Merafong City Local Municipality allegedly awarded an Enterprise Resource Planning software contract worth R69.7 million to a bidder that scored 0.09 in tender evaluations, bypassing a rival firm that quoted half the price and scored 80.00.
Winner secures R69.7 million deal despite zero score
The municipal contract is designed to manage core financial systems, utility billing, revenue collection, and municipal expenditures. The winning bidder secured the R69.7 million deal despite achieving a nearly zero evaluation score. Meanwhile, an alternative bidder quoted R34.9 million and earned an evaluation score of 80.00, earning a formal recommendation from the Merafong City Local Municipality Bid Evaluation Committee.
“This decision raises serious concerns about how the municipality evaluates tenders, spends public money, and ensures that residents receive value for money,” the Organisation Undoing Tax Abuse (OUTA) stated. The civil action group noted that while the lowest-priced bid is not legally mandated to win every government tender, any award to a substantially more expensive supplier requires lawful motivation.
Investment Holdings withdrew report backing higher priced bidder
OUTA’s investigation uncovered two conflicting technical evaluation reports produced by the technical evaluator, Investment Holdings. One report endorsed the lower-priced bidder with the 80.00 score, while another backed the higher-priced company that ultimately won the contract. Investment Holdings later withdrew the report recommending the higher-priced company, stating it was drafted unilaterally without proper authorization. Despite the withdrawal and the subsequent protests from the higher-scoring competitor, Merafong proceeded with the appointment.
The selection triggered a legal challenge from the rejected bidder, which secured a High Court interdict in January 2024 to halt the implementation of the software contract pending an internal appeal. OUTA has since demanded that Merafong disclose the resolution of that appeal, the legal justification for executing the disputed agreement, and the current administrative status of the procurement.
Revenue collections fall as municipal debt grows
The software controversy unfolds against a backdrop of severe fiscal distress within the municipality. According to OUTA senior project manager Rudie Heyneke, the local authority struggles to settle basic creditors and maintain essential public services. National Treasury records indicate that municipal revenue collections fell by 31.4%, dropping from R765.34 million in the 2023/24 financial period to R525.26 million in 2024/25.
Financial strain has severely impaired utility networks across the municipal district. Merafong owes approximately R1.4 billion to Rand Water and roughly R1.6 billion to Eskom. These outstanding debts have triggered recurring interruptions to water and electricity supplies, leaving residents to cope with prolonged shortages and deteriorating local infrastructure.
Merafong fails to release requested tender records
In pursuit of administrative transparency, OUTA filed a Promotion of Access to Information Act (PAIA) application to secure documentation regarding the tender award. Although Merafong responded to the Information Regulator concerning the application, the municipality has failed to release the underlying records to the civil organization.
“What makes this even more concerning is the municipality’s failure to provide the records we requested,” Heyneke said. “OUTA has followed the legal process, including escalating the matter to the Information Regulator, yet we have not received the information needed to properly scrutinise this appointment.”
Frequently Asked Questions About the Merafong Software Tender
What is the total value of the disputed software contract?
Merafong City Local Municipality awarded the Enterprise Resource Planning software contract for R69.7 million to a bidder that scored 0.09 in evaluations, while a competing firm offered to complete the same scope of work for R34.9 million.
How much does Merafong currently owe its major utility creditors?
According to data highlighted by OUTA, the municipality owes approximately R1.4 billion to Rand Water and roughly R1.6 billion to Eskom.
What legal action halted the software rollout?
A competing bidder that scored 80.00 on the tender evaluation filed a legal challenge and secured a High Court interdict in January 2024 to pause the contract implementation pending an internal appeal.
How did local revenue collections change according to treasury records?
National Treasury data shows that municipal revenue collections declined by 31.4%, falling from R765.34 million in the 2023/24 period to R525.26 million in 2024/25.
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