2nd QUARTER ANALYSIS REPORT FOR THE 2017/18 FINANCIAL YEAR PRESENTATION TITLE Presented by: Name Surname Directorate Date 2nd QUARTER ANALYSIS REPORT FOR THE 2017/18 FINANCIAL YEAR Supply Chain Management

Supply chain management ISSUES: ACHIEVEMENTS, CHALLENGES AND REMEDIES

Procurement Issues Achievements In an effort to address the challenges faced by the department at Implementing Agent (IA) level where there is non compliance to prescripts when implementing DWS projects, the department has developed and approved a circular which includes the SCM business process in order to guide the IA when implementing DWS projects. The benefits of this circular will improve the compliance to prescripts and document management for audit purposes. the Accounting Officer has established and appointed the committee members in writing to ensure that the operations of the Governance structures in the form of SCM committees (Departmental Bid Adjudication Committee (DBAC) and Departmental Bid Specification Committee (DBSC) as well as Information Technology Committee (ITC) have been appointed and are functional every financial year in accordance with PFMA Section 38 (iii).

Achievements cont.. With the new approved business process it became necessary that the Memorandum of Understanding (MOU) signed by the department and the IA be reviewed in line with the revised template for all active contracts . The established committees are responsible for the procurement of goods and services in the department. National Treasury conducted training for the committees members to ensure common understanding of legislation, technicality and empower members to be able to make informed decisions.

Achievement continue.. The department has reviewed the Sourcing Strategy in order to comply with the implementation of the new Preferential Procurement Regulations 2017 which has now created a platform/ added advantage by introducing the pre-qualification criteria which focuses on the QSE and EME (designated groups): 44% procurement budget was spent on the qualifying small enterprises (QSE) against the target of 15%. 31% procurement budget was spent on the emerging micro enterprise (EME) against the target of 15%

Procurement Issues . . . Challenges During the reporting period 1 April to 30 September 2017 the irregular expenditure has increased due to the irregular contracts that are continuing to the outer years until disciplinary action is taken and it is condoned. Condonement of irregular expenditure has not been finalised due to investigations that are still underway. During audits the auditors are struggling to access documents for projects implemented by IAs due to poor record keeping. The new circular will assist in this regard.

Procurement Issues . . . Remedies SCM Policy to be reviewed to incorporate the new Preferential Procurement regulations. The department is in a process of reviewing the current list of IA’s focusing on SCM capacity of all IAs to implement projects and the functioning of their SCM governance structures. The review process is planned to take place before the end of March 2018. Implementation process of the circular includes conducting workshops with relevant stakeholders (project managers, IA’s, SCM officials and Bid Committees) to ensure uniformity in implementation of the business process. The prequalification criteria will be used in selected 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 will assist the department to achieve the set targets. Disciplinary cases have already started or are underway.

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