Procurement of locally manufactured valves and actuators strengthened

National Treasury has published the updated Instruction Note stipulating the minimum threshold for local production and content for valve products and actuators.

The Valve and Actuator Manufacturers Cluster of South Africa (VAMCOSA) has announced that on 11 February 2016, National Treasury published the updated Instruction Note stipulating the minimum threshold for local production and content for valve products and actuators.

The updated Instruction Note provides clarity on topics such as how local content should be calculated and what constitutes local content, whilst at the same time provides some protection for major suppliers such as foundries, forge shops, and steel/stainless steel suppliers.

National Treasury has published the updated Instruction Note stipulating the minimum threshold for local production and content for valve products and actuators.

The Valve and Actuator Manufacturers Cluster of South Africa (VAMCOSA) has announced that on 11 February 2016, National Treasury published the updated Instruction Note stipulating the minimum threshold for local production and content for valve products and actuators.

The updated Instruction Note provides clarity on topics such as how local content should be calculated and what constitutes local content, whilst at the same time provides some protection for major suppliers such as foundries, forge shops, and steel/stainless steel suppliers.

Clarification regarding how the 70% local content is made up includes the use of locally produced and certified castings, forging and fabrication as well as verifiable manufacturing activities such as machining, drilling, coating, assembly and testing.

Further, the averaging-out of local content either across any number of valves and gearboxes / actuator combinations or locally made and imported valves or other items is not permitted. Each individual valve, manual actuator or pneumatic actuator is subject to the minimum 70% local content threshold.

In addition, the valve type list has been updated to include the “also known as” names of valves. For example a check valve is also known as a non-return valve or reflux valve or tilting disk valve and so on. This to curb the number of state-owned-entities, departments, including municipalities as well as contractors working with state-spend, assuming that by changing the name of the valve in the tender or request for information process, that designation does not apply.

“The first instruction note came out in 2014. It had many loopholes in it and did not stipulate how the 70% local content should be adhered to,” said Vamcosa member Mark Wilson.

“This most recent note clearly states what the criteria for local content should be,” he said. Saceec CEO Eric Bruggman added that, currently, there was no penalty or consequence for State-owned companies that did not procure enough local content. “Currently, 20% is local and 80% is imported and we are hoping to change that,”

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Clarification regarding how the 70% local content is made up includes the use of locally produced and certified castings, forging and fabrication as well as verifiable manufacturing activities such as machining, drilling, coating, assembly and testing.

Further, the averaging-out of local content either across any number of valves and gearboxes / actuator combinations or locally made and imported valves or other items is not permitted. Each individual valve, manual actuator or pneumatic actuator is subject to the minimum 70% local content threshold.

In addition, the valve type list has been updated to include the “also known as” names of valves. For example a check valve is also known as a non-return valve or reflux valve or tilting disk valve and so on. This to curb the number of state-owned-entities, departments, including municipalities as well as contractors working with state-spend, assuming that by changing the name of the valve in the tender or request for information process, that designation does not apply.

“The first instruction note came out in 2014. It had many loopholes in it and did not stipulate how the 70% local content should be adhered to,” said Vamcosa member Mark Wilson.

“This most recent note clearly states what the criteria for local content should be,” he said. Saceec CEO Eric Bruggman added that, currently, there was no penalty or consequence for State-owned companies that did not procure enough local content. “Currently, 20% is local and 80% is imported and we are hoping to change that.”