Procurement Policy Initiative by gyvwpsjkko

VIEWS: 6 PAGES: 66

									Procurement Policy
     Initiative




              september2003
table of contents


VOLUME 1:   Procurement Policy


VOLUME 2:   Implementation Guide for the Procurement of Goods,
            Services and Engineering and Construction Works


VOLUME 3:   Implementation Guide for      the   Selection   and
            Appointment of Consultants


VOLUME 4:   Tender Administration Procedures




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Procurement Policy Initiative
           VOLUME 1



        Procurement Policy




                             september2003
contents

1.   INTRODUCTION

2.   GOAL

3.   OBJECTIVES
     3.1. Management Objectives
     3.2. Socio – economic Objectives

4.   CLASSES OF CONTRACT AND TARGET GROUPS

5.   OTHER SPECIFIC GOALS

6.   PERFORMANCE MANAGEMENT

7.   GENERAL APPLICATION




                        PROCUREMENT POLICY INITIATIVE – VOLUME 1   2
procurement policy
1.    INTRODUCTION

Section 217 of the Constitution of the Republic of South Africa requires an organ of state to contract for goods or
services in accordance with a system which is fair, equitable, transparent, competitive and cost effective. This
policy for the City of Cape Town has been drawn up to give effect to the recent enabling legislation outlined
in the Preferential Procurement Policy Framework Act, 2000 (Act 5 of 2000) and the Preferential Procurement
Regulations, 2001.


2.    GOAL

The goal of the policy is to ensure that the City of Cape Town procures goods and services that meet it’s needs in
a manner that is cost - effective and at the same time pursue certain specific socio-economic objectives through a
preference system that enables increased participation of the Small Business sector with particular reference to
Historically Disadvantaged Individuals (HDI’s).


3.    OBJECTIVES

The Policy provides general principles for achieving the following objectives:

3.1. Management objectives:
         •    Continuing improvement in value for money.
         •    Enhance competitiveness.
         •    Enhance efficient and effective procurement practices and systems.
         •    Adopt a uniform procurement system across the City of Cape Town.
         •    Maintain National Standards and pursue best practice.
         •    Combat corruption.

3.2. Socio – economic objectives:
         •    To stimulate and promote local economic development in a targeted and focused manner.
         •    To facilitate creation of employment and business opportunities for the people of Cape Town with
              particular reference to Historically Disadvantaged Individuals (HDI’s).
         •    To promote the competitiveness of local businesses.
         •    Increase the Small Business sector access, in general, to procurement business opportunities created
              by Council
         •    Increase participation by small, medium and micro enterprises (SMME’s).
         •    To promote joint venture partnerships.


4.    CLASSES OF CONTRACT AND TARGET GROUPS

In terms of the Preferential Procurement Policy Framework Act, 2000 (Act 5 of 2000) and its Regulations, the
formulation of this Policy is based on the application of a point system, allowing for either a maximum of 10 or 20
points out of 100 to be awarded to tenders which comply with the objectives specified in this policy, with the balance
of 80 or 90 points being determined by price. Preferential Procurement is further enhanced with policies aimed at
improved access to information, simplification of documentation, reduced performance guarantee requirements and
good governance.

The classes of contract and target groups are defined in the Implementation Guides (Volumes 2 and 3).
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Furthermore, the policy allows for the establishment of procurement initiatives such as joint-venture partnerships,
public-private partnerships and unbundling as well as other best practices of procuring Goods, Services and Engineering
and Construction Works.

It should be noted that Preference points in respect of equity ownership for contracts, may only be claimed by
individual owners or shareholders who are actively involved in the management of the enterprise/business, and who
exercise control over the enterprise/business, commensurate with their degree of ownership at the closing date of
the tender. Public companies do not qualify for preference points.


5.     OTHER SPECIFIC GOALS

In terms of the Preferential Procurement Regulations, 2001 (Section 17(3)) other specific goals may be regarded as
a contribution towards achieving the goals of the Reconstruction and Development Program, and as such may be
granted preference points in the adjudication of tenders.

A target of a minimum of 40% of the Council’s annual monetary value to be allocated to Historically Disadvantaged
Individuals (HDI’s).

In order to further enhance Historically Disadvantaged Individuals (HDI’s) and black business development it is
recommended that notwithstanding awarding contracts to the highest scoring offer, a minimum 25% of contracts be
awarded to the aforementioned businesses where possible.

Opportunities and preference be given to South African companies and individuals, to promote their growth and
development, and to promotion of local job creation.

Council may also enter into a service delivery agreement with community based Organisations (CBO’s) or other
non-governmental organisations competent to enter into such an agreement, subject to the terms of the Municipal
Systems Act.


6.     PERFORMANCE MANAGEMENT

To ensure that the Procurement Policy Initiative attains its objectives, a robust performance management system will
be established by means of Western Cape Supplier database. This performance management system will ensure that
the overall goals of this policy are achieved.

Accordingly, it encompasses a process involving setting goals per Directorate in terms of the preferential procurement
objectives, establishing relevant performance areas to monitor and specific indicators to measure and enhance
continuous performance review.

The development and support of Historically Disadvantaged Individuals must be negotiated into the performance grids
of all Council Executive Directors, Directors and Managers.


7.    GENERAL APPLICATION

The policy recognizes the need to assist Emerging Contractors/Suppliers with regard to reduced payment cycles
(twice monthly) and reduces sureties and retention where appropriate.

The City Of Cape Town Procurement Policy Initiative must therefore be seen against the background of the
commitment by the Council to achieve a sustainable Preferential Procurement system by means of the attached
Guides (Volumes 2 and 3). This implies a clear commitment to the involvement of the historically disadvantaged and
marginalised sector of our community.

The procurement function is centralised and located within the corporate finance.

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Procurement Policy Initiative
               VOLUME 2



      Implementation Guide for the
   Procurement of Goods, Services and
   Engineering and Construction Works




                                        september2003
contents

1.    INTRODUCTION

2.    DEFINITIONS

3.    KEY PRINCIPLES

4.    UNBUNDLING STRATEGIES

5.    INCREASING EMPLOYMENT OPPORTUNITIES

6.    PREFERENTIAL PROCUREMENT STRATEGIES
      6.1.     Classes of Contract
      6.2.     Target Groups
      6.3.     Other Specific Goals

7.    PREFERENTIAL PROCUREMENT SYSTEM
      7.1.     Implementation Process
      7.2.     Procurement Procedure
      7.3.     Target Groups and Other Specific Goals
      7.4.     Adjudication of Tenders
      7.4.1.   General
      7.4.2.   Cancellation and Re-invitation of Tenders
      7.4.3.   Responsiveness of Tenders
      7.4.4.   Points for Price
      7.4.5.   Points for Preference
      7.4.6.   Repor ting Format and Examples
      7.4.7.   Penalties for Non-Compliance
      7.5.     Documentation
      7.6.     Sureties for Due Per formance
      7.7.     Retention
      7.8.     Payment Cycle
      7.9.     Payment Period

8.    ADJUDICATION POINTS FOR FUNCTIONALITY AND UNSOLICITED BIDS
      8.1.     Points for Functionality
      8.2.     Points for Unsolicited Bids

9.    DATABASE REQUIREMENTS
      9.1.      Registration of Contractors
      9.2.      Award and Completion Information


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       9.3.      Rating Contractors Per formance
       9.4.      Blacklisting of Contractors

10.    EMERGENCY PROCUREMENT PROVISION

       ANNEXURE A            Procurement Implementation Process

       ANNEXURE B            Reporting Format : Calculation of Tender Adjudication Points :
                             Micro and Minor Contracts

       ANNEXURE C            Reporting Format : Calculation of Tender Adjudication Points :
                             Major Contracts

       ANNEXURE D            Contract Award Data Capture Form

       ANNEXURE E            Contract Completion Data Capture Form




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1.       INTRODUCTION

The Preferential Procurement Policy Framework Act, 2000 (Act 5 of 2000) requires organs of state to determine
their Preferential Procurement Policy and to implement it in accordance with a framework specified in the Act.
The Preferential Procurement Regulations, 2001, pertaining to the Preferential Procurement Policy Framework Act,
stipulate certain requirements which must be met by a procurement system which is applied by an organ of state.

In terms of the Act therefore, the City of Cape Town has developed a Procurement Policy Initiative which requires
the application of a fair, equitable, transparent and cost effective procurement system that encourages the entry of
emerging business into Local Government procurement, transformation and empowerment within established
businesses, and the use of local government procurement as an instrument of local economic development and
redistribution.

The purpose of this implementation guide is to provide Implementing Agents and Responsible Agents with a
procurement system which embodies the requirements of the Act, the Regulations and the Procurement Policy
Statement of the City. To this end a Procurement Implementation Process for the procurement of Goods, Services
and Engineering and Construction Works Contracts has been developed.

The following procurement strategies are addressed in this implementation guide :
         •   The unbundling of large projects into smaller contracts.
         •   Increasing employment opportunities by adopting labour friendly technologies.
         •   The development of a preference system for enterprises owned by Historically Disadvantaged
             Individuals.
         •   The targeting of other specific goals.




2.       DEFINITIONS

The words and expressions defined herein shall, for the purposes of this volume of the Procurement Policy, have the
meanings hereby assigned to them :

Act : means the Preferential Procurement Policy Framework Act, 2000, (Act No 5 of 2000).

City : means the Council of the City of Cape Town or any person/persons/committee delegated with the authority to
act on its behalf.

Corrected Tender Sum : means the Tender Sum, corrected in terms of the tender documentation, where applicable.

Contract : means the agreement between parties which is concluded when the City accepts a tender/quotation
submitted by a tenderer.

Contractor: means any natural or legal person/company/closed corporation/firm/joint venture whose tender
has been accepted by the City. For the purposes of this document “contractor” shall include suppliers and
service providers.

Contract Participation Goal : means the amount equal to the sum of the value of work for which the prime
contractor contracts to engage specific target groups in the performance of the contract, expressed as a percentage
of the Tender Sum less provisional sums, contingencies and VAT.

Delegated Authority : means any person/persons/committee delegated with the authority to act for or on behalf of the
Council of the City of Cape Town.




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Disability : means, in respect of a person, a permanent impairment of a physical, intellectual, or sensory function,
which results in restricted, or lack of, ability to perform an activity in the manner, or in the range, considered normal
for a human being.

Electronic Bulletin Board : means an electronic method of obtaining quotations through a third party.

Empowerment Indicator : means a measure of an enterprise/business’s contribution to towards achieving the goals
of Government’s Reconstruction and Development Program. This indicator will relate only to certain specific goals for
the purposes of this guide.

Engineering and Construction Works : means the provision of a combination of Goods and Services, arranged
for the development and provision of an asset, including building and engineering infrastructure, or for the
refurbishment of an existing asset.

Equity Ownership : means the percentage of an enterprise or business owned by individuals or, in respect of a
private company, the percentage of a company’s shares that are owned by individuals, who are actively involved in the
management of the enterprise or business and exercise control over the enterprise, commensurate with their degree
of ownership at the closing date of the tender.

Functionality : means the suitability of a proposal, design or product for the use for which it is intended.

Goods : means those raw materials or commodities which are available for general sale.

Historically Disadvantaged Individual (HDI) : means a South African citizen :
         (1) who, due to the apartheid policy that had been in place, had no franchise in national elections prior to the
         introduction of the Constitution of the Republic of South Africa, 1983 (Act No 110 of 1983) or the Constitution
         of the Republic of South Africa, 1993 (Act No 200 of 1993) (“the Interim Constitution”); and/or
         (2) who is female and/or
         (3) who has a disability :
provided that a person who obtained South African citizenship on or after the coming to effect of the Interim
Constitution, is deemed not to be an HDI.
Implementing Agent : means the decision maker/manager mandated by the City to implement projects and invite
tenders/quotations for procurement of any nature (normally an Executive Director or Director).

Joint Venture/Consortium : means an association of persons/companies/closed corporations/firms formed for the
purpose of combining their expertise, property, capital, efforts, skill and knowledge in an activity for the execution of
a contract.

Management : in relation to an enterprise or business, means an activity inclusive of control and performed on a daily
basis, by any person who is a principal executive officer of the enterprise/business, by whatever name that person
may be designated , and whether or not that person is a Director.

Prime Contractor : means the legal entity with whom the City will contract (as opposed to sub-contractors/
suppliers/manufacturers/service providers who contract with the prime contractor).

Quotation : means a written offer which is not submitted in the form of a tender document prescribed by the City,
but is never-the-less subject to a specification, conditions of purchase and any schedules and/or annexures such as
drawings or plans, as applicable.

Regulations : mean the Preferential Procurement Regulations, 2001, pertaining to the Preferential Procurement Policy
Framework Act, 2000 (Act No 5 of 2000)

Responsible Agent : means those internal project managers (City Officials) and/or external consultants responsible for
the administration of a contract.
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Responsive Tender : means a tender which conforms to all the Terms, Conditions and Specifications of the tender
without material deviation or qualification.

Services : means the provision of labour and/or work carried out by hand, or with the assistance of plant and
equipment, including the input, as necessary, of knowledge based expertise.

Small, Medium and Micro Enterprises (SMMEs) : bears the same meaning assigned to this expression in the National
Small Business Act, 1996 (Act No 102 of 1996).

Tenderer : means any natural or legal person/company/closed corporation/firm submitting a tender or price quotation.

Tender : means a written offer on the tender documents prescribed by the City in response to an invitation to tender.

Tender Sum : means the amount stated on the tender documents prescribed by the City.




3.       KEY PRINCIPLES

The principles embodied in the Preferential Procurement Regulations, 2001 (which pertain to the Preferential
Procurement Policy Framework Act (Act No 5 of 2000)) form the basis of this Implementation Guide, and have been
used in the development of the Procurement Implementation Process for the Procurement of Goods, Services and
Engineering and Construction Works Contracts.

The key principles are :
        • The application of an 80/20 preference point system in respect of procurement (tenders/quotations)
          with a Rand value of less than or equal to R 500 000.00.
        • The application of a 90/10 preference point system in respect of procurement (tenders/quotations)
          with a Rand value greater than R 500 000.00.
        • The concept of Historically Disadvantaged Individuals (HDIs) as defined in the Regulations.




4.       UNBUNDLING STRATEGIES

In order to encourage increased participation and the sustainable growth of the small business sector, the unbundling
of larger projects into smaller, more manageable, contracts is encouraged.

Unbundling must however be considered in the context of :
        • economies of scale being lost,
        • abortive work becoming necessary,
        • additional demands (not only financial) being placed on the City’s resources,
        • the risk of later phases not being completed as a result of budget cuts becoming necessary in the future.

Unbundling, and all of its associated implications, must therefore be carefully considered at the planning stage of any
project and the budgets for, and design thereof, should be structured accordingly.

It is important to note that while it is the City’s policy to procure works in the smallest practicable quantities, the
practice of breaking out projects in order to circumvent the formal tender process is not permitted.




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5.       INCREASING EMPLOYMENT OPPORTUNITIES

Implementing Agents must be aware that one of the City’s key socio-economic objectives is to facilitate the creation
of employment for the people of Cape Town.

Increasing employment opportunities through procurement may be achieved by specifying labour friendly technologies
and/or labour intensive methods of construction in the tender documents.

