Preferential Procurement Policy
Preferential procurement and enterprise development policy

Policy statement
Historically, the majority of South Africans were not able to participate in the mainstream economy. This policy aims to open up opportunities to those individuals, particularly those involved in small and medium enterprises. The Financial Sector Charter, of which Standard Bank is a signatory, is committed to redressing imbalances of the past.

Reason for policy
By embarking on the affirmative procurement programme, Standard Bank does not only positively contribute on the support of growth and development in this country, but also progressively implements one of the important elements of the Financial Sector Charter.

Definition of BEE suppliers
Black economic empowerment (BEE) suppliers are defined by their ranking based on their scoring on criteria reflected in Table 1.

Table 1 - BEE supplier rating for supplier accreditation and tender evaluation

Criteria

Ownership

Black influenced

5% - 25%

Black empowered

>25% to 50%

Black companies

>50%

Black-women empowered

>30%

Black SME

>25%: Black empowered with annual turnover of R0.5m to R20.0m

Black SME

<25%: Black influenced with annual turnover of R0.5m to R20.0m


Supplier evaluation
When applying for registration as suppliers and when to Standard Bank, suppliers will provide an audited statement of their ownership or control, which will be used in supplier BEE assessment. When assessing tenders along with technical and commercial offerings.

During the tender process, any changes to the make up of the supplier which occur after the close date and time will not be taken into account, even if these where under consideration at the time. If however, changes occur after the closing, that results in the loss of status as a black company or BEE business, these changes must be divulged to Standard Bank immediately, and will be taken into consideration in contract award.

For the purposes of this policy, the area that will receive specific attention is ownership and control by blacks. Equity ownership, management and control as set out in the Financial Sector Charter reflect this.

When evaluating tenders for award, preference will be given for first consideration to companies as follows:

  1. Black women company
  2. Black SME
  3. Black companies
  4. Black empowered
  5. Black Influenced


As per the Financial Sector Charter, it is the intention of Standard Bank to have 50% of controllable purchases from black suppliers by 2008 and 70% by 2014.

Second tier procurement
Prime contractors/suppliers (who are non-BEE) will be required to "unpack" or "break out" contracts and procure a stated percentage of the contract value from black suppliers, by:

  • subcontracting portions of the contract
  • procuring manufactured components/subassemblies
  • procuring consumables
  • procuring insurance
  • procuring services, eg. transport
  • procuring professional services, eg. consulting, design, project management etc.


The enquiry and tender documentation sent out by Standard Bank will specify the percentage of the contract value that must be spent in line with the above criteria. This will vary from industry to industry and contract to contract according to the characteristics of the item or service procured.

Suppliers who are not willing to comply with this requirement will be advised that they could be removed from Standard Bank tender lists, in lieu of is "in place of".

Non-compliance with the contractual black supplier support conditions could lead to cancellation of the contract.

Procedure
The contracting procedures followed by Standard Bank are limited tendering and negotiated contracting, as described below.

A

Limited tendering allows only pre-qualified suppliers to tender. Standard Bank selects a tender list drawn from a list of qualified suppliers. Supplier qualification is needed due to technical, financial, environmental or commercial requirements.

B

Negotiated contracting is a procedure where Standard Bank, under exceptional circumstances, will choose one or more suppliers and negotiate only with them. The selection is usually made from a list of qualified suppliers. The conditions under which negotiated contracting is acceptable is on a business case basis where goods and services are strategic in nature.


The Supply Chain department in conjunction with business units may enter into either form of contracting procedure. All the business units should send all their requests to supply chain for contracting purposes as set out in the Procurement Guidelines document.

The offer of any tenderer who attempts to unethically manipulate the award of contracts may be rejected. Such a supplier may be removed from any Standard Bank list of suppliers.

Enterprise development
Enterprise development in the Standard Bank procurement context would refer to the following initiatives:

  • Standard Bank will offer assistance to BEE accredited companies in the financial sector and other sectors of the economy through skills transfer, secondment of staff, infrastructure support, and giving technical and administrative support and assistance.
  • Through supplier summits and forums matchmaking of BEE and traditional suppliers of similar services will be encouraged. Where matchmaking has been initiated for a joint venture, consortium and/or partnerships for BEE, Supplier Management will ensure sustainability of the new BEE status and assist with funding where required through Business Development department.
  • Commodity units will ensure that skills are transferred to SME in the respective areas.
  • Outsourcing opportunities will be pro-actively identified to develop new enterprises where feasible.


SME development
If a company qualifies as a black SME, that is, a black company with a turnover ranging from R500 000 to R20 000 000 per annum, it can qualify on application for developmental assistance. The assistance involves one or more of the following:

  • 15-day payment terms
  • Providing advice on tender procedures
  • Introduction to Business Banking for funding assistance
  • Offering mentoring expertise and skills transfer
  • Introduction to potential partners to enhance joint ventures or BEE structured companies through Supplier Development Forums
  • Standard Bank would also support existing black SME by considering favourable payment arrangements like advance payment, ie., an SME being given a portion of payment in advance in order to allow them to deliver efficiently. Supply Chain will make decisions on a case-by-case basis in this regard.

 

Support of black companies
Procurement requirements
The bank will not compromise on the fundamentals of the procurement process such as quality, expected service level or delivery, price, or other necessary commercial or technical requirements.

Registration
Databases containing sourcing directories or registers of black suppliers will be further developed and maintained by the Supplier Managers, as part of Standard Bank's supply chain system.

The records on the database for each supplier will indicate:

  • Whether the Supplier is certified as a black company, empowered or influenced Supplier according to the criteria set out in the Financial Sector Charter.
  • The categories of goods or services for which the supplier has undergone a qualification process, if any.


The onus rests with the supplier to provide Standard Bank with any changes or improvements regarding their BEE rating Standard Bank reserves the right to load suppliers on the database.

Development
After care service will be given to BEE companies who fail to win tenders with Standard Bank to ensure better competitive strength for future of tendering. The service would involve one or more of the following:

Customer Care line

0860 123 000 / +27 11 299 4701

Information@standardbank.co.za

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