Provincial Treasury Updates Its Price Index for Procurement

OCTOBER 21, 2014

Provincial Treasury has updated its Price Index that “provides departments with a schedule of prices that may be considered reasonable for certain goods and services”.

Part of the total cost containment exercise, the price index aims to ensure that departments “achieve value for money” when they procure the items that are listed.

The new price index came into effect on October 1.

Treasury says that preference points in terms of the 80-20 system for contract values of less than R500 000 “were used to determine threshold values, by distinguishing between Nelson Mandela Bay and Buffalo City as the metros, secondary urban areas such as Mthatha, Queenstown and Grahamstown and rural areas (all other regions).

It explains that prices were obtained by sourcing information from StatsSA, obtaining quotations directly from suppliers and physical visits to retailers.

These prices were used to determine the average prices which were then reduced by 5% “to factor in the bulk discounts that could be achieved considering the volumes as well as suppliers souring the items at wholesale rates rather than retail rates.

"Thereafter the average prices were increased by a percentage equal...to factor in logistical and other cost escalations”.

Nelson Mandela Bay and Buffalo City received 5%; the secondary urban area 10% and rural 15%.

What this meant in practical terms was that the Eastern Cape average price for a 4GB memory stick is R89.92; the purchase price acceptable in Nelson Mandela Bay R94.42; in the secondary towns R98.91 and from the rural areas R104.41.

For an 8GB memory stick the four prices are R102.69; R107.82; R112.95 and R118.09 respectively.

Treasury states that when procuring an item from the price index list, the supply chain management practitioner must determine in which region the business is situated. - MetroMinutes.

 

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