{"id":784772,"date":"2024-07-31T07:00:00","date_gmt":"2024-07-31T05:00:00","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=784772"},"modified":"2024-07-30T14:43:55","modified_gmt":"2024-07-30T12:43:55","slug":"major-storm-brewing-over-south-africas-new-procurement-laws","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/government\/784772\/major-storm-brewing-over-south-africas-new-procurement-laws\/","title":{"rendered":"Major storm brewing over South Africa’s new procurement laws"},"content":{"rendered":"\n

President Cyril Ramaphosa has hailed the assent of the Public Procurement Act<\/strong><\/a>, arguing that it is a key intervention in clamping down on the rampant corruption in South Africa’s public procurement.<\/p>\n\n\n\n

However, some, including Western Cape Premier Alan Winde, have raised “serious concerns over the constitutionality” of the act, labelling it as a “handbrake for service delivery.”<\/p>\n\n\n\n

Signed into law on 23 July 2024, Ramaphosa said in his weekly newsletter on 29 July that the Act makes public procurement in the country, which features endemic corruption, “far more transparent.”<\/p>\n\n\n\n

It is estimated that the South African government spends approximately R1 trillion annually on procurement through tenders, making it the largest buyer in the country.<\/p>\n\n\n\n

However, sticky fingers and corrupt ‘tenderpreneurs’ run rampant in South African procurement, with Chief Justice Raymond Zondo describing issues in public procurement as \u201cthe centrepiece of state capture\u201d. <\/p>\n\n\n\n

“The name is corruption, but the game is procurement,” former Eskom board chair Jabu Mabuza told the state capture inquiry back in 2019.<\/p>\n\n\n\n

In his commission findings, Zondo made recommendations on how to address the corruption within the procurement of goods and services by the government \u2013 particularly to do with the “fragmentation” of the procurement system.<\/p>\n\n\n\n

Ramaphosa said that these recommendations sparked the development of the Public Procurement Bill, which was tabled in Parliament in June 2023 and signed into law just over a year later.<\/p>\n\n\n\n

Broadly, the Act outlines that all state departments and public entities must use a standardised, preferential framework when procuring goods and outlines that those who work for the state are excluded from submitting bids to the state.<\/p>\n\n\n\n

“This law eliminates the problem identified by Chief Justice Zondo of fragmentation in procurement laws by creating a cohesive regulatory framework,” said Ramapohsa.<\/p>\n\n\n\n

It focuses on the people who are involved in procurement, requiring them to comply with a code of conduct and receive professional development and training.<\/p>\n\n\n\n

It specifies that the Minister of Finance is required to prescribe measures for the public, civil society, and the media to access, scrutinise and monitor procurement processes. <\/p>\n\n\n\n

It also looks for the use of technology to disclose procurement information, including the awarding of bids, and the process followed.<\/p>\n\n\n\n

“This indicates a commitment to transparency and public oversight of procurement activities,” said<\/a> Cliffe Dekker Hofmeyr’s Marelise van der Westhuizen and Katekani Mashamba.<\/p>\n\n\n\n

“No longer will tenders be awarded in dark corners far from public scrutiny,” said Ramaphosa.<\/p>\n\n\n\n

Ramaphosa said that the country\u2019s procurement system currently “faces challenges of professional capacity, fragmentation and operational flexibility.\u201d<\/p>\n\n\n\n

In hopes of countering this, the act establishes a Public Procurement Office in the National Treasury to promote standardisation in procurement and “modernise the system” <\/p>\n\n\n\n

It also notably provides for set-asides in the allocation of contracts to advance companies owned by historically disadvantaged groups, including black South Africans, women, youth, persons with disabilities and military veterans.<\/p>\n\n\n\n

“The report of the State Capture Commission shone a bright light on the weaknesses in our public procurement system.”<\/p>\n\n\n\n

