Last updated: 15/11/2019
Stage 1 of 5


First a government purchase must be planned. Goods or services purchased must be line with Government's policies, and its plans to achieve those policies.

1.1 - Overview

Before procurement can take place, a government purchase must be planned. Goods or services purchased must be line with Government's policies, and its plans to achieve those policies.

1.2 - Procurement and supply chain management

The procurement process is part of Supply Chain Management. Supply Chain Management has four phases. These phases cover the “life” of an asset. 

Acquisition is one of the four phases. Procurement takes place during the Acquisition stage of Supply Chain Management. It is a process of buying the required goods and services.

1.3 - Supply chain management (SCM) policy

  • A Supply Chain Management Policy sets out an organ of state’s policy on each of the four stages of supply chain management - demand management, acquisition management, logistics management, and disposal management. 
  • It is a document that each organ of state is required to have in terms of the PFMA and the MFMA, and you should be able to access the policy on request from the organ of state (or sometimes on their website).

System Weaknesses

  • Supply Chain Management Policies are often not publically accessible.  It is essential that organs of state make these available so that those monitoring procurement processes can ensure that internal processes have been followed. 
  • It is also essential that these policies are made public so that those monitoring procurement processes can evaluate whether SCM policies align with the requirements for these policies in the PFMA and the MFMA.

1.4 - Planning government’s work

5-year plans

Government is elected for a 5-year term. For this term, it develops 5-year plans, known as strategic plans or frameworks. In the current era, the overall 5-year plan of the government must reflect the objectives and plans of the National Development Plan, which set goals the government must reach by 2030.

5-year Strategic Plans are also produced by every government department at the start of a new term. Each financial year, running from 01 April – 31 March the following year, departments must also prepare an Annual Performance Plan.

Budgeting three years ahead

Budgets are organised in 3-year cycles, known as the medium-term. In October, the Minister of Finance presents the Medium-Term Budget Policy Statement, which sets out how the government plans to budget to meet priorities over the next three years. Then in February, the annual budget speech outlines the priorities and funding for the coming financial year.

The planning cycle each year

In each calendar year, planning and budgeting flow as follows:

  • In February, the President outlines the priorities of government in the State of the Nation Address (SONA).  How these priorities will be funded is elaborated on by the Minister of Finance in the budget speech before the end of February.
  • Organs of state must set out their annual plans in an Annual Performance Plan, published in March. These annual plans must also give effect to the 5-year strategic plan of the department, agreed at the start of the government’s term.
  • The Annual Performance Plan provides a breakdown of the procuring entity’s objectives into quarterly targets.  
  • For example, the President may say in his SONA “government will replace mud school structures in the Eastern Cape with proper infrastructure”. This must be reflected in the Strategic Document and Annual Performance Plan of the Eastern Cape Department of Education.

Municipalities’ planning cycle

Municipalities have a slightly different planning and budgeting process and a financial year that runs three months later than the national and provincial departments, from 01 July – 30 June.


The Treasury Regulations read with Public Service Regulations require the public to be consulted in this planning and budgeting process. This requirement is based on section 195(1)(e) of the Constitution. People's needs must be responded to, and the public must be encouraged to participate in policy-making.

1.5 - Identifying upcoming procurement

In order to meet the targets in an entity’s Annual Performance Plan, it must procure certain items. It must, therefore, plan what it will procure. This information is captured in a Procurement Plan.

Need identification

  • The planning of a particular procurement begins with identifying the need that must be met - as informed by the Procurement Plan. 
  • In identifying the need to be met, the public’s needs must be responded to and the public encouraged to participate.

1.6 - Procurement plans

  • If a Department or Municipality sets a target, for example, of five schools in the 3rd quarter of the year (Q3), the requirement for services to build the schools should be reflected in the Procurement Plan for quarter one (Q1) and quarter two (Q2).   
  • A procurement plan contains all tenders that a procuring entity will undertake in a year. These tenders must be advertised, indicating what government plans to buy when.
  • The procurement plan is revised quarterly – and is published by the OCPO
  • The provincial treasuries should publish the provincial procurement plans for provincial departments on the Provincial Treasury websites
  • Through their Procurement Plans, the Accounting Officers are stating they have the money to procure the services or goods contained in the procurement plan.
  • Organs of state must conduct needs assessments and market/commodity analyses which will inform their procurement decisions.

