1. City of Cape Town Overview of Processes and Procedures of Supply Chain Management 2016 Presented by: Business Support

2. Introduction  Some Facts and Figures  Legal Framework  Processes and Procedures  Bid Committees  General Instructions to Suppliers  Common Bidding Errors  Supplier Registration  Supplier Development Support  Website

3. Supply Chain Management “Procure to Pay Cycle” Identification of a need SourcingProcurementReceivingPayment

4. Some Facts and Figures 70% + spent on level 1 to 4 BBBEE enterprises City testing e- procurement R11 billion spent per annum 1 000 orders per day 38 957 vendors registered to date on CCT database 16 338 Active vendors

5. Legal Framework  Constitution  Preferential Procurement Policy Framework Act (PPPFA)  Municipal Finance Management Act (MFMA)  Municipal Supply Chain Management Regulations  Broad-Based Black Economic Empowerment Act (B-BBEE)

6. Constitution  Section 217 of the Constitution is applicable.  When goods & services are contracted, it must be done in accordance with a system that is:  fair,  equitable,  transparent,  competitive and  cost-effectiveness

7. Preferential Procurement Policy Framework Act (PPPFA)  The Act provides a framework for the implementation of the Preferential Procurement Policy that were published in August 2001.  A new Revised Preferential Procurement Regulation was aligned with the aims of the B-BBEE Act that was promulgated and implemented on 7 December 2011.

8. Municipal Finance Management Act (MFMA)  MFMA Chapter 11 - Applies to the procurement of goods and services;  City of Cape Town must have and implement a Supply Chain Management Policy (SCMP) which underpins the procurement processes and must be:  fair,  equitable,  transparent,  competitive and  cost-effective  and comply with all prescribed regulatory framework ;

9. Municipal Supply Chain Management Regulations  Published i.t.o. MFMA the Regulations deal with –  Establishment and Implementation of Supply Chain Management Policies  Framework for Supply Chain Management Policies i.Demand management; ii.Acquisition management; iii.Logistics, Disposal, Risk and Performance Management iv.Other issues : Ethical Standards Objections and Disputes Rewards and Gifts

10. Municipal Supply Chain Management Regulations  Section 44.  Prohibition on awards to persons in the service of the state  The supply chain management policy of a municipality or municipal entity must, irrespective of the procurement processes followed, state that the municipality or municipal entity may not make an award to a person – a)who is in the service of the state b)if that person is not a natural person, of which any director, manager, principal shareholder or a person in the service of the state : or c)is an advisor or consultant contracted with the municipality or municipal entity

11. Municipal Supply Chain Management Regulations  Section 44.  Definition of “in the service of the state” 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)A official of any municipality or municipal entity; d)A employee or member of any national or provincial department, Parliament, public entity or constitutional institutions within the meaning of the Public Management Finance Management Act (PFMA)

12. Processes and Procedures SCM Policy underpins the processes and procedures for the City’s procurement environment  Reviewed on a regular basis  Assessed by Provincial counterparts  (Policy amended by Council on 31 July 2013)  Reviewed on a regular basis  Assessed by Provincial counterparts  (Policy amended by Council on 31 July 2013)  Processes and procedures are reviewed and updated as and when required  Website updated regularly  Processes and procedures are reviewed and updated as and when required  Website updated regularly

13. Processe s - Procurement Overview Identify the need to procure Assemble specifications Advertise in newspapers and CoCT Web Evaluate and recommend Adjudication and award Notify successful bidders and the project commences Line departments manage the project

14. Processe s - Transparency  No restriction for registration on City Supplier Database  All procurement above R2000 advertised  All evaluation done in terms of legislated points criteria  Tenders and Quotations opened in public  Bid Adjudication Committee open to public meets regularly  Independent appeal authority

15. Processe s - Threshold Values NB: All values include Value Added Tax(VAT) Petty Cash Purchases Quotes Not exceeding transaction value of R250  Between R250 and R2 000, it requires 1 written price quotation  For goods between R2 000 – R200 000, it requires 3 written price quotations  Between R250 and R2 000, it requires 1 written price quotation  For goods between R2 000 – R200 000, it requires 3 written price quotations All advertised on the City’s website: www.capetown.gov.za

