DIPALESENG LOCAL MUNCIPALITY SUPPLY CHAIN MANAGEMENT POLICY 2017/18 The Council resolves in terms of section 111 of the Local Government: Municipal Finance Management Act (No. 56 of 2003) to adopt the following proposal as the Supply Chain Management Policy of the DIPALESENG LOCAL MUNICIPALITY. Date of Adoption:_____________________________ Document Control
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DIPALESENG
LOCAL MUNCIPALITY
SUPPLY CHAIN MANAGEMENT POLICY
2017/18
The Council resolves in terms of section 111 of the Local
Government: Municipal Finance Management Act (No. 56 of 2003) to
adopt the following proposal as the Supply Chain Management Policy
of the DIPALESENG LOCAL MUNICIPALITY.
Date of Adoption:_____________________________
Document Control
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Table Of Contents
1. Definitions............................................................................................................................................ 4 Chapter 1 ....................................................................................................................................................... 6 Implementation of Supply Chain Management Policy ......................................................................... 6 2. Supply chain management policy .................................................................................................... 6 3. Scope of Application ........................................................................................................................... 6 4. Exclusions ............................................................................................................................................ 7 5. Amendment of the supply chain management policy .................................................................... 7 6. Delegation of supply chain management powers and duties ..................................................... 8 7. Sub delegations ................................................................................................................................... 8 8. Oversight role of council ...................................................................................................................10 9. Supply chain management unit ......................................................................................................11 10. Training of supply chain management officials ......................................................................11 Chapter 2 .....................................................................................................................................................12 11. Format of supply chain management system ..........................................................................12 12. System of demand management ................................................................................................12 13. System of acquisition management ...........................................................................................13 14. Management of Procurement Requirements ............................................................................13 15. Preferential Procurement Policy Framework Act (PPPFA) ...................................................14 (b) (i) In evaluating a tender two preference systems are prescribed that are: ...........................15 16. Range of procurement processes ................................................................................................18 17. General preconditions for consideration of written quotations or bids ...............................19 18. Lists of accredited prospective providers ..................................................................................19 19. Petty cash purchases.....................................................................................................................20 20. Written or verbal quotations .......................................................................................................20 21. Formal written price quotations ................................................................................................21 22. Procedures for procuring goods or services through written or verbal quotations and formal written price quotations...............................................................................................................22 23. Competitive bids ............................................................................................................................23 24. Process for competitive bidding ..................................................................................................23 25. Bid documentation for competitive bids ....................................................................................24 26. Public invitation for competitive bids ........................................................................................25 27. Procedure for handling, opening and recording of bids .........................................................26 28. Negotiations with preferred bidders..........................................................................................26 29. Two-stage bidding process ..........................................................................................................27 30. Committee system for competitive bids .....................................................................................27 31. Bid specification committees .......................................................................................................28 32. Bid evaluation committees ..........................................................................................................29 33. Bid adjudication committees .......................................................................................................29 34. Payment of emerging contractors for capital work ................................................................31 35. CRDP - Comprehensive Rural Development Programme ......................................................31 35.1 Construction Contracts ................................................................................................................31 36. Procurement of banking services ...............................................................................................32 37. Procurement of IT related goods or services ............................................................................33 38. Procurement of goods and services under contracts secured by other organs of state .....34 39. Procurement of goods necessitating special safety arrangements .......................................34 40. Proudly SA Campaign ..................................................................................................................35 41. Development of Local Businesses ...............................................................................................35 42. Appointment of consultants.........................................................................................................35 43. Deviation from, and ratification of minor breaches of, procurement processes ................36 44. Unsolicited bids .............................................................................................................................37
