GREATER KOKSTAD MUNICIPALITY

TERMS OF REFERENCE

PROVISION OF BANKING SERVICES

Issued and Prepared by: Greater Kokstad Municipality75 Hope StreetP.O. Box 8Kokstad 4700

Municipal Manager: L MAPHOLOBAContact Person: Mr S KhozaTel: 039 797 6600E-mail: siyabonga.khoza@kokstad.gov.za

TABLE OF CONTENTS PAGE No.

1. Introduction 3

2. Request for Proposals 3

3. Financial activities and information 4

4. Minimum services required 9

5. Additional information on banking products and services 12

6. Specific requirements and information 13

7. Preferential points Claim 14

7. Evaluation criteria 21

10. Social Responsibility Programme 26

11. Closing date 26

12. Contacts 28

13. Compulsory tender briefing session 28

14. Bid advert 29

15. Declaration of Interest 31

16. Certificate of Independent Bid Determination 34

1. INTRODUCTION

Greater Kokstad Municipality, a medium capacity Local Municipality, has

improved over the years.

It is the Mission of Kokstad Municipality to achieve the economic status through:

Delivering local economic development.

Delivering a high standard of essential services.

Encouraging public participation.

Overcoming debt and achieving cost recovery on services provided.

In order to realize the mission of Greater Kokstad Municipality, Council is

partnering with service providers who display a higher than average level of

efficiency, professionalism and commitment.

2. REQUEST FOR PROPOSALS

Registered financial institutions/commercial banks, registered in terms of the

Banks Act, Act No. 94 of 1990 are invited to bid for the provision of banking

services to Kokstad Municipality. The term of the contract is for five (5) years

from signature of the agreement. Only banks registered with full commercial

banking license will considered.

3. FINANCIAL ACTIVITIES AND INFORMATION

3.1 Accounting analytics (as at 30 June 2017)

Tests of profitability/efficiency:

Analysis 2016/2017 2015/2016 Industry Benchmark

Quality of income 2.33 2.18 1.00

Tests of liquidity:

Analysis 2016/2017 2015/2016 Industry Benchmark

Cash ratio 3.03 3.31 1

Current ratio 3.11 3.54 1

Quick ratio 3.11 3.54 1: 1

Debtors Collection

Period (DCP)

60 days 90 days 5 days

Creditor days 30 days 30 days 30 days

Tests of solvency and equity position:

Analysis 2016/2017 2015/2016 Industry Benchmark

Interest coverage 582.58 times 255.29 times None

Cash coverage 593.98 times 297.54 times None

Debt to Equity ratio 0.10 0.07 1: 1 (max)

Debt ratio 0.09 0.06 1: 1 (max)

By all accounts the above indicators reflect the following features:

Sound financial control

Financial viability

Financial sustainability

3.2 BUDGET MTREF 2017/18

The following budget was approved by Council during May 2017:

Operating Revenue R 188 796 291

Operation Expenditure R 232 615 989

Capital Expenditure R 73 012 200

Total expenditure R 305 628 189

Funding of capital expenditure:

Own Funding R 13 917 200

Grant funding R 59 095 000

Loan funding nil

3.3

3.3.1. Estimates of Receipts

Number of transactions

Value of transactions (000’s)

Number of Deposits Kokstad cashiering hall

569 R 3 100 000 per annum

Cash depositsKokstad 450 R 400 000 per annum

Cheques depositsKokstad 1900 R 292 000 000 per annum

Direct/Electronic Deposits A.C.B. 250 R 30 000 per annum

Check for deposits Testing Ground 569 R 3 100 000 per annum

Cash and cheques are uplifted from both cashiering sites on a daily basis. This service

is excluded from this bid and will form part of a separate bid upon expiry of the contract

with the current service provider.

3.3.2. Payments

3.3.2.1 Issued Cheques

Number of transactions

Value of transactions

(000’s)Number of Cheques Issued & 57 R942 946.22

value 2016/07-2017/06

Council intends to reduce the use of cheque payments and utilize electronic banking

extensively for daily sundry and creditor payments.

