COMPENSATION FUND

Request for Bid to Turnaround the Compensation Fund with a view to modernise its operations in line with meeting its Service

Delivery expectations with improved governance and controls

Briefing session 12 March 2013

Topic

Welcome & IntroductionsGovernance, rules and proceduresRFP overviewRFP ModelRFP Pack Content

Bidder’s Proposal FormatPricing TemplatesB-BBEE Overview

Terms of Reference

Agenda

Welcome and introduction

Briefing Session

Purpose

Explain selected concepts, procedures and other aspects of the RFPConfirm formal registration of Bidders for notices and other communications

It may containadditional informationadditional rules that must be adhered to

It does notcover every item in the RFPreplace any of the issued RFP materialrelax any of the RFP rules unless communicated separately in writing

The conference slides will be distributed electronically to all registered Bidders via email.

The RFP pack remains the primary source of information for the Bidder to respond.

Procedures during sessionNo questions will be answered during the presentations.

Write down your questions and hand them in at the end of the presentations and / or

Email questions CF‐Turnaround@labour.gov.za

Questions :- Open date 12 March 2013 Close date 15 March 2013

Question :- Response date is no later than 20 March 2013 to all registered bidders attending the briefing compulsory session via email and labour.gov.za website

Procedures during session

Today....

The agenda is focused on review and the most pertinent themes during the session that is required to facilitate and give meaningful context to the RFP and tender procedures.

All questions handed in will be responded to in writing after the conference.

The session is being recorded

Registration and materialRegistration –complete compulsory registration requirements at reception desk

Attendance register

Registered address

Contact and correspondences details

Question template – will be handed out at the session

Governance requirements

• Strict communication channels– Bidders will be disqualified for non-

compliance• No solicitation of information will be allowed

other than by prescribed channels• Deadlines to be met• Only prescribed submission format of the

response to bids will be accepted

Rules of engagementOther than the contact for the RFP below:

Bidders may not contact CF nor Department of Labour other than the stipulated contract person (s).

All contact relating to RFP matters are only to be addressed to CF Procurement :

Khanyi Mthethwa - 012 3136393Khanyisile.mthethwa@labour.gov.za

Talifhani Netshivhangoni – 012 3136355Talifhani.Netshivhangoni@labour.gov.za

COMPENSATION FUND

Terms of Reference of the Turnaround the Compensation Fund

BackgroundThe Compensation Fund is a public entity of the Department of Labour.

The mandate of the Compensation Fund is derived from Section 27 (1)(c) of theConstitution of the Republic of South Africa. In terms of this act, all SouthAfricans have a right to social security. The Compensation Fund is thenmandated to provide social security to all injured and diseased employees.

The Fund administers the Compensation for Occupational Injuries andDiseases Act no. 130/1993 as amended by the COIDA 61/1997.

The main objective of the Act is to provide compensation for disablementcaused by occupational injuries or diseases sustained or contracted byemployees, or for death resulting from such injuries or diseases, andprovide for matters connected therewith.

BUSINESS CAPABILITY CHALLENGES

PEOPLE PROCESSES SYSTEMS

‐ Lack of efficient performance management and monitoring

‐ Low skills level and in‐sufficient training

‐ Lack of accountability  by managers and supervisors 

‐ No service orientation culture and staff motivation

‐ Fear of change and a preference to doing what is known

‐ Manual orientated processing

‐ Centralised processing organisation

‐ Numerous non value and duplicated tasks

‐ Highly segmented areas of operations – no workflows or integration

‐ Not structured for effective performance

‐ No effective reporting or exception reporting mechanisms 

‐ Highly user dependant and based on traditional manual processes

‐ Paper based \ manual input – no electronic submission or automation of standard processes and rules

‐ No reporting functionalities ‐large reliance on service provider

‐ Poor system implementation by service provider

REFLECTIONS ON THE PROBLEM..

2 000 000 DOCUMENTSBacklogs….

