the consultant to the estimated or actual project construction cost, or the cost of the goods procured or inspected. The contracts are negotiated on the basis of market norms for the services and/or estimated staff-month costs for the services, or competitive bid. It should be borne in mind that in the case of architectural or engineering services, percentage contracts implicitly lack incentive for economic design and are hence discouraged. Therefore, the use of such a contract for architectural services is recommended only if it is based on a fixed target cost and covers precisely defined services (for example, not works supervision). 1.12.5 Indefinite Delivery Contract (Price Agreement): These contracts are used when accounting officers need to have “on call” specialized services to provide advice on a particular activity, the extent and timing of which cannot be defined in advance. These are commonly used to retain “advisers” for implementation of complex projects (for example, dam panel), expert adjudicators for dispute resolution panels, accounting officers’ reforms, procurement advice, technical troubleshooting, and so forth, normally for a period of a year or more. The accounting officer and the firm agree on the unit rates to be paid for the experts and payments are made on the basis of the time actually used. 1.13 Important Provisions for Contracts with Consultants

1.13.1 Currency. RFPs should clearly state that firms must express the price for their services, in Rand. If the consultants wish to express the price as a sum of amounts in different foreign currencies, they may do so, provided that the accounting officer concurs with this practice and that the proposal includes no more than three foreign currencies outside the borders of South Africa. The accounting officer should require consultants to state the portion of the price representing local costs in Rand. Payment under the contract should be made in the currency or currencies expressed in the formal contract. 1.13.2 Price Adjustment. To adjust the remuneration for foreign and/or local inflation, a price adjustment provision should be included in the contract if its duration is expected to exceed 12 months. Exceptionally, contracts of shorter duration may include a provision for price adjustment when local or foreign inflation is expected to be high and unpredictable. 1.13.3 Payment Provisions. Payment provisions, including amounts to be paid, schedule of payments, and payment procedures, should be agreed upon during negotiations. Payments may be made at regular intervals (as under time-based contracts) or for agreed outputs (as under lump sum contracts). Payments for advances (for example, for mobilization costs) exceeding 10 percent of the contract amount should normally be backed by advance payment securities. Payments should be made promptly in accordance with the contract provisions. To that end,

accordance with the contract; and ent is delayed

due to the client’s fault beyond the time allowed in the contract. The rate of charges should be specified in the contract. 1.13.4 Bid and Performance Securities. Bid and performance securities are not recommended for consultants’ services. Their enforcement is often subject to judgement calls, they can be easily abused and they tend to increase the costs to the consulting industry without evident benefits, which are eventually passed on to the accounting officer. 1.13.5 Accounting officer’s contribution. The accounting officer normally assigns members of his/her professional staff to the assignment in different capacities. The contract between the accounting officer and the consultant should give the details governing such staff, known as counterpart staff, as well as facilities that should be provided by the accounting officer, such as housing, office space, secretarial support, utilities, materials and vehicles. The contract should indicate measures the consultant can take if some of the items cannot be provided or have to be withdrawn during the assignment and the compensation the consultant will receive in such a case. 1.13.6 Conflict of Interest. The consultant should not receive any remuneration in connection with the assignment except as provided in the contract. The consultant and its affiliates should not engage in consulting activities that conflict with the interests of the client under the contract, and should be excluded from downstream supply of goods or

construction of works or purchase of any asset or provision of any other service related to the assignment other than a continuation of the “Services” under the ongoing contract. 1.13.7 Professional Liability. The consultant is expected to carry out its assignment with due diligence and in accordance with prevailing standards of the profession. As the consultant’s liability to the accounting officer will be governed by the applicable law, the contract need not deal with this matter unless the parties wish to limit this liability. If they do so, they should ensure that:

misconduct;

total payments expected to be made under the consultant’s contract, or the proceeds the consultant is entitled to receive under its insurance, whichever is higher; and

with the consultant’s liability toward third parties. 1.13.8 Staff Substitution. During an assignment, if substitution is necessary (for example, because of ill health or because a staff member proves to be unsuitable), the consultant should propose other staff of at least the same level of qualifications for approval by the accounting officer. 1.13.9 Applicable Law and Settlement of Disputes. The contract should include provisions dealing with the applicable law and the forum for the settlement of disputes. Should it not be possible to settle a dispute by means of mediation, the dispute may be settled in a South African court of law. 1.14 Information to Consultants (ITC) 1.14.1 Scheduling the Selection Process 1.14.1.1 Modifications of Contract 1.14.1.1.1 Any granting of a substantial extension of the stipulated time for performance of a contract, agreeing to any substantial modification of the scope of the services, substituting key staff, waiving the conditions of a contract, or making any changes in the contract that would in aggregate increase the original amount of the contract by more than 15 percent, will be subject to the approval of the accounting officer or his / her delegate. 1.14.1.1.2 Whenever possible, the accounting officer should use RFPs, which include the ITC, covering the majority of assignments. If under exceptional circumstances, the accounting officer needs to amend the standard ITC, it should do so through the technical data sheet and not by amending the main text. The ITC should include adequate information on the following aspects of the assignment:

addressed and with whom the consultants’ representative should meet, if necessary;

