Municipality argues AG disclaimer report
Mokwena said that TCLM was not in agreement with the AG’s findings that construction contracts were awarded to contractors that were not registered with the Construction Industry Development Board (CIDB) and did not qualify in accordance with Section 18 (1) of the CIDB.
LYDENBURG – Thaba Chweu Local Municipality (TCLM) has responded to the disclaimer report issued by the Auditor General (AG) last year, and said that it did not agree with all the findings. TCM received its eighth disclaimer from the AG on November 30.
The 2016 report is a result of almost a decade of statements provided by the auditor that does not lay down any sort of opinion with regard to the financial position and condition of the municipality.
The acting chief financial officer, Mr Lesley Mokwena, said that irregular expenditure arises in instances where there is a dispensation in terms of procurement procedures. “We are all aware that the municipal infrastructure used for the delivery of services to the community (electrical and water infrastructure) is dilapidated. This means there are breakdowns at unexpected times which results in the interruption of service delivery. TCLM is then forced to dispense from procurement procedures in terms of Section 36 of the Municipal Finance Management Act (MFMA) where there has been an unforeseen event. These procedures are always approved by the accounting officer and council as a whole. From the AG’s perspective this is viewed as irregular.”
Mokwena said the municipality had developed stringent control measures in order to enhance supply-chain management (SCM). “On a weekly basis a bid bulletin for procurement with transaction values below R200 000 is published for a period of seven days in order to allow all members of the community and businesses to participate within the procurement environment. This has created a transparent, equitable and fair competitive bidding process which is in accordance to the SCM policy, the MFMA act and all SCM regulations.”
He further said there were only two instances where the municipality might be forced to obtain one price quotations from one prospective bidder. “Firstly when there is a service required from sole suppliers of various products, these are termed unsolicited bids as they can only be obtained from specialist manufacturing companies like prepaid meters, handling of chlorine chemicals and premix for roads infrastructure. Secondly, when there has been a dispensation in terms of procurement procedures, again, this is due to the aged and dilapidated municipal infrastructure used for the delivery of services to the community.”
Mokwena said that this occured when there were unexpected breakdowns, which result in the interruption of the delivery of services. The municipality is forced to dispense from procurement procedures in terms of Section 36 of the MFMA where there has been an unforeseen event.
With regard to quotations that were accepted from providers not registered on the list of accredited prospective providers, he said that the finding omits from the procurement of bookings within the hospitality industry (hotels). “These providers were not willing to register on municipal procurement databases. This made it difficult for municipalities to secure bookings for employees to effectively conduct their duties outside municipal jurisdiction. This was a nationwide matter. The National Treasury as a remedial action plan has developed a “centralised supplier database system’’ (CSD). Registration on the CSD is now compulsory for all players and industries who want to conduct business with the state. This will not be an issue moving forward.”
Mokwena said that TCLM was not in agreement with the AG’s findings that construction contracts were awarded to contractors that were not registered with the Construction Industry Development Board (CIDB) and did not qualify in accordance with Section 18 (1) of the CIDB. “This is not a true reflection of the status quo. During the course of the financial year, construction projects were procured by a turnkey method. This effectively means that the professional engineer who is responsible for the approval of designs and the contractor who is responsible for the actual construction work are appointed together by way of a partnership or joint venture. Only the contractor is required to be TCLM requests clarity on issues registered with the CIDB as this is the party who will ultimately be responsible for any defects. All contractors who were appointed were definitely registered and certainly do meet all the statutory requirements. The registration of professional engineers is not necessarily a requirement. Management has requested for clarity in order to allow the municipality an opportunity to address the finding.”
He said that as per the findings of the AG, that appointments made in posts that were not provided for the approved staff establishment of TCM is not true. “The municipality is not in agreement with this finding. All appointments made were in line with the organisational structure of the institution.”
The AG also stated that senior managers who were previously dismissed for financial misconduct were reappointed before the expiry of 10 years. “The municipality is not in agreement with this particular finding as this is not a true reflection of the status quo. The appointment of all senior managers has been approved by formal council resolution after all potential candidates were subjected to a stringent vetting process from the office of the State Security Agency.
“According to the municipal records there are no senior managers who were previously dismissed for financial misconduct. The AG has been requested to direct the municipality as to where this finding has come from as no official communication was received by management. This will also give the municipality an opportunity to address the findings.”