3.3.2.2 Payroll payments per month Transaction R

3.3.4.1 Number of employees Employees Councilors

Ward CommitteeTempsEPWPFWPC

R4 533 776.69R291 725.97R 94 000R13 936.4R175 482.37R10 201.95

3.3.4.2 Number of EFT Transactions 4532 R 5 119 123.38

3.3.2.3 EFT Payments to third parties

Transactions R 000Number of EFT Payment runs 22 batches per

month

R 3 98855.86

3.5 Schedule of Bank Accounts

The Municipality operates the following bank accounts:

FNB Sta

ndard Bank

Nedbank

Ithala

Investec

3.6 Investments

Investments do not fall within the requirements of this bid, but are regulated in terms of

Councils adopted Cash management and investment policy. The policy however

enables the successful banking services bidder to also compete in the process of

holding a portion of Councils investments and call accounts.

3.7 Computer systems

The Municipality utilises the following Computer related Systems that the bidder must consider:

Financial system Munsoft Version 7i

Payroll system VIP Version Premier 4.0 A

Network set up Client /Server

Connectivity 10Meg diginet line

4. MINIMUM SERVICES REQUIRED

The requirements of the Municipality in respect of banking services are as follows:-

4.1. Management of cash and cheques

SERVICES REQUIRED4.1.1.4.1.2.4.1.3.4.1.4.4.1.5.4.1.6.

Cash deposit facility.Cash withdrawals.Cheque payments.Re-deposit of post-dated cheques presented previously.On-line photographic images of cashed cheques issued by the municipality.Supply of pre-printed numbered deposit books.

4.1.7.

4.1.8.4.1.9.4.1.10.4.1.11.4.1.12.4.1.13.4.1.14.

4.1.15.4.1.16.

4.1.17.

4.1.18.4.1.19.4.1.20.

4.1.21.

Controls to ensure that the physical cash deposited is reconciled to the amount recorded on the deposit slip.Tracing of R/D cheques.Tracing cheques lost in transit.Providing copies of deposit slips/ depositor details/ statements.Verification of the authenticity of all cheques issued by the Municipality.Special clearance of cheques.Direct on-line function to enquire on the status of cheques presented.Timeous intervention and rectification of cheques that have been tampered with or fraudulently negotiated.A dedicated support team to maintain and service all banking queries.A facility whereby consumers and ratepayers can make payments on their account directly to the bank on submission of their accountsA facility whereby consumers and ratepayers can make payments on their account directly to the Municipality by way of debit order.Stop payments of chequesReturn of unpaid chequesDeposit Identifier on deposits made over the counter at the bank:· Validation of the 10 digit municipal bill reference number· Validated 10 digit reference must be reflected on Municipality’s bank statement.Debit/credit card facility at each cashier

4.2. Other

SERVICES REQUIRED4.2.1.4.2.2.

4.2.3.4.2.4.

4.2.5.

Audit Bank certificates and confirmation letters.Delivery of statements (monthly - paid cheques to be in numerical sequence).NB: Statements to be delivered atKokstad Municipality,169 Main street ,Kokstad, 3297Delivery of provisional statements.Returned/ disputed debit order. (Full details of debit order to be provided on request)

Call account linked to credit account to enable transfer of funds as and when required

4.4. Interest rates

RATES REQUIRED4.4.1. Daily aggregation of all debit and credit balances on nominated accounts and

interest to be calculated on the net balance (refer to list of bank accounts currently in operation).

4.4.2. Calculation of interest rate on debit and credit balances to be determined in relation to prime overdraft rate. If not prime, indicate benchmark used.

4.4.3. Interest to be paid at the end of each month.

4.5. Reporting, Audit Trails and Queries

SERVICES REQUIRED4.5.1.4.5.2.

4.5.3.

4.5.4.

4.5.5.

4.5.6.

Comprehensive daily and monthly cash management reports and statements.Hard copies of historic information in respect of all bank related queries and indicate the available period (minimum 12 months).A download and hard copy of electronic payments received through internet, into file format for electronic receipting into the Municipality’s system.

Deposit error corrections must be reported to the Municipality within 48 hours of the deposit inclusive of all supporting documentation.

On-line, real-time browsing facilities.

An audit trail to be maintained of cheques deposited at the bidder’s bulk cash centre.

4.6. Electronic Banking Services

SERVICES REQUIRED4.6.1.4.6.2.4.6.3.4.6.4.4.6.5.

4.6.6.

