ASSIGNMENT 1

PSC300

PUBLIC SUPPLY CHAIN MANAGEMENT I

AUGUST 14, 2023

NAME:
STUDENT NUMBER
Table of content
 Question 1
1.1 FORMAT OF THE BID EVALUATION COMMITTEE RECOMMENDATION
REPORT
The BEC recommendation report is a formal document that outlines the process for
evaluating a project submitted to the BAC. It summarises the bid closing and evaluation
process and incorporates the recommendations of the BAC. The report must be based
on facts and must be clear, accurate and understandable in its content and purpose.
The BAC bases its assessment of whether procedures and decisions were fair and
transparent based on ethical principles on this report (Student Guide 2023).
The format suggested below is a best – practice solution; every institution should
develop its own template that suits its individual needs and circumstances. The BEC
recommendation report / submission must be approved and signed by the BEC before it
is submitted to the BAC. The report contains basic information which (Student Guide
2023):
 Introduces the need for and type of goods or services required.
 Indicates the sourcing strategy followed and number of bids received.
 Records in logical order all the data and procedures that were followed during the
bid process.
 Gives the dates on which each phase of the process was completed.
 Gives the reasons for excluding any bid.
 Summarises the evaluation process.
 Provides the scores for price and B – BBEE status level of contribution in respect
of all responsive bids involved.
 Makes the final recommendation supported by convincing reasons.
 Gives the members of the BAC an overall view of the important aspects of the
preferred bid to help it make decisions during the adjudication process.
1.2 quality based selection
Quality – based selection Quality Based Selection (QBS) is part of limited bidding and
must be approved as a limited selection method by the accounting officer / authority
(Student Guide 2023).
QBS is appropriate for the following types of assignment (Student Guide 2023):
 Complex or highly specialised assignments for which consultants / professional
service providers are expected to demonstrate innovation in their proposals,
because it is difficult to define precise TOR and the required input. Examples are
country, economic or sector studies, multi – sectored feasibility studies,
designing a hazardous waste remediation plant or an urban master plan, or
financial sector reforms.
 Assignments that have a high downstream Impact and in which the objective is to
have the best experts. Examples are feasibility and structural engineering
 designs for major infrastructure such as large dams, policy studies of national
significance, and management studies of large government agencies.
 Assignments that can be carried out in substantially different ways, such that
proposals will not be comparable but will still achieve the results required. An
example is management advice and sector and policy studies in which the value
of the services depends on the quality of the analysis.
In QBS, the RFP may request submission of a technical proposal only (without the
financial proposal) or both technical and financial proposals at the same time, but in
separate envelopes (two – envelope system) (Student Guide 2023).
The RFP should not provide the estimated budget, but it may provide the estimated
amount of key staff time, specifying that this information is given as an indication only,
and that consultants / professional service providers are free to propose their own
estimates (Student Guide 2023).
If technical proposals alone were invited , using the QBS method the accounting officer
could request the consultants / professional service providers with the highest – ranked
technical proposal to submit a detailed financial proposal (Student Guide 2023).
Question 2
2.1 TYPES OF CONTRACT FOR GOODS AND PROFESSIONAL SERVICES
Apart from the contract consisting of GCC and SCC prescribed by the National Treasury
for use by all organs of state for the procurement of goods and services, there are other
contracts to consider depending on the nature of goods and services required. These
contracts require serious consideration during the demand management phase as they
may affect drafting specifications, including REP and TOR applicable to the acquisition
of professional services. A summarised version of such contracts is given below
(Student Guide 2023).
 Transversal contract
The National Treasury and each provincial treasury facilitate these contracts for the
procurement of goods and services. Unless authorised otherwise in writing by the
relevant treasury, all organs of state are compelled to use transversal contracts for any
goods or services provided for in such a transversal term contract. A list of these
contracts is provided by the relevant treasuries to organs of state to determine needs for
goods and services provided for in such contracts (Student Guide 2023).
Should an organ of state with to use a transversal contract to procure goods and
services, it may not solicit bids for the same or similar goods or services during the
duration of the transversal term contract. Once a transversal contract is awarded by the
relevant treasury, organs of state may not enter into any SLA that is inconsistent with
the terms and conditions of the contract (Student Guide 2023).
  Lump – sum (firm fixed – price) contract
This contract is useful mainly for assignments in which the content, duration of the
services and expected output of the consultants are clearly specified. It applies to
services such as feasibility and environmental studies, design of standard structures
and preparation of data Systems. Lump – sum contracts are easy to administer
because payments are due and drawings. On clearly specified outputs (deliverables),
such as reports, software programs and drawings (Student Guide 2023).
 Time – based contract
This type of contract is used when the scope and the length of services is not easily
determined because the services depend on the performance of others, for which the
completion period may vary. The output of the consultants required to attain desired
objectives of the assignment may also be difficult to assess (Student Guide 2023).
This contract is useful for complex studies, supervision of construction, advisory
services and training assignments. Payments are based on agreed hourly, daily,
weekly, or monthly rates for staff (who are normally named in the contract) and on
reimbursable items using actual expenses and / or agreed unit prices (Student Guide
2023).
 Retainer and / or contingency ( success ) fee contract
This contract is suitable when consultants (banks or financial firms) are preparing
companies for sales or mergers of firms, with privatisation in mind. The remuneration
includes a retainer and a success fee. The success fee represents a percentage of the
sale price of the assets involved (Student Guide 2023).
 Percentage contract
It is appropriate for architectural services, procurement and inspection agents. Fees
paid to the consultant involve estimated or actual project construction cost and the cost
of the goods procured or inspected. The contract is negotiated on the basis of market
norms for the services or competitive bidding (Student Guide 2023).
 Indefinite delivery contract (price agreement)
Accounting officers / authorities may consider this contract if “on – call “specialised
services are needed to provide advice on an activity. However, the extent and timing of
such activity cannot be defined in advance (Student Guide 2023).
These contracts are commonly used to retain advisors for implementing complex
projects (for example a dam panel), expert adjudicators for dispute resolution panels,
accounting officer / authority reforms, and procurement advice. The services may last
for a few months or more than a year. Payment for services rendered is based on unit
rates agreed upon and becomes payable based on the time actually used (Student
Guide 2023).
2.2 PRICE ADMINISTRATION DECISIONS: FIRM VS NON – FIRM PRICES
Price determination
During the demand phase of SCM the BSC or end user must decide on the most
effective sourcing strategy to obtain specific goods or services. Price is important in
implementing procurement strategies and actions, especially as it is one of the main
components of the value (“cost to client “ ) package when estimations must be prepared
or there is a need for negotiations (Student Guide 2023).
A price determination exercise is therefore closely involved with decisions on variables
such as the quality and quantity of goods and services. This applies even more in the
public sector, where price alone is not always the deciding factor but where external
factors such as preference stipulations affect the selection of the service provider
(Student Guide 2023).
However, it is also true that one of the pillars of public sector procurement is the
concept of” value for money “, as we are in the business of spending taxpayers’ money.
The question of adding value is therefore important and officials in SCM will always be
faced with balancing value against cost. Adding value sometimes causes costs to
increase dramatically, so it becomes prohibitively expensive (Student Guide 2023).
When a sourcing strategy is chosen it must also be decided whether a firm or a non –
firm price is required. This decision must be clearly indicate to the potential supplier, as
it has a direct impact on evaluating and comparing bid prices offered. It is not possible
to compare a “firm” with a “non – firm “price. Price is defined by the Preferential
Procurement Regulations to include all applicable taxes less all unconditional discounts
(Student Guide 2023).
To clarify the above, the impact and relevance of firm price vs. non – firm price are
discussed further below.
Firm price
A firm price is only subject to adjustments in accordance with the actual increase or
decrease resulting from the change, imposition, or abolition of customs or excise duty
and any other duty, levy or tax. These cost drivers are binding on the contractor in terms
of legislation and demonstrably have an influence on the price of any supplies, or the
rendering costs of any service, for the execution of the contract (Student Guide 2023).
Non - firm price
Best practice dictates that non – firm prices be requested for (Student Guide 2023).
 specific term contracts that will be valid for longer than one year
  Ad hoc contracts that require once – off procurement of an asset or service that
will be subject to exchange rate influences.

