Municipal SCM Regulations, tracked where irregular expenditure starts
Most irregular expenditure in local government traces back to a supply chain step that was skipped, undocumented or approved by the wrong person. Dimeri holds the SCM Regulations as controls rather than policy text, so the deviation, the declaration and the committee resolution are captured when they happen.
What the SCM Regulations require
The Municipal Supply Chain Management Regulations were made under section 168 of the MFMA and give effect to section 111, which requires every municipality and municipal entity to have and implement a supply chain management policy. The regulations set the minimum content of that policy and the structure around it, which means a municipality cannot comply simply by adopting a policy document. It has to operate the system the policy describes.
The system has three committees at its centre. A bid specification committee compiles the specifications for each procurement, a bid evaluation committee evaluates bids against those specifications and the preference points system, and a bid adjudication committee considers the evaluation report and either makes the award or recommends it. The regulations set out who may and may not sit on each, and the separation between them is deliberate: it is what stops one official from writing a specification, scoring it and awarding against it.
Around the committees sit the rules that generate most audit findings. Procurement thresholds determine whether a quotation process or a competitive bidding process applies. Regulation 36 allows deviation from the prescribed process in specific circumstances, but requires the reasons to be recorded and reported to council. Declarations of interest, prohibitions on awards to persons in the service of the state, and the rules on awards to suppliers in arrears with municipal accounts all attach to individual transactions. Each one is a control that either operated and was evidenced, or did not.
The obligations Dimeri tracks
Dimeri treats each SCM rule as a transactional control with evidence attached, because that is the level at which the Auditor-General tests it.
SCM policy adopted and implemented
A supply chain management policy that meets the prescribed minimum content, adopted by council and actually operated.
- Policy held against its review and adoption dates
- Policy clauses mapped to the controls that implement them
- Delegations recorded with their current holders
- Gap analysis against the prescribed framework
Bid committee system
Bid specification, evaluation and adjudication committees properly constituted, with the separation between them maintained and evidenced.
- Committee composition recorded per procurement
- Quorum and attendance captured with the resolution
- Conflicts declared and recusals documented
- Evaluation reports held with the adjudication decision
Procurement thresholds
The value of a procurement determines whether petty cash, verbal or written quotations, formal written price quotations or a competitive bidding process applies.
- Threshold applied and recorded per transaction
- Splitting of orders flagged for review
- Minimum quotation counts evidenced
- Advertising periods tracked for competitive bids
Deviations from the SCM process
Deviation is permitted in defined circumstances, including emergency and sole supplier, but the reasons must be recorded and reported.
- Deviation register with the ground relied on
- Reasons recorded at the time, not reconstructed
- Accounting officer approval captured
- Reporting to council and inclusion in the next report
Abuse, prohibited awards and declarations
Measures to combat abuse of the system, the prohibition on awards to persons in the service of the state, and the rules on awards where municipal accounts are in arrears.
- Declaration of interest held against each award
- Screening against persons in the service of the state
- Municipal account arrears check evidenced
- Restricted and blacklisted supplier checks recorded
Contract management
Contracts monitored on a monthly basis, with amendments and expansions handled through the proper process rather than by practice.
- Contract register with expiry and renewal dates
- Performance monitoring recorded against the contract
- Amendments and expansions with their approval trail
- Supplier risk reviewed through the contract life
How Dimeri covers MFMA SCM Regulations
Supply chain controls fail at the point of transaction, not at the point of policy. Dimeri is built to capture the evidence at that moment and to surface the pattern afterwards.
Deviations that cannot go dark
Every deviation is logged with its ground, its reasons and its approver at the time it is taken. The register is live, so the pattern of deviations by department, supplier and value is visible long before it appears in an audit report.
Irregular expenditure traced to a control
When irregular expenditure is recorded in the MFMA register, Dimeri links it to the SCM control that failed. Over a year that turns the expenditure register into a diagnosis rather than a tally.
Supplier and third party risk in the same place
Supplier screening, declarations, performance and contract expiry live alongside the procurement controls rather than in a separate vendor system, so a supplier problem and a compliance problem are visible as one thing.
Ready for the material irregularity process
Where the Auditor-General raises a material irregularity on a procurement, the specification, evaluation, adjudication, declarations and approvals are already assembled against that transaction with their dates.
Getting SCM coverage in place
- 1
Map the policy to controls
Your adopted SCM policy is loaded and each clause is tied to the control that implements it. Clauses with no control behind them are the starting gap list.
- 2
Set the committee and delegation structure
Committee composition, delegations and thresholds are configured so the system knows which route a given procurement should take and who may approve it.
- 3
Turn on transaction capture
Deviations, declarations and committee resolutions are captured as they happen, with the evidence attached at that moment rather than gathered later.
- 4
Report and review
Deviation reports to council, contract expiry forecasts and the irregular expenditure register run from the same data, with trends surfaced for the audit committee.
MFMA SCM Regulations questions
Do the SCM Regulations apply to municipal entities?
Yes. Section 111 of the MFMA requires every municipality and municipal entity to have and implement a supply chain management policy, and the regulations set the framework that policy must meet. Dimeri holds each entity's SCM controls separately and rolls them into the parent municipality's view.
How does Dimeri handle procurement thresholds?
Thresholds are configured to match your adopted policy and the prescribed framework, and each transaction records which threshold was applied and why. Where orders appear to have been split to stay below a threshold, the pattern is flagged for review rather than left to be found at audit.
What does the regulation on deviations actually require?
Regulation 36 permits the accounting officer to dispense with the prescribed procurement processes in specified circumstances, including emergencies and where a sole supplier exists, but requires the reasons to be recorded and reported. The failure is almost never the deviation itself. It is the absence of a contemporaneous record of why it was taken.
Can this replace our procurement system?
No, and it is not meant to. Dimeri holds the compliance and risk layer over whatever procurement or financial system you run: the controls, the declarations, the deviations, the approvals and the evidence. The transactions themselves stay where they are.
Is this a substitute for legal advice?
No. This page describes how Dimeri structures municipal supply chain obligations for tracking and evidence. It is not legal advice, and your legal advisers should confirm the current regulations, thresholds and how they apply to you.
Go further on MFMA SCM Regulations
Put MFMA SCM Regulations on one register
Every requirement mapped to a control with a named owner, the evidence held against it, and one view of where you stand.