MFMA & Municipal Tenders: How to Bid for Local Government Work
How the Municipal Finance Management Act differs from PFMA for supplier bidding, municipal SCM regulations, thresholds, and what you need to know to win municipal contracts.
What Is the MFMA?
The Municipal Finance Management Act 56 of 2003 (MFMA) is the financial management legislation for South Africa’s local government sphere — including metros, district municipalities, and local municipalities. Just as the PFMA governs procurement by national and provincial departments, the MFMA governs procurement by the country’s 257 municipalities.
For suppliers, the difference is significant. Municipal procurement operates under the MFMA framework, which has different thresholds, different delegations, and sometimes different processes from PFMA procurement. A supplier who understands only the PFMA may miss critical differences when bidding for municipal work.
MFMA Structure and Applicability
The MFMA applies to:
- Metropolitan municipalities (eThekwini, City of Cape Town, City of Johannesburg, City of Tshwane, Ekurhuleni, Buffalo City, Mangaung, Nelson Mandela Bay)
- District municipalities (52 across SA)
- Local municipalities (199 across SA)
- Municipal entities — companies in which a municipality is the majority shareholder
The MFMA does not apply to national or provincial departments (those use the PFMA), but many municipalities deliver services that overlap with national and provincial government, so understanding both frameworks helps.
Key implementing instruments under the MFMA include:
- MFMA Section 111 — requires every municipality to have an SCM policy
- Municipal SCM Regulations (Government Notice R868 of 2005) — detailed procurement rules
- MFMA Circular 90 (2019) — CSD integration requirements
- MFMA Circular 77 (2015) — irregular and fruitless expenditure guidance
Municipal SCM Thresholds
The Municipal SCM Regulations prescribe the following procurement thresholds (current as at 2024):
| Contract Value | Procurement Method |
|---|---|
| Up to R2,000 | Petty cash (no quotations required) |
| R2,001–R30,000 | Written or verbal quotation (3 quotes recommended) |
| R30,001–R200,000 | Formal written quotations (minimum 3) |
| R200,001–R10 million | Competitive bidding (invited tenders, 21-day advertising) |
| Above R10 million | Competitive bidding (open tenders, 30-day advertising) |
Compare to PFMA thresholds: Under PFMA, the competitive tender threshold starts at R500,000 for national/provincial departments. Municipal competitive bidding kicks in much earlier at R200,001 — meaning there is more open tendering in municipalities for mid-value contracts.
Municipal B-BBEE and Preference Points
The Preferential Procurement Policy Framework Act 5 of 2000 (PPPFA) and the 2022 Preferential Procurement Regulations apply equally to municipalities. The same 80/20 and 90/10 scoring systems apply:
- 80/20: Contracts between R30,000 and R50 million — 80 points for price, 20 for B-BBEE
- 90/10: Contracts above R50 million — 90 points for price, 10 for B-BBEE
The B-BBEE level claimed must be supported by either:
- A valid B-BBEE verification certificate from an accredited agency (for generic enterprises, turnover > R50 million)
- A sworn affidavit from a Commissioner of Oaths (for EMEs and QSEs from 1 April 2019)
CSD Requirements for Municipal Procurement
Following MFMA Circular 90 of 2019, municipalities are required to verify supplier CSD registration before awarding contracts. This brought municipalities into alignment with PFMA departments. Key requirements:
- Suppliers must be registered and active on the CSD
- CSD verification must occur at bid evaluation stage and again before award
- Municipal entities (Pty Ltds owned by municipalities) also require CSD verification
Some smaller municipalities were initially slow to implement Circular 90 requirements, but enforcement has increased following Auditor-General findings on irregular expenditure.
