QUESTION NO 1338
DATE REPLY SUBMITTED: WEDNESDAY, 14 JULY 2010
DATE OF PUBLICATION IN INTERNAL QUESTION PAPER: FRIDAY, 07 MAY 2010 (INTERNAL QUESTION PAPER: NO 12 – 2010)
Mr M S F de Freitas (DA) asked the Minister of Transport:
(1) Whether his department and its entities have a database of approved companies with whom they do business; if not, why not; if so, what criteria were applied when these companies were approved;
(2) whether this database is (a) audited, (b) updated and (c) reviewed; if not, why not; if so, (i) who undertakes such (aa) audits, (bb) updates and (cc) reviews, (ii) how often is this done in each case and (iii) how are companies on the database identified to be disqualified;
(3) (a) how many approved companies have been removed from the database in the past three years and (b) what was the reason in each case?
The Minister of Transport:
Department of Transport (DoT)
(1)The DoT has a database of approximately 3 000 approved companies with whom it does business. These companies were requested by means of advertisements in the Tender Bulletin to register as suppliers on the Department’s database. A suppliers registration form was sent to all interested companies and once their requests were received, the information therein (names of directors, if they have any judgements, et cetera) was verified through the Companies and Intellectual Property Registration Office (CIPRO), prior to them being registered on the suppliers database.
(i) (aa) Office of the Auditor-General.
(bb) Supply Chain Management.
(cc) Internal Audit.
(iii) If unsatisfactory quality of services are delivered.
(3)(a) Approximately 50.
(b) Changing their contact details without informing the DoT, non delivery or delivering substandard quality goods or services and claiming VAT when they are not registered to do so.
Airports Company South Africa Limited (ACSA)
Normally these are gathered when quotations or bids are being invited, or on request, which are then added on the database by Procurement Services. The summary is as follows:
Suppliers are requested to complete a vendor form if their services are required by ACSA and a Procurement Specialist reviews for compliance with the technical and B-BBEE requirements.
Alternatively, the supplier details are obtained as part of the normal bid process and once they are awarded the service, their details are loaded on the database.
They are loaded by procurement services.
Furthermore, potential companies are interviewed on a regular basis to establish a need for their commodity or service.
(2) (a) Yes.
(i)(aa) Internal Auditors.
(bb) Master Data Administrator.
(cc) Master Data Administrator and Procurement.
It is audited annually.
It is updated as and when suppliers forward their changes to the Procurement Department.
It is in the process of updating information (review). The first communication went out in January 2010 and the next communication will be during May 2010.
If there is no compliance in terms of requirements and other contract performance indicators, i.e. non conformance resulting from a contract agreement that allows ACSA to terminate.
Master data base clean-ups for unused companies.
Natural end of suppliers’ contracts.
(3) (a) 3 257 suppliers were removed on 19 January 2010.
(b) All unused suppliers were removed and those that do not comply with the B-BBEE requirements. This was done on the basis that there are new requirements needed from suppliers and the aligning of these requirements with the laws and the strategy of the Company were a necessity, e.g. B-BBEE contract management.
Air Traffic and Navigation Services Company Limited (ATNS)
(1)ATNS has a database of approved companies with whom they do business. They comply with the company’s policy, which includes providing ATNS with a B-BBEE certificate, a tax clearance certificate, et cetera.
(i)(aa) The database is audited annually by external financial auditors.
(bb) and (cc) It is updated and reviewed through an internal quality management system in terms of ISO 9001:2008 and external SGS audits in terms of re-certification.
(iii) When companies do not deliver satisfactory services in terms of their Service Level Agreements.
(3)(a) and (b)
No approved companies have been removed in the past three years.
Cross-Border Road Transport Agency (C-BRTA)
(1)The C-BRTA has a database and the companies must be tax compliant, i.e. a tax clearance. Other criteria will be implemented once the Supply Chain Management Unit is established with competent staff.
(c) No. The Finance Division does not have the capacity.
(i)(aa) Internal Auditors and the Office of the Auditor-General.
(bb) Internally, the database gets updated by interns.
(cc) This has not taken place yet.
(ii)The audit is done annually, updates are done daily and the reviews are conducted quarterly.
(iii)Companies that do not have tax clearance certificates are disqualified.
The C-BRTA has only established a database in May 2009. Therefore, to date, only two companies have been removed.
Reason in case 1: Non delivery and delivery of substandard quality work.
Reason in case 2: Failure to provide a valid tax clearance certificate.
South African Civil Aviation Authority (SACAA)
(1) The SACAA has an approved supplier data base. An application form is used for all service providers to complete and compliance requirements are stated on the form.
(2) (a) (b) and (c) (i) (aa), (bb) and (cc), (ii) and (iii)
The database is audited by internal and external auditors. It gets updated by the Procurement Manager and reviewed by the Senior Manager: Facilities and Procurement on an annual basis. If companies do not submit all the necessary documentation they will not be included in the data base.