“We are now fixing the problems,” concluded the President.<\/p>\n\n\n\n

However, not everyone agrees.<\/p>\n\n\n\n

Blowback<\/strong><\/p>\n\n\n\n

On 29 June, Western Cape premier Alan Winde and Western Cape MEC of Finance Deidre Baartman wrote to President Ramaphosa, “raising serious concerns over the constitutionality” of the new laws.<\/p>\n\n\n

\n
\"\"<\/a>
Western Cape Premier Alan Winde. Photo: Western Cape Government<\/figcaption><\/figure><\/div>\n\n\n

In a statement, Winde said that \u201cwe firmly believe that the Act in its current form does not pass constitutional muster as it usurps the autonomy of provinces and municipalities in adopting their own preferential procurement policies.\u201d<\/p>\n\n\n\n

Winde and Baartman argue that “the act will impose significant costs on the procurement process as well add to the administrative burden involved in procurement \u2013 it will be a handbrake on all systems and processes [and ultimately] impact service delivery.”<\/p>\n\n\n\n

“The Constitution envisages that organs of state have the discretion to decide whether to adopt a preferential procurement policy – this Act is the national government drafting policy, and usurping the autonomy of organs of state, instead of providing a framework,\u201d said Baartman.<\/p>\n\n\n\n

The Finance MEC said that \u201cthe process followed in drafting the legislation was woefully inadequate and, by National Treasury\u2019s own admission, did not consider all public input, nor was the public given all relevant information on which to engage.\u201d<\/p>\n\n\n\n

The Western Cape government contends that the National Assembly and NCOP failed to meet their constitutional responsibilities by providing too short public comment periods, “ignoring” some public feedback, inadequately evaluating the bill’s financial impact, and adopting a version of the bill that significantly differed from what was presented to the public.<\/p>\n\n\n\n

They call for urgent consultations with provinces and municipalities to resolve concerns before implementation.<\/p>\n\n\n\n

The signing of the law has also drawn mixed reactions from the business sector.<\/p>\n\n\n\n

Business lobby group Sakeliga called<\/a> the law “unconstitutional” and “a recipe for accelerated state failure.” <\/p>\n\n\n\n

They argue that it will “compel all state entities to pay exorbitant premiums for procurement, based on a tendering party\u2019s race, nationality, and other criteria, instead of prioritising value for money for the public.”<\/p>\n\n\n\n

“Its complex array of preferential procurement prescriptions, including set-asides, pre-disqualification, sub-contracting conditions, local content requirements, and more will greatly diminish the pool of available suppliers, leading to spiralling costs and lower quality,” said Sakeliga.<\/p>\n\n\n\n

The group adds that they believe it is unconstitutional because “neither Parliament nor a Minister is empowered to bind an organ of state to specific preferential policies [as] section 217 of the Constitution assigns this discretion to organs of state themselves, and even then, subject always to getting value for money.”<\/p>\n\n\n\n

“Sakeliga will now scrutinise this Act to determine appropriate steps in countering it and retaining possibilities for normal, value-for-money procurement with taxpayer funds,” the group said.<\/p>\n\n\n\n

Meanwhile, the Black Business Council lauded<\/a> the assent as a “historic moment in our democracy” and “the most important legislation, secondary only to the Constitution.”<\/p>\n\n\n\n

“Hopefully, the implementation of the Public Procurement Bill will trigger inclusive participation of the historical excluded individuals into the mainstream economy,” said the Black Business Council.<\/p>\n\n\n\n

\n\n\n\n

Read: Corruption crushing South Africa\u2019s core<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

President Ramaphosa has hailed the Public Procurement Act as a key tool for increasing transparency and combating corruption \u2013 but others have raised concerns around its impact.<\/p>\n","protected":false},"author":101,"featured_media":682225,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[23],"tags":[19740],"class_list":["post-784772","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-government","tag-public-procurement-bill"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/784772","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/101"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=784772"}],"version-history":[{"count":15,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/784772\/revisions"}],"predecessor-version":[{"id":784932,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/784772\/revisions\/784932"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/682225"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=784772"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=784772"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=784772"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}