It is up to Implementing/Responsible Agents to thoroughly investigate the options available in this regard, to evaluate
the positive versus negative impact of any proposals, and to specify labour friendly technologies and/or methods
where appropriate.




6.       PREFERENTIAL PROCUREMENT STRATEGIES

6.1.     Classes of Contract

For the purposes of implementing a preferential procurement system for Goods, Services and Engineering and
Construction Works, the following classes of contract have been identified :
         •    The Micro Contract where the estimated tender value/quotation amount is less than or equal to a
              threshold value determined by the City from time to time. At present this threshold value is R250 000.
         •    The Minor Contract (up to R 500 000) where the estimated contract value is greater than R250 000,
              but is less than or equal to R 500 000.
         •    The Minor Contract (over R 500 000) where the estimated contract value is greater than R 500 000,
              but is less than or equal to R 2 000 000.
         •    The Major Contract where the estimated contract value is greater than R 2 000 000.


6.2.     Target Groups

For each class of contract, specific groups are targeted in an appropriate capacity, firstly, in order to comply with the
Regulations and secondly, in order to achieve the socio-economic objectives of the City. The target groups for each
class of contract are as follows :

Micro Contracts :
Enterprises/businesses with equity ownership by Historically Disadvantaged Individuals (HDI’s) performing as prime
contractors. This includes Joint Venture partnerships tendering as prime contractors.

Minor Contracts (up to R 500 000) :
Enterprises/businesses with equity ownership by HDI’s performing as prime contractors. This includes Joint Venture
partnerships tendering as prime contractors.

Minor Contracts (over R 500 000) :
Enterprises/businesses with equity ownership by HDI’s performing as prime contractors. This includes Joint Venture
partnerships tendering as prime contractors.

Major Contracts :
Enterprises/businesses with equity ownership by HDI’s performing as prime contractors, joint venture partners,
sub-contractors, suppliers, manufacturers and service providers.

Preference points in respect of equity ownership for any of the above classes of contract, may only be claimed by
individual owners or shareholders who are actively involved in the management of the enterprise/business, and who
exercise control over the enterprise/business, commensurate with their degree of ownership at the closing date of

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the tender. Public companies do not qualify for preference points.

The ownership status of any enterprise/business wishing to enter into a contract with the City is subject to
verification both at the tender adjudication stage and, once awarded, throughout the course of the contract.

In all classes of contract other specific goals may be targeted where appropriate (section 6.3 below refers).


6.3.      Other Specific Goals

In terms of the Regulations (Section 17(3)) the following activities may be regarded as a contribution towards
achieving the goals of the Reconstruction and Development Program, and as such may be granted preference points
in the adjudication of tenders.

          (a) The promotion of South African owned enterprises;

          (b) The promotion of export oriented production to create jobs;

          (c) The promotion of SMMEs;

          (d) The creation of new jobs or the intensification of labour absorption (which has been interpreted, for
              the purposes of this guide, to include the employment of local labour);

          (e) The promotion of enterprises located in a specific province for work to be done or services to be
              rendered in that province;

          (f)   The promotion of enterprises located in a specific region for work to be done or services to be
                rendered in that region;

          (g) The promotion of enterprises located in a specific municipal area for work to be done or services to be
              rendered in that municipal area (the municipal area may, for the purposes of this guide, be narrowed
              down to smaller local areas such as suburbs or wards);

          (h) The promotion of enterprises located in rural areas;

          (i)   The empowerment of the work force by standardising the level of skill and knowledge of workers;

          (j)   The development of human resources, including by assisting in tertiary and other advanced training
                programmes, in line with key indicators such as percentage of wage bill spent on education and
                training and improvement of management skills (formal training of the work force undertaken on an
                enterprise’s own initiative, shall for the purposes of this guide, be recognised in this category); and

          (k) The upliftment of communities through, but not limited to, housing, transport, schools, infrastructure
              donations and charity organisations.




From the City’s perspective, the important goals are (a), (c), (d), (g), (j) and (k), although it is clearly not feasible to
target all of these goals in each and every contract. In recognition therefore, that each Service or even Directorate
may have its own priorities or objectives in this regard, it is expected that each Service or Directorate (as
appropriate) will identify perhaps three specific goals from the list above that it will target over and above HDI equity
ownership. Depending on the particular circumstances, one, or at most, two of these goals may be targeted in the
case of Major contracts, for which tenderers will receive up to 5 preference points in the adjudication of tenders.




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The targeting of other specific goals in Major contracts may be achieved by requiring tenderers to either tender a
contract participation goal from within a specified minimum and maximum range, and from which preference
points may be calculated; or by inviting contractors to claim preference points based on an appropriate
empowerment indicator.

Contract participation goals in respect of goals (a), (c), (d) and (g) should be related to the percentage of the contract
value which is carried out by the various target groups. Empowerment indicators could be the percentage of the wage
bill spent on training and education of HDIs in the case of goal (j); or the percentage of turnover contributed to the
upliftment of communities in the case of goal (k).

In the case of Micro and Minor (up to and over R 500 000) contracts, the thrust is towards the empowerment of HDIs
in the small business sector, and preference points should therefore not be allocated to any other specific goals. On
certain projects however, there may be reason to specify an additional minimum contract participation goal in the
contract documentation, which the contractor will be required to meet in the execution of the contract, but for which
no additional preference points will be granted.

Specified contract participation goals (for all classes of contract) must be measurable, quantifiable and achievable.
Responsible Agents must monitor the execution of the contract for compliance with the specified or tendered goals.




7.       PREFERENTIAL PROCUREMENT SYSTEM

7.1.     Implementation Process

Annexure A summarises the procurement strategies that may be applied at each stage of a project namely, project
planning, project design and project implementation. It then proceeds to map out the preferential procurement
strategies for each of the four classes of contract identified. The preference system applicable to each class of
contract is discussed in greater detail below.

Prior to the invitation of tenders, the process shall be properly planned, the cost of the goods, services or engineering
and construction works accurately estimated and the appropriate deliverables, preference system and performance
indicators established.




7.2.     Procurement Procedure

The City’s Tender Administration Procedures (Volume 4 of the City’s Procurement Policy) state that formal tenders
shall be invited for the supply of any goods or services, or the execution of any work which involves, or is likely to
involve, an estimated amount exceeding R250 000. In respect of procurement involving an estimated amount of less
than or equal to R250 000, quotations shall be invited. Quotations may be invited via an Electronic Bulletin Board in
which case all quotations received are considered, or where not applicable or appropriate, a minimum of three written
quotations shall be obtained.

It should be noted that the threshold value of R250 000 may be adjusted by the City from time to time.

For Micro Engineering and Construction Works contracts therefore, it is sufficient to obtain three written quotations
from suitably qualified contractors who have the necessary experience and resources, and who are in good standing
with the City. For any procurement in either of the Minor classes of contract, or the Major class of contract however,
formal tenders must be invited.

The invitation of formal tenders and quotations is discussed more fully in the Tender Administration Procedures.




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7.3.      Target Groups and Other Specific Goals

7.3.1.    Micro and Minor Contracts

In the case of Micro and Minor (up to and over R 500 000) contracts, the target group is Historically Disadvantaged
Individuals with equity ownership in enterprises/businesses performing as prime contractors only. This includes
Joint Venture Partnerships which are established with a view to contracting with the City and which tender in
the capacity of a prime contractor. No preference points are given in any of the above classes of contract for
sub-contracting with, or employing the services of sub-contractors, suppliers, manufacturers or service providers,
regardless of the HDI equity ownership of these entities.

It is quite permissible however, where appropriate, for Implementing/Responsible Agents to specify a minimum
contract participation goal to be achieved by the prime contractor in the execution of a contract, but for which no
preference points are given. Care must, however, be taken not to exclude any particular group or groups from the
tender process as a result of specifying such a minimum goal.

In order to ensure that HDI participation is achieved in Micro contracts, the following guidelines should be adhered to :
          •   Where three quotations are called for, where possible, at least one of the enterprises/businesses
              should have a minimum HDI equity ownership of 60%, another should have a minimum HDI equity
              ownership of 30 %, and the last need not have any HDI equity ownership.
          •   The Responsible Agent should establish the equity ownership status of the enterprise/business prior
              to calling for quotes. If, after a reasonable search, it is not possible to identify three firms which meet
              the above targets, a record of such should be kept for audit purposes.
          •   Quotations obtained via the Electronic Bulletin Board shall be subject to the application of the 80/20
              preference point system in terms of the regulations.




7.3.2.    Major Contracts

In the case of Major contracts the target group is HDI’s with equity ownership in enterprises/businesses performing
in any of the following capacities :

          •   As prime contractors, joint venture partnerships, sub-contractors, suppliers, manufactures, and/or
              service providers.

Other specific goals may also be targeted, for which preference points will be given. While it is up to the Implementing
Agent to determine his/her objectives in line with the Regulations, and to identify a list of perhaps three other goals
that may be considered priorities, it is suggested that, in the interests of simplicity, only one other goal, or at most
two, be targeted per contract.

Where other specific goals are targeted, realistic minimum (for which no preference points will be given) and maximum
(for which maximum preference points will be given) values must be specified in the tender documentation. Tenderers
must tender at least the minimum goal in order for their tender to be considered responsive.




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7.4.      Adjudication of Tenders

7.4.1.    General

The Regulations stipulate an 80/20 preference point system in respect of procurement with an estimated value of
less than or equal to R 500 000, and a 90/10 preference point system in respect of procurement with an estimated
value of greater than R 500 000.

This means that either 80 or 90 points, depending on the class of contract, are awarded to the tenderer who
tenders the lowest price, and proportionately fewer points are awarded to those with higher prices. Either 20 or 10
points are then available as preference points for HDI equity ownership and other specific goals.

The points for price will normally be fixed, unless there is an element of functionality brought into the adjudication
process (Section 8 below refers).

There is some flexibility within the preference points to weigh HDI equity ownership against other specific goals,
although, for the purposes of the City’s procurement system, this will only be applied to the Major class of contract
where a maximum of 5 preference points may be granted for other specific goals.

Prior, however, to the detailed evaluation of the tenders and the calculation of adjudication points for price and
preference, the Responsible Agent must determine the responsiveness of each tender, that is, whether each tender :
          •   has been submitted on the prescribed form and is properly signed,
          •   is responsive to the requirements of the tender documents,
          •   provides any clarification and/or substantiation that may be required.
          •   is realistically priced in relation to the goods, services or works required.

The successful tenderer will then normally be the one who, having submitted a responsive tender, is awarded
the most adjudication points. In cases, however, where the tenderer with the highest adjudication points is not
recommended, full details must be provided to the Delegated Authority for consideration.

It is imperative that the tender adjudication criteria, including the manner in which points are to be awarded, are
clearly stated in the tender documents.

Adjudication points calculated for both price and preference, shall be rounded off to the nearest two decimal places.




7.4.2.    Cancellation and Re-invitation of Tenders

It is a requirement of the Regulations that in the event of :
          •   an 80/20 preference point system having been stipulated in the tender documents, and all tenders
              received exceed a value of R 500 000,
          •   or a 90/10 preference point system having been stipulated in the tender documents, and all tenders
              received are equal to, or below a value of R 500 000,

then the tender must be cancelled, and new tenders must be invited.

Where new tenders are invited, a revised preference point system, either 90/10 or 80/20 as applicable, must be clearly
stipulated in the tender documents.




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7.4.3.    Responsiveness of Tenders

A responsive tender is one which conforms to all the terms, conditions and specifications of the contract without
material deviation or qualification.


A material deviation or qualification is one which, in the opinion of the Implementing/Responsible Agent :
          •   could detrimentally affect the scope, quality or performance of the contract,
          •   changes the City’s or the contractor’s risks and responsibilities under the contract, or
          •   could affect the competitive position of the tenderers who have submitted responsive tenders, if the
              deviation were to be rectified or the qualification withdrawn.

Tenders which are deemed not to be responsive should receive no further consideration in the adjudication process.




7.4.4.    Points for Price

7.4.4.1. Micro and Minor (up to R 500 000) Contracts

          A maximum of 80 points is allocated to price on the following basis :

          Np = 80 [1 - (Pt – Pmin)]
                                 Pmin

          Where :     Np     =       the number of tender adjudication points awarded for price.
                      Pt     =       the tender sum (corrected if applicable) of the responsive tender under consideration.
                      Pmin =         the tender sum (corrected if applicable) of the lowest responsive tender.




7.4.4.2. Minor (over R 500 000) and Major Contracts

          A maximum of 90 points is allocated to price on the following basis :

          Np = 90 [1 - (Pt – Pmin)]
                          Pmin

          Where :     Np     =       the number of tender adjudication points awarded for price.
                      Pt     =       the tender sum (corrected if applicable) of the responsive tender under consideration.
                      Pmin =         the tender sum (corrected if applicable) of the lowest responsive tender.




7.4.5.    Points for Preference

7.4.5.1. Micro and Minor (up to R 500 000) Contracts

          A maximum of 20 points is allocated to preference on the following basis :

          Ng = 20(%HDI)
                  100

          Where :     Ng         =     the number of tender adjudication points awarded for preference.

         PROCUREMENT POLICY INITIATIVE – VOLUME 2 – GOODS, SERVICES & ENGINEERING & CONSTRUCTION WORKS                 12
                    %HDI =         the percentage of HDI equity ownership of the tenderer under consideration
                                 (see Notes 1 & 2 below).

        Note 1.     It is only the equity ownership of the tenderer in the capacity of prime contractor that is
                    considered in this formula.
             2.     Where a joint venture partnership tenders as a prime contractor, the joint venture agreement
                    must state the percentage of the contract value that will be managed or executed by the
                    parties thereto. In this regard the adjudication points for HDI equity ownership shall be
                    calculated on the pro rata contribution of each of the parties to the joint venture partnership.




7.4.5.2. Minor (over R 500 000) Contracts

        A maximum of 10 points is allocated to preference on the following basis :

        Ng = 10(%HDI)
                100

        Where :     Ng      =    the number of tender adjudication points awarded for preference.
                    %HDI =       the percentage of HDI equity ownership of the tenderer under consideration (see
                                 Notes 1 & 2 below).

        Note 1.     It is only the equity ownership of the tenderer in the capacity of prime contractor that is
                    considered in this formula.
             2.     Where a joint venture partnership tenders as a prime contractor, the joint venture agreement
                    must state the percentage of the contract value that will be managed or executed by the
                    parties thereto. In this regard the adjudication points for HDI equity ownership shall be
                    calculated on the pro rata contribution of each of the parties to the joint venture partnership.


7.4.5.3. Major Co ntracts

        A maximum of 10 points is allocated to preference on the following basis :
        Ng = a(%HDI) + b[CPG1  - CPG1 min] + c[CPG2_ - CPG2_min]
               100      [CPG1 max-CPG1 min]   [CPG2 max-CPG2 min]

        Where :     Ng       =    the number of tender adjudication points awarded for preference.
                    a, b and c are the preference points available for allocation to target groups and other specific
                    goals.
                    a = minimum 5 points
                    b + c = maximum 5 points
                    b and/or c may = zero
                    a + b + c = 10 points
                    %HDI     =    the percentage of HDI equity ownership claimed by the tenderer under
                                  consideration (see Note 1 below).