4.6.7.4.6.8.

4.6.9.

4.6.10.

4.6.11.

4.6.12.

Direct on-line balance enquiry.Direct on-line statement enquiry.Direct on-line stop payment facility.Direct on-line reversal of stop payment.Electronic historic information in respect of all bank statements and indicate the available period (minimum 12 months).Facility to download information on the bank statement into the Municipality’s financial system.An audit trail of all electronic fund transfers in/ deposits.Direct on-line facility to enable transfer of funds electronically between the Municipality’s bank accounts.An electronic direct debit facility to collect payments from the Municipality’s consumers (Bidder’s bank and agent banks).An electronic enquiry facility to access direct debit rejections with a reason/ code explaining the rejection.EFT Payments to nominated accounts where the bidder’s system allows the Municipality to specify the maximum amount as well as the number of payments per day to be made to a nominated account with exception reports when these limits are exceeded.(Investments, salaries etc.)An audit trail of all EFT payments per payee name and should be able to be

4.6.13.

4.6.14.

4.6.15.4.6.16.

printed if required.Verification and validation of suppliers/ creditors branch and account numbers.- Tenderer’s bank- Agent bankSegregation of Duties that allow for the following :-- Capture of Information/ Create Payments- Locking/ verification of transaction/ payment batch.- Release of transaction/ payment batchAllow for multiple operators/ usersEach operator must have own user username and password

4.7 General

SERVICES REQUIRED4.7.1.4.7.2.4.7.3.4.7.4.4.7.5.4.7.6.4.7.7.4.7.8.

Issuing of guaranteesLetters of credit/forward coverBusiness credit/ petrol/ toll card facility.Customer credit referencing.Economic advice/ forecasting.Custodial services.Installation of ATM machines at various sites as required by the Municipality.Provide a process to facilitate the receipting of Foreign Deposits.

5. ADDITIONAL INFORMATION ON BANKING PRODUCTS AND SERVICES

The bidder must provide the following additional information/ services:

5.1. Cash Centre

Briefly detail:5.1.1. The cash handling procedures5.1.2. Security at the Tenderers Cash Centre5.1.3. Teller supervision5.1.4. Handling of discrepancies and queries

5.2. Interest calculations and retro-entries

5.2.1. The procedure to handle retro entries in terms of interest calculations.5.2.2. The timeframes for transactions to be effected. E.g. intra-day, over night or the next day. The Tenderer should also provide information as to the type of transactions permitted as previous day value and which are not.5.2.3. The management and recording of retro-entries. Cut-off times at the bank for electronic funds transfer (EFT).

5.3. Electronic banking services and technical equipment

5.3.1. A technical specification to enable the Municipality to interface with the computer systems of the Tenderer. The Tenderers timeframe and support systems in ensuring the implementation of the project must be stipulated.5.3.2. The Communication Software that will be made available to link into the Banks system.5.3.3. Information on the connection protocol or service provider that the Tenderer subscribes to.5.3.4. Security assurance and confidentiality in connectivity between the Municipality and the Tenderer.5.3.5. A Service Level agreement to ensure that the Tenderer will comply with the services/ standards agreed which must be finalised within a week of the awarding of the Tender.

5.4. Service Delivery

5.4.1. The procedure to deliver bank statements.5.4.2. Daily scrutiny of bank statements for erroneous debit entries, wrongly encoded cheques, incorrectly captured cheque numbers and the timeous rectification thereof.5.4.3. The bank statement must be returned with all paid cheques sorted in sequential order.5.4.4. The tenderers teller must scrutinize cheques being deposited for completeness, including signatures and dates.

5.5. Debit/ Credit Card Facility

5.5.1. A complete solution to enable ratepayers and consumers to pay Municipal Bills / Sundries utilising debit cards at the Cashiering halls, i.e.Kokstad5.5.2. The solution must include hardware/ software requirements and full costing in relation to setting up a single Cashier terminal.5.5.3 Petrol cards for 124 cars.

6. SPECIFIC REQUIREMENTS AND INFORMATION

6.1. Service Contract

The Tenderer must enclose its standard client service contract, which will be customised to the Municipality’s requirements should the Tenderer be awarded the contract.