System Weaknesses

  • There is no space for public participation in the procurement planning process of any of the three levels of government - results of needs assessments and market/commodity analyses are not published. 
  • Procurement plans are not made available to the public which makes monitoring of these plans impossible. 
  • All organs of state must report on all procurement activities and performance to their relevant legislative oversight body, eg SCOPA or their line function portfolio committee, but this is often too late to PREVENT maladministration or corruption.

Requests for Information (RFIs)

  • This process is used to gather information from the market on what kinds of products or services are available. It will not result in the award of a tender. 
  • Once this process is finished, the procuring entity will use the information gathered to draw up the specifications which will be included in its RFP.  
  • A Bid Specifications Committee may assist in determining the specifications of a particular tender.
  • Some public entities note that they have, due to internal strife or financial strain, lost the internal skills to effectively determine the specification of a bid. They are forced to hire and pay consultants to write bid specifications.

Bid Specifications Committees (BSCs) and meetings

  • An ad-hoc committee appointed in writing by the procuring entity to SPECIFY what needs to be procured.
  • This committee may include the end-user and an external specialist, if necessary. 
  • The BSC makes recommendations, on the bid specifications, to the accounting officer or his/her delegated official for approval.
  • The BSC approves and finalises the specifications, evaluation criteria and all other tender documents for a tender.

System Weaknesses

  • BSC meetings are not open to the public and minutes of these meetings are not made available to the public. It is therefore not possible for the public to participate in this process before the bid specifications have been finalised. The public will only have sight of tender documents (including the specification) after finalisation.
  • Bid Specification Documents must be published and publically available even after a tender is awarded so that procurement processes can be fully monitored.

1.7 - Glossary


The process of buying goods or services using public funds.

Organ of state

  • Every organ of state must procure when it spends money
  • Every organ of state must have a policy to guide its procurement practices, this is known as a supply chain management policy.
  • Organs of State include national departments, provincial departments, municipalities, state-owned entities and other public entities, like water boards and other regulatory bodies.
  • All national and provincial public entities are listed in the Public Finance Management Act (PFMA) 
  • A list of municipal entities, established in terms of the Municipal Finance Management Act (MFMA) can be found here. City Power in Johannesburg is an example of a municipal entity. 
  • The PFMA determines how national and provincial organs of state must spend public money and the MFMA determines how municipal organs of state must spend public money.

Accounting officer / Accounting Authorities

  • The accounting officer in a public entity is the individual, or structure, who/which is ultimately responsible for the procurement process, as well as all other financial management of public entities. 
  • Every government department (national or provincial) and constitutional institution will have an Accounting Officer. Every public entity will have an Accounting Authority. Accounting Officers and Accounting Authorities have similar responsibilities. 
  • In a provincial department, the Accounting Officer is the HOD.
  • In a national department, the Accounting Officer is the Director-General.
  • In a public entity, the Accounting Authority is usually the Board. 
  • In a municipality, the Accounting Officer is the municipal manager
  • In a municipal entity, the Accounting Officer is the CEO of the municipal entity. 
  • Accounting officers sign contracts between public entities and the suppliers / service providers. 
  • Other officials may sign these agreements on behalf of the Accounting Officers, but only if there has been a lawful, formal delegation of the power to do so, by the Accounting Officer.

Constitutional Institution

These are institutions created directly by the Constitution, for example the South African Human Rights Commission, or the Public Protector.


Public Finance Management Act 1 of 1999.


Local Government: Municipal Finance Management Act 56 of 2003.

State-owned entity

This word has no real meaning in terms of the PFMA and MFMA. What is commonly referred to as state-owned entities like Eskom or Transnet are actually known as “public entities” in terms of relevant legislation.

Public entity

Public Entities are national or provincial bodies and are defined in the full PFMA in section 1. They are bodies which are fully or substantially funded through public funds and are accountable to either the national or provincial legislatures.