                    CPG      =    the Contract Participation Goal tendered by the tenderer (see Note 2 below).
                    [Where more than one other specific goal has been targeted in the tender documents the
                    goals will be differentiated as CPG1 and CPG2].



       PROCUREMENT POLICY INITIATIVE – VOLUME 2 – GOODS, SERVICES & ENGINEERING & CONSTRUCTION WORKS             13
                      CPGmin =      the minimum specified Contract Participation Goal, which must be achieved in
                                    order for a tender to be considered responsive.
                      CPGmax =      the maximum specified Contract Participation Goal, above which no further
                                    adjudication points will be awarded.
                      [Realistic minimum and maximum values must be specified].

          Note 1.     HDI equity ownership may be claimed in respect of the prime contractor (which may be a
                      joint venture partnership) and/or any sub-contractors, suppliers, manufacturers, service providers,
                      engaged by the prime contractor, in proportion to the value of their contribution (excluding
                      provisional sums, contingencies and VAT).

                      Contributing proportionate values may only be claimed once (that is, either as part of the
                      prime contractors contribution or as part of the sub-contractor, supplier, manufacturer,
                      service providers contribution).

               2.     In cases where preference points are to be granted on the basis of an empowerment
                      indicator, as opposed to a contract participation goal, then an appropriate target indicator must
                      be specified in the tender documentation (see Section 6.3 above). Maximum points will be
                      granted to those tenderers who meet the target, or proportionately less, to those that claim
                      any amount less than the target. The relevant portion of the equation above would therefore
                      be substituted by the following :

                      Ng = ……… + c.Ic            where Ic = Indicator claimed
                                  It                   It = target Indicator
                      With c being the maximum number of preference points that may be claimed.



7.4.6.    Repor ting Format and Examples

Standard formats in which the tender adjudication results should be presented to the Delegated Authority are given
in Annexures B and C for the Minor and Major classes of contract.

The data presented in Annexures B and C is based on real examples and by applying the formula given in Sections
7.4.4 and, 7.4.5 above, the total number of tender adjudication points for each contractor may be calculated.




7.4.7.    Penalties for Non-Compliance with Specified or Tendered Goals

Penalties for failure to comply with specified or tendered participation goals must be specified in each particular
contract document and must be applied should the goals not be met.

In the case of Minor contracts, where a minimum participation goal may be specified, the contractor is simply obliged
to meet that goal, and must be penalised if he does not.

The penalty that should be applied for non-compliance with a specified participation goal is as follows :

          Penalty = (CPGs – CPGa) x Pt*


          Where :     CPGs      =   the Contract Participation Goal specified (expressed as a percentage).
                      CPGa      =   the Contract Participation Goal achieved (expressed as a percentage).
                      Pt*       =   Tender Sum less provisional sums, contingencies and VAT.

         PROCUREMENT POLICY INITIATIVE – VOLUME 2 – GOODS, SERVICES & ENGINEERING & CONSTRUCTION WORKS               14
In the case of Major contracts, tenderers must, at the time of tender, claim a %HDI equity ownership, based on the
ownership of their own enterprise/business, as well as that of their intended sub-contractors, suppliers, manufacturers
and/or service providers, in proportion to the value of the contribution of each.

Once a tender has been accepted the %HDI equity ownership claimed becomes the contractual goal to which
contractors must comply. This in effect prevents a prime contractor with a high %HDI ownership from sub-contracting
out work to sub-contractors with little or no %HDI ownership, as the prime contractor will then be unable to meet the
contractual goal (there is however some flexibility for the prime contractor make use of alternate sub-contractors with
similar %HDI ownership, as long as overall, the contractual goal is met).

Similarly, where contract participation goals are tendered on Major contracts, once the tender has been accepted, the
tendered goal becomes the contractual goal which must be met in the performance of the contract.

The penalty that should be applied for non-compliance with tendered goals is as follows :

         Penalty = (Ng – Ng*) x Pt*
                      100

         Where :      Ng     =   the number of tender adjudication points awarded for preference.
                      Ng*    =   the number of preference points achieved, that is, preference points calculated in
                                 terms of actual goals achieved in the performance of the contract.
                      Pt*    =   Tender sum less provisional sums, contingencies and VAT.



7.5.     Documentation

Within the context of Preferential Procurement, one of the strategies to encourage and assist entry into Local
Government Procurement by emerging businesses, is to simplify contract documentation wherever possible.

In order, however, to ensure that the City’s interests are protected, simplified documents should only be adopted for
relatively low risk contracts, such as the Micro and Minor classes of contract (up to R 2 000 000 in value). If however
it is totally inappropriate to use simplified documentation for a lower value contract, then standard documentation may
be applied.

By virtue of their scale and value (and more often than not, their complexity) standard contract documentation should
be applied to Major contracts.




7.6.     Sureties for Due Per formance

Obtaining sureties (guarantees) from financial institutions is one of the major obstacles preventing emerging
businesses from participating in Local Government Procurement. The value of the sureties required by the City has
therefore been reduced, or waived altogether, in accordance with the class (value) of the contract.

The sureties required for each class of contract are as follows :

         •    Micro                              waived (that is, no surety is required)
         •    Minor (under R 500 000)            2.5% of the tender sum
         •    Minor (over R 500 000)             5% of the tender sum
         •    Major                              10 % of the tender sum




        PROCUREMENT POLICY INITIATIVE – VOLUME 2 – GOODS, SERVICES & ENGINEERING & CONSTRUCTION WORKS              15
Sureties in respect of the procurement of goods and services will not generally be called for, but where required, will
be in accordance with the limits described above.




7.7.      Retention

Having a large percentage of the value of work carried out withheld as retention, presents most contractors with
serious cash flow problems, especially in the case of the higher value Major contracts. In order therefore, to lessen
the impact of retention monies withheld and to assist less established contractors in the execution of a contract,
retention, on Major contracts only, should be limited to 5% of the tender sum. In order however, to protect the City’s
interests on Minor contracts, where the value of the surety required has been reduced, or even waived, the usual 10%
retention shall apply. The value of retention deducted will therefore be as follows:
          •   Micro and Minor : 10% of the value of work carried out with no limit, reducing to 5% for the duration
              of the maintenance period.
          •   Major : 10 % of the value of the work carried out, up to a limit of 5% of the tender sum, with no
              reduction for the duration of the maintenance period.

Retention in respect of the procurement of goods and services will not generally be called for, but where required, will
be in accordance with the limits described above.

For turnkey/design and construct projects, the above retention limits may be reviewed by the Implementing Agent.

Financial guarantees may be submitted in lieu of retention.




7.8.      Payment Terms

The City determines all closing dates for receipt of documentation for payment and the payment run dates.

7.8.1.    Standard Payment Terms

All invoices received for goods and services or engineering and construction works whereby the invoices are dated on
or before the 20th of a particular month, will be paid between the 23rd and 26th of the ensuing month.




7.8.2.    Payments to SMME/HDI Contractors

7.8.2.1. In order to qualify for more frequent or earlier payments, a contractor must be classified as a SMME with
         an HDI equity ownership of not less than 50 %, on the Western Cape Supplier Database.

7.8.2.2. In order to give effect to the above, an additional mid-month payment run has been introduced. The
         payment run dates will be:

                (a)     between the 10th and the 13th and

                (b)     between the 23rd and the 26th of each calendar month,

          depending on the number of days of the month and the influence of public holidays.

7.8.2.3. All invoices received by the City or its Agents whereby the invoices are dated between the 25th of the
         previous month and the 10th of the current month will be paid between the 23rd and the 26th of the
         current month.


         PROCUREMENT POLICY INITIATIVE – VOLUME 2 – GOODS, SERVICES & ENGINEERING & CONSTRUCTION WORKS              16
7.8.2.4. All invoices received by the City or its Agents whereby the invoices are dated between the 10th and the
         25th of a particular month, will be paid between the 10th and 13th of the ensuing month.

7.8.3    Payments in Respect of Formal Contracts

Where formal contracts are to be concluded, the payment terms specified therein must be in accordance with
sections 7.8.1 and 7.8.2 above.




8.       ADJUDICATION POINTS FOR FUNCTIONALITY AND UNSOLICITED BIDS

8.1.     Points for Functionality

The Regulations permit adjudication points to be granted for functionality, at the expense of points for price, that is :

Points for Functionality + Points for Price = 80 (in respect of contracts with an estimated value of less than or equal
to R 500 000),

Points for Functionality + Points for Price = 90 (in respect of contracts with an estimated value of more than
R 500 000).

Tenders which include points for functionality will be the exception rather than the rule, and will generally apply to
only those projects of a more complex nature and of a higher value. Design and construct projects, for example, may
include points for functionality of design proposals.

As a rule, not more than 30 adjudication points may be granted for functionality in respect of contracts with an
estimated value of less than or equal to R 500 000, or 40 points in respect of a contract with an estimated contact
value of more than R 500 000.

The manner in which functionality will be evaluated, and how adjudication points will be granted, must be clearly
indicated in the tender documentation.




8.2.     Points for Unsolicited Bids

An unsolicited bid is a proposal presented to the City by a contractor, through his/her own initiative, without having
been invited to do so by the City. Such a proposal may well offer significant benefits to the City, which would be in
the City’s interests to pursue.

It is not permissible to dispense with the calling of tenders in order to favour the contractor that presented the
unsolicited bid. If however, the ideas presented are sufficiently new and innovative, and not protected by copywrite
or trade marks, the contractor may be rewarded for his initiative by being granted 10 adjudication points for
functionality in an open tender. No other tenderers would receive any points for functionality in this case. The
maximum number of points available for price would be reduced accordingly.

The circumstances leading to the calling for tenders, and the conditions applicable to the granting of the points for
functionality must be clearly indicated in the tender documentation.




        PROCUREMENT POLICY INITIATIVE – VOLUME 2 – GOODS, SERVICES & ENGINEERING & CONSTRUCTION WORKS                17
9.       DATABASE REQUIREMENTS

9.1.     Registration of Contractors

Any enterprise/business wishing to do business with the City of Cape Town must register on the Western Cape
Supplier Database.

Contractors who are not registered on the Western Cape Supplier Database are not precluded from submitting tenders
or quotations, but must register and be verified before the closing date for the submission of tenders or quotations in
order to qualify for preference points (points for price will however be awarded).

Separate parties to Joint Ventures must be registered and verified in order for the Joint Venture to qualify for
preference points.




9.2.     Award and Completion Information

In order to monitor the effectiveness of the City’s Procurement Policy Initiative and to enable effective reporting, it is
necessary to capture, on the City’s database, relevant contract award and completion information.

Standard contract award and completion forms (see Annexures D and E) must be completed for all (including Micro)
contracts by the Responsible Agent, and submitted either in electronic or hardcopy format to a central data capture
office.




9.3.     Rating Contractor’s Per formance

All contractor’s work history with the City will be maintained on the database, and it is a requirement of the contract
completion data capture form that the contractor’s performance be rated on completion of a contract.

This simple rating must be carried out by the responsible official, and is intended purely as an aid to others in
adjudicating future tenders.

Good : means that the contractor’s performance was above average and that the official would have no hesitation in
recommending that contractor on another project.

Fair : means that the contractor’s performance was acceptable, and that there is no reason not to recommend that
contractor on another project.

Unsatisfactory : means that there is some aspect of the contractor’s performance that was not acceptable or up to
standard. It is not intended to blacklist the contractor, but rather to warn others that it would be worth contacting the
responsible official for information that may be pertinent when evaluating any further tenders from that contractor.
Consistently unsatisfactory performance on more than one project may be used as a motivation to recommend to the
Delegated Authority that a subsequent tender from that particular contractor not be accepted. Where it is considered
appropriate to rate a contractors performance as unsatisfactory, this rating will be vetted by a cross functional team,
appointed by the City and the contractor shall be advised accordingly.




9.4.     Blacklist ing of Contractors

Notwithstanding the imposition of any penalties that may be applied in terms of Section 7.4.7 of this guide, where a
contractor is found guilty of misrepresenting any facts in respect of either ownership or empowerment indicator, either
in a tender submission, or on the supplier database, in order to effect the outcome of a tender, either before or after

        PROCUREMENT POLICY INITIATIVE – VOLUME 2 – GOODS, SERVICES & ENGINEERING & CONSTRUCTION WORKS                 18
the award of a contract, then that contractor shall, with the approval of the Implementing Agent, be blacklisted on the
supplier database for a period of twelve months and shall be notified accordingly.

The affect of such blacklisting is that absolutely no further work may be awarded to that contractor for the duration
of the blacklisting.

All relevant information should be compiled and reported to relevant delegated authoriy.




10.      EMERGENCY PROCUREMENT PROVISION

In certain emergency circumstances the Implementing Agent may, with the permission of the Delegated Authority,
modify or dispense with the provisions of this guide and with the calling of tenders.

The conditions warranting emergency procurement, and the procedure to be followed, are described fully in Volume
4 : Tender Administration Procedures, Section 7 : Exceptions to the Formal Tender Process.




        PROCUREMENT POLICY INITIATIVE – VOLUME 2 – GOODS, SERVICES & ENGINEERING & CONSTRUCTION WORKS              19
PROCUREME N T I M P L E M E N T AT I O N P R O C E S S                                                                                                            Annexure A
                                             Procurement
                                               Strategy                                                                              Stage 1
                                                                                                Phase 1
                                                                                                                                     Stage 2
         Project                              Unbundle
        Planning                               Project                                                                               Stage 3
                                                                                                Phase 2
                                                                                                                                     Stage 4

                                                                                            Identify                                                                  Prescribe
                                            Increase                                                                               Evaluate
                                                                                             labour                                                                   (specify)
         Project                          Employment                                                                              positive vs.
                                                                                            friendly                                                                 appropriate
         Design                           Opportunities                                  technologies
                                                                                                                                   negetive
                                                                                                                                                                    technologies
                                                                                                                                    impact
                                                                                         and methods                                                                and methods



                                                                                            Establish
      Project                               Preferential
                                                                                            class of
  Implementation                           Procurement                                      contract




                                  MICRO                                      MINOR                                      MINOR                                     MAJOR
      Class                   Value<R250,000                            (up to R500,000)                           (over R500,000)                           Value>R2 000,000
                                                                   R250,000<Value<R500,000                   R500,000<Value<R2 000,000


 Procurement                 3 QUOTATIONS                               FORMAL TENDER                             FORMAL TENDER                              FORMAL TENDER
  Procedure

                                                                                                                                                        HDI ownership of :
                              HDI ownership of                          HDI ownership of                           HDI ownership of
Target Groups                 prime contractors                         prime contractors                          prime contractors
                                                                                                                                                        • prime contractors
                                                                                                                                                        • joint ventures partners
                                                                                                                                                        • sub-contractors
                                                                                                                                                        • suppliers
                                                                                                                                                        • manufacturers
                                                                                                                                                        • service providers
                                                                                                                                                        AND other specific goals#

Other Specific           Specify minimum goals                      Specify minimum goals                      Specify minimum goals                   If other specific goals targeted,
                                                                                                                                                             then realistic min and
   Goals                    to be achieved
                          (no adjudication points given)
                                                                       to be achieved
                                                                     (no adjudication points given)
                                                                                                                  to be achieved
                                                                                                                (no adjudication points given)            max values to be specified
 (where appropriate)


   Tender                   Price : 80 points                         Price : 80 points                          Price : 90 points                           Price : 90 points
                                                                                                                                                        HDI ownership : min 5 pts
                        HDI ownership : 20 points                 HDI ownership : 20 points                  HDI ownership : 10 points
 Adjudication                                                                                                                                          Other specific goals:max 5pts


                       Electronic Bulletin Board or                Simplified CoCs, lump sum                 Simplified CoCs, lump sum                         Standard CoCs
Documentation           Simplified CoCs, lump sum
                       Contracts, or simplified BoQs              Contracts, or simplified BoQs             Contracts, or simplified BoQs                      Standard BoQs
                                 (as applicable)                          (where appropriate)                       (where appropriate)




     Surety                        Waived                                        2.5%                                       5%                                        10%



                        10% (no limit) reducing to                 10% (no limit) reducing to                10% (no limit) reducing to                    10% up to a 5% limit
   Retention             5% during maintenance                      5% during maintenance                     5% during maintenance                            (no reduction
                                                                                                                                                            during maintenance)


    Standard                                                                      Payments on a monthly cycle.
                                                               Invoices dated on or before the 20th of a particular month will be
    Payment                                                         paid between the 23rd and 26th of the ensuing month.
     Terms
Payment Terms                                                                 Payments on a twice monthly cycle.
     for                                                                                     ( Clause 7.8.2 refers )
 SMME/HDI’s            # It is expected that each Service or Directorate (as appropriate) will identify a number of specific goals of which one, or at most two, will be targeted over and
                       above HDI ownership (Clause 6.3 refers).