16. Processe s - Threshold Values NB: All values include Value Added Tax(VAT) Request for Quotation (RFQ) Tenders  All requirements up to R200 000  Services from R2000 – R200 000  Not exceeding 12 months contract period  All requirements up to R200 000  Services from R2000 – R200 000  Not exceeding 12 months contract period  All requirements above R200 000  Longer than 12 months contract period  All requirements above R200 000  Longer than 12 months contract period

17. Processes - Advertising Request for Quotation (RFQ)  City’s website and official notice board for :  2 days < R30 000  7 days > R30 000 Tenders advertised in local newspapers:  iTender (CIDB) (where applicable)

18. Processes – Advertising Tenders Goods and Services14 Days after publication Construction Works21 Days Contract > R10m > 1 year30 Days Banking Services60 Days

19. Bid Committees Tender process is well- documented i.e. specifications, criteria and functionality using a standardised set of documentation. 2. Bid Evaluation Committee shall be constituted for each project or procurement activity to evaluate bids received. 3. The Bid Adjudication Committee shall consider the report and recommendations of the Bid Evaluation Committee and make a final award on how to proceed with the relevant procurement. Legally sound process with emphasis on compliance and good governance 1. Bid Specification Committee compiles all bid documentation

20. Bid Committees

21. General Instructions to Suppliers  Work can only commence on the receipt of a official Purchase Order from the City of Cape Town.  Payment for delivery of goods and services will only be concluded after successful delivery of the goods and services based on the Purchase Order, specifications and timelines. Invoices should not pre-date Delivery Note date.  See FAQ’s link on SCM website: http://www.capetown.gov.za/en/SupplyChainManagement/Documents/FAQ- SupplyChainManagement-22-Jan-2016-(SCM%20619-V2).pdf

22. Common Bidding Errors Incomplete bid documentation. Incorrect calculations which can result in Under or Over- quoting(confuse over tender and quote). Not observing pricing instructions. Inability to interpret specification requirements or scope of work alternatively specification not properly read in conjunction with conditions of quotation/ tender.

23. Common Bidding Errors

24. Supplier Registration  In order to conduct business with City, all suppliers need to follow a three-step process: 1. Register as a supplier 2. Register for e-services 3. Activate Supplier self-service Form can be downloaded from: http://www.capetown.gov.za/en/SupplyChainManagement/Pages/Ne w-supplier-registration.aspx Alternatively, collected from the Supplier Management office on the 2 nd Floor, Civic Centre, Cape Town.

25. Supplier Registration Form Once registered as a supplier, proceed to register online for Supplier self-service in order to activate your account at: http://www.capetown.g ov.za/en/SupplyChainM anagement/Pages/Sup plier-Self-Service.aspx

26. Supplier Registration  Registration form, once completed, with all supporting documentation must be handed in/ couriered to Supplier Management office 2 nd Floor, Civic Centre, Cape Town  The supplier will be informed of his City of Cape Town Supplier Registration once Supplier database verification is completed. Confirmation notification letter is sent within 48 hours from date of verification.  It is each supplier’s responsibility to keep all their information updated on the City of Cape Town’s Supplier Database

27. Supplier Registration : Declaration Forms: Annexure A  The attached Declaration of Interest must be completed and signed (Compulsory)  NOTE: 3.10 to 3.14 Disclosure of any relationship(family, friend, other) with persons in the service of the state.  The City relies on the integrity of your information and if found incorrect, the City is obliged to take further legal action in terms of the Abuse SCM Policy.  False Declarations could have a major impact on your company as these Sanctions /Ruling can be applied from 3 months up to 5 years.

28. Supplier Registration  Make use of Supplier Self –Service to view the status of your purchase orders, invoices, supplier details and to upload statements  This function is only possible after supplier registration process is complete and you have been provided with a Supplier Number  The City will eventually link up to the National Treasury’s Central Supplier Database which has been widely advertised in newspapers. For now Suppliers interested in accessing opportunities at the City must still register on the City’s Supplier Database.

29. Supplier Development Support For supplier development support please view this website link http://www.capetown.gov.za/en/SupplyChainManagement/Policie s%20and%20Guidelines/SCM%20641%20V6_Support%20for%20Suppl iers%2004042016.pdf

30. Website

31. Questions Thank You