PUBLIC PROCUREMENT BILL: A TURNING POINT FOR PUBLIC PROCUREMENT IN SOUTH AFRICA

The much discussed Public Procurement Bill has recently been passed by Parliament and its enactment awaits the President’s signature. South Africa’s legislative environment, as it relates to the procurement of goods and services, has always been a source of great controversy. The fragmentation of South Africa’s public procurement legislation has resulted in significant challenges for both bidders and procuring institutions, leading to uncertainty, inefficiencies and the misuse of state resources. This lack of clarity undermines the rule of law, hampers economic development and transformation, and fosters an environment ripe for corruption.

Despite its promise, the Bill is not without controversy. It aims to establish uniform treasury norms and standards for procuring institutions to implement their procurement systems and to outline a preferential procurement framework for these institutions. Chapter 4, which addresses preferential procurement, mandates that procuring institutions must develop and implement a procurement policy for categories of preference in the allocation of contracts and the protection or advancement of disadvantaged groups. The Bill’s prescriptive nature, such as mandating “set-asides” for certain categories of people, has sparked debate over its constitutionality. Critics argue that these provisions might conflict with the principles outlined in Section 217 of the Constitution, which require procurement processes to be fair, equitable, transparent, competitive, and cost-effective. Some contend that the Bill places too much emphasis on equity at the expense of cost-effectiveness and competition.

Additionally, the Bill includes a mechanism which requires any challenges from bidders to procurement decisions to initially raise such challenges directly with the procuring institution before approaching the courts or the Public Procurement Tribunal, which has been established under Section 36 of the Bill. While the establishment of this Tribunal is a welcome development, there are, understandably, questions regarding its capacity to function effectively. The effectiveness of these dispute resolution mechanisms in reducing the burden on the courts, especially for urgent procurement-related cases, remains to be seen.

Public procurement is a contentious issue, yet its importance for economic development and transformation is undeniable. The hope is that the Bill will foster a procurement system that promotes growth and transformation, rather than obstruct progress.