1. PUBLIC ENTERPRISES PORTFOLIO COMMITTEE 13 MARCH 2002 PORTFOLIO COMMITTEE: ASD PRESENTATION Venue: National Parliament S26 1 st Floor NCOP Wing Date: 13 March 2002 Time: 11h00 DPE OPERATIONAL FRAMEWORK - PREFERENTIAL PROCUREMENT

2. PUBLIC ENTERPRISES PORTFOLIO COMMITTEE 13 MARCH 2002 CONTENT INTRODUCTION PROCUREMENT REGIME –PROCUREMENT REFORM –SOEs RESTRUCTURING PROGRAMME CONCLUSION

3. PUBLIC ENTERPRISES PORTFOLIO COMMITTEE 13 MARCH 2002 INTRODUCTION PURPOSE FOCUS –PROCUREMENT REFORM –SOEs RESTRUCTURING: POLICY FRAMEWORK OBJECTIVES EMPOWERMENT APPROACHES SOEs PROCUREMENT REFORM PROJECT

4. PUBLIC ENTERPRISES PORTFOLIO COMMITTEE 13 MARCH 2002 PROCUREMENT REGIME Public/ Municipal Finance Management Act Good governance in procurement SA Constitution Attaining socio Economic Objectives through procurement Preferential Procurement Policy Framework Act

5. PUBLIC ENTERPRISES PORTFOLIO COMMITTEE 13 MARCH 2002 PROCURMENT LEGISLATION & DOCUMENTS The Constitution of South Africa 10 Point Plan ( Interim Strategies) The Green Paper on Public Procurement reform in SA The Preferential Procurement Policy Framework Act Public Financial Management Act Resource Specifications Monitoring Systems for Contract Compliance Definitions of Target Groups

6. PUBLIC ENTERPRISES PORTFOLIO COMMITTEE 13 MARCH 2002 PROCUREMENT LEGISLATION  Constitutional Requirements  Organs of State (national, provincial & local) or any other institutions identified in national legislation must contract for goods and services using a system which is: Fair, Equitable, Transparent, Competitive,Cost effective  Preferential Procurement Policy Framework Act  The PPPFA provides a framework within which procurement policies can be implemented by: Creating categories of preference in the allocation of contracts; and Providing for the protection or advancement of persons, or categories of persons, disadvantaged by unfair discrimination.  The Act requires Organs of State to determine their preferential procurement policy and implement it with a framework. 1 (e) any specific goal for which a point may be awarded, must clearly be specified in the invitation to submit a tender; (2) Any goals contemplated in subsection 1(e) must be measurable, quantifiable and monitored for compliance

7. PUBLIC ENTERPRISES PORTFOLIO COMMITTEE 13 MARCH 2002 …/CONTINUES  The framework state that specific goals may include: Contracting with persons, or categories of persons, historically disadvantaged by unfair discrimination on the basis of race, gender or disability; Implementing the programme of Reconstruction and Development Programme as published in Government Gazette no. 16085 dated 23 November 1994.  The PPPFA is an outcome of the procurement reform process  It redefines value for money  No longer is least cost the primary determinant for the awarding of tenders  Contract awards are now based upon a balance between price and social objectives  The PPPFA allows procurement to be used as an instrument of social policy without comprising good governance

8. PUBLIC ENTERPRISES PORTFOLIO COMMITTEE 13 MARCH 2002 PFMA REQUIREMENTS Accounting Authority are required to have:  An appropriate procurement & provisioning system which is fair, equitable, transparent, competitive & cost effective;  Effective, efficient & transparent systems of financial risk and risk management & internal control; and  A system for properly evaluating all major capital projects to a final decision on the project.

9. PUBLIC ENTERPRISES PORTFOLIO COMMITTEE 13 MARCH 2002 CONVENTIONAL PROCUREMENT SYSTEM Material Plant/equipment LABOUR Management Skills Technical Specifications Technical design Contracting Strategies Technical Quality Assurance Goods Services Products Assets OUTPUT INPUT PROCESS Economic Benefits

10. PUBLIC ENTERPRISES PORTFOLIO COMMITTEE 13 MARCH 2002 TARGETED PROCUREMENT SYSTEM Materials Plant/equipment Labour Management Skills INPUTS Technical Specifications Technical Design Contracting Strategies Technical Quality Assurance Resource Specifications Targeting Strategy Technology Choice Compliance Monitoring PROCESS OUTPUT Goods - Focused Business Services Participation Products - Focused Employment Assets Opportunities Economic and Social Benefits

11. PUBLIC ENTERPRISES PORTFOLIO COMMITTEE 13 MARCH 2002 BASIC ELEMENTS OF OPERATIONAL EMPOWERMENT “green field”/new enterprise level Control Corporate Transformation level Ownership level SMME level Operational Responsibilities Equity

12. PUBLIC ENTERPRISES PORTFOLIO COMMITTEE 13 MARCH 2002 OPERATIONAL FRAMEWORK  Performance indicators relating to socio-economic objectives  Principles  Ten year targets  Definitions for Targeted Enterprises  Procurement Activity Sectors  Performance Indicators  Performance indicators for attaining good governance objectives  Best Practices (International & The Green Paper)  Measuring performance  Reporting by SOEs  SOE Procurement Profile  Annual Reporting on Good Governance  Quarterly reporting on the attainment of Socio-economic targets  Facilitates Interim Review of Goals  Determine Sunset Provisions

13. PUBLIC ENTERPRISES PORTFOLIO COMMITTEE 13 MARCH 2002 IMPLEMENTATION TOOLS  Resource Specifications  Data Capture Forms  Declaration Affidavits  Guidelines and Manuals  Pro-forma Tender Documentation

14. PUBLIC ENTERPRISES PORTFOLIO COMMITTEE 13 MARCH 2002 IN CONCLUSION  Procurement Best Practices in SOEs  Standardisation in procurement procedures  Targeted procurement as a supportive vehicle in attaining:  socio-economic objectives,  good governance  Accelerating public goods and service delivery