DEPARTMENT OF DEFENCE (DOD) PROCUREMENT Brig Gen T.E Mulaudzi Director Procurement Management RESTRICTED 1

BACKGROUND 2 RESTRICTED The introduction of PFMA required all State Departments to conduct procurement in line with National Treasury prescripts DOD established procurement capability (CPSC and SPSC) at DOD level The two centers migrated to Log Div (under C Log) in April 2009 The new Procurement Delegations were promulgated in May 2009 C Log established DPM in 2012 to assist him with Procurement Functional Control and Ensure Compliance The issuing of new procurement delegations intensified in 2014 with the establishment of Services’ Procurement units in line with May 2009 Procurement Delegations So far, DOD Procurement is decentralized in line with the Defence Review 2015 RESTRICTED 2

To present the DoD Procurement operation to the members of parliament AIM To present the DoD Procurement operation to the members of parliament RESTRICTED 3

SCOPE RESTRICTED SCM Framework Acquisition vs Procurement Pillars of Procurement Procurement Governance Procurement Delegations Procurement Processes 1 Military Hospital Project Procurement Achievements Challenges Conclusion Q & A Session RESTRICTED

SCM FRAMEWORK GRC Monitoring Processes GRC Monitoring Processes Demand Management Processes Acquisition / Procurement Processes Logistics Processes Disposal Processes GRC Monitoring Processes RESTRICTED

PROCUREMENT VS ACQUISITION DOD Procurement Folio 2 Budget (General Defence Account) Commercial off the Shelf and Military off the Shelf (COTS and MOTS) Competitive Procurement Process orientated DOD Suppliers Day Acquisition Folio 1 Budget (Special Account) Strategic Capability Management Process (SCAMP) Industry orientated for specific system ARMSCOR Process Industry Day RESTRICTED

PILLARS OF PROCUREMENT Value for money, Open and effective competition, Ethics and fair dealing, Accountability and reporting and Equity. RESTRICTED

Procurement Governance The Constitution of South Africa (Fair, Transparent, Economic and Equitable) Public Finance Management Act (PFMA) 1 of 1999 Preferential Procurement Policy Framework Act (PPPFA) 5 of 2000 Broad Based Black Economic Empowerment Act (BBBEE) 53 of 2003 (NT Instruction dated Nov 2011) National Treasury Regulations 16A National Treasury Practice Notes RESTRICTED

Procurement Governance National Treasury Practice Notes Procurement Guide for Accounting Officers Joint Defence Publication (JDP) 0003/2004 (under review) Department of Defence Logistics Instructions Delegations of powers to procurement authorities (Edition 4) dated May 2009 Procurement Guidelines issued by C Log (DPM) RESTRICTED

PROCUREMENT DELEGATIONS SecDef: Umlimited CSANDF: Unlimited Departmental Commercial Procurement Board (DCPB): >RM10 Corporate Commercial Procurement Committee (CCPC) >RM5 but <RM10 Central Procurement Service Centre (CPSC): RM5 Simons Town Procurement Service centre (SPSC): RM5 South African Military health Unit: RM5 SA Army Procurement Unit: RM1 SA Air Force Procurement Unit: RM1

PROCUREMENT DELEGATIONS SA Navy Procurement Unit: RM1 DHQ Unit Procurement Unit: RM1 Log Div Procurement Unit: RM1 Level 4 FSE’s Procurement Sections (60 Entities): R30 000 to R100 000 RESTRICTED

PROCUREMENT PROCESS RESTRICTED Requirement Adm Requirement Adm GRC Order Adm & Payments GRC GRC Invitations Invitations Invitations Invitations Invitations Invitations Invitations Invitations Invitations Invitations Suppliers Database Management (CSD) Contract Management GRC GRC GRC Recommendations Data Capturing & Evaluation Data Capturing & Evaluation Data Capturing & Evaluation Data Capturing & Evaluation GRC GRC GRC RESTRICTED

Capturing & Evaluation Procurement Process Req Adm (2 Days) Invitation PQ (14 - 21 Days) Bid (21 – 28 Days) New Contract (56 Days) Existing Contract (7 – 14 Days) Capturing & Evaluation 14 – 28 Days Order Admin 7 – 14 Days Recommendations 14 – 21 Days Adjudication CCPSC – 7 Days CCPC – 14 Days DCPB – 14 Days RESTRICTED 13

Procurement Process 14 RESTRICTED PQ: 79 Days Max. Bid: 93 Days Max. New Contract: 121 Days Max. Existing Contract: 21 Days Max. NB: Planning in procurement is very important . Contract system for repetitive requirements is the most convenient process. C Log’s Performance Indicator requires the entire process to be completed within 90 days RESTRICTED 14

1 Mil Hosp Project procurement DOD and NDPW made decision to devolve some of facilities maintenance functions to the DOD 1 Mil Hospital 1st Floor was identified as a Pilot Project DCPB approved submission from Log Div to take over the consultants (Tectura Architects) that were already on site GTAC advised that Hospital cannot be renovated without inputs from Medical Health Technologist (MHT) Procurement process has already commenced to acquire MHT Envisaged to appoint MHT by end November 2016 RESTRICTED 15

Achievements Streamlining of DOD Procurement function from SecDef, through C Log (DPM) to the Lowest level Issuing of Procurement Delegations Establishment of Procurement Capabilities in line with Procurement Delegations Edition 4 dated May 2009 and Def Rev 2015 Suppliers’ Day, Seminars and Forums Implementation of E-Procure System and CSD Awareness to the Suppliers iro Fraudulent GO’s RESTRICTED 16

DOD Procurement Challenges Challenge 1. Appointment of Medical Health Technician (MHT) Mitigation 1. TOR have been submitted to the DCPB for approval, then competitive procurement process Challenges 2. Retention of Procurement Skills Mitigation 2. Establishment of Procurement Mastering Challenge 3. Payment of suppliers within 30 days Mitigation 3. Establishment of Payment Forum at CFO’s office RESTRICTED 17

DOD Procurement Challenges Challenge 4. Procurement “Scam” whereby suppliers are issued with fraudulent/Bogus Government Orders Mitigation 4. Establishment of Call Centre at Log Div which work in conjunction with the Military Police and SAPS Challenge 5. Corrupting and Corruption within procurement Mitigation 5. Vetting of all DOD procurement personnel and Bid Adjudication Committee members Challenge 6. The impact of National Treasury prescripts to the fighting force which results on many deviations Mitigation 6. The DOD still busy brainstorming the possible solution RESTRICTED 18

CONCLUSION Procurement is a system, guided/governed by the Acts, Regulations, policies and processes therefore if one process collapse, the entire system collapse RESTRICTED

Q & A SESSION RESTRICTED 20