SUPPLY CHAIN MANAGEMENT POLICY, 2017 Adopted by Council on

153 Pages·2017·1.3 MB·English

ETHEKWINI MUNICIPALITY: SUPPLY CHAIN MANAGEMENT POLICY, 2017

Adopted by Council on: 28/06/2017

EThekwini Municipality: Revised SCM Policy V8/June/2017 Page 1 of 153
Table of Contents
POLICY REVIEW MANAGEMENT INFORMATION 6
CONTACT PERSON 6
HEAD SCM: ANDRE PETERSEN 6
APPROVAL AUTHORITY 6
ETHEKWINI MUNICIPALITY COUNCIL OR EXECUTIVE COMMITTEE 6
LAST DATE OF APPROVAL (PHASE 1) V7 6
31 MAY 2016 6
REVIEW DATE (PHASE 2) V8 6
03 OCTOBER 2016 6
REVIEW APPROVAL DATE 6
DATE OF NEXT REVIEW 6
30/06/2018 6
PREAMBLE 7
PURPOSE 7
PROBLEM STATEMENT 8
1. DEFINITIONS 9
2. SUPPLY CHAIN MANAGEMENT POLICY 20
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3. ADOPTION AND AMENDMENT OF THE SUPPLY CHAIN MANAGEMENT POLICY 22
4. DELEGATION OF SUPPLY CHAIN MANAGEMENT POWERS AND DUTIES 23
5. SUB DELEGATIONS 24
(7) NO SUPPLY CHAIN MANAGEMENT DECISION MAKING POWERS MAY BE
DELEGATED TO AN ADVISOR OR CONSULTANT. 25
6. OVERSIGHT ROLE OF COUNCIL 25
7. SUPPLY CHAIN MANAGEMENT UNIT 26
8. TRAINING OF SUPPLY CHAIN MANAGEMENT OFFICIALS 26
9. FORMAT OF SUPPLY CHAIN MANAGEMENT 27
10. SYSTEM OF DEMAND MANAGEMENT 27
11. SYSTEM OF ACQUISITION MANAGEMENT 28
12. RANGE OF PROCUREMENT PROCESSES 30
13. GENERAL PRECONDITIONS FOR CONSIDERATION OF WRITTEN QUOTATIONS OR
BIDS 30
14. LISTS OF ACCREDITED PROSPECTIVE PROVIDERS 31
15. PETTY CASH PURCHASES 32
16. WRITTEN OR VERBAL QUOTATIONS 32
17. FORMAL WRITTEN PRICE QUOTATIONS 33
18. PROCEDURES FOR PROCURING GOODS OR SERVICES THROUGH WRITTEN OR
VERBAL QUOTATIONS AND FORMAL WRITTEN PRICE QUOTATIONS 34
19. COMPETITIVE BIDDING PROCESS 35
20. PROCESS FOR COMPETITIVE BIDDING 36
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21. BID DOCUMENTATION FOR COMPETITIVE BIDS 36
22. PUBLIC INVITATION FOR COMPETITIVE BIDS 39
23. PROCEDURE FOR HANDLING, OPENING AND RECORDING OF BIDS 40
24. NEGOTIATIONS WITH PREFERRED BIDDERS 40
25. TWO-STAGE BIDDING PROCESS 41
26. COMMITTEE SYSTEM FOR COMPETITIVE BIDS 42
27. BID SPECIFICATION COMMITTEE 43
28. BID EVALUATION COMMITTEE 44
29. BID ADJUDICATION COMMITTEE 46
30. PROCUREMENT OF BANKING SERVICES 48
31. PROCUREMENT OF IT RELATED GOODS OR SERVICES 49
32. PROCUREMENT OF GOODS AND SERVICES UNDER CONTRACTS SECURED BY
OTHER ORGANS OF STATE 50
33. PROCUREMENT OF GOODS NECESSITATING SPECIAL SAFETY ARRANGEMENTS 50
34. PROUDLY SA CAMPAIGN 51
35. APPOINTMENT OF CONSULTANTS 51
36. DEVIATION FROM, AND RATIFICATION OF MINOR BREACHES OF, PROCUREMENT
PROCESSES 52
37. UNSOLICITED BIDS 56
38. COMBATING OF ABUSE OF SUPPLY CHAIN MANAGEMENT SYSTEM 59
39. LOGISTICS MANAGEMENT 61
40. DISPOSAL MANAGEMENT 64
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41. RISK MANAGEMENT 67
42. PERFORMANCE MANAGEMENT 67
43. PROHIBITION ON AWARDS TO PERSONS WHOSE TAX MATTERS ARE NOT IN
ORDER 68
44. PROHIBITION ON AWARDS TO PERSONS IN THE SERVICE OF THE STATE 69
45. AWARDS TO CLOSE FAMILY MEMBERS OF PERSONS IN THE SERVICE OF THE
STATE 69
46. ETHICAL STANDARDS 69
47. INDUCEMENTS, REWARDS, GIFTS AND FAVORS TO MUNICIPALITIES OR
MUNICIPAL ENTITIES, OFFICIALS AND OTHER ROLE PLAYERS 72
48. SPONSORSHIPS 72
49. OBJECTIONS AND COMPLAINTS 73
50. RESOLUTION OF DISPUTES, OBJECTIONS, COMPLAINTS AND QUERIES 73
51. CONTRACTS PROVIDING FOR COMPENSATION BASED ON TURNOVER 74
52. PREFERENTIAL PROCUREMENT 75
53. PERFORMANCE MONITORING OF SERVICE PROVIDERS 83
54. GREEN PROCUREMENT 88
55. AMENDMENTS TO CONTRACTS – MFMA SECTION 116(3) 91
56. BLACKLISTING 94
57. MUNICIPALITY CONTRACTING WITH ANOTHER ORGAN OF STATE – MFMA
SECTION 110 99
58. SPECIAL DEVIATIONS FROM SCM POLICY 100
Annexure 1 - list of Public Institutions 103
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Annexure 2- Land Alienation Policy

