The City of Ekurhuleni Metropolitan Municipality

Service Delivery Agr - EMM EDA

05/13/2019- 1 -

SERVICE DELIVERY AGREEMENT

between

THE CITY OF EKURHULENI METROPOLITAN MUNICIPALITY

(A juristic person and organ of state within the local sphere of Government, established under Government Notice no. 3585 of 2005 as published in the Gauteng Provincial Gazette Extraordinary No. 394 of 16 September 2005)

and

THE ekurhuleni development agency

(A municipal service utility and juristic person within the local sphere of Government, established in terms of section 86H(1) of the Municipal Systems Act (Act no. 32 of 2000))

Service Delivery Agr - EMM EDA

05/13/2019- 1 -

service delivery agreement

INDEX

I.PART 1: INTRODUCTORY provisions

1.PARTIES

2.introduction

3.INTerpretation

4.appointment

5.good faith and independent contracting parties

6.COMMENCEMENT AND DURATION OF AGREEMENT-

7.AREA OF OPERATION

8.SCOPE OF APPOINTMENT SERVICES AND STANDARDS OF PERFORMANCE

9.REMUNERATION

10.SHAREHOLDING AND MEMBERSHIP

II.PART 2: SPECIFIC COMPLIANCE, POWERS AND FUNCTIONS OF EXECUTIVES

11.GOVERNANCE

12.DIRECTORS, BOARD MEETINGS AND Municipality REPRESENTATION

13.CHIEF EXECUTIVE OFFICERS FUNCTIONS AND DUTIES

14.BORROWING POWERS

15.AUTHORISATION TO APPROVE EXPENDITURE AND ACQUIRE ASSETS

16.FINANCIAL INABILITY

III.PART 3: DUTIES AND OBLIGATIONS OF THE AGENCY

17.PRINCIPAL OBJECTIVE OF THIS AGREEMENT AND LINK TO BUDGETING PROCESS

18.FINANCIAL DUTIES, OBLIGATIONS AND BILLING

19.HUMAN RESOURCE POLICIES

20.STAFF COMPETENCY

21.SUPPLY CHAIN MANAGEMENT POLICY

22.COMPATIBILITY OF INFORMATION TECHNOLOGY SYSTEMS

23.RETENTION OF INFORMATION AND INFORMATION MANAGEMENT

IV.PART 4: rights, DUTIES AND OBLIGATIONS OF THE municipality

24.APPROVAL OF ANNUAL BUSINESS PLAN AND REVIEW

25.POWER TO MONITOR PERFORMANCE

26.SETTLING AND REVIEW OF KEY PERFORMANCE INDICATORS

27.RIGHT OF ACCESS OF INFORMATION

28.MONITORING PERFORMANCE

29.PRINCIPLES OF CO-OPERATION AND INTER-GOVERNMENTAL RELATIONSHIP

30.DETERMINATION OF REMUNERATION OF BOARD MEMBERS

V.PART 5: PERFORMANCE

31.PERFORMANCE OBJECTIVES, COMPLIANCE AND REVIEW

VI.PART 6: MUTUAL CO-OPERATION

32.INTER-GOVERNMENTAL CO-OPERATION

33.WARRANTIES

34.INDEMNITIES

VII.PART 7: DISPUTES, BREACH AND TERMINATION

35.DISPUTE RESOLUTION

36.FAILURE TO REACH AGREEMENT

37.COMPLIANCE WITH the IRF Act AND NEGOTIATION PROCEDURE

38.NEGOTIATION

39.MEDIATION

40.OPERATIONAL DISPUTE RESOLUTION

41.BREACH

42.TERMINATION

43.PROCESS relating to termination

44.SUBSTITUTION OF MANAGEMENT

45.AUTOMATIC TERMINATION

VIII.PART 8: GENERAL

46.GIFTS AND PAYMENT OF COMMISSION

47.FORCE MAJEURE

48.CONFIDENTIALITY

49.SUPREMACY OF THIS AGREEMENT

50.CESSION AND ASSIGNMENT

51.NON-VARIATION AND WAIVER

52.DOMICILIA AND NOTICES

53.GENERAL

53.1Entire Agreement

53.2No Indulgence

53.3Applicable Law

53.4Agreement Binding on Successors in Title

53.5Counterparts

53.6Continued Enforceability

Service Delivery Agr - EMM EDA

05/13/2019- 1 -

SERVICE DELIVERY AGREEMENT

I. PART 1: INTRODUCTORY provisions

1. PARTIES

The parties to this agreement are:

1.1 THE CITY OF EKURHULENI METROPOLITAN MUNICIPALITY

1.2 THE EKURHULENI DEVELOPMENT AGENCY

2. introduction

2.1 It is hereby recorded that:

