Post on 20-Jan-2020
Supply Chain Management Reforms
Presenter: | Kenneth Pillay, Chief Director, National Treasury | 6 April 2016
1
AGENDA
• Focus of reform
– Legal and Regulatory reforms
• Bill, PPPFA Regs, NTRs and Instructions
– Strategic Sourcing
• Differentiated approach to sourcing
• Transversal Contracts for government
– Governance and Compliance
• SOEs and Public Entities
• Improving non compliance
• Abuse of SCM system
– Managing stakeholders
– Technology and SCM
• Opportunities for Local Procurement
• Discussions and questions
2
SCM Review 2015 and SCM Review Update 2016
• Provides a frank and candid assessment of SCM aspects:
– Role of SCM in the public service;
– Organisational structures and systems;
– Roles of technical and political office bearers in SCM;
– Capacity of SCM practitioners;
– Legislation, regulations, policies and procedures in SCM;
– Supplier management and relations;
– Balance between social objectives and transformation and price and quality
of goods and services
• Provides insights SCM reform agenda; and
• Provides a view of the role and functions of the Office of the Chief Procurement
Officer.
3
Focus of public procurement
• Service delivery;
– Quality, efficient, cost-effective
– On time, right quality and quantity, the right price
• Socio-economic objectives;
– Address economic imbalances (racial)
– Women, youth, people with disabilities, SMMEs
– Job creation
• Value-for-money and return on investment;
• Getting the balance between the objectives right is important
4
Status of current SCM system
• Fragmented SCM environment;
• Operational inefficiency in government;
– High staff turnover at SMS level
• Limited or no accountability;
• Limited transparency;
• Lack of coherence between departments;
• Over emphasis on secondary objectives;
• Procurement not a strategic function; and
• Use of technology to automate, standardise and simplify SCM under utilised.
5
SCM – compulsory capabilities
Procurement system should be based on the following capabilities:
1. Demand Planning
2. Procurement Planning
3. Items and Specifications management
4. Supplier management
5. Bids management through the required committees
6. Legal, Contracting and Disputes management
7. Supplies and Contract management (supply schedules)
8. Inspection and Quality management
9. Product and Services management (utilisation)
10. Audit and Enforcement
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Instruction Notes Issued
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No INSTRUCTION STATUS /COMMENTS
1 Large bore spiral submerged arc welded steel conveyance pipes: 500MM to 3500MM
(Conveyance pipes)
Instruction issued and was effective from 21 October
2015
2 Steel Power Pylons, Monopole Pylons; Steel Substation Structures; Power line Hardware;
Street Lighting Poles and Lattice Towers and Masts
Instruction issued and was effective from 28
September 2015
3 Transformers, shunt reactors and associated equipment Instruction issued and was effective from 21 October
2015. Class 2 and Class 3 Transformers were,
however, not designated.
4 Valves and actuator products Instruction issued and was effective from 18 February
2016 (latest instruction)
5 Working Vessels (Boats) Instruction issued and was effective from 21 August
2014
6 Electrical and Telecom cables Instruction issued and was effective from 8 May 2013
7 Textile, clothing, leather and footwear sector Instruction issued and was effective from 16 July 2012
8 Bus sector Instruction issued and was effective from 16 July 2012
9 Set top boxes sector Instruction issued and was effective from 26
September 2012
10 Furniture Products Instruction issued and was effective from 15
November 2012
Instruction Notes In Process
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No INSTRUCTION STATUS /COMMENTS
1 Two-way radio terminals and associated
equipment
The instruction is being finalised from by the OCPO with the information received March 2016
2 Mining and construction vehicles (Yellow
metal)
A letter was sent to the DTI (addressed to Mzwakhe Mbatha) dated 20 October 2015 indicating that the
response from the DTI regarding the instruction on Yellow metals was not addressing the challenges that were
raised by the National Treasury.
3 Construction materials A meeting was held on 14 October 2015 and the following was decided on:
The dti will update the Instruction note on construction materials to focus on those products that have been
recommended for designation. Furthermore, the dti will also provide more information on the areas where
there were concerns that were raised in order to strengthen the case for the recommended designated
products.
4 Poultry • National Treasury’s Economic Policy unit is going through the research documents from the DTI to establish
economic rationale; and
•Waiting for official communication from the Minister of the DTI regarding the final decision to designated and a
draft instruction with all the designation details
5 Wheelie Bins • National Treasury’s Economic Policy unit is going through the research documents from the DTI to establish
economic rationale; and
•Waiting for official communication from the Minister of the DTI regarding the final decision to designated and a
draft instruction with all the designation details.