- a description of the two-stage process, if appropriate; - a listing of the technical evaluation criteria and weights given to each criterion; - the details of the financial evaluation; - the relative weights for quality and cost in the case of QCBS; - the minimum pass score for quality; and - the details on the public opening of financial proposals;

imate of the level of key staff inputs (in staff-months) required of the consultants; and indication of minimum experience, academic achievement, and so forth, expected of key staff or the total budget, if a given figure cannot be exceeded;

on negotiations; and financial and other information that should be required of the selected firm during negotiation of the contract;

from providing downstream goods, works, or services under the project if, in the accounting officer’s judgement, such activities constitute a conflict of interest with the services provided under the assignment;

be submitted, including the requirement that the technical proposals and price proposals be sealed and submitted separately in a manner that should ensure that the technical evaluation is not influenced by price;

es receipt of the RFP and informs the accounting officer whether or not it will be submitting a proposal;

associations between short-listed consultants are acceptable;

days) and during which the consultants should undertake to maintain, without change, the proposed key staff, and should hold to both the rates and total price proposed; in case of extension of the proposal validity period, the right of the consultants not to maintain their proposal;

commence the assignment;

should be VAT inclusive;

equipment, and staff to be provided by the accounting officer;

-up assignments;

1.14.2 Disbursements 1.14.2.1 The responsibility for the implementation of the project, and therefore for the payment of consulting services under the project, rests solely with the accounting officer. 1.14.3 Consultants’ Role 1.14.3.1 When consultants receive the RFP, and if they can meet the requirements of the TOR, and the commercial and contractual conditions, they should make the arrangements necessary to prepare a responsive proposal (for example, visiting the principal of the assignment, seeking associations, collecting documentation, setting up the preparation team). If the consultants find in the RFP documents — especially in the selection procedure and evaluation criteria — any ambiguity, omission or internal contradiction, or any feature that is unclear or that appears discriminatory or restrictive, they should seek clarification from the accounting officer, in writing, within the period specified in the RFP for seeking clarifications. 1.14.3.2 In this connection, it should be emphasized that the specific RFP issued by the accounting officer governs each selection. If consultants feel that any of the provisions in the RFP are inconsistent with the prescripts of the Framework for Supply Chain Management and / or the PPPFA and its Regulations, they should raise this issue with the accounting officer in writing. 1.14.3.3 Consultants should ensure that they submit a fully responsive proposal including all the supporting documents requested in the RFP. It is essential to ensure accuracy in the curricula vitae of key staff submitted with the proposals. The curricula vitae should be signed by the consultants and the individuals and dated. Noncompliance with important requirements should result in rejection of the proposal. Once technical proposals are received and opened, consultants should not be required nor permitted to change the substance, the key staff, and so forth. Similarly, once financial proposals are received, consultants should not be required or permitted to change the quoted fee and so forth, except at the time of negotiations carried out in accordance with the provisions of the RFP. 1.14.4 Confidentiality 1.14.4.1 The process of proposal evaluation is confidential until the contract award is notified to the successful firm. Confidentiality enables the accounting officer to avoid either

the reality or perception of improper interference. If, during the evaluation process, consultants wish to bring additional information to the notice of the accounting officer, they should do so in writing. 1.14.4.2 If consultants wish to raise issues or questions about the selection process, they should communicate directly in writing with the accounting officer in this regard. All such communications should be addressed to the head of the department / division for the relevant sector for the accounting officer. 1.14.4.3 Communications that the accounting officer receives from consultants after the opening of the technical proposals should be handled as follows:

due consideration and appropriate action. If additional information or clarification is required from the consultant, the accounting officer should obtain it and comment on or incorporate it, as appropriate, in the evaluation report. 1.14.5 Debriefing 1.14.5.1 If after notification of award, a consultant wishes to ascertain the grounds on which its proposal was not selected, it should address its request in writing to the accounting officer. If the consultant is not satisfied with the explanation given by the accounting officer, the consultant may refer this matter to the relevant treasury, Public Protector or court of law.