40 percent of tenders controversial

Nearly 40 percent of tenders awarded by the eThekwini municipality in the third quarter of this year were controversial Section 36 contracts. A staggering 74 Section 36 contracts worth close to R500 million were awarded by the city between July and September. Section 36 of the municipal supply chain management policy is intended for use in an emergency, if the service or goods are only available from a single supplier, and in exceptional cases. The housing department accounted for R245m in 10 awards accounting for 52 percent of all the Section 36 contracts, a document tabled at the finance and procurement committee meeting revealed on Monday.

The report, which was the directive of committee chairwoman Fawzia Peer, would allow committee members to focus on the trends by various departments and to assist the committee in playing an oversight role. According to the report, out of the R1.2 billion in tenders that were awarded by the city during the third quarter, R472m of them were Section 36. Six tenders worth R54m were awarded to the cleansing and solid waste unit, while 19 tenders worth R49m were awarded from the water and sanitation department. A further R44m went to 13 ICC Section 36 tenders. Alleged abuse of the policy has been the subject of much debate and disapproval from many councillors since last year.

Section 36 contracts spiralled from R680.7m in 2009 to R1.03bn last year. In February, however, city manager Michael Sutcliffe said there had been a marked reduction in the use of this kind of tender, but he warned that the reduction would impact on service delivery, particularly housing. A task team was set up last month to put the brakes on the use of a controversial policy that allows city officials to bypass the normal tender process in awarding contracts. Three executive committee members were selected to look at how the policy could be amended.

They would also scrutinise future contracts before they were awarded in terms of the policy to assess if use of the policy was warranted, and see to it that the contracts represented value. In his committee’s quarterly report to the city’s executive committee members, the city’s chairman of the audit and risk committee, Sipho Nzuza, last month told exco members that there had been a dramatic reduction in the use of these tenders. Reacting to the report, the DA has demanded that the housing department be called to account at the next meeting and explain why there was a need to divert such a large amount of money through Section 36. “The DA believes that the use of Section 36 is clearly being abused by certain departments and officials to by-pass proper procedure.

“Something is clearly wrong with the housing department if they were unable to properly tender for the 10 awards,” said Dean Macpherson, the party’s spokesman for finance and procurement.