To initiate a Turnaround strategy and

implementation plan for the Compensation Fund

with a view to modernisation of its operations in

line with meeting its Service Delivery expectations

with improved, administration, governance and

controls

Strategic outcome of the project

Specific objectives - summary

PMO

• Set up a PMO  ‐ CF and / or  Labour • Project Governance• Manage and implement‐ Director General (Sponsor)

Quick Fix

• Stabilizing the business and the financial management• Restoring  financial administration and controls • Audit • Remedial plan “Business unusual plan of action plan”

Future

• Develop, design and implement the turnaround plan for the CF (Future model for the CF)• Diagnostic, design and implement• Legal review and update in  terms of Government mandate• Service delivery model • Finance model ( Revenue and expenditure)• Business Process re‐engineering, systems and People 

Ideally, the primary business of the Fund is to generate income, pay out claims and manage the rehabilitation of claimants. These functions are then supported by common back‐office support services that include HR, Finance, Procurement, Information Technology, Governance and Compliance and Risk and Audit Management.

Investments Registration Submissions Claims Management

Beneficiary Payments

Case Management Pension Rehabilitatio

n

• Employer Registration

• Customer Segmentation

• Monitoring

• Employer declaration

• Contribution Determination

• Payment Management (contributions)

• Claim Registration

• Claim Pre-processing

• Claims Processing

• Adjudication• Claim status

reporting

• Payment Processing

• Approve payment

• Beneficiary payments

• Dispute Management

• Investigations• Dispute

Settlements• Recovery of

Expenses from 3rd

parties• Fraud and risk

management

• Registration• Processing• Payments• Reporting

Governance

& Com

pliance

Revenue Management Claims Management

• Implementation of Funds Strategy

• Monitoring Investments Performance

• Managing external investment managers

• Review Policy and Framework

• Reporting

• Monitoring• Restoration and

re-integration of workers

• Provision of assistive devices

• Reporting

Risk M

anagement

Support Services (HR , Finance, Supply Chain, Communications, ICT, Legal services)

Rehabilitation Management

Manage Service Delivery

IDEAL VALUE CHAIN

Source : CF Diagnostic Review

To implement a remedial plan to address

governance, controls and administration relating

to:-

1. AG queries (126 queries raised)

2. Public Protector Report

3. SCOPA’s Concerns

4. Portfolio Committee of Labour

Terms of reference

Terms of reference 3.1 Components of turnaround strategy

3.1.1 Managing the turnaround

The enabling components to manage the turnaround are turnaround leadership, stakeholder management, and turnaround project management.

3.1.2 Stabilising the business and the financial management

The CF needs to be stabilized to ensure the short-term future of the business, introducing predictability and ensuring legal and fiduciary compliance (PFMA).

3.1.3 Fixing the distressed Compensation Fund

The underperforming \ distressed entity needs to be fixed in strategic, organisational and operational terms.

3.1.4 The successful service provider will be required to:

Devise and Implement a Remedial Plan to remedy the interim crisis :-(Business unusual plan of action)

Identify the root cause or contributory factors to the issues and weaknesses identified in the business process

Perform Root Cause Analysis on finance, fraud and risk administration and management

Perform a diagnostic review of people and systems to identify weaknesses to establish controls

Develop mitigating action plan aimed to resolving, eliminating, or minimising the incidence of identified issues, weakness and lack of controls

Develop, design and implement the turnaround plan for the CF (Future model for the CF):-

Diagnostic of the alignment of the strategic objectives of the CF against its shareholders mandate and objectives

Perform a legal review with the aim of enhancing service delivery. The legal review must be included in the turnaround plan.

Develop and implement a change management program addressing all elements of the program

Map and design Business Processes for the Fund for core and support functions of the CF

Provide and align best practice benchmark studies to the CF Develop, Review and Update Governance Policy and

Procedures as may be required Facilitate the turnaround leadership Develop, design and implement the turnaround approach and

plan for the CF Implement the turnaround plan for the CF

People

• Review Employment Contracts, Score Cards and Performance management, and redefine these as may be necessary

• Develop appropriate organisational structure • Develop job descriptions covering posts in the revised organisational

structure• Perform a complete skills audit across all levels of staff and evaluate

current skills against the skills required to perform the job requirements

• Evaluate suitability of current staff and perform a best fit placement of staff into positions where they are best trained and able to perform in accordance with the organisation’s goals.

