With the financial participation of 19/09/2017 SUNREF
Municipal Contracting Seminar By Kumeshnie Naidoo and John Ferraz of 5 September 2017 19.9.2017 Towards a greener future
Overview In this presentation we will address the following topics: • Municipalities • Powers and Functions of Municipalities • The supply of goods and services to a Municipality • The provision of municipal services to a Municipality • The use of municipal infrastructure by private sector parties • Municipal PPPs • Financial undertakings by Municipalities 19.9.2017 Towards a greener future
Municipalities 19/09/2017 SUNREF
Municipalities ❖ A Municipality, when referred to as: • an entity, is an organ of state within the local sphere of government exercising legislative and executive authority within its municipal area; • a geographic area, is a municipal area determined in terms of Local Government: Municipal DemarcationAct, 1998. ❖ A Municipality is a juristic person and as such it has a separate legal personality. ❖ The executive and legislative authority of a Municipality is vested in its municipal council and the municipality has the right to govern the local government affairs of its community. 19.9.2017 Towards a greener future
Powers and Functions of Municipalities 19/09/2017 SUNREF
The Powers and Functions of Municipalities The MSA The Constitution • Section 156(1) of the Constitution • Section 8(1) of the MSA • a municipality has executive and • a municipality has all of the administrative authority iro matters functions and powers conferred by listed in Parts B of Schedules 4 and 5 or assigned to it in terms of the of the Constitution and any other Constitution matter assigned to it by national or provincial legislation • Section 8(2) of the MSA • a municipality has the right to do • Part B of Schedules 4 and 5 anything reasonably necessary for, • includes electricity reticulation, or incidental to, the effective municipal roads, refuse removal, performance of its functions and the potable water supply etc. exercise of its powers 19.9.2017 Towards a greener future
The Powers and Functions of Municipalities ❖ Electricity reticulation is thus an area of Municipal competence. ❖ In the matter of NCP Chlorchem (Pty) Ltd v National Energy Regulator and others (2017) 1 All SA 950 (GJ), the court held that no Act of Parliament gives the municipality the exclusive right to supply electricity to consumers within their area of jurisdiction and that “electricity reticulation” means only that a municipality is entitled to set up its own electricity reticulation network and supply electricity. 19.9.2017 Towards a greener future
Municipal Procurement Legislation 19/09/2017 SUNREF
Municipal Procurement Legislation Municipal The PPP SCM Municipal Systems The MFMA PPPFA SCM Regs Regs Policy Constitution Act 19.9.2017 Towards a greener future
Municipal Procurement Legislation ❖ The Constitution • Section 217 of the Constitution provides that when an organ of state in the national, provincial or local sphere of government or any other institution identified in national legislation, contracts for goods and services, it must do so in accordance with a system which is fair, equitable, transparent, competitive and cost effective. • Municipalities are regarded as organs of state and therefore section 217 of the Constitution applies to all Municipalities 19.9.2017 Towards a greener future
Municipal Procurement Legislation ❖ The MFMA • The MFMA is the primary legislation regulating the financial management of Municipalities. • The MFMA was enacted to ensure the sound and sustainable management of the financial affairs of Municipalities and other institutions in the local sphere of government including supply chain management. • Section 112 of the MFMA requires a municipality to implement a supply chain management policy which is “fair, equitable, transparent, competitive and cost effective. ” 19.9.2017 Towards a greener future
Municipal Procurement Legislation ❖ Supply Chain Management Policies • Section 111 of the MFMA- • each Municipality must have and implement a supply chain management policy which gives effect to the provisions of Chapter 11 (Goods and Services). • The SCM Policy of a municipality must comply with the Municipal SCM Regs. • The Municipal SCM Regs create the framework for the establishment and implementation of SCM policies. • The SCM Policy of a Municipality regulates, inter alia, the range of supply chain management processes which a Municipality may use (tenders, quotations auctions), when each process must be used, processes and mechanisms, bid documentation requirements etc. 19.9.2017 Towards a greener future
Municipal Procurement Legislation ❖ PPPFA The PPPFA provides a framework for the implementation of the preferential procurement policy contemplated in section 217 (2) of the Constitution. • PPPFA provides the basis for the application of the local content requirements by organs of state in tender procurement processes. 19.9.2017 Towards a greener future
Municipal Procurement Legislation ❖ PPPFA • An organ of state, such as a Municipality is required to comply with the PPPFA and the PPPFA Regs which includes adopting and implementing the preference point system prescribed in s2 of the PPPFA as well as various aspects relating to the evaluation and award of tenders in relation to such preference point system. • The PPPFA Regs make provision for the Department of Trade and Industry (“ DTI ”) to designate certain sectors to promote local production in line with national development and industrial policies. • Regulation 9(1) of the PPPFA Regs prescribes, that in the case of tenders issued for goods or services in a designated sector, such tenders must be advertised with the specific bidding condition that only bids that meet a stipulated minimum threshold of locally produced goods, services or works or locally manufactured goods will be considered 19.9.2017 Towards a greener future
The supply of goods and services to a Municipality 19/09/2017 SUNREF
The Supply of goods and services to a Municipality ❖ Goods and Services Goods Services • Electricity • Electricity metering services • Solar panels • Distribution network repairs • Solar water geysers • Debt collection services 19.9.2017 Towards a greener future
The Supply of goods and services to a Municipality ❖ Compliance with the procurement regulatory framework • Where a Municipality contracts for goods or services in general, it is bound by: o section 217 of the Constitution; o the MFMA, chapter 11; o the PPPFA; o the Municipal SCM Regs; and o the relevant Municipality’s SCM Policy. • Depending on the nature and value of the envisaged procurement, the Municipality would have to implement the relevant procurement process as per its SCM Policy. 19.9.2017 Towards a greener future
The Supply of goods and services to a Municipality ❖ Section 33 of the MFMA In terms of section 33 of the MFMA, where a Municipality enters into a contract that imposes financial obligations on a municipality beyond the three years covered in the annual budget for that financial year, it may only do so if: • the municipal manager, has before the municipal council meeting: solicited the views and recommendations of published the draft National Treasury, the contract and an invited public comment national department for information statement from the local community local government and in summarising the and interested parties; certain instances the Municipality's obligations and relevant national under the contract; department e.g DoE in respect of electricity. 19.9.2017 Towards a greener future
The Supply of goods and services to a Municipality • The Municipal Council must take into account: the Municipality’s the impact of those projected financial the comments and views obligations on future obligations for each of the community and municipal tariffs and financial year of the interested parties. revenue; and contract; 19.9.2017 Towards a greener future
The Supply of goods and services to a Municipality • The Municipal Council has adopted a resolution in which: it determines that the Municipality will secure ‘significant capital it authorises the it approves the contract investment or will derive exactly as it is to e municipal manager to sign a significant financial executed; and the contract. economic or financial benefit’ from the contract; 19.9.2017 Towards a greener future
The Supply of goods and services to a Municipality ❖ Deviation from a procurement process A Municipality may in very limited circumstances deviate from the official procurement processes set out in the SCM Policy but only: • in an emergency; • goods or services produced or available from a single provider only; • acquisition of special works of art, historical objects and animals for zoos; and • exceptional cases where it is impossible or impractical to follow a procurement process. 19.9.2017 Towards a greener future
The Supply of goods and services to a Municipality ❖ Unsolicited Bids • In terms of section 113 of the MFMA read with Regulation 37 of the Municipal SCM Regs, a Municipality is not obliged to consider an unsolicited bid. • A Municipality may only consider an unsolicited bid if: 19.9.2017 Towards a greener future
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