(3)(a) and (b)
There are no companies that have been removed from the data base. The data base is kept for a minimum period of five years.
South African Maritime Safety Authority (SAMSA)
(1)SAMSA has just completed a tender process for the establishment of a database of approved companies with whom to do business and the database will be implemented soon.
In 2008, under the new management team, SAMSA took a decision to establish a Supply Chain Unit. This was done separate from its Department of Finance, to develop a Procurement Policy Manual (which did not exist) and to review the supplier database. By then the database had not been reviewed or renewed for years. Since then the Supply Chain Management Unit has been established and capacitated with competent staff, the advert for supplier base was closed and the database has now been established in line with National Treasury guidelines.
The criteria that was used for compiling the database was of companies showing interest and demonstrating the ability and competence of being able to provide the services and commodities that are known to SAMSA, as a result of its day to day requirements and use and being able to comply with all statutory requirements (i.e. company being registered with CIPRO, providing a valid tax clearance certificate, being B-BBEE compliant, being able to provide the highest quality and efficiency at competitive prices of the required goods/service).
(2)(a) The database will be audited.
(b) The database will be updated every 12 months.
(c) The database will be reviewed every 12 months.
(i)(aa) SAMSA’s internal auditors will undertake the auditing of the database.
(bb) The updating of the database will be conducted by SAMSA’s Supply Chain Management Unit.
(cc) The reviewing of the database will also be conducted by SAMSA’s Supply Chain Management Unit.
(ii)The updates and reviews of the database will be conducted every 12 months.
(iii)The companies on the database will be identified and disqualified from the database if they are not performing to agreed standards as stipulated in their respective Service Level Agreements. The companies will also be removed if there is a change in SAMSA’s purchasing pattern that may result in the use of the respective service/goods being discontinued and/or if a term of contract is signed with one of the respective service provider for goods/services.
(3)(a) and (b)
No companies have been removed from the database in the past three years, because a formal database and relevant processes to measure and monitor performance have not been implemented.
South African National Roads Agency Limited (SANRAL)
SANRAL does not use a database system. In terms of Supply Chain Regulations, the work goes out on public tender.
Passenger Rail Agency of South Africa (PRASA)
(1)PRASA maintains a list of approved suppliers in its database and pre-determined criteria applied was informed by both the requirements of relevant departments in fit, form function, quality, service and general compliance to all legal requirements as stipulated in its Supply Chain Management Policy dated 01 April 2009.
(2)(a), (b) and (c) (i) (aa), (bb) and (cc), (ii) and (iii)
The Internal Audit Department audit and review the database when they do the control register, while the Supply Chain Management Unit updates the database on a three-yearly cycle.
All capital expenditure projects are put out on Open Tender Call, which means all companies can submit bids for such projects, those on and not on the database. Furthermore, the majority of operational expenditure projects are also put out on Open Tender Call. The use of the database is mainly for small purchases and is limited to the Three Quote System, which is purchases costing no more than R350 000.00 as per the Supply Chain Management policy.
(3)(a) and (b)
No company has been removed from the database in the past three years. Proper and due processes would be followed prior to the removal of a supplier in order to be fair to both the supplier and PRASA.
Road Accident Fund (RAF)
(1)The RAF has a database of approved companies that is being used for the procurement of goods and services. The approved companies were identified through open procurement processes advertised through the local media and/or the Government tender bulletins. The criteria used to identify suppliers are in line with the Preference Point System criteria as prescribed in the Preferential Procurement Policy Framework Act (PPPFA), 2000 (Act No 5 of 2000), which covers functional requirements, price (if applicable) and Historically Disadvantaged Individual (HDI) targets.
(i)(aa) Audits are conducted by the RAF’s Internal Audit Department and also by the Auditor-General (AG).
(bb) Updates are conducted by the RAF Procurement Department.
(cc) Reviews are done by the RAF Procurement Department.
(ii)Audits by the AG are done annually and those by the RAF’s Internal Audit Department are done more frequently in accordance with the Internal Audit Plan. Updates on the RAF database of approved companies are done regularly based on the RAF requirements. Review of the RAF database is conducted regularly but at least once annually.
(iii)Companies already listed on the RAF database are disqualified on the basis of non-compliance with the requirements of the Service Level Agreements, non-compliance with Procurement Regulations, i.e. expired Tax Clearance Certificates, and also on the basis of being blacklisted based on the List of Restricted Suppliers as maintained by the National Treasury Department.
The RAF removed 48 vendors from its database in the past three years.
Some of the reasons for the removal of these vendors are based on the fact that the RAF issued a Database Refresh Tender in April 2009, whereby all RAF vendors on the database were requested to provide updated company information, i.e. Tax Clearance Certificates, et cetera to the RAF. Most of the vendors have been removed, because they were unable to produce/submit a response to the RAF’s Database Refresh Tender and as a result their information is outdated and no longer valid.
