Question to the Minister of Finance Standing Committee - NW2728

24 November 2017 - NW2728

Brauteseth, Mr TJ to ask the Minister of Finance

Question: 1 (1) With regard to the contract concluded between SA Airways Technical and a certain company (Allen Aircraft Radio Corporation), (a) on what date was the tender for the specified contract first advertised, (b) what were the requirements to be met in order to tender for the contract, (c ) how many bids were received after the first advertisement? (d) which companies responded after the first advertisement? Question : 2 (a) why was the tender for the specified contract advertised on multiple occasions? (b) what are the full relevant details of each additional (i) placement date; and (ii) list of criteria that had to be met in the bidding process for the specified tender?

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Reply:

Question 1

1(a) The tender for the specified contract was first advertised on 16 February 2013.

1(b) A 90/10 principle was applied in accordance with the provisions of the Preferential Procurement Policy Framework Act (“PPPFA”) regulations. The requirements to be met, i.e. the evaluation criterion were follows:

CRITICAL CTRITERIA

All bidders are required to meet the following critical criteria:

Sufficiently experienced;
Equipped;
Is of sufficient sound financial standing to carry out satisfactorily any contract that may be awarded pursuant to the tender;
Must be certified for FAA and/or EASA as repair station;
Must offer an access pool or exchange basis;
Must bid on a minimum of 95% of the main list (Airbus / Boeing or both);
Must bid on a minimum of 50% of the secondary list;
Must include a proposal for reciprocal work;
Must be a 24 hour 365 service;
Must have an Internet Based Order and Reporting System; and
Must meet turnaround times as specified

Price & BBBEE Evaluation Criteria:

PRICE - 90
BBBEE - 10

Below is a breakdown of areas measured under the 90 points on price.

Area to be measured under Price	Points
Repair Rate (flight hour)	35
Base kit value (%)	5
Loan Rate (Flight Hour)	2
No Fault found rate (%)	2
BER Rate(%)	2
AD’s Mandatory (Cost Thresholds)	5
AD’s Non-mandatory (Cost Thresholds)	3
Warranties	5
Reciprocal Work (Value per annum in %)	20
Soft Factors (Completeness of bid and responses)	1
Shipping Rate (Per Flight hour)	2
Handling / Exchange rate (see template)	18
Total points	100

1(c) Nine bids were received.

1(d) The following companies responded to the first tender:

SR Technics
Sabena Technics
AJ Walters Aviation – their bid was for Boeing only not Airbus.
Air France Industries
Israel Aerospace Industries – Boeing only fleet
HAECO
AAR and SRS aviation
Lufthansa Technics
OEM Services – Boeing only very limited Airbus

Question 2

The specified tender was first advertised in February 2013 and was finally awarded in May 2016 after been advertised and retracted on only two occasions. It is important to note that in the intervening period, there were three changes in the board of directors of SAAT (the board), each with different views and strategy, which had an impact on the tender process. In the main, the reasons for multiple retractions and re-advertising were as follows:

In light of the cash-flow challenges and the drive to significantly reduce operational costs around 2013, SAAT resolved to review its major supplier contracts. These contracts include the Component support (specified contract), logistics and Aircraft tyre supply contracts. SAAT was considering negotiating for discounts and/or taking an integrated approach to awarding the said contracts.

Management had therefore requested the board to extend the contracts and delay the RFP process to provide an opportunity for the business to align the scope of the combined services to the Long-Term Strategy (LTTS); also to consider a number of smart solutions available within the global MRO industry.

Initially, SAAT’s objective was to pursue an integrated solution to the components Support and Logistics/shipping costs in order to not only reduce costs of the individual contracts but to also derive benefits out of scale discounts through joint procurement. In addition to which, SAAT would also pursue localisation as part of the award of the Tyre Supply contract.

