Contract negotiation and administration

We negotiate collaborative National Contracts and Framework Agreements as well as Individual Contracts for specific institutions. Wherever possible individual contracts are designed on a Transversal basis so they can easily be customised for use by all Members.

Collaborative contracts and associated savings are fundamental indicators of the Consortium’s performance.

During the 2021 financial year PURCO SA managed more than 804 individual contract agreements with 598 contracted suppliers across South Africa and Namibia. Overall procurement spend by Members via PURCO SA contracts started to recover to pre-pandemic growth patterns during the year, although there was a clear shift in how funds are applied.

Types of contracts
PURCO SA manages three types of contracts.

  • National Contracts or Framework Agreements are concluded on behalf of and are accessible by all Members. These umbrella agreements are typically for products and services required by all Members, where the collaborative purchasing influence of the Consortium can be brought to bear.
       Examples of National contracts include travel, catering, stationery and cleaning supplies. The framework sets out the conditions under which the goods or services can be purchased throughout the period of the agreement, including terms such as price, quality, quantities and time-scales.
       Frameworks are beneficial for the PURCO SA buying community; they save Members from the need to issue repeated tenders or negotiate new contracts for common goods, works or services; and they lead to economies of scale, savings and reduced administrative burden.
  • Individual contracts are concluded on behalf of specific Member institutions and are typically unique to that institution. Examples include construction projects, computer systems development and student transport services.
  • As part of PURCO SA’s commitment to collaboration, PURCO SA enables its Members to “piggy-back” on each other’s individual contracts. “Piggy-backing” takes place when a Member elects to procure goods or services from a service provider who is already providing the same goods or services or similar to another Member (the procurement of which took place in the ordinary course). Importantly, the “piggy-backing” Member must enter into a contract that is identical or similar with respect to terms and conditions to the contract concluded between the service provider and the original procuring Member. The terms and conditions to facilitate such “piggy- backing” are detailed in the tender documents, contracts and SLA’s.

Spend via PURCO SA contracts
Spend during 2021 reached R1.83 billion, up from R1.72 billion in 2019-2020. The lower than usual 6% increase was unsurprising as Members’ reassessed spending, reviewed operations and implemented austerity plans as a consequence of the Covid pandemic.

Although offset by exceptionally vibrant Construction and Infrastructure investments, the modest growth was largely attributable to sharp declines in the Travel, Student Transport, Catering and Printing and Copying categories as Members adapt to digitised and virtual operating models.

Our TVET Members were particularly active, with spending through PURCO SA contracts up by 60.3%. Since TVET institutions first joined PURCO SA their spending has shown annualised compounded growth of 67%.

Member savings

Overall, the resultant savings increased by 17% from R204 million to R238 million, while rebates to Members rose 16.2% from R30.7 million to R35.7 million. In total, PURCO SA has created savings and rebates of R1.67 billion since the Consortium began measuring savings in 2012.