• Manage the implementation of the new Human resource organisational structure in accordance with best HR practice

Business Processes and Systems

• Review, Map, Optimise and Define all Business Processes across the entire value chain

• Review, Map, Optimise and Define all Systems Processes to close the gaps in governance and controls across the entire value chain

• Develop mitigation strategies for work segmentation, Risks and Controls

• Develop segmented workflows to optimise employee load balancingand turnaround times on tasks and service delivery elements

• Business systems and architecture review and to make recommendations for optimisation

• Review, design and implement business intelligent information reports and advise a business specification to implement Business Intelligence (BI)

• Develop Dashboards and Radars to facilitate good and timeousmanagement information to feed into effective management processes

3.1.5 Project Office

Establishment of a Project Office to manage projects relating to the scope of work and delivery of the turnaround plan and to co-ordinate activities of the remedial and turnaround implementation plan at a location determined by the Director General of Labour.

Resource the project office with resources to manage both the remedial and modernisation of the CF.

3.1.6 Actuarial and Audit Professional Services (remedial plan)

An analysis of the Compensation Fund conducted provides for the estimation of ± 600 000 claims that has remained unpaid for a number of years.

The objective of the assignment is to conduct an actuarial valuation to determine the value of these claims as well as the impact thereof on the financial reserves of the Fund.

A comprehensive valuation report highlighting the work carried out, the methodology used and the findings and recommendations arising from the valuation should be produced.

The audit is an essential component of the diagnostic study which aims to assess the financial capacity of the C F.

Key deliverables of audit relating to the Management letter will be to:-

1. compile or update the Fund’s action plan in response to the AG findings and Public Protector reports,

2. conduct priority assessment of the action required to achieve the best results within project timeframes.

3. allocate responsibilities with timelines for the priority areas identified following the review and assessment.

4. make recommendations that are aimed at improving the financial reporting process going forward.

Key deliverables of audit will be to:-

5. design and implement general financial management in terms of GRAAP and PFMA

6. establish controls and procedures that are aimed to mitigate and eliminate risk and fraud.

7. review and optimise business processes to ultimately ensure that all amounts received by the Fund in terms of PFMA are receipted, completely, timeously and accurately deposited and that all monies transferred and paid by the Fund, for claims and other Fund expenditure are accurately, efficiently and appropriately utilized and substantiated.

3.1.7 Output Required

The project deliverables will be to manage the implementation of the turnaround of the CF in terms of the scope of work indicated under paragraph 3 (RFP).

METHODOLOGY

4.1. The service provider will be required to supply a methodology statement detailing the steps that will be employed to complete the project work, a detailed costing and the time frames in which the project will be completed in line with the expected completion date.

The methodology statement should reflect the following aspects which would be used as criteria for functionality during assessment of the submission:

(a) Proof and expertise must be demonstrated of a successful turnaround of a company/ public entity/ government department.

(b) Provide the approach (how) your company will deliver the scope of work outlined under paragraph 3. Provide reference sites.

(c) Proof of expertise and experience of the core project team covering business management, governance and audit compliance with IFRS, PFMA and Treasury Regulations, Monitoring & Evaluation, Data Management, Software Systems Design, Configuration and Implementation across Wide Area Networks for distributed processing

Technical resource skills and experience in:-

• Project and programme management, • Auditing, • Accounting & Governance in public sector, (PFMA and GRAP)• Fund and portfolio management• Pension fund management• Revenue management• Financial modelling• Risk management• Change management • All aspects of Human Resource management, • Organisational development • Legal Services• Business analytical skills• Business process re-engineering • At least 1 team leader to be qualified actuary, 10 years of experience in

relevant actuarial work and supported by a Chartered Accountant with experience in internal audit work

• Experts in actuarial science (bachelor’s degree in actuarial science, 5 years of experience in pension fund evaluations and determination of fund provisions)

TIME FRAME

The project will be completed based on the project plan that will be developed with the successful bidder. However, it is estimated that the project is estimated to be completed in 24 months from the date of commencement.

COSTING

8.1 The service provider must provide a comprehensive project costing outlining the following:Detailed costing showing items and categories of costs / expenditureThe calculation of rates charged and / or a breakdown of amounts against all the envisaged consulting time

8.2. All amounts stated (for goods, products and / or services to be rendered or to be developed) must be clearly stated showing the net amount excluding VAT, the VAT charged, and the Full Contract amount inclusive of VAT.

8.3 All subsistence, travel and accommodation costs for the staff engaged in the fieldwork of the project shall be approved by both the CF’s designated project manager (within delegation of authority) and the Service Provider’s Project Manager in accordance with a project plan approved by the Director General of Labour.