Around April 2013, there were discussions about a possible merger between SAAT and SA Express MRO, and a possibility of Denel Aviation lagging behind. A turnaround strategy document was drafted for discussion. Because of this, an original extension on the Component support agreement was granted until the end of March 2014, the period, which the potential merger was envisaged to have been finalized.
Management requested the board to allow the Supply Chain Management (SCM) team to test the market so as to understand what are the normal prices on the market for component tender. SAAT has had a contract with Air France all along, as a result the only pricing the company understood was that by Air France, which was far more expensive that what was out on the market. The cost compression initiative was already applicable in this period therefore, SCM was obligated to obtain as much savings as possible from this tender to reach their target.

The request for extension was made to the board, and SCM only offered to extend the contract with Air France after they agreed to give SAAT a discount of 400 000 USD. This amount contributed towards the Cost compression

Furthermore the retraction was effected as a risk mitigation measure on the part of SAAT to ensure that preferred bidder is able to deliver on the contracted services.

First tender

As per responses under Question 1 above.

Second Tender

Date of issue: 29 October 2014

Closing date: 2 December 2014

Evaluation Criteria:

SIGN-OFF SHEET – RFB AND WEIGHTING CRITERIA
PROJECT:	Aircraft Component Support II
PRODUCT:	Supply of aircraft component support service
TENDER NUMBER:	SP437/14
DATE:	28 October 2014

1. Critical Criteria

Capacity to Deliver

(Incorporating: Track Record, Experience, Service/Product Supply, Equipment, Financial Standing and previous performance of bidders)

As SAAT’s service levels and reputation as a safe transport provider is dependent upon the quality of its service, it stands to reason that quality of the GOODS/Services and products utilised to provide that service, cannot be compromised. A tender shall be evaluated in terms of their capacity to deliver.

Bidders to comment on all of the requirements below:

A bid shall not be recommended for acceptance if the CFST required to make the recommendation has any doubt, based on reasonable grounds as to whether the Bidder:
	YES/NO	COMMENT
Is sufficiently experienced and equipped
Is of sufficient sound financial standing to carry out satisfactorily any contract that may be awarded pursuant to the tender
Must be certified for FAA and EASA as repair station
Must offer an access pool or exchange basis
Must bid on a minimum of 95% of the main list (Airbus/Boeing or both)
Must bid on a minimum of 50% of the secondary list
Must include a proposal for reciprocal work
Must be willing to enter into a Partnership/Joint Venture with SAAT
Must be a 24 hour, 365 days service

Further to the above, this category will be subjected to the following scrutiny:

Internet Based Order and Reporting System
	YES/NO	COMMENT
The Bidder shall reflect the ability to report the sourcing, tracking and receiving of all components through an electronic system, that can be interfaced with any of SAAT’s Electronic Inventory Management Systems

AOG Help Desk The bidder shall respond to SAAT’s request for components according to the following priorities:
	YES/NO	COMMENT
Priority	Response Time	Dispatch Time
AOG	1 hour	First available flight (same day)
CRITICAL	3 hours	Within 24 hours
NORMAL/ROUTINE	12 hours	Within 72 hours
Component Modifications Status
	YES/NO	COMMENT
The bidder shall supply components that are of the same modification status or better as stipulated in Appendix 1B

Proposals received will be evaluated in terms of the following criteria. The method used is pre-determined and is both qualitative and quantitative and in line with the PPPFA 90/10 principle.

2. FUNCTIONALITY AND PRICING TEMPLATES

The following areas will be measured in terms of Functionality Criteria:

Area to be measured under PRICE	Template	Points
Repair Rate (Flight Hour)	Pricing Template	30
Basekit Value (%)	Pricing Template	5
Loan Rate (Flight Hour)	Pricing Template	2
No Fault Found Rate (%)	Pricing Template	2
BER Rate (%)	Pricing Template	2
AD’s Mandatory (Cost Thresholds)	Pricing Template	3
AD’s Non-Mandatory (Cost Thresholds)	Pricing Template	3
Warranties	Vendor Template	5
Soft Factors (Completeness of bid and responses)	Vendor Template	1
Shipping Rate (Per Flight hour)	Pricing Template	2
Access Pool Rate (see template)	Pricing Template	15
Reciprocal Work (Value per annum in %)	Vendor Template	20
Partnership and Joint Ventures (JV’s)	Vendor Template	10
TOTAL		100

PRICE/BEE

Please take note that Pricing and BEE would be evaluated on 90/10 PPPFA principle

Criteria	Points allocation	Points Scored
Price	90
BEE	10
TOTAL	100

Joint Venture BEE level will be scored at this phase.

