For the financial year ending June 2021, the City of Cape Town successfully completed more than 94% of the planned tenders required and paid 97% of its suppliers on time to enable the delivery of services to its residents, to boost the local economy and to help livelihoods, mostly small and medium enterprises. Importantly, it is only through the successful contract demand management that the City is able to deliver a high level of services and boost the economy enabling the spend of tenders and total purchase orders of approximately R14 billion for operating and capital budgets combined in the same year. The tender processes were executed in an open, fair and accountable environment, adhering to the complex and voluminous legislation and regulations that govern public finance management. This high completion rate shows that the City’s tender processes are professional, efficient and compliant.
The City has done much work over the past few years to improve tender and contract management. This management is helping to drive the City’s capital and service programme, sustain livelihoods and ensure that the City can continue to boost the local economy in an efficient, compliant, robust and accountable manner.
‘Extensive efforts were made over the last three years to improve good governance and compliance, and ensure that public funds are used to best serve the public. The City has a zero tolerance approach to corruption and ensures that it can account to the public for the use of these funds; that its tender processes are open and transparent for all to see and scrutinise; and that its tender and contract processes are efficient and compliant within the heavily legislated environment that governs local government procurement. Achieving a success rate of 94% of the planned tenders required to enable the delivery of services means service delivery can happen, the local economy can be boosted and the City can help livelihoods by paying 97% of its suppliers, mostly small and medium enterprises, within 30 days. Importantly, it is only through the successful contract demand management that the City is able to deliver a high level of services and boost the economy enabling the spend of tenders and total purchase orders of approximately R14 billion for operating and capital budgets combined in the same year.
‘The high tender award rate contributed towards the successful record capital expenditure of R6,5 billion for the past Financial Year.
‘This is a dynamic area, and improvements are constantly being made,’ said the City’s Mayoral Committee Member for Finance, Alderman Ian Neilson.
Overall, the City’s tender cancellation rate has dropped by 60% since 2018 after serious efforts were made to implement various guidelines and directives as well as training of staff within supply chain and line departments. Primary reasons for cancellation include bidders not submitting compliant bids and non-compliance with preferential procurement requirements.
The City monitors the cancellation of tenders on a monthly basis and prioritises the re-advertising of any tender that has been cancelled. After a tender is cancelled, immediate steps are taken to address the root cause and track the replacement of the cancelled tender.
Demand planning cycle
The City has a demand planning system for tracking tenders in various stages, which includes bid initiation, specification drafting, tender advertising, closing, tender evaluation, report drafting, award and appeals. Thereafter the tracking of contract management processes and project execution begins. The demand planning system focusses on tenders for three financial years aligned to the capital and operating budget processes. All tenders are registered and tracked from start to finish on a weekly basis at executive level and by the City’s Supply Chain Management Department.
Over the last three years efforts were made to standardise and improve on the business intelligence reporting capabilities of the demand planning system for tenders to support capital programmes and operational requirements. For the financial year ending 30 June 2021, the demand plan completion rate was 94% and for 30 June 2020 it was 91%. The tender completion rate for the current Financial Year which started on 1 July 2021, already stands at 41%, which is well above the first quarter target of 25% and a significant improvement on that of previous years.
Project management
The City has a Portfolio and Project Management System which tracks the life-cycle of projects. This tool helps project managers plan and monitor projects on the ground which impact on service delivery. The City has a Contract Monitoring System which tracks the contractual relationships with suppliers and service providers throughout the life of a contract. The corporate project management team screens and assesses projects prior to and during implementation to ensure that they are aligned to the Integrated Development Plan (IDP). This is to ensure that the right projects are undertaken, getting value for money, to deliver services to communities.
Legislative context – City may not operate like the private sector does
The City functions within a context governed by various laws and regulations such as the Municipal Finance Management Act (MFMA), Preferential Procurement Act, Supply Chain Regulations and various directives and policies. The MFMA coupled with Section 217( 2) of the Constitution is a supreme set of legislation which demands that the City ensures a fair, transparent, equitable, competitive and cost-effective supply chain management process. The City, unlike the private sector, has to abide by these regulations in the procurement of goods, works and services.
Source: City Of Cape Town
