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REQUEST FOR PUBLIC COMMENTS: AMENDMENT TO SERVICE LEVEL AGREEMENT

REQUEST FOR PUBLIC COMMENTS:

AMENDMENT TO SERVICE LEVEL AGREEMENT 

The escalating arrear debt due to the Nelson Mandela Bay Municipality (NMBM) has resulted in the appointment of EOH Mthombo (Pty) Ltd, specialists in the field of managing debt collection and revenue enhancement, to curb the escalating arrears and identify new revenue streams. 

The service level agreement (SLA) between NMBM and EOH Mthombo (Pty) Ltd was signed by the Acting City Manager on 28 April 2016. 

It should be noted that during the procurement of this company, the "Pricing Schedule” clearly stated that the award of the tender would be based on the rate tendered. Provisional rates were supplied, as the NMBM could not at the point of preparing the tender anticipate the possible monetary value relating to debt that could be collected by the preferred bidder. 

To this end, various discussions were held to clarify the terms of the SLA concluded between NMBM and EOH Mthombo (Pty) Ltd, which resulted in the following proposed amendments to this agreement: 

Proposed amendments to the Service Level Agreement (SLA) 

Addendum 1 

Part 3 of Service Agreement: Services - The Steering Committee on 2 August 2016 resolved: 

Amendment of point 4: Fees                                                                                                       

 4.1 MBD 3.2 Pricing Schedule: 

Delete: Variable costing dependent on units, item 2: Rate per physical verification and collection of data of each debtor (Approximately 350 000 debtor accounts) – R14.82 per debtor. 

Amend:Variable costing dependent on units, item 2: Rate per physical verification and collection of data of each debtor meter – R7.41 per meter. 

Note:All amounts include VAT. 

Addendum 2 

The Steering Committee on 23 June 2016 resolved that "….in terms of the SLA all debt in excess of 120 days must be managed by EOH except for specific items identified by NMBM and agreed to by EOH.” 

In addition, the following points are contained in the Addendum 2 to the Service Level Agreement between NMBM and EOH Mthombo (Pty) Ltd: 

"1.     That up to 31 March 2016 the base commission fee shall be calculated on 52 595 accounts that were handed over to the Service Provider;

2.       After 31 March 2016 the calculation of the base commission fee will be based on cash received by the Customer in respect of all debtors that were in arrears for 120 days and more, subject to the agreed upon exclusions: 

2.1     those debtors, as detailed in the addendum, shall be excluded from the calculation for the base commission fee; and 

2.2   all non-cash transactions on debtors’ accounts, such as ATTP, set-offs, write-offs and internal municipal accounts, will be excluded from the calculation of the base commission fee, where there are no cash receipts recorded. 

3.      The abovementioned exclusions shall fall away after 30 September 2016 as they are once off concessions.”

Point 3 of the Addendum 2 is under review with the service provider and will be amended at the NMBM’s discretion. In addition, the necessary verification of commission paid to the service provider will be conducted by Internal Audit.

Supply Chain Management Implications 

No supply chain management implications could be established, as the contract scope has not changed.

Financial Implications

There are no financial implications to Council based on the tender requirements, as the rate of commission was approved.

Compliance with MFMA Section 116(3)

To ensure compliance with Section 116(3) of the MFMA, the NMBM is issuing this media notice requesting comments on the proposed amendments to the above-mentioned contract.

The local community is therefore invited to submit representations and comments to the Municipality on its intention to amend the contract and proposed amendments mentioned above.

For more information, please contact Mr. Joel Swartz on tel. 041-506 5498 or email: jswartz@mandelametro.gov.za

Representations and comments must reach the email address jswartz@mandelametro,gov.za by not later than 22 February 2017. 

Ref. 23

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