2.1.1 The City of Ekurhuleni Metropolitan Municipality is charged in terms of the Constitution of the Republic of South Africa and other applicable legislation with the responsibility of ensuring the sustainable provision of municipal services within its area of jurisdiction;

2.1.2 with a view to deriving maximum benefit from the principles of performance-based contracting, the City of Ekurhuleni Metropolitan Municipality has elected to deliver certain the services through the Ekurhuleni Development Agency, a municipal service utility established by it;

2.1.3 in terms of the Local Government: Municipal Systems Act (Act no. 32 of 2000) a Service Delivery Agreement, which sets out the framework within which Ekurhuleni Development Agency must render such services, must be concluded between the parties without detracting from the accountability of the City of Ekurhuleni Metropolitan Municipality under its constitutional mandate;

2.1.4 the City of Ekurhuleni Metropolitan Municipality wishes to conclude a Service Delivery Agreement with Ekurhuleni Development Agency as parent municipality, to regulate the relationship and express the roles and functions required to achieve their respective objectives, in a structured manner.

3. INTerpretation

3.1 In this agreement, unless otherwise specified or the context clearly indicates the contrary, the following words and expressions shall have the meanings assigned to them below:

3.1.1 “Accounting Officer” – the accounting officer as defined in section 1 of the MFMA, who is, in relation to –

3.1.1.1 the EDA, the Chief Executive Officer as appointed in terms of section 93J of the Municipal Systems Act; and

3.1.1.2 the City, the Municipal Manager;

3.1.2 “Ancillary Services” - any action or function ancillary to the rendering of the Services, but not be interpreted to be an intention to limit the said Services;

3.1.3 “Applicable Laws” - means collectively, the MFMA, the Municipal Systems Act, the Municipal Structures Act, the POPI Act, the Consumer Protection Act, the National Credit Act, the Municipal Asset Transfer Regulations, the NEM Legislation and any and every other statute, regulation, directive, guideline, framework, policy or ordinance not specifically mentioned from time to time in force concerning the Services and necessarily affecting the EDA and/or the City and “Applicable Law” shall mean any one of the them as the context may indicate;

3.1.4 “Auditors” - the Auditor-General as defined in section 1 of the MFMA;

3.1.5 “Board” - the board of directors of the EDA, as appointed in terms of the By-Law and the Systems Act;

3.1.6 “Budget” – the budget for a Financial Year that is prepared and submitted annually by the Board to the City in terms of section 87 of the MFMA;

3.1.7 “Business Day” - any day excluding a Saturday, Sunday or public holiday in the Republic of South Africa;

3.1.8 “Business Plan” - the annual business plan of the EDA as recommended and approved by the Board and the City, and which contains (without limitation) the objectives of the EDA, the two year targets and indicators, risk management plan, human resources complement, operational and capital expenditure budgets, audit findings and plan to address the audit findings;

3.1.9 “By-Law” – the by-law passed by the City in terms of which the EDA was established, as contemplated under section 86H(1) of the Systems Act;

