Bid to rein in special contracts

The finance and procurement committee in the eThekwini council has proposed that Section 36 awards be capped to R1 million to prevent the policy from being abused to award tenders to favoured companies. A report from the committee yesterday revealed that 74 Section 36 awards had been made from July to September this year, resulting in R472.8 million worth of contracts being awarded without going to tender. However, the report did not indicate which companies the contracts were awarded to.

Committee chairwoman Fawzia Peer expressed concern over the use of Section 36 awards – which are made where the accounting officer deems it necessary to deviate from supply chain management regulations – and suggested that committee chairmen should screen such tenders before they were awarded. Peer said it appeared that the same companies were getting the lion’s share of council tenders. Last month, the executive committee set up a task team comprising human settlements and infrastructure committee chairman Nigel Gumede, DA executive committee member Ronnie Veeran and Peer to amend the Section 36 policy. The move came amid widespread concern that it was being abused to award tenders to favoured companies.

Gumede said permission to use Section 36 should be sought from the executive committee. Meanwhile, DA councillor Dean Macpherson said the party was “shocked” to learn that Section 36 contracts valued at R472.8m had been awarded in the third quarter of the year. He said it appeared certain departments had chosen to completely ignore tender processes in favour of Section 36. “The housing department must be called to account at the next portfolio meeting and explain why there was a need to divert such a large amount of money through Section 36,” he said.

According to a report, the housing department made 10 Section 36 awards valued at R242.7m in the period under review, more than half the amount spent on such contracts, while the cleansing and solid waste unit handed out six Section 36 awards valued at R54.9m. The committee proposed a permanent cap of R1m on Section 36 awards. Should a contract exceed R1m, then departments would have no alternative but to use normal tender processes.

“Something is clearly wrong with the housing department if they were unable to properly tender for the 10 awards… The same companies are (repeatedly) being awarded Section 36 contracts and this might be the reason that normal tender processes are being avoided,” said Macpherson. Minority Front councillor Ismail Cassimjee said: “There should be stringent measures in place to ensure that the policy is not abused.”