6 Water Meters • National Treasury’s Economic Policy unit is going through the research documents from the DTI to establish
economic rationale; and
•Waiting for official communication from the Minister of the DTI regarding the final decision to designated and a
draft instruction with all the designation details.
7 Fire engines/trucks National Treasury’s Economic Policy unit is going through the research documents from the DTI to establish
economic rationale; and
Waiting for official communication from the Minister of the DTI regarding the final decision to designated and a
draft instruction with all the designation details.
9
Contract Register
Contract Number Description Estimated Value for Contract Period (ZAR)
Start Date Expiry Date
RT5-2013 Courier Services 108 000 000 01-Sep-2013 30-Jun-2016 RT8-2015 Transportation of Cargo and Furniture Relocation
Services 81 277 963 01-Feb-2015 31-Jan-2017
RT11-2013 Animal Feed 126 000 000 01-Apr-2014 31-Mar-2016 RT14-2012 Toilet paper and paper towels 62 000 000 01-Aug-2013 31-Mar-2016 RT23-2013 Lubricating oil 179 000 000 01-Jan-2014 31-Mar-2016 RT46-2014 Fleet Vehicle Maintenance (Pool) 26 470 860 01-Apr-2014 31-Mar-2019 RT57-2015 Vehicles 7 889 381 002 01-Apr-2015 31-Mar-2016 RT58-2012 Insurance for subsidised vehicles 42 151 850 01-Apr-2012 31-Mar-2017 RT61-2014 Rental of aircraft and helicopters 165 000 000 01-Apr-2014 31-Mar-2017 RT62-2015 Maintenance and administration of the Subsidised Vehicle
Fleet 331 121 000 01-Dec-2015 30-Nov-2020
RT68-2015 Financing of subsidised vehicles 1 238 770 156 01-Sep-2015 31-Jul-2020 RT69-2013 Tyres and tubes - supply, delivery, fitment and balancing 220 000 000 01-Dec-2013 30-Jun-2016 RT74-2014 Prefabricated steel shelving 192 000 000 01-Dec-2014 30-Nov-2017 RT79-2015 National aero-medical service 1 445 082 903 01-Sep-2015 31-Jul-2018 RT152-2013 Photographic, micrographic reproduction material and
video tapes 12 600 000 01-Dec-2013 30-Jun-2016
RT1-2014 School Furniture 240 000 000 01-Aug-2014 31-Jul-2016 RT2-2016 Medical equipment 1 300 000 000 01-Jun-2016 31-May-2019 RT4-2015 Ambulance rescue and emergency equipment and
accessories 220 794 310 01-Mar-2015 28-Feb-2017
RT7-2015 Supply, management and distribution school textbooks 1 700 000 000 01-Aug-2015 31-Jul-2018 RT13-2015 Respiratory Aids 29 300 000 01-Dec-2015 30-Nov-2017 RT17-2015 Management and distribution of school stationery 1 900 000 000 01-Aug-2015 31-Jul-2018 RT21-2013 Radiographic Material 554 218 694 01-Oct-2013 30-Apr-2016 RT22-2016 Work books 2 791 734 533 01-Apr-2016 31-Mar-2019 RT24-2013 Hospital ward and theatre furniture 223 000 000 01-Oct-2013 31-Mar-2016 RT50-2013 Industrial compressed gases, industrial bulk gases and
medical gases 539 658 037 01-Apr-2013 30-Sep-2016
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Contract Number Description Estimated Value for Contract Period (ZAR)
Start Date Expiry Date
RT70-2014 Petrol and diesel 6 300 000 000 01-Feb-2015 31-Jan-2020 RT72-2014 Medical oxygen : Home patients 63 700 000 01-Jul-2014 30-Jun-2017 RT252-2013 Surgical instruments 27 500 000 01-Nov-2013 31-Mar-2016 RT302-2012 Surgical sutures and ligatures 33 508 022 01-Aug-2013 31-Jul-2016
RT3-2015 Office Equipment & Labour saving devices 915 948 401 01-Oct-2015 30-Sep-2018 RT9-2014 Infant Feed, Complete enteral feeds for paediatrics and
adults, enteral feed supplements, other nutritional supplements and tube feeding systems
964 000 000 01-Sep-2014 31-Aug-2017
RT10-2015 Veterinary remedies 65 300 000 01-Dec-2015 30-Nov-2018 RT12-2015 Agricultural Remedies 69 700 000 01-Dec-2015 30-Nov-2018 RT15-2016 Mobile communication services to the State 3 200 000 000 01-May-2016 30-Apr-2020 RT16-2015 Fertilizers 43 500 000 01-Apr-2015 31-Mar-2018 RT25-2016 Service providers for an integrated financial management
and internal control system for Local Government 01-Jun-2015 31-May-2019
RT26-2015 Blankets, Sheets and Pillowcases 21 774 688 01-Apr-2015 31-Mar-2016 RT59-2015 Footwear 110 628 606 01-Apr-2015 31-Mar-2016 RT60-2015 Fabric, Towelling and Towels 21 294 160 01-Apr-2015 31-Mar-2016 RT64-2014 Clothing, Uniforms, Rescue related clothing and
Underwear 33 762 230 01-Apr-2015 31-Mar-2016
RT233-2014 Wheelchairs 35 867 970 01-Sep-2014 31-Aug-2017 RT274-2014 Hearing aids 69 044 040 01-Sep-2014 31-Aug-2017 RT275-2016 Speech therapy equipment 25 454 030 01-Jun-2015 31-May-2019 RT287-2015 Dental instruments and related items 20 251 200 01-Mar-2015 28-Feb-2018 RT296-2015 Dental materials and consumables 67 607 337 01-Mar-2015 28-Feb-2018
Contract Register (Cont.)
