PREFERENTIAL PROCUREMENT’S ROLE IN ACHIEVING SA’S TRANSFORMATION OBJECTIVES BY JANICE ROBERTS
TRANSFORMATION POLICY Although the 2017 preferential procurement regulations have been set aside by the Constitutional Court, they continue to be in force until 15 February 2023 unless new regulations are promulgated before that date. Treasury is processing public comment on these regulations and is also engaged in the process of overhauling procurement entirely with a new Procurement Bill. Until then, policy uncertainty remains and Janice Roberts tracks how we got to this point. With procurement by government and state-owned entities at R2-trillion annually, this important vehicle for transformation has recently been battered by policy uncertainty and legal challenges. The original premise of black economic empowerment is based on the trickle-down concept: company A receives points for procuring from a black supplier, with the goal of developing the black SME sector. That concept remains intact within the wider enterprise and supplier development element but its success in developing a strong base of small black businesses must be questioned. When it comes to state procurement, however, government is still struggling to get it right. The Public Procurement Bill has been in the making for almost 10 years and while a version of it was published for comment in early 2020, no further drafts have appeared. On 25 February 2022, Finance Minister Enoch Godongwana told parliament that the bill is still being redrafted and may be further delayed. In the latest ruling concerning preferential procurement regulations (PPRs) on 30 May this year, the Constitutional Court (Concourt)
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stated that the 2017 PPRs in their entirety remain valid until 15 February 2023 unless new regulations are promulgated before that date. This followed National Treasury’s approach to the Concourt for clarity because while its 16 February 2022 declaration of invalidity of the 2017 PPRs was suspended for 12 months, the majority judgment was unclear about the date on which the suspension expired. This perceived lack of clarity led Treasury to issue a statement to organs of state on 25 February 2022 advising them that while awaiting clarity from the Concourt, tenders advertised prior to February 16, 2022 should be finalised in terms of the 2017 regulations, tenders advertised on or after February 16, 2022 should be held in abeyance and no new tenders should be advertised. Treasury emphasised that it was merely advising organs of state to reduce the risk of them awarding tenders based on rules that might no longer be applicable. Treasury then granted over 100 organs of state exemption from the provisions of the Preferential Procurement Policy Framework Act (PPPFA), including Transnet to ensure that public procurement was not delayed.
