To establish within the public sector an infrastructure procurement and delivery management system which is better able to realise value for money. The aim is to support the effective implementation of the regulatory instruments issued through the PFMA and MFMA which establish an infrastructure procurement and delivery management system designed to improve infrastructure project outcomes and realise value for money.
The following legislative instruments have been issued:
Model SCM Policy for Infrastructure Procurement and Delivery Management
Municipal Finance Management Act
Templates for gates associated with the control frameworks
Templates for framework agreement gates
Template for financial system gate
Templates for evaluation reports
Templates for gates for delivery management
The content of the National Treasury / Civilution special publication on the National Treasury Standard for Infrastructure Procurement and Delivery Management was prepared by National Treasury and edited by the editorial staff of the South African Institution of Civil Engineering. This publication contextualises and communicated the philosophy behind the standard, explains the impact of the separation of the supply chains, discusses the role of the client, offers guidance on how to apply the control frameworks, indicates the range of available procurement options and approaches, provides high level guidance on satisfying most aspects of the SIPDM, etc.
National Treasury / Civilution special publication
National Treasury Instruction No 4 of 2015/2016, issued in terms of the Public Finance Management Act of 1999 (PFMA), requires accounting officers and accounting authorities to implement the National Treasury Standard in the planning, design, procurement or execution of infrastruct ure projects, and to develop a suitable supply chain management policy for infrastructure procurement and delivery management.
National Treasury Circular No 77, issued in terms of the Local Government: Municipal Finance Management Act of 2003 (MFMA), provides guidance to municipalities and municipal entities to establish a suitable supply chain management system for infrastructure delivery which is better able to deliver value for money, while minimising the scope for corruption. Attached to this circular is a Model Supply Chain Management Policy for Infrastructure Procurement and Delivery Management, which is issued in terms of the MFMA in support of the Supply Chain Management Regulations as a Treasury guideline, determining a standard for municipal supply chain management policies. This policy is linked to the National Treasury Standard for Infrastructure Procurement and Delivery Management.
The intent of National Treasury Instruction No 4 of 2015/2016 and Municipal Circular 77 is to separate the supply chains for infrastructure procurement and delivery management from those for general goods and services. There is a need to understand the differences between procurement and supply chain management, the different types of procurement, and the major differences between these two different types of supply chains in order to understand the thinking behind this separation.
The National Treasury Standard for Infrastructure Procurement and Delivery Management (SIPDM) provides a control framework for he planning, design and execution of infrastructure projects, the tracking of such projects and the monitoring of performance which enables risks to be proactively managed. This control framework can also be audited. An organ of state’s supply chain management (SCM) policy for infrastructure procurement and delivery management is, in terms of the SIPDM, required to assign responsibilities for approving or accepting deliverables associated with a gate (control point) in this control framework.
There is a need to understand the thrust and intent behind this control framework and what needs to be considered when assigning responsibilities for approving or accepting deliverables at the associated gates.
There is a need to understand the roles and responsibilities of the client and delivery teams in order to develop a suitable supply chain management (SCM) policy to implement the standard and to structure an agency agreement which satisfies the minimum requirements of the SIPDM.
Projects can be linked to programmes and portfolios. It is therefore important to understand how projects are managed within an infrastructure context at a project, programme and portfolio level, and what the linkages are between these different types of management.
The Standard for Infrastructure Procurement and Delivery Management (SIPDM) establishes developmental or secondary procurement policy relating to Broad Based Black Economic Empowerment (B-BBEE), and where appropriate, work opportunities for target groups and national development goals.
The SIPDM furthermore establishes targeted procurement procedures that may be used to promote social and economic objectives, as well as those for specifying minimum local content.
It is important to understand the context within which developmental procurement policies are implemented and how targeted procurement procedures are applied.
The Standard for Infrastructure Procurement and Delivery Management includes provisions for framework agreements. Framework agreements have similarities with term service and transversal contracts, but are different in several important
aspects. Internationally framework agreements have different meanings. It is therefore important to understand what precisely a framework agreement is and how it is to be implemented in terms of the National Treasury Standard for Infrastructure Procurement and Delivery Management.
A procurement system comprises procedures and methods, procurement documents, governance or quality arrangements to manage and control procurements, and organisational procurement policies. The Constitution of South Africa in this regard requires the public procurement system to be fair, equitable, transparent, competitive and cost-effective. It also permits procurement policy which provides for categories of preference in the allocation of contracts and the protection or advancement of persons, or categories of persons, disadvantaged by unfair discrimination.
The National Treasury Standard for Infrastructure Procurement and Delivery Management (SIPDM) establishes a control framework and minimum requirements for infrastructure procurement. An organ of state’s Supply Chain Management (SCM) Policy for Infrastructure Procurement and Delivery Management is required in terms of the SIPDM as a minimum to assign responsibilities for approving or accepting deliverables associated with a gate (control point) in the control framework or authorising a procurement process or procedure, establish committees which are required by law (or the equivalent thereof) and delegate authority for the award of contracts and orders.
There is a need to understand the thrust and intent behind this control framework and the minimum requirements for infrastructure procurement when establishing a suitable SCM policy and the setting up and implementation of an
infrastructure procurement system within an organ of state which complies with the requirements of the SIPDM.
The Standard for Infrastructure Procurement and Delivery Management (SIPDM) establishes requirements for infrastructure contracts and contract management. Organs of state are required to select and use a contract selected from a prescribed list of standard forms of contract. Those responsible for the management or administration of the contract on behalf of an organ of state need to act as stated in the contract that is entered into. They also need to be professionally registered with an appropriate built environment council where such contracts involve the provision of new infrastructure or the rehabilitation, refurbishment or alteration of existing infrastructure.
Infrastructure procurement involves the development or maintenance of a product on a site. A central issue that needs to be dealt with in infrastructure projects is the financial liability related to uncertainty of future events, who takes the risk for
the difference between the actual prices paid in terms of the contract and those estimated at the time of tender, and how changes to the information are used to produce the works assessed and paid for. Standard forms of contract have been
developed by industry to enable risks to be allocated between the parties to a contract. Those responsible for administering a contract on a client’s behalf need to do so in accordance with the provisions of these standard forms of contract. The provisions in the SIPDM for infrastructure contracts and contract management need to be understood in this context.
The Standard for Infrastructure Procurement and Delivery Management (SIPDM) defines procurement documents as “documentation used to initiate or conclude (or both) a contract or the issuing of an order”. Procurement documents need to:
Procurement documents as such capture the procurement strategy and tactics that are decided upon. They are in effect a tool for identifying a suitable contractor during the tender process and managing risks during the execution of a contract. The SIPDM establishes a number of requirements for procurement documents. It is important to have a working knowledge of these requirements, as procurement documents form the backbone of the infrastructure procurement system.
Standard for Infrastructure Procurement and Delivery Management makes no reference to “functionality”. It does make reference to “quality” which may be used in the evaluation of tenders as other objective criteria and provides detailed
procedures for doing so. This enables contracts to be awarded not only on the basis of lowest price adjusted for a preference, but also on the most economically advantageous or cost effective offer that is submitted.
SIDPM returnables procurement documents:
SIPDM information is freely available. The verification of knowledge and understading of the SIPDM is performed in conjunction with partners.
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