6.2. Safety/ security procedures and insurance

6.2.1. Furnish information of all insurance cover to safeguard the interests of the Municipality in the event of negligence on the part of the Tenderer.6.2.2. The ability to investigate and recover losses arising from all fraudulent activities.

6.2.3. Provide on-going advice on fraud prevention and methods of detecting fraud i.e. E-Commerce, cheques, cash, etc.

6.2.4. Advice and facility to detect money laundering activities.6.2.5. The Municipality requires protection against all forms of fraud relating to the receipt and payment of cash, and the processing of banking transactions. Such measures should include cheque verification, authorisation of EFT’s, password controls, bulk cash handling security, payment mandates, security of data, etc.

6.3. Implementation of Project

6.3.1 The Tenderer must demonstrate its ability to implement the banking services through accepted project management principles and demonstrate its capability to achieve the time frames as determined by the Municipality. 6.3.2 The Tenderer should detail its experience in implementing similar accounts at provincial and local government level.6.3.2 Additional costs associated with the implementation (including hardware and software costs) should be clearly indicated or identified, which the Tenderer is of the view is for the account of the Municipality.

6.4. Training

The Tenderer must indicate:-

6.4.1. Training that will be furnished on site to use its electronic banking systems and any upgrades in the future.6.4.2. Training which will be provided for any unfamiliar service or facility offered by the Tenderer.6.4.3. The ability and willingness to assist with the training of any future system developments.6.4.4. Costs associated with the aforementioned, who the Tenderer is of the view is for the account of the Municipality.

7. EVALUATION CRITERIA

Bids will be evaluated and adjudicated in terms of the Council’s Supply Chain Management Policy, firstly on functionality and thereafter on the 80/20 Preferential Procurement Point System in terms of the 2011 Preferential Procurement Regulations. Only those bidders who obtain the minimum threshold points on functionality will proceed into the next phase of evaluation.

“STAGE 1: EVALUATION CRITERIA – FUNCTIONALITY” will count for 60% (60 points) of the 100 points

8. EVALUATION CRITERIA – STAGE 1 – FUNCTIONALITY 100 (60%)

8.1 Presence of banking branch in Kokstad 20 points

Proof of Physical address(s) must be supplied for all branches in Kokstad.( Rates statement/lease agreement)

8.2 Proof of value of fidelity cover (exceeding R 100 000 000) 20 points

8.3 Proof of experience in providing banking services to local government municipalities

30 points8.3.1 One appointment and positive reference letter – 5 points8.3.2 Two appointment and positive reference letters – 10 points8.3.3 Three appointment and positive reference letters – 15 points8.3.4 Four appointment and positive reference letters – 20 points8.3.5 Above Five appointment and positive reference letters – 30 points

8.4 Account Executive Relevant experience: 10 years in servicing Local government spheres (CV attached and certified qualification )

30 points

8.4.1 Account Executive with Relevant qualification and experience less than 5 years

(10)

8.4.2 Account Executive With Relevant qualification and experience with 5-10 years

(15)

8.4.3 Account Executive With Relevant qualification and experience above 10 years

(30)

Bidders are requested to provide proof of the above functionality

9. EVALUATION CRITERIA – STAGE 2 – PRICING SCHEDULE

The Bidder must ensure that this Section is fully completed. Either enter ‘YES’ or ‘NO’. If the answer is ‘YES’ then indicate the associated costs if applicable:

Reference to section

Service/s required Yes/NO Measure of unit

Unit cost (excl. VAT

4.1.1. Cash deposit facility4.1.2. Cash withdrawals4.1.3. Cheque payments4.1.4. Re-deposit of post-dated cheques

presented previously.4.1.5. On-line photographic images of cashed

cheques issued by the municipality.4.1.6. Supply of pre-printed numbered deposit

books.4.1.7. Controls to ensure that the physical

cash deposited is reconciled to the amount recorded on the deposit slip.

4.1.8. Tracing of R/D cheques.4.1.9. Tracing cheques lost in transit.4.1.10. Providing copies of deposit slips/

depositor details/ statements.4.1.11. Verification of the authenticity of all

cheques issued by the Municipality.4.1.12. Special clearance of cheques.4.1.13. Direct on-line function to enquire on the

status of cheques presented.4.1.14. Timeous intervention and rectification of

cheques that have been tampered with or fraudulently negotiated.