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1 008
1 032
1 033
1 085
1 123
1 152
1 187
1 197
1 252
1 372
1 431
1 450
2 012
2 067
2 137
2 231
2 238
2 961
3 101
3 149
3 275
3 471
3 505
3 918
4 766
17 097
23 797
Transport conveyance rental or lease services
Network applications software
Social development and services
Print advertising
Data Sevices
(Contract- Const & Maint Machinery)
Water and sewer utilities
Computers
(Legal Advice)
Internal audits
Meeting facilities
Facsimile and telegraph services
Management support services
(Security services)
Building maintenance and repair services
Printing and writing paper
Banquet and catering services
Passenger air transportation
Software or hardware engineering
Electric utilities
Business and corporate management consultation services
Passenger road transportation
Hotels and motels and inns
Temporary personnel services
Project management
Lease and rental of property or building
Commercial and office building construction services
Spend by commodity classes 2012 – 2014 (Rm)
National Government Spend Overview by commodity class
27 Commodity classes
accounted for 80% of
National government
spend
Total for 27 classes (80% = R94Bn
Total National Government
Spend = R116Bn
Drugs and pharmaceuticals
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Inventory
Medicine
• (Inventory Med : Unspecified)
• (Inventory Medicine:
Antiretroviral Drug)
• (Inventory Medicine: Tablets,
Capsules and Lozenges)
• (Inventory Medicine: Vaccines)
• (Inventory: Animal Medicine)
• (Inventory: Animal Vaccines)
• (Inventory Med : Unspecified)
• (Inventory Medicine:
Antiretroviral Drug)
• (Inventory Medicine: Tablets,
Capsules and Lozenges)
• (Inventory Medicine: Vaccines)
• (Inventory: Animal Medicine)
• (Inventory: Animal Vaccines)
• 15 494
• 8 034
• 208
• 3 158
• 41
• 77
Medsas • Medsas
• (Medsas- Stock Purchase
General)
• (Medsas- Miscellaneous
Variance)
• (Medsas- Stock Issues)
• (Medsas- Purchase Variance)
• (Medsas- Stores Surpluses)
• 8 563
• 0.9
• 0.04
• -0.09
• -2
Estrogens and
progestins and
internal
contraceptives
• Estrogen, progestin, or internal
contraceptive
• Oral contraceptives • 252
*Class Family *Commodity Spend (Rm)
100% = R36Bn 252
8 562
27 283
Estrogens and progestins andinternal contraceptives
Medsas
Inventory Medicine
Drugs and Pharmaceutical spend 2012/13 -2014/15 (Rm)
National and Provincial Supplier overview
13
878
899
928
1073
1144
1145
1223
1231
1263
1378
1601
1619
1701
1804
2022
2053
2129
2555
6747
8389
GROUP FIVE CONSTRUCTION
MEDPRO PHARMACEUTICAL
THE STANDARD BANK
ADCOCK INGRAM
BLOEMFONTEIN CORRECCONTRACTS*
THE MVULA TRUST
THE BIOVAC INSTITUTE
DCOG CWP
PTY TRADE 73 (PTY) LTD
SA CUSTODIAL SERVICES
FIRST AUTO PTY LTD
TELKOM SA
GEMINI MOON TRADING
SITA
SA NATIONAL BLOOD SERVICES
ASPEN PHARMACARE LTD
IMPILO CONSORTIUM
AUDITOR GENERAL*
NATIONAL HEALTH LABS
INDEPENDENT DEV. TRUST
Top Government Suppliers* 2012-2014 (excluding government entities
Total = R41.7Bn
• Building Construction and MRO
• Laboratory services
• External Auditing
• Building Construction – MRO
• Pharmaceuticals
• Blood services
• IT products & services
• Travel and accommodation agency services
• Telecommunications
• Fleet services
• Property & Operating Leases
• Leaner & Teacher Material support
• Casual Labour ( temporary personnel)
• Pharmaceuticals
• Building Construction and MRO
• Property Leases
• Pharmaceuticals
• Fleet services
• Pharmaceuticals
• Building Construction & MRO
Top 20 suppliers
(10% of spend)
= R 42Bn
47% spend
unclassified by
supplier
= R220Bn
100% spend
=R431Bn
National Government Spend Overview by
department
12 departments account for 80% of National government spend*
22 720
2 552
2 857
3 312
4 980
5 111
5 485
6 640
9 483
10 192
13 038
13 588
16 755
OTHERS
AGRICULTURE,FORESTRY & FISHERIES
HEALTH
ENVIRONMENTAL AFFAIRS
HOME AFFAIRS
RURAL DEVELOPMENT & LAND REFORM
COOP GOVERNANCE & TRADITION AFFAIRS
INTERNATIONAL RELATIONS & COOPERATION