3.1.10 “CCR” - Core Competency Requirements as identified in the Scorecard;

3.1.11 “Chief Executive Officer” or “CEO” – the managing director of the EDA, which term may be used interchangeably with CEO;

3.1.12 “City” - when referred to as –

3.1.12.1 an entity; means the City of Ekurhuleni Metropolitan City established under Government Notice no. 3585 of 2005 as published in the Gauteng Provincial Gazette Extraordinary No. 394 of 16 September 2005, or its successors-in-title, and includes duly authorised officials of the municipality who have been delegated the necessary powers, functions and duties to give effect to this Agreement and decide upon and administer the matters referred to herein; and

3.1.12.2 a geographical area: means the Territory;

3.1.13 “Confidential Information” – the following information, belonging to either the City or the EDA:

3.1.13.1 any know-how, information, method of trading, technology, techniques, data, records, reports, business idea, business forms and stationery, drawings, models, programmes and any information of whatsoever nature and form directly or indirectly, related to the Parties, or the business of any of the Parties’ suppliers, service providers, agents, business associates or partners which was or may be supplied to one Party by the other Party or any of the aforesaid entities;

3.1.13.2 without limiting the generality of clause 3.1.13.1 in any manner whatsoever, confidential information shall include:

3.1.13.2.1 technical, financial, economic and general information, information provided orally, in computer readable media, in writing or through any other means of communication; and

3.1.13.2.2 information which the parties, when providing same to the each other expressly indicates to be confidential, irrespective of whether it falls within the ambit of clauses 3.1.13.1 and 3.1.13.2.1;

3.1.13.2.3 information relating to the provisions of this Agreement;

3.1.13.2.4 information regarding the negotiations relating to this Agreement;

3.1.13.2.5 information relating to the subject matter of this Agreement and the Services;

3.1.13.2.6 information relating to the other Party;

3.1.14 “Commencement Date” - the date on which this agreement is signed by the Party signing it last in time;

3.1.15 “Consumer Protection Act” – the Consumer Protection Act (Act no. 68 of 2008);

3.1.16 “Council”- the Council of the City as defined in section 1 of the Municipal Structures Act;

3.1.17 “Demarcation Act”- the Local Government: Municipal Demarcation Act (Act no. 27 of 1998);

3.1.18 “Designated Oversight Structures” - the respective portfolio to which the EDA belongs in the municipal structure charged with municipal entity oversight under the City’s governance model and the relevant MMC and Head of Department of the relevant portfolio. As at the Commencement Date, the oversight structure is as follows:

3.1.18.1 shareholder oversight will be performed by the risk management department of the City;

3.1.18.2 political head and shareholder representative functions will be performed by the Head of Department and the MMC;

3.1.19 “EDA” – the Ekurhuleni Development Agency, a municipal entity and juristic person within the local sphere of Government duly established as a service utility in terms of section 86H(1) of the Municipal Systems Act;

3.1.20 “Feasibility Study” – the following reports, prepared pursuant to a feasibility study undertaken by the City into the viability of the EDA, which set out the various outputs, functions and focus of the proposed EDA, and which were approved in terms of a resolution passed by an ordinary council meeting of the City on 23 June 2016:

3.1.20.1 the Report on the Feasibility Study, Proposed Mandate and Focus Areas for the Ekurhuleni Development Agency dated August 2015;

3.1.20.2 the Ekurhuleni Development Agency Feasibility Report;

3.1.20.3 the Ekurhuleni Development Agency Benchmark and Mandate Report;

3.1.20.4 the Ekurhuleni Development Agency Options Report dated 1 March 2017;

3.1.20.5 the Ekurhuleni Development Agency Legal and Governance Report;

3.1.21 “Financial Year” - the financial year of both the City and the EDA, being a 12 (Twelve) month period commencing on 1 July of one year and ending the following 30 June;

