Awarding of contracts still a problem
Auditor-general’s finding on metro spending
NELSON Mandela Bay metro is first in the country. Unfortunately, it is first in the category of being the municipality with the highest irregular expenditure nationwide.
The auditor-general (for the 2016-17 financial year) states that R28.376-billion is identified as irregular expenditure by municipalities across the country with the NMBM contributing R8.184-billion (or nearly a third) thereof. (This figure has accumulated since the early 2000s. – The editor)
This is totally unacceptable for a municipality of this size.
Some R45-million (0.5%) of the R8.184-billion irregular expenditure occurred in 2016-17 under the watch of the DA.
Although indicating a dramatic reduction, the citizens of the metro expect all expenditure to be regular.
The report states, “The majority (99%) of the irregular spend (by NMBM) is attributed to non-compliance with procurement process requirements. Key projects affected include water infrastructure, road infrastructure and housing.”
Glancing through the auditor-general’s reports from 2005 (available on the NMBM website), non-compliance with the Public Finance Management Act has been a persistent issue.
Non-compliance includes not advertising public tenders, not awarding to recommended suppliers, wrongly calculated points, awards to non-Construction Industry Development Board-registered contractors, etc.
In addition, overrunning of contract budgets was the norm without providing any rational reasons therefor.
Having retired from a life of contracting in 2014, I bear personal witness to the skulduggery committed in Port Elizabeth since 1994 and which probably reached a peak around 2010.
Contractual claims against NMBM became a norm as logical and reasonable response was non-existent in the NMBM departments of infrastructure and engineering as well as housing. These departments became a law unto themselves, [allegedly] breaching written contracts with abandon.
The auditor-general reports show claims against the NMBM approaching R200-million carried on the NMBM books as cost provisions over this period.
I believe that the bulk of these claims were directed at the two departments and that most judgments went against them.
No wonder that legal costs of R54-million were still incurred in 2016-17, largely wasted in trying to defend the indefensible.
Due to non- and late payment, several reputable construction companies were forced into liquidation during this period.
The auditor-general has consistently mentioned the NMBM’s failure to pay suppliers within the stipulated 30-day period.
This trend continues today with the NMBM going so far as to [allegedly] illegally write construction contracts where payment terms are extended to 60 days and that no interest may be charged as provided in the contract.
Infrastructure and housing budgets form a major portion of NMBM spending, and are at the forefront of service delivery.
These departments should be staffed with managers and professionals of integrity and experience in the management of multi-million-rand projects.
Appointments of consulting engineers and awards to contractors should be strictly in accordance with national policy and laws governing the built environment to comply with the over-arching constitutional Clause 217, which inter alia states:
When an organ of state in the national, provincial or local sphere of government, or any other institution identified in national legislation, contracts for goods or services, it must do so in accordance with a system which is fair, equitable, transparent, competitive and cost-effective.
The disconcerting fact is that most of the handful of key players [allegedly] responsible for this criminal waste of public funds are still in position with the NMBM.
Either the DA administration is blissfully unaware of the situation or does not deem remedy as a priority.
President Cyril Ramaphosa is on record that state-owned entities (SOEs) that have drained the fiscus over the years must be restructured, and that those guilty of contributing to the losses must be dismissed and charged if found liable for breach of their duties.
Municipalities are de facto SOEs governed by locally elected political parties on behalf of the taxpayers and it is expected of municipalities to follow the president’s directive set by example.
The NMBM should investigate this matter to stop the haemorrhaging of funds while improving service delivery to all.
This may not be popular with the 5 000 CIDB grade 1 SMMEs (3 283 of which are active) registered in Port Elizabeth, but maybe the 241 CIDB grade 2 SMMEs (130 active) will appreciate being clear of the rats and mice whose sole ambit is to purportedly protest for work by stopping others who have work.
I say purportedly because unless work is given to them at [allegedly] inflated prices and substantial profits are virtually guaranteed, their clamour for award of a contract quickly wanes.
We all know the importance of job creation, but forcing the inexperienced into formal construction contracts does nobody any favours, least of all the SMMEs who government purports to “help”.
Paying two or three times for the same service at inflated prices and still having to accept a substandard outcome is bankrupting the country rapidly.
This issue remains the prime mover for irregular expenditure by municipalities and results in the lack of progress shown on service delivery to the poor.
Retired PE contractor