Annexure 3- Letting Policy

Annexure 4- Inventory Policy
POLICY REVIEW MANAGEMENT INFORMATION
Contact Person Head SCM: Andre Petersen
Approval Authority EThekwini Municipality Council OR Executive Committee
Last date of approval (Phase 1) V7 31 May 2016
Review Date (Phase 2) V8 03 October 2016
Review Approval date 28/06/2017
Date of next review 30/06/2018
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PREAMBLE

Section 111 of the Municipal Finance Management Act requires each Municipality and Municipal
entity to adopt and implement a supply chain management policy, which gives effect to the
requirements of the Act. In addition, the Preferential Procurement Policy Framework Act requires
an Organ of State to determine its Preferential Procurement Policy and to implement it within the
framework prescribed.This requirement is given effect in section 52 of this policy. The eThekwini
Municipality is further committed to combating fraud, corruption, favoritism and irregular practices
in Supply Chain Management by blacklisting persons who have been found to have engaged in
such practices. This is the Supply Chain Management Policy of eThekwini Municipality
PURPOSE
The purpose of this Policy is :
(a) to implement a Supply Chain Management system in accordance with Section 217 of the
Constitution which is fair, equitable, transparent, competitive and cost effective;
(b) to provide for procedures and processes for the procuring of goods, services or works ;
(c) to provide for procedures and processes for the disposal of goods no longer needed ;
(d) to provide for procedures and processes for the selection of contractors to provide
assistance in the provision of municipal services other than where Chapter 8 of the
Municipal Systems Act applies ;
(e) to provide for provision of municipal services through a service delivery agreement with a
natural or juristic person which is not an organ of state ;
(f) to ensure consistency with other applicable legislation and regulations thereto ;
(g) to give effect to the Preferential Procurement Policy objectives of the Municipality;
(h) to ensure optimal service delivery by facilitating effective and efficient procurement;
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(i) to combat fraud, corruption favouritism and irregular practices in Supply Chain
Management by blacklisting persons who have been found to have engaged in such
practices;
(j) to create a Blacklisting Committee to implement the provisions of this policy;
(k) to specify guidelines to prevent the municipality from doing business with persons who
abuse the Supply Chain Management system by engaging in unlawful and/or irregular
practice(s);
(l) to specify guidelines that will prevent the municipality from doing business with persons
who default on performance willfully or negligently;
(m) to develop uniform criteria and a fair process for blacklisting such persons;
(n) to discourage persons who are blacklisted from re-entering the procurement arena by
setting up new business entities and by using the existing business entities to tender for
the public sphere of work, during the period which they are blacklisted;
(o) to give the municipality power to deregister blacklisted persons from its suppliers
database;
(p) to create a database of persons who are blacklisted and to publish the list on the
municipality’s website so as to expose and publicise the identity of the blacklisted person;
and
(q) to deal with the conduct of officials who are found to have engaged in unlawful and/or
irregular practices together with such persons, to be dealt with in terms of internal
disciplinary procedure.
PROBLEM STATEMENT
The Municipality is committed in terms of the Constitution and its procurement policies to have a
supply chain policy that is fair, equitable, transparent, competitive and cost effective and to
combat irregular practices in the tendering process in order to acquire the best goods and
services for the City.
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(1) Section 217 (1) of the Constitution provides that when an organ of state in the national,
