Supply Chain Management Policy And Procedure Manual

1 REGISTRATION NO. 1998/009584/06 SANRAL Supply Chain Management Policy And Procedure Manual This report contains pages SANRAL SCM Policy and Procedure Manual (2) (3) (2) 2006 KPMG Services (Proprietary) Limited, a South African company and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. SANRALS upply Chain Management Policy and Procedure i 2007 KPMG Services (Proprietary) Limited. All rights reserved. 1 PART 1 1 Section 1: Document definition 1 Section 2: Terminology 2 Abbreviations 2 Definitions 4 Section 3: Overall objectives 7 Overall objectives 7 This Supply Chain Management Policy and Procedure Guidelines 7 Section 4.

2 Legislative environment 8 The Constitution 8 Public Finance Management Act 8 National Treasury practice notes 9 The Preferential Procurement Policy Framework Act (PPPFA) 10 Broad Based Black Economic Empowerment Act (BBBEE) 10 The King report on Corporate Governance for South Africa 2002 10 The Prevention and Combating of Corrupt Activities Act, Act 12 of 2004 10 Section 5: Authority to execute 12 Policy 12 Section 6: Roles and responsibilities 13 Procurement focus 13 The SCM system 13 SANRAL Board 13 Contracts committee 14 Assets and Liability Committee 14 Chief Financial Officer 15 Specification Committee 15 Tender Evaluation Committee 15 Tender Adjudication Committee 15 SCM official 15 Section 7: Procurement principles 16 Policy 16 Part 8.

3 Ethics and fair dealings in Supply Chain Management 18 Policy 18 Ethical principles in the Supply Chain Management arena 18 Fraud and corruption 21 Combative practices 21 Section 9 Preferential procurement 23 Policy 23 Equity ownership 24 SANRALS upply Chain Management Policy and Procedure ii 2007 KPMG Services (Proprietary) Limited. All rights reserved. Application of preferences 25 2 PART 2 26 Section 10: Demand Management 26 Policy 26 Annual performance planning process 26 Annual operational planning process 28 Procurement plan 29 Ad hoc needs-analysis 29 Scoping through a request for information (RFI) 30 Determining Specifications/Terms of reference 30 Addressing risks 32 General 32 Section 11.

4 Prospective provider list per commodity 33 Policy 33 Establishment of the prospective provider list per commodity 33 Utilisation Procedure from the prospective provider list per commodity 35 Removal from the prospective provider list per commodity 35 3 Part 3 Section 12 Process and threshold overview 36 Hierarchy for satisfying requirements 36 Overview of process and thresholds 37 Section 13 Selection mechanisms and thresholds 38 Selection mechanisms up to R 200 000 38 Competitive tenderding 40 Limited rendering 42 Other procurement arrangements and procedures 42 The appointment of consultants 46 Section 14 Quotation/Tender compilation 68 Advertising of tenders 68 Elements for inclusion in tender documents 71 Section 15 Opening of quotations/tenders 73 Opening procedures for quotations up to R 200 000 (VAT INCLUDED) 73 Opening procedures for tenders above R200 000 73 Tenders received late 74 Dealing with unsolicited tenders 75 Section 16.

5 Evaluation process 76 Policy 76 Compliance check procedures 76 Evaluation less than R 10 000 77 Evaluation committee for procurement from R 10 000 and above 77 SANRALS upply Chain Management Policy and Procedure iii 2007 KPMG Services (Proprietary) Limited. All rights reserved. Evaluation steps 78 Cancellation of quotations/tenders 79 Negotiations with tenderders 80 Tax clearance certificates 80 Extension of validity periods 80 Amendment of tender prices, conditions and specifications when the validity period is extended 80 Providers own conditions 80 Deviations from specifications 81 Equal offers 81 Comparative prices: tenders for contracts with a duration of more than three years 81 Declaration of interest 81 Confidentiality 82 Clearance of providers prior to the award of a contract.

6 Restricted persons 82 Clearance of providers prior to the award of a contract: NIPP 82 Section 17: Adjudication 83 Adjudication structures 83 Adjudication structures less than R 10 000 83 Powers of the adjudication structure less than R 10 000 83 Adjudication structure from R 10 000 and above 83 Powers of the award structure from R 10 000 and above 84 Section 18: Contractual Commitments 85 Policy 85 Contractual commitment less than R 10 000 (per order/transaction) 85 Contractual commitment from R 10 000 and above 85 Section 19 Access to tenderding information 87 Policy 87 Informing the successful tenderders 87 Informing the unsuccessful tenderders 87 Disclosure of information 87 Publishing of a award 88 Section 20 Sale of assets 89 Policy 89 Determination to sell 89 Section 21 Contract/Project Management 90 Policy 90 General responsibilities 90 Contract documentation 90 Contract monitoring 90 Managing the

7 Contract 91 Policy 91 Transfer and cession of contracts 91 SANRALS upply Chain Management Policy and Procedure iv 2007 KPMG Services (Proprietary) Limited. All rights reserved. Transfer of contract payments 92 Non-contractual purchases 92 Contract variations/amendments 92 Policy 92 Amendment of conditions 93 Price adjustments 93 Unsatisfactory performance 95 Policy 95 Contract termination 95 Policy 95 4 Logistics Management 98 Purchase requisitions 98 Purchase orders 98 Receiving of assets 98 Fixed asset register 98 Sale and scrapping of fixed assets (Also see chapter on disposal Management )

8 98 Depreciation 98 Assets under construction (Buildings, Roads & Bridges and Equipment via project systems and materials Management ) 98 Disposal of land (Also see chapter on disposal Management ) 98 Insurance of assets 98 Land Acquisition 98 Leased assets 98 5 Handing and taking over procedures 99 Assuming and relinquishing of accountability 99 Handing and taking over by chief executive officers 99 Handing and taking over between officials in charge of equipment 100 Handing and taking over procedures for inventory holders 100 6 Labour saving devices 102 Responsibilities and control 102 Repair and maintenance 103 Monthly statistics 103 7 Disposal Management 104 Obsolescence Planning 104 Renewel planning 104 Disposal Decision 105 Disposal Plan 105 Methods

9 Of disposal 105 SANRALS upply Chain Management Policy and Procedure v 2007 KPMG Services (Proprietary) Limited. All rights reserved. 8 Reporting 108 Monthly reporting 108 9 Performance measurement 109 Contractor assessment 109 Consultant assessment 110 Monitoring of the SCM Policy And Process 110 Achieving of predetermined targets and record keeping 111 SANRALS upply Chain Management Policy and Procedure 1 2007 KPMG Services (Proprietary) Limited. All rights reserved. 1 PART 1 Section 1: Document definition Version Draft 1 Date 5 February 2007 Summary This document is the draft Supply Chain Management Policy and procedures Manual applicable to SANRAL.

10 Signature Date CHIEF EXECUTIVE OFFICER Next revision date SANRALS upply Chain Management Policy and Procedure 2 2007 KPMG Services (Proprietary) Limited. All rights reserved. Section 2: Terminology Abbreviations BBBEE Broad Based Black Economic Empowerment BEE Black Economic Empowerment CEO Chief Executive Officer CFO Chief Financial Officer CIDB Construction Industry Development Board DTI Department of Trade and Industry FM Financial Manager GCC General Conditions of Contract HDI Historically Disadvantaged Individual HOC Heads of Clusters MTEF Medium Term Expenditure Framework NIPP National Industrial Participation Programme PAM Procurement Administration Manager PFMA Public Finance