Implications of government entities not complying with revised PPPFA

The new PPPFA regulations became effective from 7 December 2011. Lucille Jansen van Vuuren of Volition Consulting Services outlines the implications if government entities do not comply with the amendments, in this month’s SmartProcurement.

“In addition to an adverse Audit General Report, non-compliance with the PPPFA regulations as amended may result in expenditure to be found fruitless and wasteful in terms of the PFMA, in which case the PFMA imposes:
• Reporting duties;
• Disciplinary action;
• A finding of financial misconduct;
• Imprisonment or a fine.

“In addition to the above and in terms of the Promotion of Administrative Justice Act (PAJA), a party who intends to respond to a tender may already upon tender invitation, when noted that the invitation to tender is deficient, at that stage seek to have the invitation set aside on the basis that it is not compliant with the PPPFA or for any other reason which would result in the tender process being necessarily inherently flawed.

“The PAJA further details the circumstances when a court or tribunal has the power to judicially review an administrative action and where the action is found not to have been fair then the effect may be to:
• Set aside the award and award the tender to a different bidder.
• Set aside the award and instruct the entity to re-issue a compliant tender.
• Set aside the award and order that the evaluation be redone.

What is required from you?

“Implementation of the changed requirements as well as effort required for implementation is directly linked to the current progress and success of implementation of Supply Chain Management practices within the entity as prescribed and governed by National Treasury Regulations.

Specific requirements include:
• Review and alignment of the current Preferential Procurement Policy and Preferential Procurement Implementation Plan.
• Review and alignment of Supply Chain Management policies, practices and instruction notes.
• Review and alignment of Standard Procurement Documents (i.e. tender documents).
• Update of the supplier database and verification of supplier details in line with the amended requirements.
• Review and alignment of reporting standards and requirements.

How to achieve the required results

“Affected Government entities need to follow a structured project-based approach to implementation to ensure successful implementation and integration and alignment with the Supply Chain Framework Regulations (as issued by National Treasury). The approach includes:
• Understanding the revised PPPFA regulations (training).
• Developing a project plan that addresses policy, process, people, suppliers and reporting with clear responsibilities and time lines.
• Developing a communication and change management plan addressing all stakeholders, including current and potential new suppliers.
• A focussed implementation effort.
• A monitoring and evaluation mechanism.

“The successful implementation will ensure compliance with the revised PPPFA requirements, correct evaluation and adjudication of proposals and quotes, an increase in spend with BBBEE suppliers and accurate reporting on procurement activities.

Main changes

“National Treasury’s revised Preferential Procurement Regulations have been aligned with the aims of the Broad-based Black Economic Empowerment Act and its associated Codes of Good Practice. The revised regulations are also in line with government’s Industrial Policy Action Plan and are supported by Supply Chain Management principles.

“Changes as incorporated in the new PPPFA regulations align closely with the requirements for implementation of Supply Chain Management practices within government organisations and address:
• Policy;
• Processes and Procedures;
• Governance and Reporting requirements.

“Previously bidders scored a maximum of 80 or 90 points for price, and 20 or 10 points for black ownership and for promoting specified RDP goals. The points for price will remain unchanged, while bidders will now score up to 20 or 10 points for their B-BBEE status level of contribution.

“All bidders will have to submit BEE rating certificates, issued by either verification agencies accredited by the South African Accreditation System (SANAS) or by registered auditors approved by the Independent Regulatory Board for Auditors (IRBA).

“The threshold value for the distinction between the 80/20 and 90/10 preference point system has now been increased to R1-million (previously R500 000) to stimulate the development of small enterprises.

“As part of the drive to promote uniformity throughout the public sector procurement system, the revised regulations will also be applicable to schedule 2, 3B and 3D public entities, which were previously exempt.

For more information and assistance contact Lucille Jansen van Vuuren of Volition Consulting Services on LJvanvuuren@volition.co.za

SmartProcurement is hosting practical technical workshops analysing and addressing the far reaching implications the revised PPPFA regulations have for procurement officers, service providers, suppliers and vendors.

Public courses are being held on February 28 in Gauteng and March 22 in Capetown.