           PROCUREMENT POLICY INITIATIVE – VOLUME 2 – GOODS, SERVICES & ENGINEERING & CONSTRUCTION WORKS                                                                              20
                                                                                                R E P O R T I N G F O R M AT                                                                                                   Annexure B
                                                                                                Calculation of Tender Adjudication Points : MICRO and MINOR CONTRACTS


                                                                                                                                                           Contract [No.] : [Description]

                                                                                                    Tenderer            Tender             Corrected        HDI Equity        Points for         Points for         Total      Tender
                                                                                                                         Sum             Tender Sum         Ownership           Price           Preference      Adjudication   Ranking
                                                                                                                                         (if applicable)     of Prime            [Np]               [Ng]           Points
                                                                                                                                                            Contractor         max 80             max 20
                                                                                                                                                                                (up to             (up to
                                                                                                                                                                              R500 000)          R500 000)
                                                                                                                                                                               max 90             max 10
                                                                                                                                                                            (R500,000 up       (R500,000 up
                                                                                                                           R                   R                %          to R 2000,000)     to R 2000,000)      max 100
                                                                                                  Contractor A         728 190.90         728 190.90             40              90                    4           94.00         2
                                                                                                  Contractor B         764 161.68         774 161.68            100             84.31                 10           94.31         1
                                                                                                  Contractor C         837 522.69         837 522.69            67              76.49                 6.7          83.19         3
                                                                                                  Contractor D         894 363.02         858 608.53             0              73.88                  0           73.88         4



                                                                                                Points for Price               Np = 80 [1 - (Pt - Pmin)]      for Micro and Minor (up to R 500 000) Contracts
                                                                                                (see Section 7.4.4)                            Pmin

                                                                                                                  or           Np = 90 [1 - (Pt - Pmin)]       for Minor (over R 500 000) Contracts
                                                                                                                                               Pmin


                                                                                                Points for Preference          Ng = 20(%HDI)                  for Micro and Minor (up to R 500 000) Contracts
                                                                                                (see Section 7.4.5)                    100




PROCUREMENT POLICY INITIATIVE – VOLUME 2 – GOODS, SERVICES & ENGINEERING & CONSTRUCTION WORKS
                                                                                                                  or           Ng = 10(%HDI)                   for Minor (over R 500 000) Contracts
                                                                                                                                       100




21
                                                                                                R E P O R T I N G F O R M AT                                                                                                          Annexure C
                                                                                                Calculation of Tender Adjudication Points : MAJOR CONTRACTS




                                                                                                                                                            Contract [No.] : [Description]

                                                                                                 Tenderer             Tender     Corrected     HDI Equity       Tendered      Points for         Points for Preference         Total    Tender
                                                                                                                       Sum     Tender Sum Ownership            Paticipation     Price                    [Ng]              Adjudication Ranking
                                                                                                                               (if applicable)  Claimed            Goal          [Np]                                         Points
                                                                                                                                                                                                 HDI       Participation
                                                                                                                                                                                               Ownership       Goal
                                                                                                                                                              min Spec 5%
                                                                                                                        R           R             %           max Spec 20%     max 90            min 5         max 5        max 100
                                                                                                Contractor A    5 931 420.00 5 931 420.00          0                 10            90             0             1.67          91.67        2

                                                                                                Contractor B    6 272 216.11 6 262 216 .11        100                15           84.98           5             3.33          93.31        1

                                                                                                Contractor C    6 570 323.00 6 570 323.00         67                 5            80.31          3.35             0           83.66        3

                                                                                                Contractor D    6 365 884.05 6 595 884.05         55           none stated                                                               reject

                                                                                                Contractor E    7 016 917.89 7 016 917.89         100                20           73.53           5               5           83.53        4



                                                                                                Note :The columns for Tendered Participation Goal and Points for Participation Goal may be modified or expanded to allow for an Empowerment
                                                                                                Indicator or an additional Participation Goal if need be.

                                                                                                Points for Price               Np = 90 [1 – (Pt – Pmin)]
                                                                                                (see Section 7.4.4)                            Pmin




PROCUREMENT POLICY INITIATIVE – VOLUME 2 – GOODS, SERVICES & ENGINEERING & CONSTRUCTION WORKS
                                                                                                                                                        1        1            2            2
                                                                                                Points for Preference          Ng = a(%HDI) +b[CPG - CPG min] + c[CPG - CPG min] or …+ c .Ic
                                                                                                                                                1         1         2         2
                                                                                                (see Section 7.4.5.3)                 100   [CPG max - CPG min] [CPG max - CPG min]        It




22
 AWA R D D ATA C A P T U R E F O R M                                                                                               Annexure D
(To be completed upon award of a contract)




Service : ……………………………………………………………………………………………………………………………………

Directorate : …………………………………………………………………………………………………………………………………

Branch : ………………………………………………………………………………………………………………..…………………..

Section : ………………………………………………………………………………….........................................………………….

Name of Compiler : ……………………….....................…………                              Telephone : ……….........................................…………

Contract/Tender No :………………...............................…………                     Date of Award : ………………........................…………

Contract Description : ………………………………………………………………….........................................…………………..



1.     CLASS OF CONTRACT
       (Tick one box only)

1.1         Micro Contract

1.2         Minor Contract (up to R 500 000)

1.3         Minor Contract (over R 500 000)

1.4         Major Contract



2.     TENDERS SUBMITTED

2.1    Number of Tenders received ? ………………………………………………….......................................………………….

2.2    Number of Responsive Tenders ? .......................................................................................................………………….



3.     PA R T I C U L A R S O F S U C C E S S F U L T E N D E R E R

3.1    Name of Firm : …………………………………………….......................................................................………………….

3.2    City of Cape Town Registration Number : ……………………………………........................................………………….

3.3    Tender Sum (corrected if applicable) : R …….......................................................................................…………………


3.4    Preferential Procurement Aspects :

3.4.1 Percentage HDI Ownership Claimed : ..........................................................................................……………………%
(of prime contractors in respect of Micro and Minor Contracts, or of prime contractors, JV partners, sub-contractors, suppliers, manufacturers and/or
service providers in respect of Major Contracts)




          PROCUREMENT POLICY INITIATIVE – VOLUME 2 – GOODS, SERVICES & ENGINEERING & CONSTRUCTION WORKS                                           23
3.4.2 Other Specific Goals in respect of Major Contracts :
      (Tick appropriate boxes (not more than two) and fill in details)


           Promotion of SA owned enterprises

           Specified CPG’s : min : ....................................... max : .................................................................................. %
           Tendered CPG : ….............................................................................................................................................. %

           Promotion of SMMEs

           Specified CPG’s : min : ....................................... max : ................................................................................... %
           Tendered CPG : …............................................................................................................................................... %

           Creation of new jobs/employment of local labour

           Specified CPG’s : min : ....................................... max : ................................................................................... %
           Tendered CPG : …............................................................................................................................................... %

           Promotion of enterprises located within the municipal area

           Specified CPG’s : min : ....................................... max : ................................................................................... %
           Tendered CPG : …............................................................................................................................................... %

           Development of human resources

           Target Indicator : ................................................. %
           Tendered Indicator : ............................................ %

           Upliftment of communities

           Target Indicator : ................................................. %
           Tendered Indicator : ............................................ %


                                                                                                                       [CPG = Contract Participation Goal]




4.    PA R T I C U L A R S O F L O W E S T R E S P O N S I V E T E N D E R
      (i.e. Tenderer whose price was used to evaluate the points in respect of price, for other tenderers)


4.1   Name of Firm : ................................................................................................................................................................

4.2   Western Cape Supplier Database Registration Number :...............................................................................................

4.3   Tender Sum (corrected if applicable) : R .........................................................................................................................




         PROCUREMENT POLICY INITIATIVE – VOLUME 2 – GOODS, SERVICES & ENGINEERING & CONSTRUCTION WORKS                                                                           24
C O M P L E T I O N D ATA C A P T U R E F O R M                                                                                                       Annexure E
(To be completed upon completion of a contract)




Service : …………………………………………………………………………………………………………………........................

Directorate : ……………………………………………………………………………………………………………….....................

Branch : ………………………………………………………………………………………………………………..…......................

Section : ………………………………………………………………………………….........................................…......................

Name of Compiler : ……………………….....................                                  Telephone : ……….........................................…......................

Contract/Tender No :………………...............................                          Date of Award : ………………........................…......................

Contract Description : ………………………………………………………………….........................................….......................



1.      C O M P L E T I O N D A T E : ……………...............................................................................................…......................

2.      COST AND TIME

2.1     Final Contract Value : R ……................................................................................................................…......................
        (including escalation (where applicable) and VAT, but excluding any penalties imposed)


2.2     Was the contract completed within the (extended) contract period ?
          Yes            No

        If no, state amount of penalty imposed : R ...............................................................................................…......................

3.      PREFERENTIAL PROCUREMENT

3.1     HDI Ownership

3.1.1 HDI Ownership Claimed : ..............................................................................................................…...................... %

3.1.2 HDI Ownership Achieved : .............................................................................................................…...................... %

3.2     Other Specific Goals (in respect of Major contracts)
        (Tick appropriate boxes and fill in details)


             Promotion of SA owned enterprises

             Tendered CPG..........................................................................................................…......................…............. %
             Achieved CPG : …....................................................................................................…......................…............. %

             Promotion of SMMEs

             Tendered CPG..........................................................................................................…......................…............. %
             Achieved CPG : …....................................................................................................…......................…............. %

             Creation of new jobs/employment of local labour

             Tendered CPG..........................................................................................................…......................…............. %
             Achieved CPG : …....................................................................................................…......................…............. %



           PROCUREMENT POLICY INITIATIVE – VOLUME 2 – GOODS, SERVICES & ENGINEERING & CONSTRUCTION WORKS                                                               25
           Promotion of enterprises located within the municipal area

           Tendered CPG..........................................................................................................…......................…............. %
           Achieved CPG : …....................................................................................................…......................…............. %

                                                                                                               [CPG = Contract Participation Goal]

3.2   Penalties imposed for non-compliance : R...........................................................................................….......................
      (in respect of all goals not achieved)




4.    CONTRACTOR’S PERFORMANCE

           Good (above average)

           Fair (acceptable)

           Unsatisfactory             (there is some aspect of the contractors performance which was not up to standard
                                      and which would be worth discussing with the project manager prior to awarding any
                                      further contracts)




        PROCUREMENT POLICY INITIATIVE – VOLUME 2 – GOODS, SERVICES & ENGINEERING & CONSTRUCTION WORKS                                                                26
Procurement Policy Initiative
                VOLUME 3



   Implementation Guide for the Selection
      and Appointment of Professional
             Service Providers




                                            september2003
contents

1.    INTRODUCTION

2.    DEFINITIONS

3.    BACKGROUND

4.    KEY PRINCIPLES

5.    SUPPLIERS’ DATABASE

6.    PROCESS OF APPOINTMENT

7.    CONSULTANTS WITH PRE-DETERMINED TARIFFS: DIRECT APPOINTMENT

8.    SELECTIVE PROPOSAL CALL

9.    OPEN PROPOSAL CALL

10.   MULTIDISCIPLINARY APPOINTMENTS AND SUB-CONSULTANTS

11.   SPECIAL CIRCUMSTANCES WARRANTING DEVIATION FROM SELECTION PROCESS

12.   THE BRIEF OR “TERMS OF REFERENCE”

13.   APPOINTMENT OF CONSULTANT

14.   FEE ARRANGEMENTS

15.   PROFESSIONAL INDEMNITY INSURANCE

16.   PROFESSIONAL CONDUCT AND ETHICS

17.   NON-COMPLIANCE PROCEDURES

18.   PERFORMANCE MANAGEMENT

19.   UNSOLICITED BIDS

20.   RISK WORK




ANNEXURE A:       Direct Appointments for Consultants with Pre-determined Tariffs

ANNEXURE B:       Selective Proposal C all

ANNEXURE C:       Performance Evaluation of Consultant

ANNEXURE D:       Consulting Assignment Award Data Capture Form

ANNEXURE E:       Consulting Assignment Completion Data Capture Form




         PROCUREMENT POLICY INITIATIVE – VOLUME 3 – SELECTION & APPOINTMENT OF CONSULTANTS   2
1.        INTRODUCTION

The Preferential Procurement Policy Framework Act, 2000 (Act 5 of 2000) requires organs of state to determine
their Preferential Procurement Policy and to implement it in accordance with a framework specified in the Act.
The Preferential Procurement Regulations, 2001, pertaining to the Preferential Procurement Policy Framework Act,
stipulate certain requirements that must be met by a procurement system that is applied by an organ of state.

In terms of the Act therefore, the City of Cape Town has developed a Procurement Policy which requires the
application of a fair, equitable, transparent and cost effective procurement system that encourages the entry of
emerging business into Local Government procurement, transformation and empowerment within established
businesses, and the use of Local Government procurement as an instrument of local economic development
and redistribution.

The purpose of this implementation guide is to provide City officials with systems and procedures for the selection and
appointment of Professional Service Providers (Consultants) in line with the Act, the Regulations and the Procurement
Policy Statement of the City.




2.       DEFINITIONS

The words and expressions defined herein shall, for the purposes of this volume of the Procurement Policy, have the
meanings hereby assigned to them:

Act : means the Preferential Procurement Policy Framework Act, 2000, (Act No 5 of 2000).

City : means the Council of the City of Cape Town or any person/persons/committee delegated with the authority to
act on its behalf.

Consultant : see Professional Service Provider

Delegated Authority : means any person/persons/committee delegated with the authority to act on behalf of the
Council of the City of Cape Town.

Disability : means, in respect of a person, a permanent impairment of a physical, intellectual, or sensory function,
which results in restricted, or lack of, ability to perform an activity in the manner, or in the range, considered normal
for a human being.