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45. Combating of abuse of supply chain management system ....................................................38 46. Logistics management .................................................................................................................41 47. Disposal management ..................................................................................................................42 48. Risk management .........................................................................................................................43 49. Performance management ..........................................................................................................43 50. Prohibition on awards to persons whose tax matters are not in order ...............................44 51. Prohibition on awards to persons in the service of the state .................................................44 52. Awards to close family members of persons in the service of the state ................................44 53. Ethical standards ..........................................................................................................................45 54. Inducements, rewards, gifts and favours to officials and other role players .....................45 55. Sponsorships ..................................................................................................................................46 56. Objections and complaints...........................................................................................................46 57. Resolution of disputes, objections, complaints and queries ...................................................46 58. Contracts providing for compensation based on turnover ....................................................47 59. Management of expansion or variation of orders against the original contract ...............48 60. Cancellation and re- invitation of bids ......................................................................................48 61. Procurement of goods and services under contracts secured by other organs of state .....49 62. Commencement .............................................................................................................................50
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1. Definitions
In this Policy, unless the context otherwise indicates, a word or expression to which a
meaning has been assigned in the Act has the same meaning as in the Act, and –
“competitive bidding process” means a competitive bidding process referred to in
paragraph 12 (1) (d) of this Policy;
“competitive bid” means a bid in terms of a competitive bidding process;
“final award”, in relation to bids or quotations submitted for a contract, means the
final decision on which bid or quote to accept;
“formal written price quotation” means quotations referred to in paragraph 12 (1)
(c) of this Policy;
“in the service of the state” means to be –
(a) a member of –
(i) any municipal council;
(ii) any provincial legislature; or
(iii) the National Assembly or the National Council of Provinces;
(b) a member of the board of directors of any municipal entity;
(c) an official of any municipality or municipal entity;
(d) an employee of any national or provincial department, national or provincial public
entity or constitutional institution within the meaning of the Public Finance
Management Act, 1999 (Act No.1 of 1999);
(e) a member of the accounting authority of any national or provincial public entity; or
(f) an employee of Parliament or a provincial legislature;
“long term contract” means a contract with a duration period exceeding one year;
“list of accredited prospective providers” means the list of accredited prospective
providers which the Dipaleseng Local Municipality must keep in terms of paragraph 14
of this policy;
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“other applicable legislation” means any other legislation applicable to municipal
supply chain management, including –
(a) the Preferential Procurement Policy Framework Act, 2000 (Act No. 5 of 2000);
(b) the Broad-Based Black Economic Empowerment Act, 2003 (Act No. 53 of 2003);
and
(c) the Construction Industry Development Board Act, 2000 (Act No.38 of 2000);
“Senior Manager” means
(a) in relation to a municipality, means a manager referred to in section 56 of the
Municipal Systems Act; or
(b) in relation to a municipal entity, means a manager directly accountable to the Chief
Executive Officer of the entity;
“Treasury guidelines” means any guidelines on supply chain management issued by
the Minister in terms of section 168 of the Act;
“the Act” means the Local Government: Municipal Finance Management Act, 2003
(Act No. 56 of 2003);
“the Municipality” means the Dipaleseng Local Municipality;
“the Regulations” means the Local Government: Municipal Finance Management Act,
2003, Municipal Supply Chain Management Regulations published by Government
Notice 868 of 2005;
“written or verbal quotations” means quotations referred to in paragraph 12(1)(b)
of this Policy.
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Chapter 1
Implementation of Supply Chain Management
Policy
2. Supply chain management policy
(1) All officials and other role players in the supply chain management system of the
Dipaleseng Local Municipality must implement this Policy in a way that –
(a) gives effect to –
(i) section 217 of the Constitution; and
(ii) Part 1 of Chapter 11 and other applicable provisions of the Act;
(b) is fair, equitable, transparent, competitive and cost effective;
(c) complies with –
(i) the Regulations; and
(i) any minimum norms and standards that may be prescribed in
terms of section 168 of the Act;
(d) is consistent with other applicable legislation;
(e) does not undermine the objective for uniformity in supply chain
management systems between organs of state in all spheres; and
(f) is consistent with national economic policy concerning the promotion of
investments and doing business with the public sector.
3. Scope of Application
(1) This Policy applies when the Municipality–
(a) procures goods or services;
(b) disposes goods no longer needed;
(c) selects contractors to provide assistance in the provision of municipal
services otherwise than in circumstances where Chapter 8 of the
Municipal Systems Act applies; or
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(d) selects external mechanisms referred to in section 80 (1) (b) of the
Municipal Systems Act for the provision of municipal services in
circumstances contemplated in section 83 of that Act.