3.1.22 “Force Majeure Event” - any circumstances which is beyond the reasonable control of a Party, including, but not limited to, war (whether declared or not), revolution, invasion, insurrection, riot, civil commotion, mob violence, sabotage, blockade, embargo, boycott, the exercise of military or usurped power, fire, explosion, theft, storm, flood, drought, wind, lightning or unusually intense adverse weather condition (where the usual precautions to prevent damage could not prevent it), epidemic, quarantine, accident, breakdown of machinery or facilities, strikes, lockout or labour dispute, acts or restraints of government imposition, or restrictions of or embargos on imports;

3.1.23 “GPAC” - the Group Performance Audit Committee, being the structure established in terms of the Local Government: Municipal Planning and Performance Management Regulations, 2001 for ensuring the objective review and verification of the various components of the City employee performance management system;

3.1.24 “Grant Funding” - funding made available by the City to the EDA in terms of section 81(2)(b) of the Municipal Systems Act to fulfil obligations in terms of this Agreement, including funding to be transferred to the EDA upon the approval of the Budget;

3.1.25 “GRAP” - the Standards of Generally Recognised Accounting Practice as determined by the Accounting Standards Board of South Africa from time to time;

3.1.26 “Head of Department” - the Head of Department of the City responsible for oversight of the EDA. As at the Commencement Date, this function will be performed by the Head of Department: Economic Development;

3.1.27 “IDP” – the City’s integrated development plan, as envisaged in section 25 of the Municipal Systems Act, and which is aimed at integrated development and management of a municipal area within the Territory;

3.1.28 “Information” – information in the widest sense and shall include, without limiting its ordinary meaning, data, letters, telefaxes, e-mails, agreements, specifications and strategic plans;

3.1.29 “IRF Act” – the Intergovernmental Relations Framework Act (Act no. 13 of 2005);

3.1.30 “King IV” - King Report and Code on Governance for South Africa, 2016;

3.1.31 “KPA” – key performance area, being an explicit statement of a performance objective and outcome result that relate to a major functional, operational, technical, financial or behavioural area of the role and accountability of the individual or entity whose performance is being assessed;

3.1.32 “KPI” – key performance indicator, being the deliverables, standards or measures used to indicate whether or not a KPA has been met. These must be within the control of the individual or entity whose performance is being assessed, as well as being objective, observable and capable of being measured;

3.1.33 “Local Community” – that body of persons in the Territory, comprising the residents and ratepayers of the City, any civic organizations and non-governmental, private sector or labour organizations or bodies which are involved in local affairs within the Territory; and visitors and other people residing outside the Territory and because of their presence in the Territory, make use of services or facilities provided by the City, and includes, more specifically, disadvantaged sections of such body of persons;

3.1.34 “Material Deviation” - a deviation from the Budget in excess of 10% (Ten Percent);

3.1.35 “MFMA” – the Municipal Finance Management Act (Act no. 56 of 2003);

3.1.36 “Minister” - the Cabinet member under whose portfolio local government affairs fall;

3.1.37 “MMC” - a Member of the Mayoral Committee as contemplated in section 60 of the Municipal Structures Act;

3.1.38 “Municipal Budget Regulations” – the Local Government: Municipal Finance Management Act, 2003 Municipal Budget Regulations, published under Government Notice No. 393 under Government Gazette No. 32141 of 17 April 2009;

3.1.39 “Municipal Manager” – the municipal manager of the City, as appointed in terms of section 82(1)(a) or (b) of the Municipal Structures Act, and who is also the accounting authority for purposes of the MFMA;

3.1.40 “Municipal Structures Act” – the Local Government: Municipal Structures Act (Act no. 117 of 1998);

3.1.41 “Municipal Systems Act” – the Local Government: Municipal Systems Act (Act no. 32 of 2000);

3.1.42 “National Credit Act” – the National Credit Act (Act no. 34 of 2005);