Equity Ownership : means the percentage of an enterprise or business owned by individuals or, in respect of a
company, the percentage of the company’s shares that are owned by individuals, who are actively involved in the
management of the enterprise or business and exercise control over the enterprise, commensurate with their degree
of ownership at date of award of the commission. [It should be noted that equity within private companies must be
based on the percentage of equity ownership and that preference points may not be awarded to public companies
and tertiary institutions.]

Functionality : means the suitability of a proposal, design or product for the use for which it is intended.

Historically Disadvantaged Individual (HDI) : means a South African citizen :
         (1) who, due to the apartheid policy that had been in place, had no franchise in national elections prior to the
         introduction of the Constitution of the Republic of South Africa, 1983 (Act No 110 of 1983) or the Constitution
         of the Republic of South Africa, 1993 (Act No 200 of 1993) (“the Interim Constitution”); and/or
         (2) who is female and/or
         (3) who has a disability :
               PROCUREMENT POLICY INITIATIVE – VOLUME 3 – SELECTION & APPOINTMENT OF CONSULTANTS                     3
provided that a person who obtained South African citizenship on or after the coming to effect of the Interim
Constitution, is deemed not to be an HDI.
Implementing Agent : means the decision maker/manager mandated by the City to implement projects and invite
tenders/quotations for procurement of any nature (normally an Executive Director or Director).

Joint Venture : means an association of persons/companies/closed corporations/firms formed for the purpose of
combining their expertise, property, capital, efforts, skill and knowledge in an activity for the execution of a contract.

Local : means a Professional Service Provider with a permanent office in the City of Cape Town manned by a
Partner/Director with adequate staff and resources to provide the majority of their services without outside support
or assistance.

Management : in relation to an enterprise or business, means an activity inclusive of control and performed on a daily
basis, by any person who is a principal executive officer of the enterprise/business, by whatever name that person
may be designated , and whether or not that person is a Director.

Principal : means a person in a firm who is a partner in a partnership, a sole proprietor, a director in a company
established in terms of the Companies Act, or a member of a close corporation registered in terms of the Close
Corporation Act. [Note that the names of directors in companies established in terms of the Companies Act and
the names of members of close corporations registered in terms of the Close Corporation Act are those that are
registered with the Registrar of Companies. Persons in such companies whose names are not registered are
not Principals.]

Professional Services : the provision on a fudiciary basis of services requiring knowledge based expertise.

Professional Services Provider (Consultant) : any person or body corporate who is under contract to the city for the
provision of Professional Services.

Regulations : mean the Preferential Procurement Regulations, 2001, pertaining to the Preferential Procurement Policy
Framework Act, 2000 (Act No 5 of 2000).

Responsible Agent : means those internal project managers (City Officials) and/or external consultants responsible for
the administration of a contract.

Small, Medium and Micro Enterprises (SMME) : bears the same meaning assigned to this expression in the National
Small Business Act, 1996 (Act No 102 of 1996).

Technical/Professional : means a person who holds a suitable tertiary educational qualification relevant to the core
business of the Professional Services Provider or the Professional Services that the firm offers and registered with
the relevant Professional Council or other recognised professional body or statutory organisation. For example in case
of engineers, the Engineering Council of South Africa (ECSA) established in terms of the Engineering Profession Act,
2000 (Act 46 of 2000).




3.       BACKGROUND

Section 2 of the Preferential Procurement Policy Framework Act, 2000 (Act No. 5 of 2000) states that an organ of state
must determine its preferential procurement policy and implement it on the basis of a preference point system for
price and specific goals. However, clause 2 (3) of the Preferential Procurement Regulations, 2001 (“the Regulations”)
states, “An organ of state may deviate from the framework contemplated in section 2 of the Act in respect of
a (sic) pre-determined tariff based professional appointments.”




               PROCUREMENT POLICY INITIATIVE – VOLUME 3 – SELECTION & APPOINTMENT OF CONSULTANTS                      4
In terms of National legislation the various Professional Councils have the responsibility to determine professional fees.
These are published in the Government Gazette from time to time and may be deemed to satisfy the requirement of
“pre-determined tariffs”.

Where no such gazetted tariffs exist for a particular profession it may, at Council’s discretion, be acceptable for
a proposed schedule of tariffs to be submitted to Council for approval on an annual basis. The duly approved
tariffs may then be deemed to satisfy the requirement of “pre-determined tariffs” for that profession in terms of
this policy.

It should be noted that this avenue shall only be acceptable for recognised professions providing
Professional Services.

All appointments of Consultants, which are not in respect of pre-determined tariffs, must therefore comply with
section 2 of the Act.

This implementation guideline is written in accordance with the Preferential Procurement Policy Framework Act, 2000
(Act No. 5 of 2000) and the Preferential Procurement Regulations, 2001 and should be read in conjunction with those
documents. All definitions are consistent with the aforementioned legislation.




4.       KEY PRINCIPLES
         •    Consultants are appointed on the basis of having specialised knowledge and capabilities to provide
              specific knowledge based services.
         •    Consultants who wish to be considered for appointments by the City of Cape Town must be
              registered on the City’s suppliers’ database.
         •    All appointments not based on pre-determined tariffs shall apply a preference point selection system
              in line with the Regulations.
         •    In respect of pre-determined tariff based appointments the selection process shall ensure an equitable
              distribution of work among Consultants registered on the database with preference points for
              equity ownership by HDI’s and other specific goals being awarded to firms on the final shortlist.
         •    All Consultants who wish to be considered for appointments by the City of Cape Town shall be
              registered with their recognised Professional Association or Institute. For example, the South African
              Association of Consulting Engineers (SAACE) in the case of engineering consultants. Furthermore,
              individuals directly responsible for the execution of projects shall be registered with the relevant
              Professional Council. For example, the Engineering Council of South Africa (ECSA) in the case
              of engineers.
         •    A Joint Venture or Consortium may, based on the percentage of the assignment value managed or
              executed by their HDI members, be entitled to equity ownership in respect of HDI’s.




5.       SUPPLIERS’ DATABASE

The Western Cape suppliers’ database will contain a list of all Consultants who wish to do business with the City.
Registration of Consultants on the database will be dealt with on the following basis:
         •    Consultants will be required to provide details of their business including, inter alia, the disciplines and
              sub-disciplines in which the Consultant is competent, resources, the HDI status of individuals in
              the firm, personnel details, locality of offices, Professional Indemnity (PI) Insurance cover and the
              percentage of the total annual wage bill spent on education and training of HDIs. Consultants will be
              required to update their particulars whenever a significant change occurs and, in any event, at
              intervals not exceeding six months.

               PROCUREMENT POLICY INITIATIVE – VOLUME 3 – SELECTION & APPOINTMENT OF CONSULTANTS                      5
         •    Where Consultants have more than one office in the City, the Consultant may only register on the
              database as a single legal entity.
         •    No individual may be a Principal of more than one Consultant registered on the database.
         •    A Consultant may be registered on the database without PI Insurance cover but must obtain such
              cover on receipt of an appointment from the City.
         •    On award of an assignment to a Consultant the estimated fee value of the appointment and other
              pertinent details shall be logged on the database and updated on completion of the assignment. This
              record will be used to ensure an equitable distribution of work among Consultants registered on the
              database. For this reason it is important to ensure that appointments of sub-consultants by main
              consultants or parties to a joint venture are recorded separately on the database so that the main
              consultant is not unfairly prejudiced in future selection processes. Standard award and completion
              forms are attached as Annexures D and E.
         •    The City official signing the appointment shall be responsible for ensuring that the above-mentioned
              data is captured on the database. Failure to do so will be considered in a serious light, as the record of
              the value of work received by Consultants is central to the selection process in terms of this policy.




6.       PROCESS OF APPOINTMENT

The process to be followed in selecting and appointing a Consultant via the database shall be as follows:
         •    Prepare a preliminary brief or terms of reference for the project in accordance with Section 11 hereof.
         •    Establish whether the Professional Services required are governed by pre-determined tariffs or not.
         •    Follow one of the processes described below as appropriate.




7.       CONSULTANTS WITH PRE-DETERMINED TARIFFS : DIRECT APPOINTMENT

Wherever possible, direct appointments shall be used for assignments where fees are calculated in accordance with
pre-determined tariffs as follows:
         •    Enter the required discipline and sub-discipline of competence and the estimated fee value of the
              assignment into the database. The database will sort qualifying Consultants in ascending order of
              value of previous appointments from the City over the preceding three years commencing from the
              implementation date of the suppliers’ database. In order to relate this value to the size of the firm the
              value will be given per Technical / Professional staff member of the Local office. In order to
              be eligible for assignments with a fee value greater than R300 000 a Consultant must have at least
              two Principals.
         •    The selection of suitable Consultants for a short list shall be from as near to the top of the database
              as possible sorted as described above. The shortlist should comprise at least 5 firms where possible
              but may be increased if desired. Non-Local Consultants may only be used where the required
              expertise is not available locally.
         •    Final selection from the shortlist will be determined by means of a brief assessment as detailed in
              Annexure A, which includes the allocation of preference points for equity ownership by HDI’s and
              other empowerment objectives.
         •    Inform the Consultant achieving the highest number of points of their nomination and provide them
              with the preliminary brief or terms of reference. Request a categorical written assurance from the
              Consultant that they possess suitable, available staff and resources to undertake the assignment in
              terms of the preliminary brief or terms of reference.


              PROCUREMENT POLICY INITIATIVE – VOLUME 3 – SELECTION & APPOINTMENT OF CONSULTANTS                     6
         •    On the basis of the resources assurance decide whether the Consultant is to be recommended to the
              Delegated Authority for appointment. If not, advise the Consultant accordingly and repeat the process
              with the next Consultant on the shortlist.
         •    Maintain a record of the process followed for audit purposes.




8.       SELECTIVE PROPOSAL CALL

The evaluation of tenders on a combination of functionality and price in accordance with clause 8 of the Regulations
shall be used for all assignments where fees are not calculated in accordance with pre-determined tariffs or where a
direct appointment is not appropriate:
         •    Enter the required discipline and sub-discipline of competence into the database. The database will
              sort qualifying Consultants in ascending order of value of previous appointments from the City over
              the preceding three years commencing from the implementation date of the suppliers’ database. In
              order to relate this value to the size of the firm the value will be given per Technical / Professional
              staff member of the Local office. In order to be eligible for assignments with a fee value greater than
              R300 000 a Consultant must have at least two Principals.
         •    The selection of suitable Consultants for a short list shall be from as near to the top of the database
              as possible sorted as described above. The shortlist should comprise at least 5 firms where possible
              but may be increased if desired. Where the resulting shortlist of Consultants does not appear to offer
              the required depth of expertise or experience, additional names from lower down the sorted database
              list may be included on the shortlist. Adequate motivation must be provided in this case. Non-Local
              Consultants may only be used where the required expertise is not available locally.
         •    Consultants from the shortlist should be requested to submit technical and financial proposals in
              accordance with a detailed brief or terms of reference. The “Request for Proposals” (RFP)
              should detail the manner in which the proposals are to be assessed and how preference points are to
              be allocated.
         •    The assessment may take one of two forms as detailed in Annexure B:
              o    Quality-Based Assessment in which points for price are accorded a zero weighting and fees are
                   negotiated only with the best proposal, or,
              o    Value-Based Assessment where proposals are evaluated on a combination of functionality
                   and price.

In both cases points are awarded for empowerment objectives as envisaged in clause 8 of the Regulations.

Quality-Based Assessment should only be used in exceptional cases where it is not possible to adequately define the
terms of reference or scope of work and is therefore impossible for Consultants to price on a fair and equitable basis.
In such cases Consultants should nevertheless be requested to submit proposed hourly rates for various categories
of staff for each major activity identified in the work plan, which may then be used as a basis for negotiating fees
to be paid on a proven time and cost basis. In this case the hourly rates submitted are not used in the evaluation in
any way.

Value-Based Assessment should be used wherever possible as it introduces an element of price competition. However,
it is essential that this route should only be followed if the terms of reference or scope of work can be adequately
defined. Where this is not possible an estimate may be made of the time that will be spent on the assignment by various
categories of staff, in order to enable Consultants to tender prices based on hourly rates, which are directly comparable.




               PROCUREMENT POLICY INITIATIVE – VOLUME 3 – SELECTION & APPOINTMENT OF CONSULTANTS                      7
Clause 8.(5) of the regulations states that “The conditions of tender may stipulate that a tenderer must score a specified
minimum number of points for functionality to qualify for further adjudication”. Accordingly it is recommended that a
minimum “threshold” value be specified wherever appropriate.

In Value-Based Assessments the technical and financial proposals should be submitted in separate envelopes. The
financial proposals should only be opened after the technical assessment has been completed in order not to influence
the technical evaluation process.




9.       OPEN PROPOSAL CALL

Where the database does not list any Consultants suitable for a particular assignment it may be necessary to
advertise a request for “Expressions of Interest” (EOI) followed by a RFP as follows:
         •    The request for EOI should be advertised publicly.
         •    The EOI received should be assessed and a shortlist of the most suitable candidates drawn up.
         •    As an independent control measure, the shortlist should be submitted to the relevant Director or
              Executive Director for approval prior to proceeding with the next step.
         •    RFP should then be issued to the shortlist of Consultants requesting technical and financial proposals
              in accordance with a detailed brief or terms of reference. The RFP should detail the manner in which
              proposals are to be assessed and how preference points are to be allocated
         •    The assessment may take one of two forms as detailed in Annexure B:
              o    Quality-Based Assessment in which points for price are accorded a zero weighting and fees are
                   negotiated only with the best proposal or,
              o    Value-Based Assessment where proposals are evaluated on a combination of functionality
                   and price.

In both cases points are awarded for empowerment objectives as envisaged in clause 8 of the Regulations.

The same provisos listed in Section 8 regarding the choice of quality-based or value-based assessment, and the
applications thereof, apply.




10.      MULTIDISCIPLINARY APPOINTMENTS

Where a project is clearly of a multi-disciplinary nature and where the estimated fees of each individual discipline
exceed R30 000, the entire project team must be selected and appointed in terms of this policy. It will not
be acceptable for the Principal Agent or lead Consultant to select and appoint the rest of the project team as
sub-consultants.




11.      SPECIAL CIRCUMSTANCES WARRANTING DEVIATION FROM SELECTION PROCESS

Circumstances do arise from time to time when it is neither practical nor expedient to implement the procedures
prescribed above. In such instances the procedure that was followed in identifying the Consultant to be appointed
shall be stated in the report to the Delegated Authority.




               PROCUREMENT POLICY INITIATIVE – VOLUME 3 – SELECTION & APPOINTMENT OF CONSULTANTS                      8
The special circumstances envisaged include the following:
         •    Application of specialist technology or expertise where limited capacity in the market or an exclusive
              right such as a patent or a copyright may be in effect and the application of such specialist technology
              or expertise is in the City’s interest.
         •    Continuity of previous work which requires the re-appointment of a Consultant in order to avoid
              dispute or undesirable contractual situations which are not in the City’s interest or where such
              continuity will provide time or financial benefit to the City.
         •    Investigations, which require specialised testing and expertise, may be allocated to Universities,
              Technikons, the Council for Scientific and Industrial Research or similar institutions when it is in the
              City’s interest to do so.
         •    Other circumstances not foreseen, such as an emergency, where implementation of the standard
              administrative procedure is impractical.




