Govan Mbeki Municipality extends contact with billing firm
Council resolved to extend the contract with Munsoft for a further 12 months.
The Govan Mbeki Municipality has proposed extending its contract with Munsoft (Pty) Ltd for the provision of a financial management system for an additional 12 months, subject to compliance with all relevant legislative requirements.
Presenting the matter to council during a meeting held on May 27, Executive Mayor Nhlakanipho Zuma said the extension is necessary while the municipality addresses objections received regarding a recently advertised tender for the provision of a financial management system.
Zuma explained that Section 116 (3) of the Municipal Finance Management Act (MFMA) allows a contract procured through a municipality’s supply chain management policy to be amended, provided the reasons for the amendment are first tabled before council.
“Munsoft was appointed on May 16, 2018, to provide an MSCOA (Municipal Standard Chart of Accounts)-compliant financial management system for a period of five years ending on June 30, 2023.
“The contract was subsequently extended for a further three years, ending on June 30 this year,” Zuma said.
Council resolved to extend the contract with Munsoft for a further 12 months. In preparation for the expiry of the current agreement, the municipality advertised a tender for the licensing, maintenance, support and enhancement of its existing financial management system.
However, following the advertisement, the municipality received a formal objection from Solvem Consulting (Pty) Ltd, which alleged that the tender specifications were anti-competitive and amounted to unlawful vendor lock-in.
The objection further claimed that the procurement process may not fully comply with Section 217 of the Constitution, the Municipal Supply Chain Management Regulations and National Treasury procurement principles.
Zuma said the municipality’s financial management system is critical to the institution’s functioning, as it supports key operations, including billing and revenue management, budgeting and financial reporting, supply chain management, asset management, MSCOA compliance, payroll integration, and statutory reporting requirements.
He warned that the current Munsoft contract expires on June 30 and that any interruption in licensing, support, maintenance and system upgrades could expose the municipality to significant operational, financial and compliance risks.
“The municipality acknowledges the objection received and considers the matters raised by Solvem Consulting to be material in nature,” said Zuma.
He added that proceeding with the procurement process without adequately addressing the concerns could expose the municipality to legal proceedings, audit findings related to supply chain management non-compliance, delays in implementing a financial management system, possible irregular expenditure findings, and reputational and operational risks.
ALSO CHECK: Community volunteers say vandalism and recurring occupation threaten Secunda’s green strips
To ensure continuity of critical financial services while the municipality finalises its legal review and determines an appropriate procurement model, Zuma proposed extending the current Munsoft contract until June 30, 2027.
“It would not be prudent to switch systems during a financial year,” he said.
According to Zuma, the extension would provide sufficient time for the municipality to obtain a formal legal opinion, assess the objection received, review the current procurement approach, determine the most appropriate and legally compliant procurement strategy, avoid disruptions to critical municipal financial operations and ensure future procurement processes are fair, equitable, transparent, competitive and cost-effective.
He further noted that the extension would result in financial obligations extending beyond the original contractual term and could therefore constitute a contract contemplated under Section 33 of the MFMA.
In terms of Section 33, contracts imposing financial obligations beyond three financial years require public participation, consideration of comments and representations from the community and stakeholders, consultation with National Treasury and Provincial Treasury, and council approval.
Furthermore, Section 116(3) of the MFMA requires that any material amendment or extension of an existing contract be subjected to a public participation process before approval.
“The municipality will therefore ensure full compliance with Sections 33 and 116(3) of the MFMA before the extension is finalised,” Zuma said.
ALSO CHECK: Mpumalanga Education Department condemns violence at school in eMbalenhle
