Procurement


ABBREVIATIONS

B-BBEE : Broad Based Black Economic Empowerment
CIDB : Construction Industry Development Board
LHDA : Lesotho Highlands Development Authority
LHWC : Lesotho Highlands Water Commission
LHWP : Lesotho Highlands Water Project
SADC : Southern African Development Community
RSA : Republic of South Africa

DEFINITIONS

Broad-Based Black Economic Empowerment (B-BBEE): A form of Economic Empowerment initiated by the South African government to distribute wealth across as broad a spectrum of previously disadvantaged South African society as possible.

Construction Industry Development Board (CIDB): The CIDB was established to provide leadership to stakeholders and to stimulate sustainable growth, reform and improvement of the construction sector for effective delivery and the industry’s enhanced role in RSA’s economy. Also, to establish a national register of contractors and of construction projects to systematically regulate, monitor and promote the performance of the industry for sustainable growth, delivery and empowerment.

Southern African Development Community (SADC): An inter-governmental organisation of 15 southern African member states, its goal is to further socio-economic cooperation and integration as well as political and security cooperation among its members. It complements the role of the African Union.

1. THE LHDA PROCUREMENT OBJECTIVES

The main objective during the construction and operation phases is to procure the services of consultants, service providers and contractors with the skills, expertise and commitment to perform their duties and obligations under the project to internationally recognized standards.

The following are central to the project procurement processes and procedures:

  • 1. To comply with the spirit and objectives of Article 6 of the Treaty and Articles 10 and 11 of the Phase II Agreement, as well as the provisions of the Lesotho Public Procurement Regulations of 2007, Part III(12), which are to foster competiveness and transparency while increasing participation of individuals from Lesotho, South Africa and SADC member states.
  • 2. To maximize procurement opportunities for Lesotho and South African suppliers.
  • 3. To minimise the utilisation of imported goods, skills and labour, where applicable, within the ambit of the laws governing Lesotho.
  • 4. To maximise skills and technology transfer through the training of individuals and enterprise development opportunities for Lesotho-based companies and black owned companies in the Republic of South Africa.

To effect the above and to encourage socio economic change in the region, LHDA will implement preferential procurement principles focusing on the benefits that will accrue to the implementing countries – Lesotho and South Africa - which are the parties to the Treaty.

2. LHDA PROCUREMENT PRINCIPLES

LHDA shall apply the following principles during the procurement of works, goods and services:

  • 2.1 Cost Effectiveness - Ensures that the cost of procuring the goods and services is at least commensurate with the potential benefits i.e. cost benefit analysis will be conducted. Cost effectiveness implies the best available outcome when all relevant costs over the procurement and life cycle of the product or service are considered.
  • 2.2 Competitiveness - Ensures that adequate and timely information is provided to all suppliers to enable them to bid competitively. The instructions to tenderers shall be unambiguous, transparent, consistent and easy to follow.
  • 2.3 Transparency - Ensures that potential suppliers have equitable access to procurement opportunities and that available opportunities are announced in the most appropriate medium of communication. The quotes or tenders will be evaluated on the basis of pre-determined and communicated criteria.
  • 2.4 Quality - Ensures the best quality of works, services or product that meets expectations/requirements. Evaluation will not focus solely on the lowest cost at the expense of performance.
  • 2.5 Preference - Preference will be given to suppliers, including contractors and consultants from Lesotho, South Africa, the SADC member states and others, in that order, provided that the provisions outlined above are satisfied.

Ethics and fair Dealings - Ensures equal treatment of all suppliers, consultants and contractors whilst promoting the broader procurement objectives. All stakeholders shall conduct themselves and their business with integrity, professionalism and fairness. All suppliers, consultants and contractors shall be required to disclose any interests that may present an actual or perceived conflict. Tender adjudication team members shall sign declaration of conflict of interest and confidentiality forms.

In conducting its business the LHDA is committed to upholding the highest principles of business ethics and conduct. To this end, bidders for work under the LHWP shall sign a declaration to abide by, and be bound by, the LHWP Anti-corruption Policy.


3. PROCUREMENT GUIDELINES

The procurement policy and its guidelines are aligned to the provisions and spirit of Article 10 of the Phase II Agreement.

