Targeted Procurement provides
employment and business opportunities for marginalised / disadvantaged
individuals and communities – referred to as the “Target Groups”.
It enables social objectives to be linked to procurement in a fair,
transparent, equitable, competitive and cost effective manner.
Targeted Procurement is effective in establishing new business linkages,
particularly between large and small businesses.
Targeted Procurement, through a variety of techniques, provides
opportunities for participation by targeted enterprises. On small
contracts having a value below a predetermined financial threshold, direct
preferences are accorded to targeted enterprises to tip the scales in
their favour. On contracts above a financial threshold, bidders are
required to compete on the basis of both that which is to be constructed
or maintained (the product) and the social benefits which target groups
(business for targeted enterprises and / or employment for targeted labour)
may derive in the execution of the contract (social deliverables).
Technical specifications are used to define the product and to set out the
acceptance criteria relating thereto. Resource specifications are used to
define social deliverables and the acceptance criteria relating thereto.
These specifications not only define the social deliverables which are to
be realised in the process of delivery, but also set out the manner in
which they can be achieved, measured and monitored. They accordingly
enable bidders to quantify the social deliverables which they are prepared
to offer during the bidding stage of the procurement process. Contracts
was awarded to the most advantageous offer, based on a balance between the
tendered price and the tendered deliverables in respect of targeted
groups. Sanctions are applied to contractors who, in the performance of
their contracts, fail to deliver their contracted social deliverables.
The Targeted Procurement approach of making the social benefits just one
of the criteria relevant to the contract award, which must be balanced
against other criteria (such as price and quality) ensures that social
benefits are obtained with the minimum possible costs. This enables
companies to make use of varied sector expertise and knowledge of the
markets concerned to use the targeted groups in the most effective way
possible. Targeted Procurement also promotes business linkages between
large and small scale enterprises. Such linkages link not only services
but also materials supply and manufacture, transportation etc.
In South Africa, Targeted Procurement has been used mainly to target those
groups of society that were disadvantaged under the apartheid system. It
has however also been used within South Africa to support local economic
development, to promote growth within the small business sector and to
target the unemployed in poverty alleviation program. However, it is
important to emphasise that this kind of approach can be used by companies
and governments to target any kind of community or group or used to
underpin a range of socio-economic policies.