Key Differences Between PFMA and MFMA Procurement
| Feature | PFMA (National/Provincial) | MFMA (Municipal) |
|---|---|---|
| Governing legislation | PFMA + Treasury Regs | MFMA + Municipal SCM Regs |
| Competitive tender threshold | R500,000+ | R200,001+ |
| Governing body | Accounting Officer / National Treasury | Municipal Manager / Municipal Council |
| Delegated authority | Treasury Regulation 16A | Municipal SCM Policy |
| Emergency procurement | Treasury Reg 16A.6.6 | Municipal SCM Reg 36 |
| Annual reports | National Treasury portal | Municipal portal + Auditor-General |
Delegation in municipalities
Unlike PFMA departments where delegation of authority follows a relatively standardised Treasury framework, municipal delegation is determined by each municipality’s own SCM Policy and Delegation Register. The municipal manager is the accounting officer under section 60 of the MFMA, but may delegate to senior officials.
This means that award authority varies significantly between municipalities. In larger metros, a senior official may award contracts up to R2 million without council approval. In smaller municipalities, council may need to approve awards above R500,000.
Municipal Bid Committees
Municipal SCM Regulations prescribe a bid committee structure similar to PFMA:
- Bid Specification Committee (BSC) — prepares terms of reference and bid documents
- Bid Evaluation Committee (BEC) — evaluates responses and prepares a recommendation
- Bid Adjudication Committee (BAC) — approves or adjusts the recommendation
The BAC typically includes the chief financial officer (CFO) or their delegate. For high-value contracts, the municipal manager must approve. For very large contracts (typically above R10 million), the municipality’s council must ratify the award.
Municipal Emergency Procurement
Under Municipal SCM Regulation 36, a municipality may deviate from competitive bidding in genuine emergencies — situations of immediate risk to life, property, or the continuation of essential services. Emergency procurement must:
- Be documented with a written motivation
- Be reported to the next meeting of the BAC
- Be included in the annual report
- Be disclosed in the Auditor-General’s audit
Emergency procurement is a common source of irregular expenditure findings. Municipalities sometimes invoke emergency provisions for non-emergency situations, which triggers PFMA-equivalent irregular expenditure classification under the MFMA.
Municipal Entities (Section 21 Companies)
Many municipalities procure through separate legal entities — for example, a city-owned bus company or a development agency. These entities fall under the MFMA if the municipality is the controlling entity. As a supplier to a municipal entity, you must:
- Comply with the entity’s procurement policy (which must align with MFMA)
- Be registered on the CSD
- Submit the same SBD forms as required for municipal procurement
Municipal entities sometimes have faster procurement processes than the municipality itself, as their supply chain policies can be more flexible. However, they cannot operate outside the MFMA framework.
Finding Municipal Tenders
Municipal tenders are advertised through:
- eTenders portal (etenders.treasury.gov.za) — all municipalities above a certain threshold must publish here
- Municipal websites — each municipality maintains its own tender notice page
- Provincial Government Gazettes — larger contracts are gazetted
- Municipal newspapers — local community newspapers still carry tender notices for compliance
The lack of a single portal for all 257 municipalities is one of the most significant information challenges for suppliers. Tenderpreneurs aggregates municipal tenders to address this gap.
Frequently Asked Questions
Q: Do PFMA compliance documents (SBD forms) apply to municipal tenders? A: Generally yes. Most municipalities use the same SBD forms as PFMA departments, as they are prescribed by Treasury and aligned with PPPFA. However, some municipalities use slightly modified templates — check the specific bid documents.
Q: Can a municipality procure directly from me without advertising? A: For contracts above R200,000, competitive bidding is required. Below this threshold, three written quotations are required (R30,001–R200,000). Single-source procurement without competing quotes is irregular expenditure unless an emergency is declared.
Q: My municipality owes me money from a previous contract — can this affect a new bid? A: Not directly. Being a creditor of the municipality does not disqualify you. However, disputes with the municipality may affect your willingness to bid again.
Q: How do I find out who the SCM manager is in a specific municipality? A: The municipal website typically lists SCM contact details. If not, contact the CFO’s office. Municipal telephone directories are also available from the South African Local Government Association (SALGA) at salga.org.za.
Q: Is there a waiting period before I can bid for a municipality I just registered with? A: No — there is no mandatory waiting period. Once your CSD profile is active and your bid is responsive, you are eligible to be considered for award.