On 18 July 2024, President Ramaphosa signed the Public Procurement Act 28 of 2024 ('the Act') into law. The Act, according to a statement by the Presidency, 'aims to create a single framework that regulates public procurement, including preferential procurement, by all organs of state, with the necessary efficiency, cost-effectiveness and integrity.'
The Act introduces a number of reforms, including the establishment of the Public Procurement Office within the National Treasury, with the power to issue binding instructions and non-binding guidelines on any procurement matter to promote integrity, transparency, and standardisation in procurement. The Act also establishes the Public Procurement Tribunal, which is tasked with reviewing decisions taken by procuring institutions, including decisions to debar a bidder or supplier.
Importantly, the Act also repeals the Preferential Procurement Policy Framework Act, 2000 in its entirety. Chapter 4 of the Act provides for the regulation of preferential procurement, and introduces the following:
- 'set-asides' (section 17), obliging procuring institutions to reserve certain bids for specified categories of persons, such as black people, black women, women, persons living with disabilities and small enterprises, subject to targets prescribed by the Minister of Finance in the regulations;
- 'pre-qualification criteria' (section 18), which must be included by procuring institutions in their procurement processes to promote the allocation of contracts to certain categories of historically disadvantaged persons;
- 'subcontracting as condition of bid' (section 19), requiring that 'where feasible' a procuring institution must ensure that a prescribed minimum level of subcontracting to specified categories of entities is included in bids that exceed a prescribed threshold amount; and
- 'local production and content' (section 20), empowering the Minister of Trade, Industry and Competition to stipulate minimum thresholds for local content and production for certain designated sectors or industries.
Since the Public Procurement Bill was first introduced in the National Assembly in June 2023, it has received a great deal of criticism from stakeholders in the public and private sectors alike. One notable concern is the over-reliance on subordinate instruments. The Act refers to a number of subordinate instruments, including regulations, frameworks, instructions, guidelines, codes of conduct, and policies, to be issued by various authorities including the Minister of Finance, the Public Procurement Office, and provincial treasuries. These potentially overlapping instruments at the subordinate level may introduce the very legal complexity, fragmentation, and incoherence the Act aims to eradicate.
The Act will come into effect on a date determined by the President by proclamation in the Government Gazette. According to the Act, different effective dates may be determined in respect of different provisions in the Act. Until then, procuring institutions remain bound by the existing procurement legislation.
Reviewed by Pippa Reyburn, Executive in ENS' Public Law Department
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