4. Exclusions
(1) This Policy, except where provided otherwise, does not apply in respect of the
procurement of goods and services contemplated in section 110(2) of the Act,
including –
(a) water from the Department of Water Affairs or a public entity, another
municipality or a municipal entity; and
(b) electricity from Eskom or another public entity, another municipality or a
municipal entity.
5. Amendment of the supply chain management policy
(1) The accounting officer must –
(a) at least annually review the implementation of this Policy; and
(b) when the accounting officer considers it necessary, submit proposals for
the amendment of this Policy to the council.
(2) If the accounting officer submits proposed amendments to the council that differs
from the model policy issued by the National Treasury, the accounting officer
must –
(a) ensure that such proposed amendments comply with the Regulations; and
(b) report any deviation from the model policy to the National Treasury and
the relevant provincial treasury.
(3) When amending this supply chain management policy the need for uniformity in
supply chain practices, procedures and forms between organs of state in all
spheres, particularly to promote accessibility of supply chain management
systems for small businesses must be taken into account.
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6. Delegation of supply chain management powers and
duties
(1) The council hereby delegates all powers and duties to the accounting officer
which are necessary to enable the accounting officer –
(a) to discharge the supply chain management responsibilities conferred on
accounting officers in terms of –
(j) Chapter 8 or 10 of the Act; and
(i) this Policy;
(b) to maximize administrative and operational efficiency in the
implementation of this Policy;
(c) to enforce reasonable cost-effective measures for the prevention of fraud,
corruption, favoritism and unfair and irregular practices in the
implementation of this Policy; and
(d) to comply with his or her responsibilities in terms of section 115 and other
applicable provisions of the Act.
(2) Sections 79 and 106 of the Act apply to the sub delegation of powers and duties
delegated to an accounting officer in terms of subparagraph (1).
(3) The accounting officer may not sub delegate any supply chain management
powers or duties to a person who is not an official of Municipality or to a
committee which is not exclusively composed of officials of the Municipality;
(4) This paragraph may not be read as permitting an official to whom the power to
make final awards has been delegated, to make a final award in a competitive
bidding process otherwise than through the committee system provided for in
paragraph 26 of this Policy.
7. Sub delegations
(1) The accounting officer may in terms of section 79 or 106 of the Act sub delegate
any supply chain management powers and duties, including those delegated to
the accounting officer in terms of this Policy, but any such sub delegation must be
consistent with subparagraph (2) of this paragraph and paragraph 4 of this
Policy.
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(2) The power to make a final award –
(a) above R10 million (VAT included) may not be sub delegated by the
accounting officer;
(b) above R2 million (VAT included), but not exceeding R10 million (VAT
included), may be sub delegated but only to –
(i) the chief financial officer;
(i) a senior manager; or
(ii) a bid adjudication committee of which the chief financial officer or
a senior manager is a member; or
(c) not exceeding R2 million (VAT included) may be sub delegated but only
to –
(i) the chief financial officer;
(i) a senior manager;
(ii) a manager directly accountable to the chief financial officer or a
senior manager; or
(iii) a bid adjudication committee.
(3) An official or bid adjudication committee to which the power to make final
awards has been sub delegated in accordance with subparagraph (2) must within
five days of the end of each month submit to the official referred to in
subparagraph (4) a written report containing particulars of each final award
made by such official or committee during that month, including–
(a) the amount of the award;
(b) the name of the person to whom the award was made; and
(c) the reason why the award was made to that person.
(4) A written report referred to in subparagraph (3) must be submitted –
(a) to the accounting officer, in the case of an award by –
(j) the chief financial officer;
(i) a senior manager; or
(ii) a bid adjudication committee of which the chief financial officer or
a senior manager is a member; or
(b) to the chief financial officer or the senior manager responsible for the
relevant bid, in the case of an award by –
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(i) a manager referred to in subparagraph (2)(c)(iii); or
(i) a bid adjudication committee of which the chief financial officer or
a senior manager is not a member.
