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TPT CE’s Procurement ImbizoGovernance

2nd November 2015

Contents

Contents

What does the Law expect

What does Transnet do

How Transnet buys goods and services

2

Tender Process

Preference (BBBEE)

What does Transnet do?

3

Transnet is an integrated Freight transport and logistics companywith 5 Operating divisions and a number of support businesses.

We are the largest freight logistics company in Southern Africa.

We deliver goods throughout South Africa, Africa and the world.

Goods are transported through our ports and on rail and fuel through our pipeline.

> 66 000 employees

Legislation

Transnet SOC Ltd (“Transnet”) is fully owned by the South African government and operates as a corporate entity. It is aimed at supporting and contributing to the country’s freight logistics network by developing South African industry, reducing the cost of doing business, ensuring efficient and profitable operations, whilst at the same time promoting critical developmental objectives.

Section 217 of the Constitution Act 108 of 1996 and section 51(1)(a)(iii) of the Public Finance Management Act 1 of 1999 (“PFMA”) stipulates that Transnet must have and maintain an appropriate procurement and provisioning system which is fair, equitable, transparent, competitive and cost-effective. Transnet’s Procurement Policy and this Procurement Procedures Manual (“PPM”) gives effect to these statutory requirements.

What does the law expect?

Transparent

Process must be open – nothing to hide

Fair

Everyone given the same oppor-tunity to tender

No favouritism

Fair evaluation of tenders

Competitive

Promotion of open and fair competition

Cost –effective

Best value for money must be obtained

Value for money is not the same as cheapest price

All contracts for goods or services must be procured in accordance with a system which is

Examples of the effect of some laws on Transnet’s procurement?

The tax affairs of a supplier MUST be in order before a state owned company may awardbusiness to it;

Preference must be allowed to B-BBEE enterprises in the procurement ofgoods and services

Proof must be provided of B-BBEE status Fronting is illegal

A supplier who has an interest in a specific tender may request information relating to the award of the tender.

A tenderer must declare any interest they may have with a Transnetemployee when tendering for Transnet’s business.

Misrepresentation may result in disqualification and even blacklisting. Corruption- Treasury List of Tender Defaulters

How does Transnet buy its Goods and Services ?

Mainly through the open tender system

Advertisements

Low value items through the quotation method

Fax quotes

RFQ document

Sometimes once-off delivery

Sometimes contracts for a specific period or specific value or both (as and when required)

Where are tenders advertised?

Transnet tenders are normally advertised in the following publications:

National Treasury eTenderPublication Portal at www.etenders.gov.za

National Newspapers (e.g. Sowetan, Sunday Times, City Press, New Age, etc.).

OD Websites (some ODs display their tenders- moving towards a single Transnet tender website).

CIDB website –for engineering & construction tenders.

Tender notice boards at Transnet offices.

Where can you collect Tenders?

In accordance with National Treasury Instructions No: 1 of 2015/2016

Transnet must advertise and publish all its bids on the eTender Publication

Portal, this with effect form the 1st May 2015.

Therefore Transnet bids can be obtained from the eTender Publication Portal:

www.etenders.gov.za

For those who do not have access to internet, bid documents can still be

obtained at a relevant Transnet office where the bid is advertised.

It is important to note that, the bids that are collected at Transnet offices will

attract costs, whilst the bids on the eTender Publication Portal are freely

available.

Tender evaluation process

Step 3 Step 4 Step 5

Administra-

tive respon-

siveness

Substantive

respon-

siveness

Minimum

Threshold

for Local

Content

Minimum

Threshold for

BBBEE/SD

Weighted

scoring / 100

Price/TCO

SD

B-BBEE s/c

& FRC

Returnable

documents/

schedules

Pre-

qualification

SD

B-BBEE

s/c &FRC

Technical /

functional

FINAL

WEIGHTED

SCORE

Minimum

Threshold for

functionality/

technical

Step 2Step 1 Step 6

PREQUALIFICATION STAGE 1 STAGE 2

Bid lodged

on time

Ret. Docs.

Ret sche-

dules

Missing docs

by ext.

deadline

Doc signed

Pre-qualifica-

tion criteria

met?

Priced offer

Crucial asp-

ects met

Material

compliance

with scope/

spec

Designated/

non

designated

sectors

May use

threshold in

normal

processes

Threshold must

be passed

BBBEE

Scorecard

FRC:

(0wnership,

Mgt control,

Empl. Equity,

ED, Pref.

Procurement

___________

SD

Sustainability,

Technology &

IP transfer

Skills develop-

ment, Job

creation

Small business

promotion

Adherence to

spec

Service levels

Quality

References

National

footprint

After sales

services

Continuous

improvement

etc.

Comparative

prices/ TCO

(value to

Transnet)

SD scores in

step 4,

transposed

B-BBEE

scorecard &

FRC scores

in step 4

transposed

29

The required returnable documents by bidders must be determined. There are two

categories of returnable documents :

Mandatory Documents:

must be submitted by the closing date and time

must be limited to critical documents that will be used to evaluate bidders e.g. Pricing

schedule

Essential Documents

other required documents which may not result in automatic elimination if not

submitted e.g. Audited Financial Statements and the B-BBEE Improvement Plan

NB: Failure to submit mandatory returnable documents at the closing date and time of

the bid WILL result in the bidder’s disqualification, and failure to submit essential

returnable documents MAY result in the bidder’s disqualification.

Administrative Responsiveness Test

Substantive Responsiveness Test

Whether any pre-qualification criteria (Yes or No Questions) set by

Transnet, have been met:

Technical/Functional

Supplier Development

Financial Stability

Whether the Bid contains a priced offer as prescribed in the RFP

Whether the Bid materially complies with the scope and/or

specification given

RFP Declaration & Breach of Law Form

In this section bidders are expected to declare that:

All the questions they might have had and submitted to Transnet for clarityhave been answered to their satisfaction by Transnet.