The Proposal must include:

Methodology / Approach covering issues captured under 3 and 4 of the terms of reference:-

• CV’s of Key Team Members• A High Level Project Plan• A detailed Project Costing• Submission of all required compliance documentation• Provision to meet with and / or brief CF’s management

team on a regular basis

During the Bid Evaluation Stage, Service providers may be required to make presentations on their proposal if required to do so by CF.

COMPENSATION FUND

Structure of bid documents andprocurement process

Open tender

The RFP has mandatory requirements

Bidder must meet these before Bidder’s Tender will be considered for evaluation.

Bidder is strongly advised to make sure it complies fully before making decision to bid.

The CF reserves the right to exclude companies and or persons from the bidding process in terms of good governance outlined under Treasury Regulations 16.A.8.4 and 19.A.9.

Organisation, companies and / or persons who have worked and are currently working within the operations for past 4 consecutive years of the CF from 1 April 2008 till to date, will be excluded from the bidding process and bids will be disqualified.

Evaluation process

Pre‐qualification

Functional  (80/100)

Price  (90 )& B‐BBEE  (10)

Any mandatory ground  paragraph 16 and 17.No valid tax compliance certificateIncomplete  SBD’s

…etc.Qualify

Qualify

Disqualify

Unacceptable solution / risk e.g.Don’t meet threshold pointsRejection of key contract  terms …etc.

Disqualify

Not able to evaluate pricing e.g.Incomplete pricingUnable to calculate priceEtc.

Disqualify

1

2

3

Qualify Appoint 

Evaluation : Functionality

The 90/10 Principle for Bid Evaluation will apply as reflected in the table below.

Bidders who score less than 80 % of the 100 % points of the Functionality Points available for their Technical Proposal, will be considered materially unresponsive, and will not be evaluated further, having being considered to not meet the minimum threshold score.

Evaluation Category Maximum Points Threshold Score Weighted Score Technical Proposal 1890 1512 100% Total Score 1890 = 80 % out of 100 % 100%  

Evaluation Category Maximum Points Threshold Score Weighted Score Technical Proposal 1890 1512 100% Total Score 1890 = 80 % out of 100 % 100%  

Evaluation: Price and B-BBEE

90/10 evaluation in terms of PPPFA1 on contract value.B‐BBEE evaluation performed on the basis of the submitted B‐BBEE certificate.2Statutory formula2 applied to the Bidder’s submitted pricing.1 Preferential Procurement Policy Framework Act 5 of 20002 National Treasury Regulations 2011 to the PPPFA

ELIMINATION OF PROPOSALS ON GROUNDS OF FUNCTIONALITY

Bids that score less than 80% of the 100% available for functionality will be eliminated from further consideration. Points will therefore not be awarded for their cost proposals or for B-BBEE Status Level of Contribution

Points Awarded for BBBEE Contribution

B-BBEE Contributor Level Number of Points (80/20 system)

Number of Points (90/10 system)

1 20 10

2 18 9

3 16 8

4 12 5

5 8 4

6 6 3

7 4 2

8 2 1

Non-Compliant Contributor 0 0

PriceAPPENDIX H

Price should give a cost per resource in terms of levels

Note: any cost not reflected on the pricing schedule will be excluded from the evaluation process and the approved fee structure

Prices must include VAT.

(value add services proposed will be in favour of the points allocation to the bidder)

PAYMENTS WILL BE ON ORIGINAL DOCUMENTS ONLY

RFP Pack ContentsRFP pack is organised into 6 Sections

Section 1 COMPULSORY COMPLIANCE DOCUMENTATION

Section 2 COMMENTS ON APPENDIX A (SLA)COMPLETED APPENDICES B,C,D,E

Section 3 EXECUTIVE SUMMARY COMPANY EXPERIENCE

Section 4 CV’S OF TEAM REFERENCE SITES VALUE ADDED SERVICES

Section 5 TECHICAL / FUNCTIONAL RESPONSE APPENDIX F

Section 6 COMPLETED APPENDIX H (PRICE)

Bidder’s Proposal

Each Proposal section must be separately wrapped and must contain:

Two hardcopyA4, ring binders

One electronic copyCD or DVD

The hardcopy must be signed and must contain the original signatures.

Please hand in your questions

and/or email questions to

CF-Turnaround@labour.gov.za