New Public Procurement Rules for the …

1 New Public Procurement Rules for the construction SectorDr Ron WatermeyerDEng, FSAICE, FIStructE, FICECEng, PrEng, PrCM, PrCPMD irector, Infrastructure Options (Pty)LtdVisiting adjunct professor, School of construction Economics and Management, University of the Witwatersrand Recent developments The Standard for Infrastructure Procurement and Delivery Management (SIPDM) The Public Procurement Framework Act (PPPFA) Regulation Alignment of the SIPDM and PPPFANov 2015 Standard for Infrastructure Procurement and Delivery ManagementThe SIPDM regulates the following: thedecisionmakingprocessassociatedwithpr ocurementanddeliverymanagementthroughcon trolframeworksandpoliciesassociatedwitht heassigningofresponsibilitiesforapprovin goracceptingdeliverablesortheauthorising ofaprocurementprocessorprocedure; aspectsofdeliverymanagement procurementprocesses,methodsandprocedure s.

2 And frameworkInstitutional arrangementsDemand managementAcquisition managementContract managementLogistics managementDisposal managementReporting of supply chain management informationRegular assessment of the SCM performanceRisk management and internal controlsSANS 10845-1 SANS 10845-2 SANS 10845-3 SANS 10845-4 Forms of contractProgressive implementation of SIPDMA reasCompliancePFMAMFMAPut in place SCM policy Put in place agency agreements, if requiredApply control frameworksCompleted 1 April 2017 Completed 1 July 2017 Put in place implementation plansDevelop Procurement documents in accordance with the SIPDM provisionsBuilt environment professionals performing designated functionsBefore 1 April 2018 Before 1 July 2019 National Treasury Standard for Infrastructure Procurement and Delivery Management (SIPDM) Trainingand verification examinationsConstitution217.

3 (1) ,contractsforgoodsorservices,itmustdosoi naccordancewithasystemwhichisfair,equita ble,transparent, (2) Subsection (1) does not prevent the organs of state or institutions referred to in that subsection from implementing a Procurement policy providing for categories of preference in the allocation of contracts; and the protection or advancement of persons, or categories of persons, disadvantaged by unfair discrimination. (3) National legislation must prescribe a framework within which the policy referred to in subsection (2) may be implemented. Section 217(2) permits a deviation from the principles of fair, equitable, transparent, competitive and cost effective through the Preferential Procurement Policy Framework Act Equality versus equity.. the protection or advancement of persons, or categories of persons, disadvantaged by unfair.

4 PPPFA Provides a means for tipping the scales in favour of the target groupPPPFA the specific goals may include (i) contracting with persons, or categories of persons, historically disadvantaged by unfair discrimination on the basis of race, gender or disability; (ii) implementing the programmes of the Reconstruction and Development ProgrammeThe concept of primary and secondary objectivesObjectives inform decisions that are made regarding investments in infrastructure. Primary objectives relate to the delivery of the product: tangible objectives including budget, schedule, quality and performance characteristics required from the completed works, rate of delivery intangible objectives including those relating to buildability, relationships, client involvement in the project; end user satisfaction; maintenance and operational objectives typically relate to what can be promoted through Procurement Secondary Procurement objectives are additional to those associated with the immediate objective of the Procurement itself.

5 An objective is an aim or a goal. It is something that one's efforts or actions are intended to attain or accomplishTimeCostQuality / performanceQuantum of deliveryCompeting objectivestensionPrior to the promulgation of the PPPFABASIC OUTCOME OF THE SOUTH AFRICAN DEPARTMENT OF Public WORKS' AFFIRMATIVE Procurement POLICY Index10 Point plan interim policy (Nov 1995)Contract participation goals linked to preference points in the evaluation of tendersAverage statistics for period August 1996 to December 1998 Average ABE index 27,1%Direct financial premium Procurement Regulations 2001 Points awarded to a tenderer for being an HDI and / or subcontracting with an HDI and / or achieving any of the specified goalsPreference points stipulated in respect of a tender must include preference points for equity ownership by and above the awarding of preference points in favour of HDIs, the following activities may be regarded as a contribution towards achieving goals of the RDP The promotion of South African owned enterprises,export orientated production to create jobs, SMMEs, enterprises located in a specific province, specific region, specific municipal areas.

