Questions/Answers

Purchase Card (P Card) was initially implemented as an effective, low cost procurement and payment system for low value, high volume transactions. The cost of processing such transactions often exceeded the value of the goods/ service being purchased. P-Card was the appropriate solution to a cumbersome, expensive procedure. However, during implementation it became evident that the main driver for implementing the P Card changed from being an effective, low cost purchasing and payment mechanism to that of primarily being a fully automated purchasing and payment mechanism specifically aimed at the economic upliftment of local, community based, micro enterprises (EME's), and more specifically focused on enterprises owned by People with Disabilities, the Youth, Black Women, and Historically Disadvantaged Individuals (HDI's) in alignment with Section 217 of the South African Constitution which is aimed at addressing the socio-economic injustices of the past. P Card is a web-based system that can be installed at any government office. The P-Card system, along with its reporting component, was therefore implemented at all Gauteng Provincial Government (GPG) Departments. The system interfaces with the SAP ERP system for payment purposes. It enables the capturing of corporate transactions, including third level data, which enables the electronic authorization and settlement of Visa Card transactions, ordering and delivering of goods and services and printing of invoices and delivery notes, thus saving administration and billing costs for suppliers. Payment is made 4-5 days after delivery which results in improved cash flow for suppliers.Suppliers are provided province wide business exposure. It also facilitates the decentralization of low value, high volume purchases and payment transactions to GPG entities and departments, the coal face of service delivery to the public.

Suppliers: Payments are made within 4-5 days after delivery which results in improved cash flow for the designated, previously disadvantaged supplier categories. Suppliers are provided with province wide business opportunities as they are registered with all GPG departments on the system, thus improving their business sustainability. Administration and billing costs are kept to a minimum as all purchasing and payment documentation ,except requisitions and delivery notes, are systems generated. Public The Gauteng public benefits from improved service delivery as a result of reduced delivery times and improved quality of goods and services to Departments. P Card is supporting new business development opportunities (BEE focused) and economic upliftment of local communities. Provincial Departments and entities: GPG Departments benefit from decentralized purchasing and payment as P Card results in a substantial reduction in cycle time between requisition, delivery and payment thereby improving supplier relations and service delivery. Enhanced reporting, analysis and control capabilities allows for accurate, detailed spend reports as 3rd level purchasing and a full audit trail is available for every transaction. Gauteng Provincial Government benefits from reduced purchasing and payment transactional cost savings, detailed procurement spend and management information.

The P Card is a fully automated purchasing and payment system aimed at the economic upliftment of local, community based micro enterprises and specifically focused on enterprises owned by People with Disabilities, the Youth, Black Women, and Historically Disadvantaged Individuals. In addition to the above the standard P Card system did not sufficiently enable the legislative mandate of the Broad Based Black Economic Empowerment (BBBEE) amendment act or the Preferential Procurement Policy Framework Act (PPPFA) legislation towards correcting the socio economic injustices of the past (Apartheid). Substantial development was therefore required to allow for the implementation of the "Localization" and "Rotation" functionalities of the P Card system. In addition to this a decision was taken to only register micro suppliers that are 100% BEE (Black Economic Empowerment) compliant and that are from the Gauteng Townships in support of Township Economy Revitalization (TER). Therefore, only suppliers that meet the registration requirements in all respects qualify to become suppliers on the P Card system. The P Card supplier registration process is being automated which will provide potential suppliers with the means to initiate the registration process via the Gauteng government website using "e-Forms". Suppliers are also assisted with inventory compilation and registration.

This project is specifically aligned to the following pillars of the TMR (Transformation, Modernization and Re-Industrialization) Programme of the Gauteng Province: 1. Radical Economic Transformation Procurement is limited to 100% BEE compliant EME (Exempted Micro Enterprises) suppliers from the following previously disadvantaged supplier categories; Youth owned businesses, Black Women owned business, businesses owned by people with disabilities and historically disadvantaged individuals. Purchasing from suppliers that do not accede to these requirements is not possible (national companies with an annual turnover exceeding R 10 million). 2. Modernization of the public service and the economy The procurement and payment functions are paperless and web based allowing government officials access to purchasing and payment functions from where-ever they are. The application can be accessed on a web-enabled tablet or cell phone. Similarly, suppliers receive purchase orders electronically via e-mail and can therefore access the purchase order information from their cell phones. All procurement (purchase orders) and payment documents (invoices) are generated electronically by the system except for requisitions and delivery notes.The system has a fully automated supplier rotation and localization functionality that ensures equal spend between suppliers from local communities.