  • Guideline for Goods, Services and Works above M 500 000.00
  • 3.1.1 Quotes or Tenders will be evaluated on the basis of pre-determined criteria which will be based on Quality/functionality (technical ability/technical applicability), Preference and Price (financial viability).
  • 3.1.2 Firms previously involved or implicated in corruption as provided for in the Anti-corruption Policy may be excluded from any involvement in the Project.
  • 3.1.3 Contracts will be packaged into the smallest components practicable with due consideration for potential effects on quality of service, logistics of implementation and impacts on the project schedule.
  • 3.1.4 No single firm will be allowed to tender (as a Joint Venture member, in association with or as a sub-contractor/consultant) with different entities for the same contract, the exception being highly specialist work, at the sole discretion of LHDA. In such cases, the applicable sub-contract work will be identified and clearly communicated in the Terms of Reference for the relevant contract.
  • 3.1.5 Lesotho firms are as defined under Article 1 of the Phase II Agreement. Newly registered companies (After 2011) will be considered as Lesotho firms only if they are registered under the Lesotho Companies Act No. 25 of 1967 as amended and more than 75% shareholding is held by Lesotho Nationals (Valid Lesotho passport holder)
  • 3.1.6 A margin of preference will be applied to local and regional firms whilst not excluding international firms from participating where special expertise and capacity are needed. Preference points will be based on the following:
    1. A. For Lesotho firms - Shareholding and participation by Lesotho nationals.
    2. B. For South African firms - Recognition level as per Broad Based Black Economic Empowerment (BBBEE Amendment Act No 46 of 2013) and participation by Lesotho nationals.
    3. C. For International Firms - Participation by Lesotho & Republic of South Africa (RSA) nationals.
    4. D. For All Firms - Engagement of Lesotho & RSA nationals & women in key positions
    Preference margins shall be determined per contract and approved by the Lesotho Highlands Water Commission.
  • 3.1.7 Consideration will be given to the use of labour-intensive construction methods in contract specifications to increase participation of local workers provided no significant impact on the project schedule is anticipated.
  • 3.1.8 In case of all building infrastructure (houses & offices), only contractors with 10 years’ registration with the Building Design Services of the Lesotho Ministry of Public Works and Transport or South African companies with 10 years’ experience, appropriate Construction Industry Development Board (CIDB) Registration and Level 2 BBBEE rating or better shall be eligible to bid.
  • 3.2 Guideline for Goods, Services and Works below M 500 000.00

    Contracts with a value less than M500 000.00 may be sourced through the obtaining of three (3) requests for quotations (RFQ) from pre-approved LHDA suppliers, with the proviso that:

  • 3.2.1 Such suppliers have submitted Valid Tax clearance Forms, copies of Certificates of Incorporation if a company, and in Lesotho, a valid Traders licence to LHDA, and LHDA has validated their existence by doing an inspection of their premises, if not a national, listed or public company.
  • 3.2.2 A waiver of the prerequisite three (3) quotations for contracts must be approved by the Chief Executive, and for contracts in excess of M50 000.00, a further approval from the LHWC must be obtained.

4. SPECIAL RULES FOR LHWP PHASE II

LHWP Phase II has two distinct components, namely: the Water Transfer Component and the Hydro Power Component. In order to achieve equitable distribution of work and to prevent monopolisation by others, the following restrictions shall apply:

  • 4.1 The Water Transfer Component
  • 4.1.1 The dam and tunnel contracts will not be awarded to the same firm or Joint Venture. (This rule will apply to the Design & Supervision Contracts and the Construction Contracts).
  • 4.1.2 Subject to 4.1.1 above, a single firm or Joint Venture will be allowed to participate (as a Joint Venture member, in association with or as a sub-contractor/consultant) in a maximum of six (6) contracts for others and a maximum of eight (8) contracts for Lesotho firms, provided that the cumulative total value of contracts for which such a firm or Joint Venture participates does not exceed the amounts shown in the table below.
    NATURE OF WORK CEILING AMOUNT CONDITION
    Engineering - Consultancy M 180 million The ceiling amounts exclude contracts related to the main works i.e. dam, tunnel and main access road, major bridges and RAP for the reservoir.
    Environment - Consultancy M 70 million Entities participating in the main works will be limited to a maximum of 4 contracts for others and to a maximum of 6 contracts for Lesotho firms.
    Combined Eng. & Environ. Consultancy M 250 million
    Contractor - Construction M 400 million
    Other N/A

    Notes

    1. 1. The above restrictions will apply to Phase II contracts advertised after August 2014, save in the event that the ONLY qualifying tenders are from entities which have already hit the ceiling amount or maximum number of contracts.
    2. 2. In order to enable potential tenderers to plan and formulate their tender strategies, a list of potential contracts to be issued under Phase II will be available at LHDA offices and will also be published on the LHDA's website. This list will be updated from time to time.
  • 4.1.3 To give effect to Article 10(c) of the Phase II Agreement, the percentage allocation of work for each infrastructure contract will be determined on the basis of complexity of work, operational experience of the Consultants and Contractors as well as disbursements under other contracts already issued under the infrastructure component (including Feeder Roads) with the ultimate aim of achieving (on aggregate) equal distribution of work on monetary basis between Lesotho and South Africa firms.
  • 4.2 The Hydropower Component
    As and when more information about the extent of the scope and potential number and type of contracts becomes available, the Special Rules for Phase II will be amended to accommodate the Hydropower component.