PROCUREMENT HANDBOOK - Coega

1 FOURTH EDITION | NOVEMBER 2012 PROCUREMENT HANDBOOKA GUIDE TO THE PROCUREMENT POLICY AND PRACTICES OFTHE Coega DEVELOPMENT CORPORATIONTHIS GUIDE EXPLAINS The principles followed in PROCUREMENT . The way contractors and service providers are canvassed. The way tenders and proposals are its inception, the Coega Development Corporation (CDC) has implemented a number of projects on behalf of the provincial governments, mostly in the Eastern Cape and KwaZulu Natal, and it continues to do so. These projects are focused mainly on infrastructure development which includes building roads, upgrading hospitals, and critically building schools in the aforementioned provinces.

2 The Department of Education sponsored schools building project is a flagship initiative of the CDC as implementing agent. There are two major projects rolling out:Eastern Cape Department of EducationThe CDC has for two years provided services to the Eastern Cape Department of Education (DoE-EC) through its School Building Program (SBP). This programme includes the provision of Early Learning Centres and the eradication of school mud structures that can be found dotted around the rural Eastern Cape countryside. This is done so that the learners and educators can have access to an environment that is conducive to learning and growth. The nature and size of the projects permits the use of smaller contractors and thus enables building industry contractor development.

3 The Expanded Public Works Programme learner contractor initiative is carried out through the SBP and has been hailed as a resounding success. The CDC implemented a total of 32 projects amounting to R316 million on behalf of the Eastern Cape Department of Education during the 2011/12 financial year. The project continues and will do so into the next financial KwaZulu Natal Department of EducationDuring the 2010/11 financial year, the CDC extended its services to the KwaZulu Natal province to provide assistance to the Department of Education. One hundred and fifty eight (158) projects amounting to R971 million were allocated to CDC-S for implementation in the past year.

4 The KZN portfolio increased significantly in 2011/12 compared to the initial allocation in 2010/11 FY, which was 30 projects amounting to R250 million. This has enabled many contractors to benefit from the process both from a financial and experience-based perspective. Not only have contractors benefited, but learners can now learn in schools that and well-built and equipped to deliver education to the leaders of the future. CONTENTSWhat is the CDC? 1 Aims of the CDC 2 What is the PROCUREMENT Policy? 3 CDC s PROCUREMENT Principles 5 SMME Support Programmes 10 PROCUREMENT Structures 13 Compliance Monitoring 16 The Coega Industrial Development Zone (IDZ) is South Africa s primary location for newindustrial investments.

5 Located within the Nelson Mandela Metropolitan Municipality, theinitiative is a multi-billion rand industrial development covering 11 000 hectares and includes a new Deepwater Port. The project aims to position South Africa as a platform for globalexports through attracting foreign and local investment in manufacturing Coega Development Corporation (CDC) is the developer and operator of the zone and isresponsible for the entire landside infrastructure for the IDZ, while a modern Deepwater Portfacility was developed by the National Ports Authority of South Africa. The CDC is committed tooperating an efficient, world class Industrial Development Zone for the benefit of all investors. TheCDC has prepared a strategic Development Framework Plan for the this strategic plan, specific infrastructural development requirements for the 4 500 ha CoreDevelopment Area need to be IS THE1 The aim of the CDC is to stimulate economic development by the formation of an industrialdevelopment area that business will prefer to locate in, in order to gain a competitiveadvantage.

6 The attractions of the IDZ at Coega are broadly: The availability of large areas of land that can be configured to suit the needs of the industry; Purpose built infrastructure provided and operated by the CDC; A Deepwater Port adjacent to the industrial area; The Nelson Mandela Metropolitan Municipality, with excellent amenities and resources for business and leisure; A large skilled labour force in a suitable environment; and Attract Foreign Direct THE CDC2 WHAT IS THE3 The CDC is very conscious of its responsibility to follow best practice in all activities relatedto the establishment of the Coega Industrial Development Zone. In particular, the CDC iscommitted to exercising responsible corporate governance.

7 The CDC uses public funds topurchase goods and services in the private sector for the development of the zone. In aworld class environment where abuse or wastage of public funds is all too common, the CDCis determined to implement policies and procedures that will ensure this does not occur. TheCDC complies with the Broad Based Black Economic Empowerment Act (No 53 of 2003).Because there is strong competition from other countries in attracting business, the CDC needsto emphasise efficiency and commercial viability. Accordingly, resources must be employed in themost efficient and sustainable manner. This extends to the PROCUREMENT of consultants, contractors and suppliers required to develop the zone.

8 This is an economic objective using resources mostly efficient and effectively. However, it must also be remembered that the main purpose of the Coega Project is to benefit people of the region and the country as a whole. There is therefore, a substantial social objective in all activities. Employment creation and skills development are two important elements of the social broad requirements of the CDC s economic and social objectives must be reflected in abalanced manner in the PROCUREMENT FOR MONEY AND FITNESS FOR PURPOSECDC Managers are mandated to initiate PROCUREMENT only for products and services that arejustified in terms of the business case for a project or the zone.

9 Even where PROCUREMENT istargeted at SMME s (Small Medium and Micro Enterprises) the objective will still be to get thebest value for money, in terms of the predetermined S PROCUREMENT5 EMPLOYMENT CREATION AND SKILLS DEVELOPMENTW hereas the operation of the IDZ as a whole is aimed at employment creation and skillsdevelopment, the construction process also provides such opportunities. The CDC will favourmethods of construction that maximise or optimise employment. In particular cases, the CDCwill set aside projects or portions of projects for SMMEs or labour intensive methods OF LOCAL ECONOMYThe Coega IDZ is one of several IDZ s being established nationally. While it brings to the country as awhole, the development is aimed first and foremost at the Nelson Mandela Metro and surroundingareas of the Eastern Cape.

10 The construction of the IDZ will be undertaken using local resources asfar as is OF BLACK COMPANIESThe CDC will promote the empowerment of Black Companies participating in the constructionand operation of the IDZ. At all levels, whether Consulting, Sub Consulting, Main contractor , Sub- contractor or Supplier, the CDC will favour teams which maximise opportunities for Small and LocalCompanies. The CDC will pay particular attention to ensuring that the empowerment aspects of aproposal or tender are GOVERNANCEThe CDC s PROCUREMENT procedures provide for the aspects of good governance that will eliminateconflict of interests or corruption, and promote fairness and good ethics. Ease of compliancewith the CDC s adopted policy is also promoted.