P Card Procurement is limited to 100% BEE compliant EME (Exempted Micro Enterprises) suppliers from the following previously disadvantaged supplier categories; Youth owned businesses, Black Women owned business, businesses owned by people with disabilities and historically disadvantaged individuals. Purchasing from suppliers that do not accede to these requirements is not possible (e.g. national companies with an annual turnover exceeding R 10 million). P Card spend with the designated supplier categories increased from ZAR 4, 9 million in the 2016/ 2017 financial year to ZAR 8, 1 million in the 2017/ 2018 financial year (year to date). The significance of these results must be viewed against the fact that P Card purchases are limited at this stage to purchases below R 10 000 per purchase order. It is planned to increase this limit to R 30 000 per order in the new financial year which will obviously substantially increase the benefit and business opportunities for the targeted, historically disadvantaged suppliers . In addition to the above consideration must also be given to the fact that the system is automated (paperless) and that suppliers are paid within 5 days of delivery which greatly improves supplier cash flow and economic sustainability.

All P Card suppliers are sourced from the Gauteng Provincial Government Supplier database with the additional requirements of being 100% BEE, an Exempted Micro Enterprise (EME) and from the following supplier categories; Youth Owned businesses, Black Women owned businesses, businesses owned by people with disabilities and previously disadvantaged individuals. In addition to the above businesses from townships are given preference during sourcing. The "localization" function of P Card utilizes the GPS co-ordinates of suppliers and government offices to ensure that purchasing is done from the closest available supplier within the local area.The net effect of the above is that every cent spent goes directly back into the local community which allows for business growth and employment opportunities. The "rotation" functionality of the system ensures that government spend is equitably shared among the supplier base.

a. Spend via the the P Card system increased from R 4,9 million in the 2016/2017 financial year to R 8,1 million this year. This is despite the implementation of stringent cost control measures and was achieved by re-directing purchasing that would have been done with large national suppliers to the EME suppliers on P Card. b. P Card suppliers are predominantly sourced from the Gauteng townships in support of the Township Economy Revitalization initiative and all are 100% Black Economic Empowerment micro enterprises from the following priority supplier categories: Youth owned, Black women owned, People with Disabilities owned and Previously Disadvantaged owned businesses. c. The supplier categories mentioned in b. above have traditionally been limited to only conduct business with the closest government offices or specific departments that are known to them, as funds for marketing are limited. The P Card system provides all P card suppliers province wide exposure without the need for advertising or visits as all suppliers are visible on the P Card system to all GPG departments and offices. The above required significant development and configuration in order to be made possible.

P Card is used globally for goods and services purchasing. The American military uses P Card extensively due to it's decentralized nature without compromising on controls. The standard P card solution offered by most banks could not be implemented "as is" in Gauteng as it allows suppliers to process their own payment transactions at their premises after delivery. This is not allowed within government. In addition to the above the standard P Card system did not answer to the requirements of GPG Departments based upon BBBEE and PPPF legislation. Substantial development was therefore required to allow for the implementation of the "Localization" and "Rotation" functionalities of the P Card system. In addition to this, a decision was taken to only register EME suppliers that are 100% BEE compliant and that are from the Gauteng Townships in support of Township Economy Revitalization (TER). The P Card supplier registration process is currently being automated which will provide potential suppliers with the means to initiate the registration process via the Gauteng government website using "e-Forms".

1. Procurement of the basic P Card software system. 2. Reconfiguration and development to align with legislative requirements, specifically the Broad Based Black Economic Empowerment Amendment Act as well as the Preferential Procurement Policy Framework Act. 3. Implementation at 94 government offices and Departments. 4. Training of 200 officials and change management. 5. Identification, verification and registration of initial 310 qualifying suppliers. Ongoing registration sessions are held and an on-line registration process in in development. 6. Alignment of departmental supply chain business processes with legislative and system requirements

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The system was designed and configured specifically for application within the public service. The system is web based and can therefore be accessed from any web-enabled device 24 hours a day, 7 days a week . In addition to this the system is also fully automated and does not require any installation, paper or other running costs.

