2016/2017 SUPPLY CHAIN MANAGEMENT POLICY REPORT IN TERMS OF MUNICIPAL FINANCIAL MANAGEMENT ACT NO.56 OF 2003 REGULATION 6 (2) (i) (3) AND (4)

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1 2016/2017 SUPPLY CHAIN MANAGEMENT POLICY REPORT IN TERMS OF MUNICIPAL FINANCIAL MANAGEMENT ACT NO.56 OF 2003 REGULATION 6 (2) (i) (3) AND (4) 1. Purpose To report to the Board about the implementation of supply chain management policy. The purpose is to give effect to Section 6 (3) of the Council s Supply Chain Management Policy, which requires the Accounting Officer to submit a report on the implementation of Supply Chain Management Policy to the Mayor and Section (4) requires that the report be made public in accordance with section 21A of the Municipal Systems Act. 2. Background Regulation 6(1) of Supply chain management stipulates that Council of a Municipality and the board of directors of a Municipal entity must maintain oversight over the implementation of its supply chain management policy. Sub-section (2) of the regulations stipulates that for the purposes of such oversight, the Accounting Officer must in the case of a municipal entity, within 20 days of the end of each financial year, submit a report on the implementation of the supply chain management policy of the municipality and of a municipal entity under its sole or shared control, to the council of the municipality. 3. Legal implications Supply Chain Management activities are governed by various legislation which among others includes, PPPFA, MFMA, B-BBEE and CIDB Act. Compliance to Acts is paramount I order to ensure that Lejwe Le Putswa Development Agency has procurement system that is fair, transparent, equitable and economical. 4. Discussions Section 6(2) (a) (i) of the Supply Chain Management regulations dated 30 May 2005 requires the Accounting Officer to submit a report to Council pertaining the implementation of the Supply Chain Management policy as part of the Council`s oversight responsibilities. 4.1 Supply chain management unit The Accounting officer has as per section 7 of Supply chain management regulations established a supply chain management unit aimed at the implementation of its supply chain management policy. The unit is under the direct supervision of the Finance Manager as required by sub section 3 of the Supply chain management regulations. The following subunits were established within the Supply Chain Management Unit, i.e., Demand, Acquisition, Contract Management and Performance management.

2 4.1.1 Demand Management The demand management system used is to ensure that the resources required to support the strategic and operational commitments of the Agency are delivered at the correct time, at the right price and at the right location. It is also to ensure that the quantity and quality satisfy the needs of the Municipal entity as required by regulation 10 of Supply Chain Management Regulations Acquisition Management Supply Chain Management policy has an effective system of acquisition Management to ensure that: - a) Goods and services are procured by the municipal entity in accordance with authorised processes only; b) Expenditure on goods and services is incurred in terms of an approved budget in terms of Section 15 of the Act; c) The threshold values for the different procurement processes are complied with; d) Bid documentation, evaluation and adjudication criteria and general conditions of a contract, are in accordance with any applicable legislation; and; e) Any Treasury guidelines on acquisition management are properly taken into account Contract Management The Municipal entity has effective system of contract management. Part of the functions of contract Management system are that; a) administer all contracts entered into between the Municipal entity and responsive bidders; b) facilitate the signing of the Service Level Agreements with all responsive and appointed bidders etc; However, the system is not watertight and needs to be improved Performance Management System The Municipal entity is currently using the approved Performance Management policy system of the parent municipality until the Board approved the Agency s performance management policy for implementation at the Agency. The effectiveness of the system was not put into test due to shortage of human capital.

3 5. Contents 5.1 Goods and Services Procured by means of Quotations (less than R ) REQUEST FOR QUOTATIONS FIRST QUARTER DEPAR TMEN T PROJE CT UNIT 2016/06/0 01 OF SERVICE REVIEW LED STRATEGY FOR TOKOLOGO LOCAL MUNICIPALITY 09/06/ /06/ /08/ SECOND QUARTER THIRD QUARTER FOURTH QUARTER FINANCE 2017/05/01 QUALITY REVIEW OF ANNUAL FINANCIAL STATEMENTS 19/05/ /06/ /06/2017 1

4 5.2 Goods and Services Procured by means RFT (more than R ) REQUEST FOR TENDER FIRST QUARTER PROJECT UNIT 2016/03/001 LEGAL SERVICES PROJECT UNIT 2016/08/001 CONSULTANTS TO SOURCE FUNDING 01/04/ /04/ /09/ /08/ /09/ /09/ SECOND QUARTER THIRD QUARTER FOURTH QUARTER

5 CONTRACTS - CONTRACT AMOUNT EXPENDITURE FOR 2016/17 SIGNING PROJECT UNIT DPSA FUNDING FOR ICT HUB R R /03/2017 PROJECT UNIT REVIEW TOKOLOGO LED R R /08/2016 STRATEGY PROJECT UNIT SOURCING OF FUNDING (LICT) DPSA DPSA 30/09/2016 PROJECT UNIT SOURCING OF FUNDING (DUMAKA) DPSA DPSA 10/10/2016 PROJECT UNIT LEGAL SERVICES R R /10/2016 PROJECT UNIT IMPLEMENTATION OF ICT HUB R R /01/2017 PROJECT NEW VISION STUDIO PROJECT R R /06/2017 UNIT PROJECT TRANSFER OF ASSETS FOR /05/2017 UNIT UPGRADE AND MANAGEMENT FINANCE REVIEW OF ANNUAL FINANCIAL STATEMENTS R R /06/ SCM Regulation 32 No Bid(s) were sourced through SCM Regulation 32 of MFMA. 7. Recommendation That the content of this report be noted.. Compiled: SCM Officer Review: Finance Manager.. Approved: Chief Executive Officer

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