6 Rural areas The creation of new jobs or the intensification of labour absorption The empowerment of the work force The development of human resources The upliftmentof communitiesthrough, but not limited to, housing, transport, schools, infrastructure donations, and charity organisations. PPR 2001 permitted price to be split into price and functionality (undefined)Standard for Uniformity in construction Procurement . Quality= means the totality of features and characteristics of a product or service that bear on its ability to satisfy stated or implied needsEvaluate tenders on the basis of financial offer, preference and qualityQuality criteria used in the evaluation of tender offers shall form an integral part of the tender offer and hence the outcome of the Procurement . Such criteria shall: relate directly to the goods, services or engineering and construction works that are being procured and to matters that cannot directly be expressed in monetary terms; be justifiable in terms of projected Procurement outcomes; enable the most economically advantageous offer to be established; and to the extent practicable, be objective and criteria shall not include matters relating to the basic capability or capacity of the tendering entity to execute the least three persons who are fully conversant with the technical aspects of the Procurement shall undertake such evaluation.

7 Preferential Procurement Regulations 2011 functionality" meansthemeasurementaccordingto predetermined norms, assetoutin thetenderdocuments, ofaservice orcommodity thatisdesignedtobepracticalanduseful, workingoroperating,taking intoaccount, amongotherfactors, thequality, reliability, viabilityand durability of a service and the technical capacityand ability of a tendererQuality (Oxford dictionary) -the standard of something as measured against other things of a similar kind; the degree of excellence of something-distinctive attribute or characteristic possessed by someone or something"local content" meansthat portion ofthetenderpricewhichis not includedintheimportedcontent,providedtha tlocalmanufacture does takeplaceCIDB: Quality (functionality) All points allocated to B-BBEE scorecard Quality -SANS 10845-1 Specialist work requiring considerable innovation, creativity, and expertise or skill)or work that has a high downstream approaches where the scope of work is ill defined when the partners are work characterized by requirements for higher levels of skills, greater resources or not well-defined inputs and workwhere the tasks/activities are of a straightforward nature in terms of which inputs are relatively well known and outputs can be readily least importantPrice most importantIncreasingweightingofpricePRICE QUALITYI ncreasing weighting for qualityObjective criteria -exampleCriteriaSub-criteriaPointsMax pointsHighest qualificationNational diploma15 BTech2 BEng3 MSc4 Phd5 Professional registrationCandidate (any category)

8 14 Professionaltechnician2 Professional Technologist4 Professional Engineer5 Yearsof post graduateexperience1-5 years2106 -10years411-15 years616-20 years8>16 years10 Eligibility or quality criteria?Evaluating quality in tender offers -exampleThequalitycriteriaandmaximumscor einrespectofeachofthecriteriaareasfollow s:Quality criteriaSubcriteriaMax pointsExperience of Principal Consultant (key person)Professional profile in relation to the required service30 Experience in relation to the required service30 Value add40 Approach paper Maximum possible score for quality (Ms)100 Qualityshallbescoredbynotlessthanthreeev aluatorsinaccordancewiththeabovementione dschedules:Theminimumnumberofevaluationp ointsforqualityis60 Eachevaluationcriteriawillbeassessedinte rmsoffiveindicators noresponse,poor,satisfactory, ,40,70,90or100willbeallocatedtonorespons e,poor,satisfactory,goodandverygood, dataSIPDM requirement Quality evaluation by three built environment professionals PrArch PrSArchT PrEng PrTechEng PrLArch PrLArchT PrCPM PrCM PrQsCourt cases EasternCapeHighCourt,Grahamstown,inCaseN o230/09.

9 Thereisinmyjudgementnothingoffensiveeith erinusingqualityorfunctionalassessmentsa saninitialthresholdrequirement, (thosearemetintheBBBEE pointsallocation);theprocessremainscompe titive(notonlyinrelationtoprice),andeffe ctivenessisenhanced(priceandfunctionalit ycounts). Western Cape High Court, Cape Town, in reportable case No 21158/2012 Iconsiderthattheconstitutionalimperative thattheprocurementsystembecost-effective , , Procurement Policy Framework Act 2. (1) An organ of state must determine its preferential Procurement policyand implement it within the following framework:(a) A Preference point system must be followed;(b) (i) for contracts with a Rand value above a prescribed amount a maximum of 10 points may be allocated for specific gods as contemplated in paragraph (d) provided that the lowest acceptable tender scores 90 points for price.

10 ;(c)any other acceptable tenders which are higher in price must score fewer points, on a proratabasis .. (f)the contract must be awarded to the tenderer who scores the highest points, unless objective criteria in addition to those the award to another tendererEstablishes principles and not detailEstablishes preference points systemCan score quality in the evaluation of tender criteriaNational Treasury Standard for Infrastructure Procurement and Delivery Quality may be evaluated in tender submissions as other objective criteria as provided for in the Preferential Procurement Policy Framework Act in accordance with the provisions of SANS 10845-1. Functionality and quality PPR 2017 PreferentialProcurementRegulations2017fu nctionality- theabilityofatenderertoprovidegoodsorser vicesinaccordancewithspecificationsasset outinthetenderdocuments.