The P card system has been in existence since 2011 and, except for some reporting enhancements, stayed the same. The primary aim of the system is to facilitate the inclusion of previously marginalized supplier categories in the economy through ensuring that government officials utilize the P Card for purchasing from these preferred suppliers. This strategy will continue and be further enhanced in the future by registering additional suppliers on an ongoing basis as well as by increasing the transactional limit of ZAR 10 000,00 to ZAR 30 000,00 The fact that the system is web-based and automated ensures that no infrastructure expenses are required by either government officials or the suppliers thereby limiting costs associated with implementation and support. The system can be deployed at short notice and with ease as it is web based. From an environmental perspective the system is sustainable as it is paperless and invoices are not printed and delivered in the traditional manner requiring transportation

The system has been in existence since 2011 and, except for minor functional enhancements. has largely remained the same with excellent stability and reliability. The ground breaking, leading edge functionalities employed within the P card system in support of disadvantaged supplier categories as well as the ease of use will result in the P Card initiative growing substantially during the next 5 years and eventually replacing the current procurement processes for all purchases below ZAR 500 000, 00. The P Card system was developed for the Gauteng Provincial Government and is owned by the Provincial Government with the Provincial Treasury having custodianship. As such, additional enhancements have already been identified for development which will further support continued use of the system.

Oui

The initiative is evaluated on an annual basis as part of the compliance and performance audit cycle. From an operational point of view the initiative and specifically the use thereof is evaluated on a weekly basis to ensure that the maximum possible purchases out of total weekly purchases are made using P Card and will therefore be to the benefit of the designated previously disadvantaged suppliers. On a monthly basis a P Card spend report is compiled which is a summary of the weekly reports. The monthly report is issued to and discussed with all Departmental Chief Financial Officers to identify institutions or entities that do not utilize the P card sufficiently and that are continuing buying from suppliers other than the designated previously disadvantaged supplier categories on P card. Surveys are conducted with all registered P card suppliers as well as with all Gauteng Department end-users in order to establish the efficiency and effectiveness of the system towards achieving its intended outcomes. The outcomes The P Card system is continuously evaluated from a technical and end-user point of view to ensure that it operates optimally and that any possible enhancements are identified and implemented without delay.

The evaluations conducted result in the following: 1. Compliance audits performed by the Auditor General of South Africa (AGSA) ensure that the P Card initiative complies with and is operated within the legislative framework established to ensure redress of the socio- economic injustices of the past through procurement for previously disadvantaged supplier categories. 2. Performance audits performed by AGSA ensure that the P Card achieves the intended objectives of the initiative, that being the provision of a user-friendly, web-based, automated procurement and payment platform aimed at promotion and economic upliftment of previously disadvantaged supplier categories. 3. P Card supplier and end-user surveys assist with identifying opportunities to enhance the functional design of the system and ensure sustainability and alignment with the latest, leading edge supply chain management (SCM) technologies available. 4. Spend reports (weekly and monthly) ensures that the P Card system is optimally used to the benefit of the designated suppliers. 5. P Card supplier surveys assist with assessing the financial and socio economic impact at ground roots level on the designated supplier categories. Feedback provided thus far has been very positive with supplier indicating increased business sustainability due to enhanced market exposure and payment within 5 working days.

1. Year-on year percentage increase in procurement of goods and services via P Card. 2. Increase in P Card spend as a percentage of total spend on goods and services. This is measured down to institutional level and at departmental level. 3. Year on year percentage increase in spend per supplier. 4. Compliance and performance audit reports. 5. Survey feedback from suppliers and end-users.

P Card purchasing is not new technology and is being used extensively in America and Europe. However, the "standard" P Card systems used in other countries allow for suppliers to process their payments from their offices after delivery. South African legislation prohibits suppliers processing their own payments. The "standard" P Card processes and systems therefore had to be aligned with legislation whilst taking black economic empowerment and preferential procurement polices into account. This required that the P Card software service provider as well as the banking partner assist with the compilation of business requirements specifications, process designs,standard operating procedures as well as the systems configuration. In addition to the above an application needed to be made to National Treasury for approval of the P Card implementation as well as the resultant financial commitments. Departmental end-users as well as SCM specialists and suppliers were consulted during the design phase of the customized P Card system and they were also involved with the implementation phase of the project.

Key lessons learned: 1. The purpose and aim of the project must be clearly defined and communicated to all stakeholders from the outset. 2. Effective change management is of extreme importance, should be allocated sufficient time and resources and should involve the recipients of the services being implemented. 3. Project Buy-in from all stakeholders, customers and implementation partners is crucial towards successful implementation. 4. Legislative requirements and guidelines need to be clarified early on in the project. 5. Ongoing and post implementation project outcome and impact assessments need to be conducted religiously. Further improvements: 1. An automated, electronic supplier P Card registration system, accessible 24/7, is being developed. This will be published on the Gauteng Provincial Government common platform. 2. A business case is being developed to increase the per purchase order value from ZAR 10 000,00 to ZAR 30 000,00.