Section 217 of the Constitution of the Republic of South Africa requires an organ of state to contract for goods or services in accordance with a system which is fair, equitable, transparent, competitive and cost effective. The policy of the Auditor-General has been developed to give effect to the enabling legislation as outlined in the Preferential Procurement Policy Framework Act, 2000 (Act 5 of 2000) and the Preferential Procurement Regulations, 2001.

The policy guides all procurement in AGSA in accordance with sound business practices and the five pillars of procurement:

• Value for money,
• Open and effective competition,
• Ethics and fair dealing,
• Accountability and reporting
• Preferential procurement.

Types of procurement
The AGSA's procurement focuses on two distinct areas:

1. General procurement
This type of procurement gives support to the AGSA in general and includes both non-audit and support service. It procures goods and services for various functions to enable the AGSA to operate as a business on a day-to-day basis.
2. Contract work procurement
This type of procurement gives support to the audit business units. The purpose is to contract out work to audit firms and to contract-in firms to audit on behalf of the Auditor-General.

Supply chain management office
The supply chain management has been established to effectively manage supply chain in the AGSA. It's sole and deliberate goal is to increase the effectiveness and efficiency of business units and to ensure that the process is streamlined, effective, transparent, fair and equitable.

Our understanding of the supply chain:

1. Demand management
   Identify requirements
2. Acquisition management
   Procurement process
3. Logistics management
   Inventory management
4. Disposal management
   Removing products in the most economical way