The total value of Reciprocal Work and Partnership should amount to 30% of the value of the contract, and below are the requirements to be considered.

Reciprocal Work should amount to 10% of the value of the contract, and it will be based on the following:
Description of Services	YES/NO	COMMENT
Any component overflow from the company to SAAT (based on the Aircraft types related to in the GTA).
Additional work allocated to SAAT on aircraft components or components from airlines not part of the contract GTA)

Partnership/Joint Venture should form 20% of the value of the contract, and it should include (not limited to):
Description of Services	YES/NO	COMMENT
Line Maintenance in Africa
Base Maintenance from 3rd parties (C and D checks)
Joint Procurement strategy
Provide test equipment, supply drawings to build test equipment, removal of components from contract and reduction in rates ill form part of the partnership)
Marketing
Technical Training
Sharing and placing of MBK items at different Line Stations i.e. Mauritius, London.

Third Tender:

Date of issue: 14 July 2015

Closing date: 28 July 2015

Alternate third Tender:

Date of issue: 30 July 2015

Closing date: 10 August 2015

Evaluation Criteria

1. Critical Criteria

1.1 Capacity to Deliver

(Incorporating: Track Record, Experience, Service/Product Supply, Equipment, Financial Standing and previous performance of bidders)

Bidders to comment on all of the requirements below:

A bid shall not be recommended for acceptance if the CFST required to make the recommendation has any doubt, based on reasonable grounds as to whether the Bidder:
	YES/NO	COMMENT
If awarded the contract, the bidder must be able to set up, and offer services on the aircraft component immediately
Is sufficiently experienced and equipped
Is of sufficient sound financial standing to carry out satisfactorily any contract that may be awarded pursuant to the tender
Must be certified for FAA and EASA as repair station
Must offer an access pool or exchange basis
Must bid on a minimum of 95% of the main list (Airbus/Boeing or both)
Must bid on a minimum of 50% of the secondary list
Must include a proposal for reciprocal work if NIPP is applicable
Must be a 24 hour, 365 days service

Further to the above, this category will be subjected to the following scrutiny:

Internet Based Order and Reporting System
	YES/NO	COMMENT
The Bidder shall reflect the ability to report the sourcing, tracking and receiving of all components through an electronic system, that can be interfaced with any of SAAT’s Electronic Inventory Management Systems

AOG Help Desk The bidder shall respond to SAAT’s request for components according to the following priorities:
	YES/NO	COMMENT
Priority	Response Time	Dispatch Time
AOG	1 hour	First available flight(same day)
CRITICAL	3 hours	Within 24 hours
NORMAL/ ROUTINE	12 hours	Within 72 hours

Component Modifications Status
	YES/NO	COMMENT
The bidder shall supply components that are of the same or better modification status and age as stipulated in Appendix 1B

Proposals received will be evaluated in terms of the following criteria. The method used is pre-determined and is both qualitative and quantitative and in line with the PPPFA 90/10 principle.

EVALUATION CRITERIA

Functionality and Pricing Templates

The following areas will be measured in terms of Functionality Criteria:

Area to be measured under PRICE	Template	Points
Repair Rate (Flight Hour)	Pricing Template	50
Basekit Value (%)	Pricing Template	10
Loan Rate (Flight Hour)	Pricing Template	2
No Fault Found Rate (%)	Pricing Template	2
BER Rate (%)	Pricing Template	2
AD’s Mandatory (Cost Thresholds)	Pricing Template	3
AD’s Non-Mandatory (Cost Thresholds)	Pricing Template	3
Warranties	Vendor Template	3
Access Pool Rate (see template)	Pricing Template	25
TOTAL		100

PRICE/BEE

Please take note that Pricing and BEE would be evaluated on 90/10 PPPFA principle