12.      THE BRIEF OR “TERMS OF REFERENCE”

As a minimum the following information should be included in the brief or terms of reference:
         •    The nature and scope of the Professional Services required.
         •    The time frame for the provision of the Professional Services.
         •    Any specific or exceptional requirements in regard to the performance of the Professional Services.
         •    Detailed design parameters if appropriate.
         •    An estimate of professional fees and the total project cost.
         •    A description of the objectives of the project.
         •    The conditions of engagement (Form of Agreement) to be used for the eventual appointment and the
              manner of determining professional fees, including disbursements.




13.      APPOINTMENT OF CONSULTANT

Once the selection process has been completed, approval for the appointment must be obtained from the relevant
Delegated Authority. The approval report shall state that the procedures outlined in this document have been adhered
to, or in the case of the special circumstances referred to above, state the procedure followed and the reasons for
the deviation.

Once approval has been obtained a letter of appointment shall be sent to the successful Consultant confirming
the project brief, deliverables and the documentation basis of the Professional Services agreement. Unsuccessful
consultants in a proposal call process should have their proposal returned, together with all copies, to protect their
intellectual property rights associated with the proposal call.




14.      FEE ARRANGEMENTS

All letters of appointment and Professional Services agreements should state the basis for remuneration of
the Consultant.

Where fees for a particular profession have been pre-determined these fee scales, including time-based fees, shall be
applied wherever possible. The relevant Government Gazette / Scale schedule should be recorded and shall apply for
the duration of the stage of assignment unless otherwise agreed.
              PROCUREMENT POLICY INITIATIVE – VOLUME 3 – SELECTION & APPOINTMENT OF CONSULTANTS                   9
The basis for payment of disbursements shall be seperately agreed and recorded.

Where fees for a particular profession have not been pre-determined, or where such fees are not considered to be
appropriate in a particular instance, fees shall be determined on the basis of functionality and price as described in the
proposal call process above.

Arrangements for the payment of disbursements vary widely between professions and it shall be the responsibility of
the City to establish detailed guidelines in this regard.




15.      PROFESSIONAL INDEMNITY INSURANCE

Where the City considers Professional Indemnity Insurance cover to be warranted because of the size or nature of a
particular project, the nominated Consultant must provide written proof that such insurance has been obtained prior
to the appointment being finalised.




16.      PROFESSIONAL CONDUCT AND ETHICS

Consultants applying for registration on the City’s database must undertake to subscribe to the codes of conduct
and ethical behaviour laid down by their respective professional societies and statutory councils, and to the following
general principles:
         •    Any attempt to exploit or influence the operation of the database by misrepresentation of information
              used in the operation of the database will be deemed to constitute unprofessional conduct.
         •    Misrepresentation of the Principals, composition, structure, competencies, status, available staff,
              resources and capacity, PI Insurance and the like of a Consultant in order to obtain an assignment
              which would otherwise not be awarded to the Consultant will be regarded as unprofessional conduct.
         •    Consultants must update their particulars whenever a change in their Principals, competencies and
              contact particulars occurs or when a Consultant is no longer eligible to remain on the database, within
              two months of such a change / eligibility status occurring and, in any event, at intervals not exceeding
              six months.
         •    Consultants shall exercise due care and diligence and undertake all their duties with professionalism,
              competence, integrity and good faith.




17.      NON-COMPLIANCE PROCEDURES

On receipt of any allegation of non-compliance the City shall notify the Consultant in writing of the allegations, giving
them fourteen days to respond. The City shall then deal with the allegations as follows:
         •    Where a Consultant is found guilty of misrepresenting any facts with respect to their registration on
              the database the Consultant shall be removed from the database and shall not be considered for
              readmission for a period of twelve months. The record of the value of previous appointments given to
              the Consultant shall, however, be maintained.
         •    Where a Consultant is found guilty of not keeping their database particulars up to date they may be
              removed from the database. The Consultant may immediately reapply for admission to the database.
              The record of the value of previous appointments given to the Consultant shall, however,
              be maintained.
         •    In cases of gross misconduct or professional negligence the Director of the relevant Directorate shall
              chair a hearing to be attended by representatives of the Consultant, the legal department,

               PROCUREMENT POLICY INITIATIVE – VOLUME 3 – SELECTION & APPOINTMENT OF CONSULTANTS                      10
             representatives of the relevant professional body and the party or parties who raised the issue of
             non-compliance. A recommendation shall then be made to the relevant Executive Director who may
             instruct that the Consultant be removed from the database for a period of time not less than twelve
             months. The record of the value of previous appointments given to the Consultant shall, however,
             be maintained.




18.      PERFORMANCE MANAGEMENT

Details of all Consultant appointments made throughout the City of Cape Town shall be logged on the database on
award and updated on completion of the project.

As a condition of appointment Consultants must concede to undergo a performance evaluation on completion of the
assignment. The assessment should be undertaken in conjunction with the project manager’s line manager and the
Consultant and be signed by representatives of both the City and the Consultant. Annexure C provides a pro forma
assessment form for this purpose.

Should the Consultant’s performance be assessed as less than 50% a meeting should be arranged between senior
management of the Consultant and the Director of the Directorate concerned to determine the reasons for the poor
performance and to agree suitable remedial measures to ensure better performance in future.The Director shall
use the outcome of this meeting to determine whether the relationship should be discontinued and may notify the
Consultant in writing that the City will no longer consider the firm for work and their name will be removed from the
City’s database for a period of time not less than twelve months. The record of the value of previous appointments
given to the Consultant shall, however, be maintained.

The results of each assessment shall be recorded on the database for future reference. The City official managing
the appointment shall be responsible for ensuring that the above-mentioned data is captured on the database. Failure
to do so will be considered in a serious light, as the record of performance by Consultants is important to improved
service delivery and the selection process in terms of this policy




19.      UNSOLICITED BIDS

An unsolicited bid or proposal is a bid or proposal submitted by a Consultant without being formally requested to do
so by the City. It normally involves some form of entrepreneurial initiative or undertaking by a Consultant in order
to create work for himself or capture a niche market. As it is the City’s stated intent to encourage private sector
participation in local government affairs and to encourage business development within the City this is a practice to
be encouraged. However, the City has to ensure that the fine line between encouraging private sector initiative, and
the potential breaching of the principles of its Procurement Policy, is adequately addressed.

The following procedure is suggested as a way of formally dealing with unsolicited bids:
         •   The relevant department or Directorate should decide whether the unsolicited bid has merit in terms
             of the City’s priorities.
         •   If so, proposals should be requested by means of Selective or Open Proposal Call which shall include
             the Consultant who submitted the unsolicited bid, in terms of this document.
         •   Consultants should be allowed a short, but reasonable, period of time in which to prepare and submit
             their proposals.
         •   The proposals should be assessed in terms of Annexure B of this document with the following
             difference.




              PROCUREMENT POLICY INITIATIVE – VOLUME 3 – SELECTION & APPOINTMENT OF CONSULTANTS                  11
         •   The Consultant who originally submitted the unsolicited bid should be given a 10 point bonus in the
             analysis as reward for taking the initiative.
         •   The successful Consultant should then be appointed as for a proposal call.

20.      RISK WORK

Employing Consultants to work at risk (work without payment in the expectation or hope of being appointed for work
at some later date) is considered to be an unacceptable practice in terms of this policy. Consultants shall always be
selected as detailed in this policy and paid for their services accordingly.




              PROCUREMENT POLICY INITIATIVE – VOLUME 3 – SELECTION & APPOINTMENT OF CONSULTANTS                  12
DIRECT APPOINTMENTS FOR CONSULTANTS WITH PRE-DETERMINED TARIFFS                                           Annexure A




 Item                       Description                          Points        Firm     Firm    Firm    Firm    Firm
  No.                                                                            1        2       3       4       5

     1       Rand value of previous appointments over             N/A            R       R       R        R       R
             preceding 3 years per Technical /
             Professional staff member from database

     2       Points for value of previous work                     40

     3       Points for HDI equity ownership                       10

     4       Points for % HDI Technical / Professional staff       10                                             0
             excluding shareholders

     5       Points for % of wage bill spent on
             education & training of HDI’s (max. of 3%)             5

     6       Track record                                          35

     7                                             Total          100



Notes pertaining to item numbers above:

1.       May be zero if the firm has not received any previous appointments over the preceding three years.




2.       Points awarded for value of previous work shall be calculated as follows:
         •      40 Points if the value of previous appointments over the preceding three years equals zero or the firm
                under consideration has the lowest Rand value of all the firms listed.
         •      For those firms that have had some previous work up to 40 points is awarded as follows:

         NF = 40 [1 – (TS - TM) / TM] where

         NF = Number of points awarded for the firm under consideration.

         TS =        Value of previous work in Rand, as listed in the table above (item 1), for the firm
                   under consideration.

         TM = Lowest value of previous work above zero listed in the table above. If none of the listed firms have
              had any previous work, all the firms will qualify for the 40 points.

         This formula will give negative values when the value of previous work of the firm under consideration is
         greater than twice the value of the lowest value of previous work. In such cases the number of points
         awarded should be set to zero.




                PROCUREMENT POLICY INITIATIVE – VOLUME 3 – SELECTION & APPOINTMENT OF CONSULTANTS                 13
3.   Points for HDI equity ownership shall be calculated as follows:

     NE = 10 (% equity held by HDI’s) where

     NE = Number of HDI equity points awarded.

     Preference points may not be awarded to public companies and tertiary institutions.




4.   Points for percent HDI Technical / Professional staff shall be calculated on the following basis:

     NW = 5 (% of HDI Technical/Professional staff in relation to total number of Technical/
         Professional staff)

     where

     NW = the number of points awarded for HDI Technical / Professional staff.




5.   Points for percentage of wage bill spent on education and training of HDI’s shall be calculated as follows:

     NQ = 5 (% of wage bill spent on education and training of HDI’s up to a max. of 3%) / 3

     where

     NQ = the number of points awarded for education and training of HDI’s.




6.   Points for track record shall be calculated as follows based on the average historical performance
     assessment score for the preceding three years for the firm under consideration as listed on the database:

     NR = 35 [% average historical performance assessment score]

     where

     NR = the number of points awarded for the track record.


     If a firm has had no previous appointments, and therefore no track record, they shall be awarded 28 points
     for purposes of this evaluation.




7.   The Consultant with the highest number of points shall be nominated for the appointment




          PROCUREMENT POLICY INITIATIVE – VOLUME 3 – SELECTION & APPOINTMENT OF CONSULTANTS                   14
SELECTIVE PROPOSAL CALL                                                                              Annexure B




The following assessment form and the weighting of the various items (other than empowerment) must be amended
as required to make it more project specific. However, the basic principles must be complied with. This procedure
should be read in conjunction with clause 8 of the Regulations:




                   Criteria                                Suggested         Firm     Firm    Firm   Firm   Firm
                                                         Weighting Range       1        2       3      4      5

 Specific project applicable expertise
 • Key expertise                                               10-25
 • Project experience in the field

 Approach & methodology
 • Understanding the Terms of Reference/brief
 • Problem conceptualisation                                    5-20
 • Innovation in approach
 • Fit with Client’s procedures, practices etc

 Project management
 • Workplan                                                     5-20
 • Organisation skills
 • Management skills

 Expertise of key personnel
 • Appropriate fields of specialisation                         5-20
 • Relevant experience

 Track record
 • Completion of previous assignments on time                   5-15
 • Completion of previous assignments within budget
 • Transparency and openness on progress reporting

 Empowerment(1)
 • Points for HDI equity ownership                             6 or 10
 • Points for % HDI Technical / Professional staff             2 or 5
 • Points for % of wage bill spent on education                2 or 5
   & training of HDI’s (max. of 3%)

 Price(2)                                                        20
 Total                                                          100




                PROCUREMENT POLICY INITIATIVE – VOLUME 3 – SELECTION & APPOINTMENT OF CONSULTANTS            15
Notes pertaining to the calculation of points:

1.       EMPOWERMENT

In terms of the Regulations (clause 8) a total of 20 points for assignments with an estimated Rand value up to R500
000 and 10 points for assignments with an estimated Rand value above R500 000 are allocated for empowerment.
With price fixed at 20 points the points for functionality must obviously total 60 and 70 respectively to give an overall
total of 100 points. The following formulae shall be used where appropriate:

         •    Points for HDI equity ownership shall be calculated as follows:
         NE = (6 or 10) (% equity held by HDI’s) where
         NE = Number of HDI equity points awarded.
         Preference points may not be awarded to public companies and tertiary institutions.

         •    Points for percentage of HDI Technical / Professional staff shall be calculated on the following basis:
         NW = (2 or 5) (% of HDI Technical/Professional staff in relation to total number of Technical/
             Professional staff)
         where
         NW = the number of points awarded for HDI Technical / Professional staff.

         •    Points for percentage of wage bill spent on education and training of HDI’s shall be calculated
              as follows:
         NQ = (2 or 5) (% of wage bill spent on education and training of HDI’s up to a max. of 3%) / 3
         where
         NQ = the number of points awarded for education and training of HDI’s.




2.       PRICE

For Quality-Based Assessments points for price are accorded a zero weighting. For Value-Based Assessments points
for price shall be awarded as follows:
         NF = 20 [1 – (TS - TM) / TM] where
         NF = Number of points awarded for the tender under consideration.
         TS = Tendered price in Rand of tender under consideration.
         TM = Lowest tendered price in Rand.

In certain circumstances it may be desirable to accord price a higher weighting and the points for functionality must
then be adjusted downwards accordingly. Points for empowerment are legislated according to the value of the
appointment. (i.e. A total of 20 points for assignments with an estimated Rand value up to R500 000 and 10 points for
assignments with an estimated Rand value above R500 000) and may not therefore be adjusted.

The Consultant with the highest number of points shall be nominated for the appointment.




               PROCUREMENT POLICY INITIATIVE – VOLUME 3 – SELECTION & APPOINTMENT OF CONSULTANTS                     16
PERFORMANCE EVALUATION OF CONSULTANT                                                                                                                           Annexure C



To be completed on completion of project:


 Consulting Firm
 Consultant’s Representative
 Designation
 Telephone No.
 City of Cape Town Project Manager
 Designation
 Telephone No.
 Project Title
 Brief Project Description


 Total Fees (incl. VAT)
 Date

Perceptions of service quality - Circle the number below that best describes the extent to which you agree or disagree
with each statement:


                                                                                                                 STRONGLY                                         STRONGLY
                                 STATEMENT                                                                       DISAGREE                                              AGREE



 1       The Consultant treats the City as its client and represents its interests in a balanced way               1          2            3           4           5           6

 2       The Consultant’s solutions meet the required specifications                                               1          2            3           4           5           6

 3       The Consultant’s staff respond to queries and complaints timeously                                        1          2            3           4           5           6

 4       The Consultant provides regular progress reports, both written and verbal                                 1          2            3           4           5           6

 5       The Consultant provides cost-effective solutions                                                          1          2            3           4           5           6

 6       The Consultant’s project documentation is comprehensive and complete                                      1          2            3           4           5           6

 7       The Consultant’s solutions add value to the City’s projects                                               1          2            3           4           5           6

 8       The Consultant has the required technical expertise                                                       1          2            3           4           5           6

 9       The Consultant delivers within programme                                                                  1          2            3           4           5           6

 10      The Consultant delivers within budget                                                                     1          2            3           4           5           6


Comments: ..................................................................................................................................................................

