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Empowering Procurement: A Framework for Preferential Procurement Policies

Explore the operational framework of preferential procurement policies for socio-economic objectives, governance, and empowerment. Learn about legislation, good practices, and tools for effective implementation.

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Empowering Procurement: A Framework for Preferential Procurement Policies

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  1. PORTFOLIO COMMITTEE: ASD PRESENTATION DPE OPERATIONALFRAMEWORK - PREFERENTIAL PROCUREMENT Venue: National Parliament S26 1st Floor NCOP WingDate: 13 March 2002Time: 11h00

  2. CONTENT • INTRODUCTION • PROCUREMENT REGIME • PROCUREMENT REFORM • SOEs RESTRUCTURING PROGRAMME • CONCLUSION

  3. INTRODUCTION • PURPOSE • FOCUS • PROCUREMENT REFORM • SOEs RESTRUCTURING: • POLICY FRAMEWORK • OBJECTIVES • EMPOWERMENT APPROACHES • SOEs PROCUREMENT REFORM PROJECT

  4. PROCUREMENT REGIME Public/ Municipal Finance Management Act Good governance in procurement SA Constitution Preferential Procurement Policy Framework Act Attaining socio Economic Objectives through procurement

  5. PROCURMENTLEGISLATION & 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. 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. …/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. 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. CONVENTIONAL PROCUREMENT SYSTEM INPUT Material Plant/equipment LABOUR Management Skills PROCESS Technical Specifications Technical design Contracting Strategies Technical Quality Assurance OUTPUT Goods Services Products Assets Economic Benefits

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

  11. BASIC ELEMENTS OF OPERATIONAL EMPOWERMENT “green field”/new enterprise level Operational Responsibilities Equity Control Ownership level Corporate Transformation level SMME level

  12. 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. IMPLEMENTATION TOOLS • Resource Specifications • Data Capture Forms • Declaration Affidavits • Guidelines and Manuals • Pro-forma Tender Documentation

  14. 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

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