Criteria	Points allocation	Points Scored
Price	90
BEE	10
TOTAL	100

Fourth and Final Tender

Date of issue: 8 December 2015

Closing date: 19 January 2016

CRITICAL CRITERIA

Bidders to comment on all of the requirements below:

Compliance Requirements	COMPLY YES/NO
Is sufficiently experienced and equipped
Is of sufficient sound financial standing to carry out satisfactorily any contract that may be awarded pursuant to the tender
Must be certified for FAA and EASA as repair station
Must offer an access pool or exchange basis
No Fault Found Rate (20%)
BER Rate (70%)
AD’s Mandatory (Cost Thresholds set to $3 500.00)
AD’s Non-Mandatory (Cost Thresholds set to $3 500.00)
Warranties (Cession of warranties to reduce rates)
*Supplier Development - (Must be equal to 10%** of the value of the contract. Bidder to include a proposal)
Reciprocal work* - (Must be equal to 10% of the value of the contract. Bidder to include a proposal)
Bidder must be willing to enter into a Partnership/Joint Venture* with SAAT equal to 10% of contract value
Must be a 24 hour, 365 days service

Further to the above, this category was subjected to the following scrutiny:

Systems Interface	COMPLY YES/NO
The Bidder shall reflect the ability to report the sourcing, tracking and receiving of all components through an electronic system, that can be interfaced with any of SAAT’s Electronic Inventory Management Systems

Components status	COMPLY YES/NO
The bidder shall supply components that are of the same modification status or better as stipulated in Appendix A

Turn-around times (TAT)	COMPLY YES/NO
Priority	Response Time	Dispatch Time
AOG	1 hour	First available flight (same day)
CRITICAL	3 hours	Within 24 hours
NORMAL/ROUTINE	12 hours	Within 72 hours

Phase 2

PRICE AND BEE EVALUATION

Pricing Evaluation	Points
Price	90
BEE	10
TOTAL	100

Take Note: None of the bidders were awarded any BEE points, as none of the ones that tendered with BEE partners furnished SAAT with a consolidated BEE certificate.

The elements below will be evaluated under the pricing category, and points allocated as indicated below based on the quoted bid price.

Area to be measured under PRICE	Template	Points
Repair Rate (Flight Hour)		50
Basekit Value (%)		15
Loan Rate (Flight Hour)		5
Access Pool Rate (see template)		30
TOTAL		100

Reciprocal Work should amount to 10% of the value of the contract, and it will be based on the following:
Any component overflow from the company to SAAT (based on the Aircraft types related to in the GTA).
Additional work allocated to SAAT on aircraft components or components from airlines not part of the contract GTA)
Any maintenance services contracted to SAAT for which SAAT has got capability

Partnership/Joint Venture (value) should form 10% of the value of the contract, and it should include (not limited) to:
Line Maintenance in Africa
Base Maintenance from 3rd parties (C and D checks)
Joint Procurement strategy
Provide test equipment, supply drawings to build test equipment, removal of components from contract and reduction in rates ill form part of the partnership)
Marketing
Technical Training
Provide an inventory management system that will/can be integrated into AMOS for SAAT
Sharing and placing of MBK items at different Line Stations i.e. Mauritius, London.

Supplier Development (value)– must form 10% of the contract value, and it must entail the following:

SAAT has embarked on a supplier development program with a list of nominated suppliers being approved by the SAAT Board to promote the development of our local economy.

SAAT considers any mentorships, partnerships, skills transfers, knowledge transfers, assistance in developing a local company to become sustainable in an area that a local company currently does not have capability, SMME, job creation, training and development and/or any sustainable economic growth through revenues accumulated over the fulfilment period to be possible initiatives that are considered as supplier development. Other initiatives include research and development and/or technology transfer. As a result, bidders are requested to supply a proposal on how and what they would impart in terms of skills /training/technical information etc, to a local South African vendor.

Bidder to indicate what value they would place on each area of development, based on the above, which they would be imparting to the local vendor.

Source file

RNW2728-171124.docx

24 November 2017 - NW2728

Brauteseth, Mr TJ to ask the Minister of Finance

Reply:

Source file

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