(5) Subparagraphs (3) and (4) of this policy do not apply to procurements out of
petty cash.
(6) This paragraph may not be interpreted as permitting an official to whom the
power to make final awards has been subdelegated, to make a final award in a
competitive bidding process otherwise than through the committee system
provided for in paragraph 26 of this Policy.
(7) No supply chain management decision-making powers may be delegated to an
advisor or consultant.
8. Oversight role of council
(1) The council reserves its right to maintain oversight over the implementation of
this Policy.
(2) For the purposes of such oversight the accounting officer must –
(a) (i) within 30 days of the end of each financial year, submit a report on
the implementation of this Policy and the supply chain management
policy of any municipal entity under the sole or shared control of the
municipality, to the council of the municipality; and
(i) whenever there are serious and material problems in the
implementation of this Policy, immediately submit a report council.
(3) The accounting officer must, within 10 days of the end of each quarter, submit a
report on the implementation of the supply chain management policy to the
mayor.
(4) The reports must be made public in accordance with section 21A of the Municipal
Systems Act.
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9. Supply chain management unit
(1) A supply chain management unit is hereby established to implement this Policy.
(2) The supply chain management unit operates under the direct supervision of the
chief financial officer or an official to whom this duty has been delegated in terms
of section 82 of the Act.
10. Training of supply chain management officials
The training of officials involved in implementing this Policy should be in accordance
with any Treasury guidelines on supply chain management training.
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Chapter 2
11. Format of supply chain management system
This Policy provides systems for –
(i) demand management;
(i) acquisition management;
(ii) logistics management;
(iii) disposal management;
(iv) risk management; and
(v) performance management.
Part 1: Demand management
12. System of demand management
(1) The accounting officer must establish and implement an appropriate demand
management system in order to ensure that the resources required by the
Municipality support its operational commitments and its strategic goals outlined
in the Integrated Development Plan.
(2) The demand management system must –
(a) include timely planning and management processes to ensure that all
goods and services required by the Municipality are quantified, budgeted
for and timely and effectively delivered at the right locations and at the
critical delivery dates, and are of the appropriate quality and quantity at a
fair cost;
(b) take into account any benefits of economies of scale that may be derived
in the case of acquisitions of a repetitive nature; and
(c) provide for the compilation of the required specifications to ensure that its
needs are met.
(d) To undertake appropriate industry analysis and research to ensure that
innovations and technological benefits are maximized.
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Part 2: Acquisition management
13. System of acquisition management
(1) The accounting officer must implement the system of acquisition management
set out in this Part in order to ensure –
(a) that goods and services are procured by the Municipality in accordance
with authorised processes only;
(b) that expenditure on goods and services is incurred in terms of an
approved budget in terms of section 15 of the Act;
(c) that the threshold values for the different procurement processes are
complied with;
(d) that bid documentation, evaluation and adjudication criteria, and general
conditions of a contract, are in accordance with any applicable legislation;
(e) and
(f) that any Treasury guidelines on acquisition management are properly
taken into account.
(2) When procuring goods or services contemplated in section 110(2) of the Act, the
accounting officer must make public the fact that such goods or services are
procured otherwise than through the Municipality’s supply chain management
system, including -
(a) the kind of goods or services; and
(b) the name of the supplier.
14. Management of Procurement Requirements
(1) All requests for the procurement of goods or services, for which no bids are
required, shall be submitted by the Heads of Departments to the Procurement
Section of the Budget and Treasury office. All requests shall comply to the
following and must be in writing:
(a) Clearly specify the description of goods or servicesrequired, where
applicable the quantity of goods (in correct units of measure, e.g. 10
packets of 20 units per packet), packaging size (e.g. 1kg), of the goods
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required as well as the address of where the goods or services should be
delivered.
(b) Avoid the use of brand names and the preparation of specifications aimed
at procuring goods or services provided by only specific suppliers.
(c) Bear the certification by the official responsible for financial management
in the department concerned that there is sufficient provision in the
current annual budget of the department for the envisaged expenditure.