Score:                   Score out of 60                          %




Signed:             .....................................................................       .....................................................................
                                           For Consultant                                                                    For City of Cape Town

                     PROCUREMENT POLICY INITIATIVE – VOLUME 3 – SELECTION & APPOINTMENT OF CONSULTANTS                                                                     17
CONSULTING ASSIGNMENT AWARD DATA CAPTURE FORM                                                            Annexure D



   1     Service

   2     Directorate

   3     Branch

   4     District

   5     Name of Project Manager

   6     Telephone

   7     Appointment Reference Number

   8     Date of Appointment (dd/mm/yy)

   9     Project Description

   10    Name of Consulting Firm

   11    City of Cape Town Registration Number

   12    Estimated Value of Fees (Incl. VAT)

   13    WBS Number




Note:

Appointments of sub-consultants by main consultants or parties to a joint venture must be recorded separately on a
separate data capture form on the database so that the main consultant is not unfairly prejudiced in future selection
processes. The “Estimated Value of Fees” refers to the fees for the particular consultant only, not for the project as
a whole.




              PROCUREMENT POLICY INITIATIVE – VOLUME 3 – SELECTION & APPOINTMENT OF CONSULTANTS                   18
CONSULTING ASSIGNMENT COMPLETION DATA CAPTURE FORM                                                      Annexure E




   1     Service

   2     Directorate

   3     Branch

   4     District

   5     Name of Project Manager

   6     Telephone

   7     Appointment Reference Number

   8     Date of Appointment (dd/mm/yy)

   9     Project Description

   10    Name of Consulting Firm

   11    City of Cape Town Registration Number

   12    Completion Date (dd/mm/yy)

   13    Final Value of Fees (Incl. VAT)

   14    WBS Number

   15    Performance Assessment Score (%)




Note:

Appointments of sub-consultants by main consultants or parties to a joint venture must be recorded separately on a
separate data capture form on the database so that the main consultant is not unfairly prejudiced in future selection
processes. The “Final Value of Fees” refers to the fees for the particular consultant only, not for the project as
a whole.




              PROCUREMENT POLICY INITIATIVE – VOLUME 3 – SELECTION & APPOINTMENT OF CONSULTANTS                  19
Procurement Policy Initiative
              VOLUME 4



    Tender Administration Procedures




                                       september2003
contents

1.   DEFINITIONS

2.   GENERAL DIRECTIVES
     2.1.     General
     2.2.     Communication with the City
     2.3.     Availability of Conditions and Procedures
     2.4.     Acceptance    of  Te n d e r / Aw a r d      of    Contract,       Correspondence   and
              Notices to Tenderers

3.   INVITATION OF FORMAL TENDERS
     3.1.     General
     3.2.     Prequalification of Tenderers
     3.3.     Issuing of Tender Documents
     3.4.     Specifications, Evaluation Criteria and Procedures
     3.5.     Validity Periods
     3.6.     Te n d e r Prices    and              Contract         Periods        for    Engineering
              and Construction Contracts
     3.7.     Provisional Sums and Prime Cost Items
     3.8.     Samples
     3.9.     Closing of Tenders
     3.10.    Submission of Tenders
     3.11.    Late Tenders
     3.12.    Tenders Received Prior to Closing without Envelopes, in Unsealed
              Envelopes and/or in Envelopes without a Tender Number or Title and
              Closing Date on the Envelope
     3.13     Opening of Tenders
     3.14     Invalid Tenders
     3.15     Tender Sum
     3.16     Confidentiality of Rates and Proprietary Information

4.   CONSIDERATION AND ACCEPTANCE OF FORMAL TENDERS
     4.1.     General
     4.2.     Request for Withdrawal of Tender
     4.3.     Acceptance of Tenders

5.   ANNUAL TENDERS
     5.1.     General
     5.2.     Adjudication of Annual Tenders


             PROCUREMENT POLICY INITIATIVE – VOLUME 4 – TENDER ADMINISTRATION PROCEDURES           2
6.   QUOTATIONS
     6.1.    General
     6.2.    Specifications, Evaluation Criteria and Procedures
     6.3.    Quotation Prices
     6.4.    Issuing and Submission of Documents
     6.5.    Adjudication of Quotations
     6.6.    Acceptance of Quotations

7.   EXCEPTIONS TO THE FORMAL TENDER PROCESS
     7.1.    General




            PROCUREMENT POLICY INITIATIVE – VOLUME 4 – TENDER ADMINISTRATION PROCEDURES   3
1.       DEFINITIONS

The words and expressions defined herein shall, for the purposes of this volume of the Procurement Policy, have the
meanings hereby assigned to them :

Acceptance of Tender : means the award in writing of a contract to a Tenderer in response to his tender or price
quotation, which award may be inclusive of any conditions determined by the City.

City : means the Council of the City of Cape Town or any person/persons/ committee delegated with the authority to
act on its behalf.

Closing Time : means the time and day specified in the tender documents for the receipt of tenders.

Contract : means the agreement between parties which is concluded when the City accepts a tender/quotation
submitted by a tenderer.

Contractor : means any natural or legal person/company/closed corporation/firm whose tender has been accepted by
the City.

Delegated Authority : means any person/persons/committee delegated with the authority to act on behalf of the
Council of the City of Cape Town.

Electronic Bulletin Board : means an electronic method of obtaining quotations through a third party.

Quotation or Quote : means a written or electronic offer to the City in response to an invitation to submit
a quotation.

Republic : means the Republic of South Africa.

Responsible Agent : means those internal project managers (City Officials) and/or external consultants responsible for
the administration of a contract.

Tender : means a written offer on the tender documents prescribed by the City in response to an invitation
to tender.

Tenderer : means any natural or legal person/company/closed corporation/firm submitting a tender or a
price quotation.

Words importing the singular shall include the plural and vice versa and words importing the masculine gender shall
include females and words importing persons shall include companies, closed corporations and firms, unless the
context clearly indicates otherwise.

All amounts/limits stated in this document shall be deemed to be inclusive of Value Added Tax (VAT)




2.       GENERAL DIRECTIVES

2.1.     General

2.1.1.   These Tender Administration Procedures contain the general conditions and procedures and are applicable,
         as amended from time to time, to all formal tenders, informal tenders, contracts, and orders for the City.

2.1.2.   Under exceptional circumstances, special conditions or procedures pertaining to specific supplies or services
         may be applied with the prior approval of the City Manager.

                 PROCUREMENT POLICY INITIATIVE – VOLUME 4 – TENDER ADMINISTRATION PROCEDURES                      4
2.1.3.   Where such special conditions or procedures are in conflict with these general conditions and procedures,
         the special conditions or procedures shall apply, to the extent that they are inconsistent with these general
         conditions and procedures.

2.1.4    No contract may be awarded to a person/company/closed corporation/firm who has failed to submit an
         original Tax Clearance Certificate from the South African Revenue Service (SARS) certifying that the taxes of
         that legal entity are in order or that suitable arrangements have been made with SARS.




2.2.     Communication with the City

2.2.1.   All correspondence in regard to this document shall be addressed to the City Manager.




2.3.     Availability of Conditions and Procedures

2.3.1.   Copies of these procedures are available on the official City of Cape Town web site.




2.4.     Acceptance of Tender/Award of Contract, Correspondence and Notices to Tenderers

2.4.1.   Every acceptance of a tender/award of a contract shall be in writing and shall:
         •   be delivered by hand on the day that it was signed and dated, or
         •   be faxed and posted to the address chosen by the tenderer/ contractor on the day that it was signed
             and dated,
         •   be acknowledged by the tenderer/contractor upon receipt and be recorded accordingly.

2.4.2.   Any notice issued prior to the closing of tenders, shall be issued in accordance with the procedures
         described in Clause 2.4.1 above. Posting of the original notice is however not required where the notice has
         been faxed to those concerned.

2.4.3.   Notwithstanding a request for acknowledgement of receipt of the acceptance of tender/award of
         contract or any notices, the tenderer/contractor will be deemed to have received such acceptance or notices if the
         procedures described in Clauses 2.4.1 and 2.4.2 have been complied with.




3.       INVITATION OF FORMAL TENDERS

3.1.     General

3.1.1.   Unless otherwise indicated in the tender documents, the City shall not be liable for any expenses incurred
         in the preparation and/or submission of a tender.

3.1.2.   Unless the City Manager otherwise directs:
         •   tenders are invited in the Republic only,
         •   the laws of the Republic shall govern contacts arising from the acceptance of tenders.

3.1.3.   The tenderer shall choose a domicilium citandi et executandi in the Republic and unless notice of the change
         thereof has duly been given in writing, it shall be the address stated in the tender.



                 PROCUREMENT POLICY INITIATIVE – VOLUME 4 – TENDER ADMINISTRATION PROCEDURES                           5
3.1.4.   The City shall, by notice published in the press, in newspapers circulating in the Cape Metropolitan Area, in
         English, Afrikaans and Xhosa, and in the electronic media or at dissemination centres as applicable, invite
         tenders before entering into any contract which is for the execution of any engineering and construction
         work for, or the supply or sale of any goods or materials to the City and which involves or is likely to involve
         an estimated amount exceeding R250 000 (two hundred and fifty thousand rand) or any such greater
         amount as may be determined by the City from time to time.

3.1.5.   For the procurement of goods and services or engineering and construction works below the limit
         specified in Clause 3.1.4 above, see Section 5, Informal Tenders.

3.1.6.   The notice contemplated by Clause 3.1.4 above shall specify :
         •   the nature of the proposed contract,
         •   such particulars of such contract as the City may deem fit,
         •   that all tenders for such contract shall be submitted in a sealed envelope upon the outside
             whereof is clearly stated that such envelope contains a tender and the contract for which such tender is
             being submitted,
         •   a day, not less than 21 (twenty one) days after publication of such notice, and the hour on such day on
             or before which such tenders must be received, and
         •   the place where such tenders must be submitted and when such tenders will be opened.

3.1.7.   The notice shall as soon as possible after the publication contemplated by Clause 3.1.4 above, be posted on
         a notice board at designated City offices.

3.1.8.   Tender documentation shall be available for collection by prospective tenderers until the closing date of
         tenders. Site inspections, where applicable, shall not be compulsory/mandatory. Where site inspections are
         to be held, details thereof shall be included in the tender notice.

3.1.9.   If, in exceptional circumstances, it becomes necessary to extend the tender period, a notice shall be
         published in the press, at least one week prior to the original tender closing date. This notice shall also be
         posted on the notice boards at designated City offices, and a notice to all tenderers to this effect shall
         be issued.




3.2.     Prequalification of Tenderers

3.2.1.   Only in exceptional circumstances shall the City employ the practice of prequalifying tenderers. This may
         apply to tenders where there are legislative, design, technological and/or safety reasons to restrict tenders
         to firms who have proven their capability and qualification to meet the specific requirements of the tender.

3.2.2.   The notice inviting tenderers to prequalify shall comply with Clause 3.1.6 in all respects.

3.2.3.   Once tenderers have prequalified for a particular project, they shall be given not less than 7 (seven) days to
         submit a tender after having been called to do so.




3.3.     Issuing of Tender Documents

3.3.1.   Tender documents and any subsequent notices shall only be issued by the City from one of its designated
         issuing offices.

3.3.2.   A non-refundable charge, as required in the tender notice, may be raised by the City for tender documents.
         Tender charge to be determined by Tender Manager in conjunction with the Project Leader.
                PROCUREMENT POLICY INITIATIVE – VOLUME 4 – TENDER ADMINISTRATION PROCEDURES                         6
3.3.3.   Details of all prospective tenderers who have been issued with tender documents, shall be recorded by the
         issuing office. Such details shall include:
         •   the legal and full name of the person/company/closed corporation/firm drawing documents,
         •   a contact person,
         •   a contact telephone number,
         •   a contact fax number,
         •   a postal address,
         •   an e-mail address.

3.3.4.   Details recorded as required by Clause 3.3.3 above, shall remain confidential for the duration of the
         tender period.




3.4.     Specifications, Evaluation Criteria and Procedures

3.4.1.   Tender documents shall clearly indicate the terms and conditions of contract, specifications, criteria for
         evaluation and procedures to be followed where applicable.

3.4.2.   The specifications and evaluation criteria shall not be aimed at hampering competition, but rather to ensure
         fair, equitable, transparent, competitive and cost effective tendering, as well as the protection or advancement
         of persons, or categories of persons, as embodied in the City’s Procurement Policy.

3.4.3.   The specifications shall not mention trade names or particular processes of manufacture unless these are
         the only acceptable products. However, where the use of trade names, trade marks or origin is the only
         known way of accurately describing the products required, the words “or other equal and approved” shall
         be included in the specifications mentioned in the tender document.

3.4.4.   Where the specifications are based on standard documents available to tenderers, a reference to those
         documents is sufficient.

3.4.5.   The City may, if necessary, communicate with tenderers prior to tenders closing in order to supply additional
         information or to clarify vague points in the tender documents. Such communication shall be in the form of
         a notice issued in accordance with Clause 2.4.2 above and should, where possible, be issued at least one
         week prior to the tender closing date.




3.5.     Validity Periods

3.5.1.   The period for which tenders are to remain valid and binding shall be indicated in the tender documents.
         The period is calculated from the closing time and tenders shall remain in force and binding until the end of
         the final day of the period.

3.5.2.   This period of validity may be extended by mutual consent in writing between the City and the tenderers,
         provided that the original validity period has not expired, and that all tenderers shall have an opportunity to
         extend such period.




                 PROCUREMENT POLICY INITIATIVE – VOLUME 4 – TENDER ADMINISTRATION PROCEDURES                         7
3.6.     Tender Prices and Contract Periods for Engineering and Construction Contracts

3.6.1.   For all contract periods equal to or exceeding one year in duration, an appropriate contract price adjustment
         formula shall be specified in the tender documents.

3.6.2.   In general, where contract periods do not exceed one year in duration, the tender shall be a fixed price
         tender (not subject to contract price adjustment). However, if as a result of any extension of time granted,
         the duration of a fixed price contract exceeds one year, the contract will automatically be subject to
         contract price adjustment for that period by which the extended contract period exceeds such one year. An
         appropriate contract price adjustment formula shall be specified in the tender documents.

3.6.3.   Notwithstanding Clause 3.6.2 above, where the tender validity period is extended, then contract price
         adjustment may be applied.

3.6.4.   An appropriate contract period must be specified for all engineering and construction contracts. This time for
         completion shall be stated in number of weeks.




3.7.     Provisional Sums and Prime Cost Items

3.7.1.   Where monetary allowances in respect of provisional sums or prime cost items have been included in the
         tender documents, they shall be dealt with in terms of these tender administration procedures.




3.8.     Samples

3.8.1.   When samples are called for in the tender documents, samples (marked with the tender and item number
         as well as the tenderer’s name and address) shall be delivered to the addressee mentioned in the tender
         documents by no later than the closing time of the tender. Tenders shall not be included in parcels
         containing samples.

3.8.2.   If samples are not submitted as requested, the tender concerned may be declared invalid.

3.8.3.   Samples shall be supplied by a tenderer at his own expense and risk. The City shall not be obliged to pay
         for such samples or compensate for the loss thereof, unless otherwise specified in the tender documents,
         and shall reserve the right not to return such samples and to dispose of them at its own discretion.