BASIC EDUCATION
PUBLIC WORKS
WATER AFFAIRS
JUSTICE&CONSTITUTION DEVELOPMENT
CORRECTIONAL SERVICES
Spend by department 2012 – 2014 (Rm)
*excluding police and defence
100% = R116bn
80
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Areas for centralisation
• Travel and accommodation
• Telecommunications
• Computer services and hardware
• Consultancy/professional services
– Financial first…later construction
• Education
– Learner and teacher support materials
– Infrastructure
• Health
– Medical equipment, drugs and medicine
15
Areas for urgent review/intervention
• Construction/infrastructure standards
• Human settlements
– Super profits
– Indirect cost on other programmes
• Public entities
– Relevance
– Corporate structure
• Infrastructure delivery
– All three spheres weak (pockets of excellence)
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PC/ Smartphone/Laptop/ Internet Cafe
Request Workflow
Update Supplier
Master
CSD Supplier
Master
Business Registration
(CIPC)
Member. Director details
(CIPC)
Bank Account
CDV (BAS)
B-BBEE (SANAS)
Tax Clearance (SARS)
Account Holder information
(BankServ)/SafetyWeb) Government
Network Subscriber A
File based
Subscriptions placed
for subscribers Government Employee
Verification :
- PERSAL
- PERSOL
- eDeclaration
- Municipal Payroll.
Supplier Self-Registration
ID Number (Dept of Home
Affairs)
Supplier (User)
Supplier
Request Data
Assisted Supplier Self
Registration
Data Preparation
Subscriber A
Prepared Supplier Data Upload to CSD
User
Security
Subscriber x
Subscriptions
Fetched
Central Supplier
Data from
Subscribers
Subscription
Management
3rd Party Interfaces for
Electronic Verification
In-Process
Automated
Verification
Subscribers: National-, Provincial- and Local government as well as
State Owned Entities (SOE’s)
Internet
Subscriptions
Subscriber B
CSD HIGH LEVEL CONCEPTUAL SOLUTION
Note: xxxxx will be done in future once an electronic
source is available with consolidated information to
allow for automated vetting.
In-Process queries from
Subscriber systems via
Standard Web APIs
Subscriber
Users
Departments;
Municipalities;
SOEs;
Internet
Regular
Automated Re-
Verification
G-Commerce site
18
E-tendering
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SCM Review update
• Focus on renegotiating contracts with government’s top 100 suppliers
– Travel and Accommodation - Leasing
– Transversal contracts - ICT
– Construction - Pharmaceuticals
• Optimising procurement strategies
• Stakeholder engagement and outreach programmes
• 30 day payment violations
• Avoiding unnecessary purchases, reducing waste and inefficiency
• Drafting of Procurement Bill
20
Opportunities for Local Content
Improved collaboration between the DTI, DSBD, Economic Development and National Treasury and
Government Agencies
More sector specific and commodity driven interventions by government/ business compact
Centralised contracting for key commodities across the State
Use technology for public sector local content - flag Local RSA products on gCommerce with a national flag
next to the item to promote buying local, proudly SA too conservative in their marketing campaigns
Alternative instruments to stimulate local content rather than designated sectors eg. Tax incentives
Manufacturing and purchase of industrial goods will he stimulated through SOE purchasing power - mobilise
where the impact will be;
Cut the red tape in procurement proceses - too expensive, takes to long
Make 3 year demand plans for SOEs and infrastructure projects compulsory for tabling with budget and
appropriation and lead quarterly engagements between gov and business on opportunities
Good old fashioned pep talk by leaders with captains of industry to do the patriotic thing namely to buy local
products –
top 100 manufacturing companies indaba
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Questions
Any questions or further
clarifications?
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