4.1.15. A dedicated support team to maintain and service all banking queries.

4.1.16. A facility whereby consumers and levy payers can make payments on their account directly to the bank on submission of their accounts

4.1.17.A facility whereby consumers and levy payers can make payments on their account directly to the Municipality by way of debit order.

4.1.18. Stop payments of cheques4.1.19. Return of unpaid cheques4.1.20. Deposit Identifier on deposits made over

the counter at the bank:Validation of the 10 digit municipal bill reference numberValidated 10 digit reference must be reflected on Municipality’s bank statement.

4.1.21. Debit/credit card facility at each cashier4.2.1. Audit Bank certificates and confirmation

letters.

4.2.2. Delivery of statements electronically (daily, weekly and monthly - paid cheques to be in numerical sequence).

4.2.3. Delivery of provisional statements.4.2.4. Returned/ disputed debit order. (Full

details of debit order to be provided on

request)

4.2.5. A download of deposits with the 10-digit consumer account numbers in a file format for electronic receipting purposes.

4.2.6. Call account linked to credit account to enable transfer of funds as and when required

4.3.1. Daily aggregation of all debit and credit balances on all accounts and interest to becalculated on the net balance (refer to list of bank accounts currently in operation).

4.3.2. Calculation of interest rate on debit and credit balances to be determined in relation to prime overdraft rate. If not prime, indicate benchmark used.

4.3.3. Interest to be paid at the end of each month.

4.4.1. Comprehensive daily and monthly cash management reports and statements.

4.4.2. Hard copies of historic information in respect of all bank related queries and indicate the available period (minimum 12 months).

4.4.3. A download and hard copy of electronic payments received through internet, into file format for electronic receipting into the Municipality’s system.

4.4.4.Deposit error corrections must be reported to the Municipality within 48 hours of the deposit inclusive of all supporting documentation.

4.4.5. On-line, real-time browsing facilities.

4.4.6. An audit trail to be maintained of cheques deposited at the bidder’s bulk cash centre.

4.5.1. Direct on-line balance enquiry.4.5.2. Direct on-line statement enquiry.

4.5.3. Direct on-line stop payment facility.4.5.4. Direct on-line reversal of stop payment.4.5.5. Electronic historic information in respect of

all bank statements and indicate the available period (minimum 12 months).

4.5.6. Facility to download information on the bank statement into the Municipality’s financial system.

4.5.7. An audit trail of all electronic fund transfers in/ deposits.

4.5.8. Direct on-line facility to enable transfer of funds electronically between the municipality’s bank accounts.

4.5.9. An electronic direct debit facility to collect payments from the Municipality’s consumers (Bidder’s bank and agent banks).

4.5.10 An electronic enquiry facility to access direct debit rejections with a reason/ code explaining the rejection.

4.5.11 EFT Payments to nominated accountswhere the bidder’s system allows the Municipality to specify the maximum amount as well as the number of payments per day to be made to a nominated account with exception reports when these limits are exceeded.(Investments, salaries etc.)

4.5.12 An audit trail of all EFT payments per payee name and should be able to be printed if required.

4.5.13 Verification and validation of suppliers/ creditors branch and account numbers.- Tenderer’s bank- Agent bank

4.5.14 Segregation of Duties that allow for the following :-- Capture of Information/ Create Payments- Locking/ verification of transaction/ payment batch.- Release of transaction/ payment batch

4.5.15 Allow for multiple operators/ users4.5.16 Each operator must have own user

identification and password

4.6.1. Issuing of guarantees4.6.2. Letters of credit/forward cover4.6.3. Business credit/ petrol/ toll card facility.4.6.4. Customer credit referencing.4.6.5. Economic advice/ forecasting.4.6.6. Custodial services.4.6.7. Installation of ATM machines at various

sites as required by the Municipality.4.6.8. Provide a process to facilitate the receipting

of Foreign Deposits.

4.6.9 Petrol cards for 124 municipal vehicles

4.7.0 Enterprise Banking app

4.8.0 Forex payments ( inbound and outbound)

NB: ONLY BIDDERS WHO HAVE RESPONSED TO ALL THE ABOVE SERVICES WILL BE CONSIDERED. FAILURE TO COMPLY WITH THE REQUIRED SERVICES WILL RESULT IN DISQUALIFICATION.