3.8.4.   Where a tender is accepted for the supply of goods according to a sample submitted by the tenderer, such
         sample shall become the contract sample. All goods/materials supplied shall comply in all respects to the
         contract sample.




3.9.     Closing of Tenders

3.9.1.   Tenders shall close on the date and at the time stipulated in the tender notice.

3.9.2.   The tender closing date may be extended if circumstances justify this action. The closing date may only be
         extended only if there is sufficient time to publish an amending notice in accordance with Clause
         3.1.9 above.




                 PROCUREMENT POLICY INITIATIVE – VOLUME 4 – TENDER ADMINISTRATION PROCEDURES                       8
3.10.     Submission Of Tenders

3.10.1.   Tenders shall be submitted before the closing time, at the address and in accordance with the directives in
          the tender documents.

3.10.2.   Each tender shall be in writing using non-erasable ink and shall be submitted on the official Form of Tender
          issued with the tender documents. The tender shall be submitted in a separate sealed envelope with the
          name and address of the tenderer, the tender number and title, the tender box number (where applicable),
          and the closing date indicated on the envelope. The envelope shall not contain documents relating to any
          tender other than that shown on the envelope.

3.10.3.   The onus shall be on the tenderer to place the sealed envelope in the official marked locked tender box
          provided for this purpose, at the designated venue, not later than the closing date and time specified in the
          tender notice.

3.10.4.   Postal tenders will be accepted for consideration only if they are received in sufficient time to be lodged in
          the appropriate tender box by the closing time for such tenders, it being understood that the City disclaims
          any responsibility for seeing that such tenders are in fact lodged in the tender box. Proof of posting of a
          tender will not be accepted as proof of delivery to the appropriate place for the receipt of tenders.

3.10.5.   No tenders forwarded by telegram, facsimile or similar apparatus shall be considered. However, photostat
          copies of tenders or facsimiles which are submitted in the prescribed manner will be considered, provided
          the original Forms of Tender can be shown to have been posted or couriered prior to the close of tenders.

3.10.6.   Tenders shall not be included in packages containing samples and such tenders may be rejected as
          being invalid.




3.11.     Late Tenders

3.11.1.   Tenders are late if they are received at the address indicated in the tender documents after closing time.

3.11.2.   A late tender shall not be admitted for consideration and where feasible shall be returned unopened to
          the tenderer.




3.12.     Tenders Received Prior to Closing without Envelopes, or in Envelopes without a
          Tender Number or Title and Closing Date on the Envelope

3.12.1.   Any tenders received without envelopes, shall be sealed in an envelope, and the tender number and title,
          the tender box number (where applicable) and closing date shall be written on the envelope, if ascertainable.
          Tenders received in envelopes (sealed or unsealed) without a tender number or title on the envelope,
          shall be opened, where possible in the presence of a witness, the tender number and title ascertained, the envelope
          sealed and the tender number and title, the tender box number (where applicable) and closing date written
          on the envelope. Any such envelopes shall be lodged in the applicable tender box, it being understood that
          the City disclaims any responsibility for seeing that such tenders are in fact lodged in the correct
          tender box.




3.13.     Opening of Tenders

3.13.1.   At the specified closing time on the closing date the applicable tender box shall be closed.


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3.13.2.   The tender box shall be opened in public as soon as practical after the closing time and the contents
          thereof checked for compliance.

3.13.3.   Tenders found to be inadvertently placed in the incorrect tender box shall be redirected provided that the
          applicable tenders either closed on the same day at the same time, or are still open (in which case the City
          disclaims any responsibility for seeing that the tenders are in fact lodged in the correct tender box).

3.13.4.   Immediately after the opening of the tender box, all tenders shall be opened in public, the official opening
          the tenders shall in each case read out the name of the tenderer and where possible, the amount of
          the tender.

3.13.5.   As soon as a tender has been opened:
          •   the tender document shall be stamped with the official stamps, and where necessary, endorsed with
              the opening official’s signatures,
          •   the name of the tenderer shall be recorded in a tender opening record kept for that purpose, and
          •   the responsible official who opened the tender shall forthwith place his signature on the tender
              opening record.

3.13.6.   After being recorded in the tender opening record, the tenders shall be handed over to the official responsible
          for the supervision of the processing thereof and that official shall acknowledge receipt thereof by signing
          the tender opening record.




3.14.     Invalid Tenders

3.14.1.   Tenders shall be considered invalid and shall be endorsed and recorded as such (in the tender opening
          record) by the responsible official who opened the tender in the following instances:
          •   where the tender is not submitted on the official Form of Tender,
          •   where the tender is not completed in non-erasable ink,
          •   where the Form of Tender has not been signed,
          •   where the Form of Tender is signed, but the name of the tenderer is not stated, or is indecipherable.

3.14.2.   When tenders are declared invalid at the tender opening, the tender sum of such tenders shall not be read
          out. However, the name of the tenderer and the reason for the tender having been declared invalid shall
          be announced.




3.15.     Tender Sum

3.15.1.   A tender will not necessarily be invalidated if the amount in words and the amount in figures do not
          correspond, in which case the amount in words shall be read out at the tender opening.




3.16.     Confidentiality of Rates and Proprietary Information

3.16.1.   All rates and proprietary information are confidential and shall not be disclosed.




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4.       CONSIDERATION AND ACCEPTANCE OF FORMAL TENDERS

4.1.     General

4.1.1.   All valid tenders shall be considered.

4.1.2.   The City shall not be obliged to accept the lowest or any tender. For goods and services tenders, the City
         shall have the right to accept the whole tender or part of a tender or any item or part of an item or accept
         more than one tender, in the event of a number of items being tended for.

4.1.3.   The City may, before tenders are considered for acceptance examine and take into account the following,
         although not limited thereto:
         •   the financial standing of tenderers, including their ability to furnish the required institutional guarantee,
             where applicable,
         •   the tenderers goods standing with the City,
         •   the tenderer’s ability to fulfill their obligations in terms of the tender documents.

4.1.4.   The remaining acceptable tenders shall be adjudicated according to the following as applicable:
         •   tender price (corrected if applicable and brought to a comparative level where necessary),
         •   the unit rates and prices,
         •   any qualifications to the tender,
         •   the tender ranking obtained in respect of Preferential Procurement as required by the City’s
             Procurement Policy,
         •   Any other criteria specified in the tender documents.

4.1.5.   Additional information or clarification of tenders may be called for if required.

4.1.6.   The City reserves the right to consider alternative tenders, provided that a tender free of qualifications
         and strictly in accordance with the tender documents is also submitted. Alternative tenders shall be submitted
         on separate complete sets of tender documents and shall be clearly marked “Alternative Tender” to
         distinguish it from the unqualified tender referred to above. The City shall not be bound to consider
         alternative tenders.

         If, after tenders have been brought to a comparative level and are equal in all respects, the Delegated
         Authority shall in the presence of a witness, draw lots to decide the award.

4.1.7.   If, after tenders have been brought to a comparitive level, two or more score equal total adjudication points,
         the successful tender should be the one scoring the highest number of preference points. Should two or
         more tenders be equal in all respects, the Delegated Authority shall in the presence of a witness draw lots
         to decide the awards, or split 50 percent each where applicable.




4.2.     Request for Withdrawal of Tender

4.2.1.   Where a tenderer requests in writing, after the closing of tenders prior evalution and adjudication process,
         that this tender be withdrawn, then such a request may be granted by the Delegated Authority if it is in the
         best interests of the City.




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4.3.     Acceptance Of Tenders

4.3.1.   Once tenders have been adjudicated in accordance with Clause 4.1.4 above, a report in the approved format
         shall be submitted to the relevant Delegated Authority for approval.

4.3.2.   Where a tender has been recommended for acceptance and is approved by the Delegated Authority, the
         successful tenderer shall be notified thereof in accordance with Clause 2.4.1 above.

4.3.3.   In the event of it becoming necessary to cancel and/or readvertise tenders, then a report to this effect shall
         be submitted to the relevant Delegated Authority.

4.3.4.   Where tenders have either been cancelled or are unsuccessful, then the tenderers shall be notified in
         writing accordingly.




5.       ANNUAL TENDERS

5.1.     General

5.1.1.   It is permissable to invite formal tenders for the supply of goods and services or engineering and construction
         works that is of an ad-hoc or repetitive nature, for a predetermind period of time (commonly referred to as
         an annual tender).

5.1.2.   All such tenders shall comply with provisions of the City’s Procurement Policy Initiative in all respects.

5.1.3.   Acceptance of the tenders (that is, of the rates provided) will not necessarily guarantee the tenderer any
         business with the City.

5.1.4.   The practice of using annual tenders to circumvent the formal tender process in respect of traditional project
         work is not permissable.




5.2.     Adjudication of Annual Tenders

5.2.1.   Annual tenders shall be considered in terms of Section 4.1 above. The adjudication of tenders
         must include a tender ranking in respect of Preferential Procurement as required by the City’s
         Procurement Policy.

5.2.2.   Where different selections of items are required from the same tenders and it is not possible or practical
         to split the orders then the adjudication process will have to be carried out in respect of each application.
         Individual orders will then be placed (or contracts awarded) on the basis of the highest total adjudication
         points received, per application.

5.2.3.   Where the selected supplier, service provider or contractor (in terms of the adjudication process followed)
         is unable to provide the required goods, services or construction works at the required time and confirms as
         much in writing, then the tenderer with the next highest adjudication points may be selected.




6.       QUOTATIONS

6.1.     General

6.1.1.   Where the City intends to enter into any contract which is for the execution of any engineering and
         construction work for, or the supply of any goods or materials to, the City and which involves or is likely to
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         involve an estimated amount less than or equal to R250 000 (two hundred and fifty thousand rand, or any
         such greater amount as may be determined by the City from time to time, then a minimum of three written
         quotations from suppliers, service providers and/or contractors who are suitably qualified and experienced,
         having the necessary resources, and who are registered and verified on the Western Cape Supplier Database,
         shall be obtained.

6.1.2.   Notwithstanding Clause 6.1.1 above, where quotations have been invited via Electronic Bulletin Board, no
         additional quotes need to be obtained should the number of responses be less than three.

6.1.3.   For all purchases of goods and services of a value less than R2000 (two thousand rand), or any such greater
         amount as may be determined by the City from time to time, a minimum of one quote is required.

6.1.4.   The practice of breaking out projects in order to circumvent the formal tender process is not permissable.




6.2.     Specifications, Evaluation Criteria and Procedures

6.2.1.   Quotation documents shall clearly indicate terms and connditions of contract, the specifications, criteria for
         evaluation and procedures to be followed where applicable.

6.2.2.   The specifications and evaluation criteria shall not be aimed at hampering competition, but rather
         to ensure fair, equitable, transparent, competitive and cost-effective tendering as well as the protection or
         advancement of persons, or categories of persns, as embodied in the City’s Procurement Policy.

6.2.3.   The specifications shall not mention trade names or particular processes of manufacture unless these are
         the only acceptable products. However, where the use of trade names, trade marks or origin is the only
         known way of accurately describing the products required, the words “or other equal and approved” shall
         be included in the specifications mentioned in the quotation document.

6.2.4.   Where the specifications are based on standard documents available to tenderers, a reference to those
         documents is sufficient.

6.2.5.   The City may, if necessary, communicate with tenderers prior to the submission of quotations in order to
         supply additional information or to clarify vague points in the quotation documents.




6.3.     Quotation Prices

6.3.1.   All quotations shall be deemed to be fixed (not subject to contract price adjustment) unless otherwise stated
         in the tender documents.




6.4.     Issuing and Submission of Documentation

6.4.1.   Documents pertaining to quotations (including the quotation itself) may be issued and received by either the
         originating office or a procurement office.

6.4.2.   Quotation documents shall clearly state the place where such documents must be submitted and if
         necessary, a date by when they must be returned.

6.4.3.   No quotations submitted after any stipulated closing date shall be considered.

6.4.4.   All prices submitted shall remain confidential until all invited quotations have been received.


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6.5.     Adjudication of Quotations

6.5.1.   Quotations received shall be adjudicated in accordance with Clause 4.1.4.




6.6.     Acceptance of Quotations

6.6.1.   Once quotations have been adjudicated, a report in the approved format shall be submitted to the relevant
         Delegated Authority for approval.

6.6.2.   Quotations shall be accepted by means of a letter of acceptance or the issue of an official order.

6.6.3.   Unsuccessful tenderers shall be notified accordingly.




7.       EXCEPTIONS TO THE FORMAL TENDER PROCESS

7.1.     General

7.1.1.   The provisions of Clause 3.1.4 shall not apply in respect of:
         •   any contract relating to an emergency (as described in Clause 7.1.2 below) where it would not
             be in the interests of the City to invite tenders,
         •   any contract relating to the publication of notices and advertisements by or on behalf of the City,
         •   any order which the City may consider it necessary or desirable to place outside the Republic,
         •   any purchase on behalf of the City at a public auction sale,
         •   any contract with an organ of State, a local authority or a public utility corporation or company,
         •   any contract for the supply of goods or materials to the City by a contractor of an organ of State at the
             price and on the terms and conditions applicable to the State, with the contractors agreement,
         •   any contract in respect of which compliance therewith would not be in the public interest and the City
             Manager has authorised the City to dispense with such compliance,
         •   the appointment of any person to provide professional advice or services, or
         •   any contract for which only one authorised supplier is available in the municipal area.
         •   repairs to plant and equipment where it is not possible to ascertain the nature or extent of the work
             required in order to call for tenders.

7.1.2.   The conditions warranting lower Emergency Procurement should include the existence of one or more of
         the following:

         •   the possibility of human injury or death,
         •   the prevalence of human suffering or deprivation of rights,
         •   the possibility of damage to property, or suffering and death of livestock and animals,
         •   the interruption of essential services, including transportation and communication facilities or support
             services critical to the effective functioning of the City as a whole,
         •   the possibility of serious damage occurring to the natural environment,
         •   the possibility that failure to take necessary action may result in the City not being able to render an
             essential community service,
         •   the possibility that the security of the State could be compromised.

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7.1.3.   The prevailing situation, or imminent danger, should be of such a scale and nature that it could not readily be
         alleviated by interim measures, in order to allow time for the formal tender process.

7.1.4.   At least three quotes should be obtained, failing which reasons shall be provided to the Delegated Authority
         as to why it has not been possible to obtain the required number of quotes.

7.1.5.   The quotes shall be adjudicated as with any other Formal tender.

7.1.6.   Any procurement undertaken after hours in terms of clause 7.1.2. must be formalised in the next
         working day.

7.1.7.   Emergency Procurement should not be used in respect of the following:

         •   To circumvent normal procurement procedures;

         •   As a result of insufficient stock-levels for items that are used daily.

         •   As a result of working programmes not properly planned;

         •   As a result of no / insufficient communication between depots and the buying office(s).

7.1.8.   Urgent requirements not properly planned for, must be condoned by the Procurement Manager, or his
         delegated authority (without delaying the purchase) to enable fast tracking of the procurement process.

7.1.9    Where it is not possible to ascertain the nature or extent of repairs to plant and equipment, the services
         required may only be procured from a panel of service providers approved by the City, whose services will
         be utilised on a rotation basis.




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