3.1.43 “NEM Legislation” – collectively, the National Environmental Management Act (Act no. 107 of 1998), the National Environmental Management: Waste Act (Act no. 59 of 2008), National Environmental Management: Air Quality Act (Act no. 39 of 2004), National Environmental Biodiversity Act (Act no. 10 of 2004), and the National Environmental Management: Protected Areas Act (Act no. 57 of 2003);

3.1.44 “Operational Dispute” - any dispute between the parties, or between any Party and any other municipal entity of the City;

3.1.45 “Party” and “Parties” – the City and the EDA, as well as their respective successors in title and assigns, as the context may indicate;

3.1.46 “Performance Standards” - the standards to be achieved by the EDA in providing the Services under this Agreement as more fully described in Annexure “B” hereto;

3.1.47 “Prescribe” - in the context of this Agreement means prescribed by the City and/or any legal requirements prescribed by way of publication of a regulation in terms of the Applicable Laws;

3.1.48 “POPI Act” – the Protection of Personal Information Act (Act no. 4 of 2013);

3.1.49 “R & CRM Department” – the City’s Revenue and Customer Relations Management Department established by the City in respect of the EDA;

3.1.50 “Services” – the services provided by the EDA to the City in terms of this Agreement, as more fully described in Annexure “A” hereto, and which comprise (without limitation):

3.1.50.1 services relating to the branding and international promotion of the City in accordance with the Growth Development Strategy 2055 and the Feasibility Study, and in terms of which the EDA will, amongst others, be required to undertake international and local branding and promotion to attract investors, business and institutions and tourism in the Territory;

3.1.50.2 services relating to investment attraction and retention in accordance with the Growth Development Strategy 2055 and the Feasibility Study, and in terms of which the EDA will, amongst others, be required to improve business and governmental efficiencies in creating opportunities fostering growth through coordinated access to competitive funding in the Territory;

3.1.50.3 services relating to strategic real estate, urban realm and infrastructure development in accordance with the Growth Development Strategy 2055 and the Feasibility Study, and in terms of which the EDA will, amongst others, be required to facilitate the coordination and prioritisation of strategic real estate, urban realm and infrastructure development in the Territory;

3.1.50.4 services relating to partnership facilitation, planning and visioning in accordance with the Growth Development Strategy 2055 and the Feasibility Study, and in terms of which the EDA will, amongst others, be required to create opportunities for facilitating stakeholder partnerships and common visioning aligned to coordinated and prioritised planning of strategic programmes and projects in the Territory;

3.1.50.5 services relating to outdoor advertising management in accordance with the Growth Development Strategy 2055 and the Feasibility Study, and in terms of which the EDA will, amongst others, be responsible for certain outdoor advertising management services in the Territory;

3.1.51 “Scorecard” - in the context of performance management, the Scorecard is the document within which all relevant KPIs and KPAs impacting on the performance assessment of the EDA are captured relative to a particular assessment period;

3.1.52 “Service Area” - the geographical area in the Territory in respect of which the EDA is appointed (and where applicable, licensed in terms of applicable regulatory provisions) to render the Services, being the geographical area of the City and such other jurisdictions as agreed by the Parties from time to time.

3.1.53 “SDBIP” - the Service Delivery and Budget Implementation Plan which is approved by the Mayor of the City in terms of Section 53(1)(c)(ii) of the MFMA;

3.1.54 “Shareholders Quarterly Meeting” - a meeting convened by the City and attended on a quarterly basis by the chairperson of the Board, the relevant MMC, EDA Accounting Officer, shareholder representatives, representatives from the Risk Department and Line Department/s;

3.1.55 “Tariffs” - the user charge(s) agreed to between the City and the EDA in terms of this Agreement in respect of the Services rendered by the EDA and attached as Annexure “F”;

3.1.56 “Territory” – the municipal area of the City, as determined in terms of the Demarcation Act, as well as any other municipal boundaries that the parties may agree upon in writing from time to time.