10. Social Responsibility Programme

It is encouraged that banking institutions undertake social responsibility

programme(s) for the benefit of the Community of Greater Kokstad Municipality.

Greater Kokstad Municipality will provide:

a) The description of proposed programmes or programmes

b) The financial investments to be made

c) The bidder will liaise with the relevant department regarding

targeted programmes.

11. CLOSING DATE

Proposals are to be completed in accordance with the conditions attached to the

Terms of Reference document and must be sealed in an envelope must be

deposited in the tender box situated at the municipal office in 75 Hope street,

Kokstad not later than 12h00 on 14 September 2018, at which time proposals

will be opened in public. Late proposals received by way of post, facsimile or e-mail will under no circumstances be considered

12. CONTACTS

For further information and understanding on the tender, please contact:

SUPPLY CHAIN MANAGEMENT

Telephone: 039 797 66743

e-mail : mnqobi.mahlaba@kokstad.gov.za

BUDGET AND TREASURY

Telephone: 039 797 6626

e-mail : siyabonga.khoza@kokstad.gov.za

13. COMPULSORY TENDER BRIEFING SESSION

There will be no compulsory tender briefing session

CERTIFICATE OF INDEPENDENT BID DETERMINATIONI, the undersigned, in submitting the accompanying bid:________________________________________________________________________(Bid Number and Description)in response to the invitation for the bid made by:______________________________________________________________________________(Name of Municipality / Municipal Entity)do hereby make the following statements that I certify to be true and complete in every respect:I certify, on behalf of:_____________________________________________________ that:(Name of Bidder)1. I have read and I understand the contents of this Certificate;2. I understand that the accompanying bid will be disqualified if this Certificate is found notto be true and complete in every respect;3. I am authorized by the bidder to sign this Certificate, and to submit the accompanyingbid, on behalf of the bidder;4. Each person whose signature appears on the accompanying bid has been authorized bythe bidder to determine the terms of, and to sign, the bid, on behalf of the bidder;5. For the purposes of this Certificate and the accompanying bid, I understand that theword “competitor” shall include any individual or organization, other than the bidder,whether or not affiliated with the bidder, who:(a) has been requested to submit a bid in response to this bid invitation;(b) could potentially submit a bid in response to this bid invitation, based ontheir qualifications, abilities or experience; and(c) provides the same goods and services as the bidder and/or is in the sameline of business as the bidder6. The bidder has arrived at the accompanying bid independently from, and withoutconsultation, communication, agreement or arrangement with any competitor. Howevercommunication between partners in a joint venture or consortium³ will not be construedas collusive bidding.7. In particular, without limiting the generality of paragraphs 6 above, there has been noconsultation, communication, agreement or arrangement with any competitor regarding:(a) prices;(b) geographical area where product or service will be rendered (marketallocation)(c) methods, factors or formulas used to calculate prices;(d) the intention or decision to submit or not to submit, a bid;(e) the submission of a bid which does not meet the specifications andconditions of the bid; or(f) bidding with the intention not to win the bid.8. In addition, there have been no consultations, communications, agreements orarrangements with any competitor regarding the quality, quantity, specifications andconditions or delivery particulars of the products or services to which this bid invitationrelates.9. The terms of the accompanying bid have not been, and will not be, disclosed by thebidder, directly or indirectly, to any competitor, prior to the date and time of the official

bid opening or of the awarding of the contract.³ Joint venture or Consortium means an association of persons for the purpose of combining their expertise, property, capital, efforts, skilland knowledge in an activity for the execution of a contract.

Checked by SCM:

_______________________MR. M. MAHLABAASS. MANAGER: SCM

Compiled by:

_______________________MR. S. KHOZAMANAGER: ASSETS & REPORTING

Recommended by:

________________________MR. N. MTHIMKHULUBSC CHAIRPERSON

Recommended by:

___________________________MS. A. WHYTEBEC CHAIRPERSON

Comments by BAC Chairperson_______________________________________________________________________________________________________________________________________________________________________________________________________________________________________

___________________________MR. T. MKETSUBAC CHAIRPERSON

Approved by:

_______________________MR. L.H. MAPHOLOBAMUNICIPAL MANAGER