In the case of procurement requirements extending over more than one
financial year – that provision has also been included in the annual
budgets for the ensuing financial year(s), and be signed by the head of
department concerned or by a senior official in the department designated
by the head of department for this purpose, provided that such designated
official shall be a deputy or assistant head of the department or the
equivalent.
(d) In the event that a product or service of a particular brand name,
specifications, personal preference or work of art is desired, such request
to the Procurement Section must be fully motivated by the Head of
Department.
(e) No procurement shall be conducted outside the supply chain
management unit and framework.
15. Preferential Procurement Policy Framework Act
(PPPFA)
(a) In order to give effect to the objectives of this policy the Council supports
measures to make the bid process more accessible to HDI’s and small,
medium and micro enterprises (SMME’s). Consideration must be given to
the relaxation of certain criteria. The Accounting Officer will have the
right to deviate from this policy in pursuit of implementing the Black
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Economic Empowerment Act, Act 53 of 2003. Detail thereof will be
covered in the implementation manual.
(b) (i) In evaluating a tender two preference systems are prescribed that
are:
The 80/20 preference point system is applicable to bids (including
price quotations) with a Rand value equal to, or above R30 000 and up
to a Rand value of R50 million (all applicable taxes included)
The 90/10 preference point system is applicable to bids with a Rand
Value above R50 million (all applicable taxes included).
Calculation of points for price
Points for price are calculated by using the below formulae as per the prescripts
PPPFA:
80/20 Preference Point System
Ps = 80 {1 - PT – Pmin}
Pmin
Where:
Ps = Points scored for comparative price of bid under consideration.
Pt = Rand value of comparative price of bid under consideration
Pmin = Rand value of comparative price of lowest acceptable bid
And 90/10 Preference Point System
Ps = 90 {1 - PT – Pmin}
Pmin
Where:
Ps = Points scored for comparative price of bid under consideration.
Pt = Rand value of comparative price of bid under consideration
Pmin = Rand value of comparative price of lowest acceptable bid
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Calculation of points for B-BBEE status level contributor
Bidders are required to, together with their bids, submit original valid BBBEE
Status Level Verification Certificates or certified copies thereof to substantiate
their BBBEE rating claims.
Points must be awarded to a bidder for attaining the B-BBEE status level of
that all information, documentation and decisions regarding any matter before the committee are confidential and undertake not to make known anything in this regard
that I will treat all providers and potential providers equitably and will not purposefully favour or prejudice anybody
that I will make known details of any private or business interest which I, or any close family member, partner or associate may have in any proposed procurement or disposal process of, or in any award or contract and that I will immediately withdraw from participating in any manner whatsoever
NAME DEPARTMENT / SECTION SIGNATURE
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Annexure C
Dipaleseng Local Municipality
Committees
Committees established in terms of the Municipal Supply Chain Management Regulations
Serial No.
Terms of Reference Regulation
No.
1. Bid Specification Committee
1.1 Composition
1.1.1 1.1.2
The Committee must be composed of (a) an official of the Finance Department nominated
by the Chief Financial Officer (CFO);
(b) an official of the Internal Audit Unit nominated by the CFO;
(c) the Director of the procuring Department;
(d) the relevant Unit Manager of the procuring Department;
(e) the municipality’s legal adviser (if it has one); The Chairperson will be the Director of the procuring Department External specialist advisers may be included on the Committee from time to time as and when the need arises
R27(3) R27(3)
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Serial No.
Terms of Reference Regulation
No.
1.2 Prohibition 1.2.1 No person, adviser or corporate entity involved with
the committee, or director of such corporate entity, may bid for any resulting contracts
R27(4)
1.3 Functions
1.3.1 1.3.2
Compile the specifications for each procurement of goods and services by the municipality Specifications – (a) must be drafted in an unbiased manner to allow
all potential suppliers to offer their goods or services;
(b) must take account of any accepted standards such
as those issued by Standards South Africa, the International Standards Organisation, or an authority accredited or recognized by the South African National Accreditation System with which the equipment, material or workmanship should comply
(c) where possible, be described in terms of
performance required rather than in terms of descriptive characteristics for design
(d) may not create trade barriers in contract
requirements in forms of specifications, plans, drawings, designs, testing and test methods, packaging, marking or labeling of conformity certification
(e) may not make reference to any particular trade
mark, patent, design, type, specific origin or producer, unless there is no other sufficiently precise or intelligible way of describing the characteristics of the work, in which case such reference must be accompanied by the words “equivalent”
(f) must indicate each specific goal for which points
may be awarded in terms of the points system set out in the supply chain management policy
R27(1) R27(2)(a) to (f)
1.4 Quorum
A quorum of the Committee shall be 50% of the members of the Committee plus 1.