provincial or local sphere of government contracts for goods and services, it must do so in
accordance with a system which is fair, equitable, transparent, competitive and cost-
effective;
(2) Section 111 of the Municipal Finance Management Act requires every municipality to
develop and implement a supply chain management policy in order to give effect to the
provisions of the Act;
(3) The Preferential Procurement Policy Framework Act, 2000 (No. 5 of 2000) provides for
the framework for a procurement policy which allows for categories of preference in the
allocation of contracts, together with consideration of the provisions of the Broad-Based
Black Economic Empowerment Act, 2003 (No. 53 of 2003);
(4) The Governments Preferential Procurement Policy objectives include increased usage of
local resources; redressing the skewed employment and ownership though the BBBEE
Act; the creation of job opportunities and poverty alleviation; stimulation of skills
development and transferring of skills and fast-tracking the growth of and ensuring the
sustainability of SMME’s;
(5) In establishing the Supply Chain Management Unit Blacklisting Committee and applying
its policy and guidelines, the Municipality will be in compliance with the requirements of
the Municipal Finance Management Act and the Supply Chain Management Regulations;
and
(6) In terms of the Supply Chain Management Regulation 11 (1) and (2), where a municipality
procures goods and services otherwise than through its supply chain management
system, it must make that fact public. The name of the supplier and the kind of goods or
services procured must be made public.
1. Definitions
In this policy, unless the context otherwise indicates, a word or expression to which a meaning
has been assigned in the Act has the same meaning as in the Act, and:
“Accounting Officer” must mean the City Manager, or Acting City Manager, of the eThekwini
Municipality as per section 60 of the MFMA. In the case of Municipal Entities-Must mean the
Chief Executive Officer or Acting Chief Executive Officer as per section 93 of the MFMA.
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“Amendment” must mean a change made to the value of the contract beyond the contract
authority and/or the duration of the contract beyond the contract authority and/or scope changes
in the contract and/or contracting arrangements beyond the contracting allowances. An
amendment may be a minor amendment or a major amendment;
“Appeal Authority” must mean an independent and impartial person appointed by the
Accounting Officer in terms of Regulation 50 of the Local Government Municipal Supply Chain
Regulations;
“Applicant” must mean a Department of eThekwini Municipality;
“Award” must mean the acceptance of a bid or proposal;
“B-BBEE” must mean broad-based black economic empowerment as defined in section 1 of the
Broad-Based Black Economic Empowerment Act;

“B-BBEE Status Level of Contributor” must mean the B-BBEE status received by a measured
entity based on its overall performance using the relevant scorecard contained in the Codes of
Good Practice on Black Economic Empowerment, issued in terms of section 9(1) of the Broad-
Based Black Economic Empowerment Act;
“Blacklisting Authority” must mean the Blacklisting Committee;
“Blacklisting Period” must mean the period for which the blacklisted person is barred from
participation in the procuring processes of the Municipality;
“Blacklisting” must mean the act of disqualifying a person or an entity from participating in or
continuing to participate in the procurement process of the eThekwini Municipality;
“Capital Assets” are all assets with a life cycle of greater than one year and above
the capitalization threshold (where applicable). For example, this would include
property, plant and equipment (infrastructure network, furniture, motor vehicles,
computer equipment, etc.), intangible assets, and investment property.
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