They have been afforded access to Transnet operational sites for them toassess Transnet so that they will be in a better position to bid.

They are satisfied with the bidding process and with the requiredinformation as per RFP

They have no family, business or social relationship with the employees,Board members of Transnet or with any person who might be involved inthe evaluation process

They have not been found guilty of breaching any law in the last five years(company law for an example). This those not include minor offences suchas traffic offences.

Tax clearance requirements

The tenderer must submit an original, valid tax clearancecertificate / letter of good tax standing.

Transnet is not allowed to do business with a companywhose tax affairs are not in order.

Delivery period

The tenderer must state the delivery period in words− whetherdelivery will occur in calendar days, working days, weeks ormonths.

22

What could disqualify a tender response

Failure to attend compulsory site/clarification meeting.

Unsigned tender documents.

Tenders deposited after the closing time and date or at thewrong address.

Failure to submit returnable documents asked for e.g.original valid tax clearance or B-BBEE certificate.

Being blacklisted from doing business with Transnet orGovernment.

No CIDB registration for required grading for constructiontenders.

Non-compliance with or contravening legislative provisions.

Not signing a non-disclosure agreement where this was arequirement.

Not complying with material forms and conditions of tender.

Not quoting a price.

Misrepresentation of facts.

Fraud and corruption.

Failure to declare an interest.

Other breaches of law. 30

Tips for successful tendering

Do your homework and start early

Get a copy of the tender documents as soon as you can,preferably on the day the tender is issued to the market.(You can read a draft tender document before deciding tobuy the document.)

Give yourself enough time to plan and prepare yoursubmission.

Review and understand the requirements

Read the tender document carefully and thoroughly.

Attend any scheduled briefing session and ask questions if the information is unclear.

If you need further help or clarification, ask the Transnet contact person, mentioned in the tender document.

Make sure you have all the requested accreditations and documents.

Read the contract terms and conditions and make sure you can comply.

31

Study the evaluation criteria and respond as requested in theRFP

Note any weighting placed on each of them (i.e. how big a role doeseach criterion play in the final evaluation).

Satisfy each of the criteria as best you can.

Work out the budget and resources required to do the work.

Do not under-quote as you will not be allowed to increase your priceonce the tender is awarded. The contract may be cancelled and youand your company may be blacklisted for under-performance.

Give a breakdown of your price/cost.

Tips for successful tendering contd…

32

Tips for successful tendering contd…

Check your tender response for completeness and accuracy

Make sure you include all the requirements and specifications for goods and services to be supplied.

Be 100% sure that you will be able to deliver as tendered.

Inform Transnet how you will meet the requirements.

Check for arithmetical errors in your tender price or other calculations.

Include details of the relevant experience you have in relation to the proposed contract.

Indicate who can give reference for your work/performance on previous contracts.

Attach all returnable documents.

Tips for successful tendering contd…

Check the closing date, time and place for delivering the bid

Late tenders and tenders delivered to an incorrect address will not beconsidered.

Make sure you have enough time to prepare and submit your tender.

Submit the tender in the right place/tender box.

Make sure the document is completed in full and that all the pages

have been signed/initialled.

Don’t wait until the last minute to deliver/submit your documents.

Do not submit more than one tender in the same envelope.

Common Challenges

Incorrect or incomplete completion of tender documents;

Failure to read and understand what is required and seek clarity when unsure;

Failure to ask relevant information during briefing sessions;

Failure to return mandatory documents on or before the closing date;

Failure to submit essential documents on or before the closing date, even when requested to submit within a reasonable time after the closing date;

Failure to correctly fill in the required information on the pricing schedule;

NB: the Bid document always has a schedule of Mandatory Returnable Documents and Essential Returnable Documents.

Fraud and Corruption

Transnet insists on honesty, integrity and acting beyond reproach at all times and will not tolerate any form of improper influencing, bribery, corruption, fraud or any other unethical conduct on the part of Bidders / Transnet employees.

If Transnet has determined that a Bidder / contractor / supplier has or has caused to be promised, offered or given to any Transnet employee, any bribe, commission, or any unauthorized gift, loan, advantage or other consideration, Transnet shall be entitled to revoke the bid / contract by following the process that governs the Exclusion of Bidders

Transnet will be entitled to place any Bidder / contractor / supplier who has contravened the provisions of Transnet’s business ethics on its List of Excluded Bidders.

Bid documents contain a clause indicating that any suspected fraud, corruption or other unethical activities should be reported to Transnet Tip-offs Anonymous at any of the following addresses and contact numbers. Confidentiality is guaranteed at all times.

Toll-free anonymous hotline : 0800 003 056

Email : Transnet@tip-offs.com

Fax number : 0800 007 788

Procurement Ombudsman

Independent and provides Bidders and Transnet with a fair, objective and expeditious dispute resolution process.

As a general rule, the Ombudsman will only consider complaints pertaining to bids valued at R5 million and above.

Complaints involving bids below R5m must be sent to the General Manager of the relevant Transnet Division for review.

In most instances the Ombudsman will conduct the investigation without the need for a formal, oral hearing. However, in highly exceptional circumstances, the Ombudsman may in his sole discretion conduct an oral hearing if it would assist with the resolution of the matter.

The Ombudsman has the power to conduct a full investigation of a

complaint and to make appropriate recommendations regarding the

appropriate remedial measures to be undertaken.

Details of Ombudsman are: procurement.ombud@transnet.net

Thank you