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Serial No.
Terms of Reference Regulation
No. 1.5 Role of Accounting Officer
1.5.1 The Accounting Officer must approve specifications prior to publication of the invitation for bids in terms of R22
R27(2)(g)
2. Bid Evaluation Committee
2.1 Composition
2.1.1 2.1.2 2.1.3
The Committee must be composed of: (e) an official of the Finance Department nominated
by the Chief Financial Officer (CFO);
(f) an official of the Internal Audit Unit nominated by the CFO;
(g) the Director of the procuring Department;
(h) the relevant Unit Manager of the procuring Department;
(e) the municipality’s legal adviser (if it has one); The Chairperson will be the Director of the procuring Department At least one supply chain management practitioner of the municipality
R28(2)(a) and (b)
2.2 Functions
2.2.1 The Committee must: (a) evaluate bids in accordance with –
i. the specifications for a specific procurement; and
ii. points system as must be set out in the supply
chain management policy of the municipality or municipal entity in terms of regulation 27(2)(f) and as prescribed in terms of the Preferential Procurement Policy Framework Act;
(b) evaluate each bidders ability to execute the
contract; (c) check in respect of the recommended bidder
whether municipal rates and taxes and service charges are not in arrears; and
R28(1)(a) to (d)
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Serial No.
Terms of Reference Regulation
No. (d) submit to the Adjudication Committee a report
and recommendations regarding the award of the bid or any other related matter.
2.3 Quorum
2.3.1 A quorum of the Committee shall be 50% of the members of the Committee plus 1.
3. Bid Adjudication Committee
3.1 Composition and appointment of Chairman 3.1.1 3.1.2 3.1.3 3.1.4
The Committee must be composed of – (a) the Chief Financial Officer (CFO), or if the CFO
is not available, another Manager in the Budget and Treasury office reporting directly to the CFO and designated by the CFO;
(b) the Directors of all the Municipal Departments; (c) a technical expert in the field who is an official of
the municipality, if the municipality has such an expert
The Chief financial Officer will be the Chairperson of the Committee In the absence of the Chairperson, the members of the Committee present at the meeting must elect one of them to preside at the meeting Neither a member of a Bid Evaluation Committee, nor an adviser or person assisting the Evaluation Committee, may be a member of a Bid Adjudication Committee
R29(3) R29(3) R23(4)
3.2 Powers and Functions
3.2.1 The Committee must consider the report and R29(1)(a) and (b)
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Serial No.
Terms of Reference Regulation
No. 3.2.2
recommendations of the Bid Evaluation Committee and make a recommendation to (a) the Chief Financial Officer if the amount
involved falls within the CFO’s delegated authority; or
(b) the Accounting Officer to make a final award If the Committee decides to award a bid other than the one recommended by the Bid Evaluation Committee, it must prior to awarding the bid – (a) check in respect of the preferred bidder whether
that bidder’s municipal rates and taxes and service charges are not in arrears; and
(b) notify the Accounting Officer
R29(5)
3.3 Quorum
3.3.1 A quorum of the Committee shall be 50% of the members of the Committee plus 1.
3.4 Role of the Accounting Officer
3.4.1 3.4.2 3.4.3
The Accounting Officer may ratify or reject the decision of the Bid Committee referred to in 3.2 above If the decision is rejected by the Accounting Officer, it must be referred back to the Committee for reconsideration The Accounting Officer may at any time during the bidding process refer any recommendation made by either the Evaluation Committee or the Adjudication Committee back to that Committee for reconsideration of the recommendation