Signed into law this week, it is unsurprisingly polarising – with preferences for some and not for others. From Moneyweb.
President Cyril Ramaphosa this week signed the new Public Procurement Bill into law to standardise procurement practices across all organs of state.
It was deemed necessary because of the previously fragmented system of procurement across sectors that constrained “justified advancement of persons or categories of persons who could provide goods or services”, according to a statement from the president’s office.
In a nod to the findings of the Zondo Commission of Inquiry into Allegations of State Capture, the bill further aims to address widespread corruption in public procurement.
Chapter 4 provides for preferential procurement for black South Africans, women, the disabled, military veterans, youth, small enterprises and co-operatives.
It is this section that attracted most criticism since it entrenches race and other preferences rather than relaxing them, as some had hoped for.
Chapter 4 is also criticised for failing to provide clear guidelines on whose job it is to initiate procurement policies within departments. Parliamentary legal advisors point out that this becomes clearer when the procurement act is read together with the Public Finance Management Act and other acts.
The new law also sets up a public procurement office under National Treasury that will issue binding instructions on procurement matters to all organs of state, except municipalities, which will be guided by non-binding circulars.
Countering corruption
Accounting officers are charged with investigating allegations of corruption and checking to see if procurement bidders appear on the register of debarred persons.
Bids with false documents or misrepresentations must be rejected.
This has also attracted widespread criticism since there seems no certainty on how this will be enforced any differently to the current, highly flawed procurement system.
The fear is that without adequate policing, corruption will continue as before.
In its submission to parliament, National Treasury argued that the anti-corruption measures in the bill conform with the Constitution of the Republic, adding that enforcement requires the collaboration of various law enforcement agencies and government institutions.
The bill on its own should not be relied upon as the sole instrument to combat corruption, it said.
The Zondo Commission recommended the establishment of an independent and properly resourced anti-corruption authority to confront abuses within the current system.
‘Clearer, faster’
“By introducing standardised procedures and stringent oversight mechanisms, the law aims to minimise bureaucratic delays and reduce opportunities for corruption,” says Kamogelo Mampane, executive chair of the Supply Chain Council.
“Supply chain professionals will benefit from clearer guidelines and faster decision-making processes, enabling them to focus on strategic planning and execution.”
The Black Business Council commended the signing of the bill as “a historic moment in our democracy”.
“In our view, this is the most important legislation, secondary only to the South African Constitution. The legislation will ensure that the state is able to set aside procurement opportunities for blacks, women, youth and persons with disabilities. It will make it possible for President Ramaphosa to implement the 40% set asides for women.”
‘Buy local’
One less contentious aspect of the bill is the requirement for a minimum threshold of locally-produced goods.
The law stipulates that government entities prioritise locally produced goods and services in their procurement decisions.
This provision aims to boost local industries, create jobs, and stimulate economic growth within the country.
Supply chain professionals will need to cultivate robust relationships with local suppliers, ensuring that the procurement of locally manufactured products meets quality and cost-efficiency standards.
‘Starkly polarising’
In a 2023 submission to parliament, the Public Procurement Working Group, representing several civil society groups, wrote that policy deliberations on preferential procurement were both “starkly polarised and astonishingly simplistic”.
“Debates often hinge on whether to completely phase out or radically expand preferential provisions, but this elides the constitutional, political, and economic reality.
“This reality requires that we configure preferential procurement in a way that optimally sustains, expands, and deracialises our economy and society.”
Too vague?
The language of the bill is often vague and open to interpretation, and that opens the door to litigation.
For example, confidential information as defined in the act is defined as personal information protected by the Protection of Personal Information Act (Popia), a definition so broad as to potentially prevent disclosure of the names of business owners and directors. That would defeat the law’s purported transparency measures.
The set-aside provisions of the law which favour certain groups over others when it comes to procurement might trigger a Constitutional Court challenge, something the framers seemed to have anticipated.
Ramaphosa says the bill complies with Section 217 of the Constitution, which requires state procurement to be conducted in a way that is equitable, transparent, competitive and cost-effective.
Much of the adverse commentary around the bill has focused on whether cost-effectiveness would be subordinated to other concerns, such as equity and preferential set-asides.
Expect ongoing scrutiny
The Democratic Alliance was among those critical of the bill in November last year for failing to address the core issue of systemic corruption, entrenching racial divisions and exacerbating inefficient public spending. Now it finds itself a partner in the government of national unity, which has just passed this into law.
Given the massive state procurement budget of about R1 trillion a year, the new law is bound to attract critical and ongoing scrutiny – those in line to benefit praising its implementation, while those potentially excluded are decidedly less enthusiastic.
It’s by no means clear whether this is the cure for the corruption so amply detailed in the Zondo reports.