Question 3
3.1 ROLES AND RESPONSIBILITIES OF BID ADJUDICATION COMMITTEE
MEMBERS
Members of the committee must adhere to the following key responsibilities (Student
Guide 2023):
 Be fully conversant with the powers and limitations of the committees as well as
all directives pertaining to SCM, including the relevant sections of the
Constitution, the Public Finance Management Act and accompanying Treasury
Regulations, the Preferential Procurement Policy Framework Act, the Broad
Based Black Economic Empowerment Act and accompanying regulations, and
all directives issued by National Treasury / the relevant provincial treasury.
 Be fully conversant with the Guide for Accounting Officers and the Code of
conduct for BACs.
 At all times act in accordance with above mentioned legislation, regulations and
procedures.
 Apply their minds to matters at hand in order to make meaningful and
accountable decisions and in the event of doubt or uncertainty , propose that
matters be referred for clarification
 Furnish a written apology in advance should he / she not be able to attend a
meeting
 Strive to be punctual for meetings and to stay for the duration of a meeting.
 Prepare properly for each meeting by studying the agenda and submissions /
reports
 Be familiar with meeting procedures in order to contribute in the correct manner.
 Declare beforehand (including the chairperson or vice chairperson) his / her
interest regarding any matter before the committee and then then recuse her /
himself during the discussion of that matter.
No discussion by the member concerned is allowed prior to serving that submission /
report and such a member may not retain that submission / report (Student Guide
2023).
Any personal interest that may infringe, or might reasonably be deemed to infringe,
on a member’s impartiality in any matter relevant to their duties must be recorded.
Out voted members must abide by the majority decision of the committee (Student
Guide 2023).
 No member should communicate with a bidder / contractor prior to or after any
meeting Members of the committee have certain rights, such as a share in the
control of the matter for which the meeting is constituted, and may exercise this right
by making proposals or voting (Student Guide 2023).
A member's conduct at the meeting must not, however, infringe on the rights of
others. The rules of conduct are based on mutual respect for the rights of others and
the purpose of the meeting (Student Guide 2023).
Question 4
4.1 THE MAIN FUNCTIONS OF THE OFFICE OF THE CHIEF PROCUREMENT
OFFICER
An SCM office has been established in the National Treasury to oversee the
implementation of the SCM policy, in conjunction with provincial treasuries. The main
functions of the Office of the Chief Procurement Officer (OCPO) at the National
Treasury are to (Student Guide 2023):
 Promote communications and liaison between different SCM units (SCMUS)
located in institutions.
 Monitor the performance of SCMUs at national, provincial and local government
level.
 Audit the performance of accounting officers and accounting authorities to
ensure compliance with SCM regulations, treasury instructions, guidelines and
policy, including norms and standards.
 Serve as a link between central government, National Treasury and the different
SCMUS located in organs of state.
 issue regulations to ensure uniform application of the national SCM policy
including the following :
 Address the requirement for consistency with other policy initiatives in
government.
 Ensure that material construction standards are aligned with those
standards that support international best practice.
 Establish selection standards for appointing consultants.
 Observe the principles of cooperative governance as expounded in the
Constitution.
 Promote the policy objectives outlined in the PPPFA and BBBEE Acts
and their accompanying regulations.
References