LTSM

The way forward for centralized procurement

Report on the Meeting between ESP Consulting, who have been commissioned by the Treasury to compile a report recommending methods of sourcing Learner Teacher Support Materials (LTSM) in SA and executive members of the SA Booksellers Association.

The Chair of the meeting, Ms Shamela Rajah began the meeting by saying that a decision had already been taken at the highest levels in the Department of National Education and in the Treasury to proceed with centralised book purchasing for both Section 20 and Section 21 schools. She will recommend the provision of a pack to all school children in the country. If there are insufficient funds for this, some of the lower quintile schools might receive less. Where Section 21 schools have their own funds they will have to spend them using the new system. Provision will be made for the replacement of 15% of the books each year, with new sets every five years.

The department needs to purchase in a way that ensures reliability of supply, good value (enabling the department to supply more books), promoting the national transformational objectives and supporting a sustainable retail book trade.

The quality of the books’ content was not an issue, as this will be established before a book is chosen by the Department of Education (DOE) to be on the prescribed book list. Teachers have expressed a preference for a selection of books for each grade for each subject, and though the number of books are yet to be decided, it is likely that there will be some choice. The supplier will however be responsible for seeing that books supplied are properly bound and that they are in good condition. If the books require replacement due to a defect the suppliers will have to do this. It was noted that this had been a problem in some cases with the managing agents.

Ms.Rajah’s research indicated that books were supplied in most cases at discounts of from 13.5 to 16.5% off the publishers’ prices. There were occasions where much higher prices were charged and some where they were much lower. The members present believed that SA Booksellers Association members would agree to supply at a maximum of published prices less 10% (based on publishers allowing booksellers a discount of 30 %).

Ms Rajah pointed out that price competition was essential and said her proposed recommendation was that a list of suppliers should be made up. All will have to be on the Central Suppliers Database and will have to have listed themselves as suppliers of books or stationery. Whenever a school requires books, the order will have to be put onto a specially designed website. Three of the suppliers on the list will be chosen by the programme and they would be invited to tender. The lowest tenderer would be awarded the tender (after taking into account the BEE preference percentages allowed for in regulations), and their name will then go to the bottom of the list and they will not be eligible for another order for a time. She said this will be to the disadvantage of the larger retailers, but it met the transformational requirements of the department.

Ms Rajah said at present all the largest suppliers (the top twenty) are managing agents or tenderers for the departments’ bulk orders, and that she did not think this promoted a sustainable retail trade. It will be suggested that the “tender by school” system should apply also to the stationery requirements. Statistics did not show that the managing agents supplied books more cheaply than the booksellers. She still wishes to consult further with the DOE and would like to have the new system ready for implementation in 2018 subject to approval.

The SA Booksellers Executive gave the following reply after lengthy discussions:

The SA Booksellers Association agrees with five book titles and the centralization of procurement which will ensure the economies of scale, timeous delivery of books and timeous payment.

The members present believed that SA Booksellers Association members would agree to supply at a maximum of published prices less 10% (based on publishers allowing booksellers a discount of 30 %.)

The SA Booksellers Association also indicated their importance on the chain because of their expertise as content advisors to the schools when such consultations is needed.

They welcomed the fact that the managing agents would, if the proposals were accepted, no longer take the bulk of the business.

It was also noted that publishers hold exhibitions with booksellers, therefore booksellers “become responsible” for the quality standards of the books.

Discussion was engaged around the possibility of implementing an automated procurement system that will be accessible at a school level, and catalogue will be made available on the system where orders will be placed at a school level, consolidated at a provincial level and a bulk order issued at a national level.

The SA Booksellers Association raised a concerned regarding the remote schools without internet connection. Ms Rajah said that most Provincial Education Departments have centers or districts with internet access which could be used, and most schools’ heads have access to internet via cellphones.

Another concern was raised regarding open tender for centralized procurement, that the business would not go to booksellers, but rather to many one-man band suppliers who do not have any commitment to bookselling.

The SA Booksellers Association believes that there should be a sustainable retail book trade, where schools can have unrestricted access to exchange, return and/or replace lost books.
All the stock holding educational booksellers presently survive on the business of the S 21 schools and, to a lesser extent, on the support of private schools and they are concerned that much of this will be lost to them.

The costs of distribution vary depending on how far away the school is from the booksellers. It was indicated that a proposed procurement system can be designed to choose tenderers closer to the schools. Even so, costs of distribution may be high for some remote schools.
The SA Booksellers Association accepts the need for competition and notes that there is already a great deal of price competition among retailers.

The SA Booksellers Association suggests that being on the Central Supplier Database should not be the only criterion for being a supplier of books but also include a requirement for a supplier/tenderer to have a stock of books throughout the year of not less than R75,000 and an area in a shop allocated to books of not less than 25 square meters. This area should be accessible to the public during normal business hours.

Requiring such a commitment to bookselling, though a small one, would ensure that all genuine booksellers would have access and that those with no involvement in the industry would be excluded.

This method has been managed by the Education Department in the past. There were problems with little suppliers, one of them being that they do not have the capital to buy the books from the publishers prior to delivery, and the publishers were reluctant to give credit to businesses without good credit records because so many of them failed to pay.

The SA Booksellers Association considers the proposals to have many sound elements and appreciates the fact that we have been consulted and that the interests of small businesses have been taken into account in the formulation of the planned system.