Part A: The procurement framework
Introduction to public sector procurement
Key takeaways
- Procurement is the process of acquiring goods, works and services, from need identification through to contract completion; store keeping is the receipt, safe custody, recording and issuing of those goods until they are used or disposed of.
- Article 227 of the Constitution requires a procurement system that is fair, equitable, transparent, competitive and cost-effective, and the Public Procurement and Asset Disposal Act, 2015 gives it effect.
- Five general principles guide every procurement: transparency, accountability, fair competition and equal treatment of bidders, value for money (not simply lowest price), and efficiency and effectiveness.
- The procurement cycle runs from identifying the need, through planning and budgeting, choosing the method, and solicitation, evaluation and award, to contract management and the receipt, storage and eventual disposal of the goods.
- Accountable documents (local purchase and service orders, goods received notes, inspection and acceptance certificates, payment vouchers) are the paper trail an audit checks against.
Authority for this chapter
Article 227 of the Constitution (a system that is fair, equitable, transparent, competitive and cost-effective) and the Public Procurement and Asset Disposal Act, 2015 that gives it effect, with the Public Procurement and Asset Disposal Regulations, 2020; section 7 of the Act for the National Treasury's policy role.
Introduction to procurement and store keeping
General procurement principles
- Transparency, an open, traceable process
- Accountability for procurement decisions and outcomes
- Fair competition and equal treatment of all bidders
- Value for money, not simply lowest price
- Efficiency and effectiveness in how public resources are used
The procurement cycle in public institutions
- Identifying the need and preparing specifications
- Planning and budgeting for the procurement
- Selecting and applying the appropriate procurement method (see the chapter on procurement methods)
- Solicitation, evaluation and award
- Contract management (see the chapter on contract management)
- Receipt, storage and eventual disposal of the goods (see the chapter on stores and disposal)
Accountable documents
The controlled, traceable documents evidencing each stage of the procurement cycle, the paper trail an audit ultimately checks against, are:
- Local purchase orders
- Local service orders
- Goods received notes
- Inspection and acceptance certificates
- Payment vouchers
Procurement and supply chain officers
Procurement and supply chain officers plan procurement, manage the tendering and evaluation process, and coordinate with user departments and suppliers throughout the procurement cycle, within the legal and institutional framework the next chapter sets out.
Working with stores personnel
Procurement officers and stores personnel work as a connected chain, procurement acquires goods, stores personnel receive, record and safeguard them, with accurate handover and documentation at the point goods arrive being essential to accountability.
Public stores and their procedures
Public stores follow defined procedures for receiving, recording, storing and issuing goods, ensuring goods are accounted for from arrival to eventual use, loss or disposal (see the chapter on stores and disposal).
Exam tip
The five general principles (transparency, accountability, fair competition, value for money, efficiency) are the yardstick nearly every later chapter's rules exist to uphold, when a procedure seems overly strict, connect it back to one of these five principles.
Self-check
(a) List, in order, the stages of the public procurement cycle. (6 marks)
(b) Distinguish procurement from store keeping as functions within the same procurement cycle. (2 marks)
(c) State two accountable documents used in public procurement, and what each one evidences. (2 marks)
Show worked answer
(a) Identifying the need and preparing specifications; planning and budgeting; selecting and applying the appropriate procurement method; solicitation, evaluation and award; contract management; receipt, storage and eventual disposal (6 marks).
(b) Procurement is the process of acquiring goods, works and services, from need identification through to contract completion; store keeping is the receipt, safe custody, recording and issuing of goods once acquired, until they are used or disposed of (2 marks).
(c) Any two of: a local purchase order or local service order (evidences the order placed); a goods received note (evidences goods actually received); an inspection and acceptance certificate (evidences goods met specification); a payment voucher (evidences payment made) (2 marks).