The implementation and procurement plan will give guidance to the procurement process leading to the compilation of a contract. The plan must follow supply chain management (SCM) regulations in terms of the procurement process.
The final contract includes the objectives and deliverables for both parties.
The process must include:
- Internal mechanism: capacity and budgeting
- Contract with public sector partner: proceed with competitive procurement
- Public sector: supply chain management procedures apply
- Competitive procurement (including PPP) must comply with s120 of the MFMA and the following:
- Bid specification: informed by the outcome of the feasibility and Council resolution
- Bid evaluation: comparative evaluation of bids received against bid specification
- Bid adjudication: supply chain department strictly administers this process and no interference by any other individual is allowed in this process
Once the contract is finalised it may trigger s33 of the MFMA if the municipality will have a financial obligation beyond 3 (three) years. This section 33 stipulates that a municipality may enter into a contract which will impose financial obligations on the municipality beyond the three years covered in the annual budget for a financial year.
Contract management includes the following four steps:
- Procurement stage: signing of contract
- Development stage: signing commitment to service delivery
- Delivery stage: period during which services are provided and used
- Exit stage: end of project
Council should resolve to:
- Note the outcome of the procurement process
- Note the s33 report regarding future financial commitment
- Note views, recommendations and comments of Treasury
- Authorise Municipal Manager to execute the contract, ensure contract monitoring and enforcement
The contract can then be signed and implemented.
Types of contracts
A report will be made to Council:
- Identifying the need
- Explaining how the need can best be addressed
- Recommending that it be addressed by way of internal mechanism; alternatively that the feasibility of external options be explored
- Obtain Council resolution
Service provider being paid a fee by the municipality to provide operational services.
Municipality pays service fees to service provider. assuming all responsibility for operation and maintenance of delivery service.
Service provider rents facilities from municipality for operations and maintenance.
Concessionaire will lease assets owned by the municipality for period of concession. Focus will be on operating, maintenance and financing of existing fixed assets.
This is a stand-alone capital project for which a concession is granted and where the municipality may or may not receive profits or fees.
The municipality and the contracting entity / concessionaire will agree to perform and meet the objectives of the contract and oblige in terms of:
- Partnership management: managing the accountability and how do the municipality and service provider relate to each other
- Service delivery management: systems and procedures designed to manage risk and performance
- Contract administration: effective managing of all administrative requirements stipulated in the contract