Local Government: Municipal Finance Management Act, 2003 (Act No. 56 of 2003)

Chapter 11 : Goods and Services

Purchase

(1)	The supply chain management policy of a municipality or municipal entity must be fair, equitable, transparent, competitive and cost-effective and comply with a prescribed regulatory framework for municipal supply chain management, which must cover at least the following:

(a)	The range of supply chain management processes that municipalities and municipal entities may use, including tenders, quotations, auctions and other types of competitive bidding;

(b)	when a municipality or municipal entity may or must use a particular type of process;

(c)	procedures and mechanisms for each type of process;

(d)	procedures and mechanisms for more flexible processes where the value of a contract is below a prescribed amount;

(e)	open and transparent pre-qualification processes for tenders or other bids;

(f)	competitive bidding processes in which only pre-qualified persons may participate;

(g)	bid documentation, advertising of and invitations for contracts;

(h)	procedures and mechanisms for—

(i)	the opening, registering and recording of bids in the presence of interested persons;

(ii)	the evaluation of bids to ensure best value for money;

(iii)

negotiating the final terms of contracts; and

(iv)	the approval of bids;

(i)	screening processes and security clearances for prospective contractors on tenders or other bids above a prescribed value;

(j)	compulsory disclosure of any conflicts of interests prospective contractors may have in specific tenders and the exclusion of such prospective contractors from those tenders or bids;

(k)	participation in the supply chain management system of persons who are not officials of the municipality or municipal entity, subject to section 117;

(l)	the barring of persons from participating in tendering or other bidding processes, including persons—

(i)	who were convicted for fraud or corruption during the past five years;

(ii)	who wilfully neglected, reneged on or failed to comply with a government contract during the past five years;

(iii)

whose tax matters are not cleared by South African Revenue Service;

(m)	measures for—

(i)	combating fraud, corruption, favouritism and unfair and irregular practices in municipal supply chain management: and

(ii)	promoting ethics of officials and other role players involved in municipal supply chain management;

(n)	the invalidation of recommendations or decisions that were unlawfully or improperly made, taken or influenced, including recommendations or decisions that were made, taken or in any way influenced by—

(i)	councillors in contravention of item 5 or 6 of the Code of Conduct for Councillors set out in Schedule 1 to the Municipal Systems Act; or

(ii)	municipal officials in contravention of item 4 or 5 of the Code of Conduct for Municipal Staff Members set out in Schedule 2 to that Act;

(o)	the procurement of goods and services by municipalities or municipal entities through contracts procured by other organs of state;

(p)	contract management and dispute settling procedures; and

(q)	the delegation of municipal supply chain management powers and duties, including to officials.

(2) The regulatory framework for municipal supply chain management must be fair, equitable, transparent, competitive and cost-effective.