Railway Safety Regulator (RSR)
(1)The Railway Safety Regulator (RSR) has a comprehensive database of registered and approved suppliers with whom it transact on a business level in compliance with the stipulations of section 38 (1) (a) (iii) of the Public Finance Management (PFMA) Act, 1999 (Act No 1 of 1999), as amended, to maintain an appropriate procurement and provisioning system that is fair, equitable, transparent, competitive and cost effective.
The criterion used by the entity in approving these suppliers and/or companies is the completion of a supplier registration/declaration form with certified copies of the following documents for attachments:
A concise company profile.
Original valid tax clearance certificate.
Company certificate or shareholder(s) register.
Certified ID copies of all members/partners/directors.
Vat registration certificate (for VAT vendors only).
(2) (a), (b) and (c) (i) (aa), (bb) and (cc), (ii) and (iii)
This is audited by both the Internal (in-house) and External auditors (Auditor-General) bi-annually in terms of the approved audit plans.
The database of suppliers is captured in the iQual system, which allows a pressing need for supplier rotation in order to give emerging historically suppliers an equal opportunity to obtain contracts and submit quotations.
The database of suppliers is updated annually at the insistence of the Finance Committee, which is a Board sub-committee. The last robust update was undertaken by the Supply Chain Management unit in September 2009, followed by an advert in the Weekly Tender and Executive Bulletin: Jessina Naome and Associates in May 2010 for invitations to register as a supplier on the RSR database.
The entire update process is conducted in-house by the Supply Chain Management (SCM) Unit in direct consultation with Predicate Logistics, who are the owners of the iQual system currently in use and annually maintained through a maintenance agreement. The latter entails free updates, free service packs, training, re-training, site visits and support to name but a few functionalities.
SCM in consultation with management performs a review on a monthly basis through BEE status reports.
The Finance Committee reviews the database on a quarterly basis, making use of quarterly BEE reports for discretionary spending to ensure that RSR provides an equal opportunity to all registered and potential suppliers.
(3) (a) and (b)
A total of 943 suppliers were registered on the database until September 2009.
Pursuant to the database clean-up project in September 2009, a total of 322 were inactivated and made dormant for not responding to information updates. A total of 101 were removed due to inaccessibility and incorrect information, expired and non-renewal of tax clearance certificates despite numerous requests. There are currently 520 active suppliers on the RSR database.
Road Traffic Management Corporation (RTMC)
(1) Yes, the RTMC has a database of approved companies. In applying for registration in the RTMC’s database, the companies submit completed forms indicating the commodities which they provide as well as shareholder or directorship information. The companies must also submit the following documents, which forms the criteria for approval:
Tax Clearance Certificate
CIPRO Certificate, and/or
Compliance with the above mentioned requirements forms the basis of approval to be registered in the database.
(2)(a) No, the database is not audited. However, the internal audit unit does cover some areas of the database in their audit program as and when they perform audits in the supply chain management environment.
The reason for not being audited is because the audit of the database is not covered in the internal audit plan as a separate audit area. However, the audit of the supply chain management covers some aspects of the database. These audits are conducted annually.
(b) Yes, the database is updated with new companies who apply for registration in the supplier database of the Corporation.
(c) No, the database is not reviewed formally. However, the management within the Supply Chain Management Unit do review the forms and other input documents before new companies are registered in the database. These reviews are done daily or as and when the new companies apply to register in the database.
The review of the database was not considered necessary as all the input
documents are reviewed before capturing into the supplier database.
(bb)This is undertaken by personnel within the Supply Chain
(cc) Not applicable.
Audits – There is no specific audits for the database. However, the database is covered in the internal audit program for supply chain management. The audit of supply chain management is performed at least annually.
Updates – Updates of the database is done as and when new companies apply for registration in the database. These updates may take place daily if companies register on a daily basis.
Reviews – Even though formal reviews of the database are not done, the input documents are reviewed all the time when new companies apply to register in the entity’s database.
(iii) There is currently no policy or procedure on disqualification of service providers that are on the database. As a result the entity has not disqualified any service provider who met all the requirements for registration in the database.
(3)(a) and (b)
The entity has not removed companies or service providers from the supplier database.
(1)The Ports Regulator has a database of companies with whom it does business. These companies were approved on the basis of their compliance with South African Revenue Services (SARS) information supplied by them in completing a supplier database form. This form was developed to comply with the procedures set out in the Accounting Officers Procurement Procedures (AOPP), as referred to in the Public Finance Management Act, 1999 (Act 1 of 1999) (PFMA).
(2)The database is:
(a)Not audited as a rule, but on tendering compliance is checked and updated.
(b)Updated as more businesses submit the database form.
(c)Reviewed as goods and services are required that are not provided by existing database companies.
(i)(aa) Supply Chain Management.
(bb) Finance department.
(cc) Finance department.
(iii) Companies are disqualified if they do not conform to the AOPP.
No companies have been removed from the database during the past three years.
(b) Not applicable.