Leading up to the promulgation of the Public Procurement Bill, which the National Treasury will soon submit to Cabinet and Parliament for approval, President Cyril Ramaphosa has clarified the intention of the Bill and the Preferential Procurement Regulations that were published last week.

He says government remains wholly committed to transformation and empowerment and that broad-based black economic empowerment (BBBEE) is here to stay, with no prospect of being reconsidered.

The Bill is aimed at unifying the currently disparate and fragmented laws dealing with public sector procurement by creating a single regulatory framework for local, provincial and national governments, as well as State-owned enterprises.

It repeals the Preferential Procurement Policy Framework, or Preferential Procurement Regulations of 2017.

The Preferential Procurement Regulations serve as a “placeholder” until the Bill is finalised and becomes effective from January 16, 2023.  

Ramaphosa cites the Constitution in his latest weekly newsletter, stating that, to promote the achievement of equality, legislative and other measures may be taken to advance people who had been disadvantaged by unfair discrimination – this being black people, women and persons with disabilities.

The same Constitution provides for both value-for-money and empowerment in public procurement and that, when public bodies contract for goods and services, they must do so in a manner that is fair, equitable, transparent, competitive and cost-effective, Ramaphosa highlights.

“It also says the State must implement a preferential procurement policy that advances people who have been disadvantaged by unfair discrimination. It is in this context that the new Preferential Procurement Regulations need to be understood. Some people have mischaracterised the purpose and effect of the new regulations,” the President explains.

He says some commentary has claimed that the current government is back-tracking on its commitment to BBBEE; however, this is “far from the truth”.

The new regulations fulfil an order of the Constitutional Court last year declaring that the preferential procurement regulations of 2017 are illegal and requiring that the Finance Minister replace them within 12 months.

“Some of the commentators on this matter neglect to mention that the crux of the judgment is the scope of Ministerial powers to make preferential procurement regulations.

“These regulations now fully comply with Section 217 of the Constitution in that they empower organs of State to develop and implement preferential procurement policies when contracting for goods and services,” Ramaphosa explains.

These regulations are an interim measure pending the enactment of the Public Procurement Bill, which Treasury will soon submit to Cabinet and Parliament.

The Public Procurement Bill will maximise both value-for-money and preferential procurement objectives to enable the delivery of services and transformation. 

The new regulations have no effect on the BBBEE Act, as all organs of State must fully comply with this Act when developing their procurement policies.

This Act remains in force as one of the most transformative pieces of legislation to come out of democratic South Africa.

“Government’s policy framework has not changed with the introduction of these regulations, nor has our commitment to service delivery and black economic empowerment,” Ramaphosa affirms.

Empowerment criteria will still be applied in government contracting and organs of State must comply with the BBBEE Act when developing their procurement policies.

“What has changed is that organs of State will be able to set and apply specific ‘goals’ when evaluating a tender under a preferential procurement policy.

“Despite the provisions of the Constitution, despite the introduction of measures to advance the economic empowerment of black South Africans and women, we are certainly not as far as we had hoped to be with economic transformation,” Ramaphosa states.

He reiterates the need to develop a new vision for black economic empowerment that builds on successes, learns from shortcomings and that responds to local and global economic realities.

The new regulations are not “a victory for sound business practices” as one interest group has claimed, Ramaphosa says.  

“What is unsound, unsustainable and, above all, immoral, is an economy that benefits the few at the expense of the many. Put plainly, we remain as committed as ever to BBBEE, meeting our localisation objectives and transforming an economy that, despite our best efforts, is still largely controlled by a minority,” the President adds.

He concludes the newsletter by imploring business, labour and civil society to join government on this transformative journey and advance economic transformation.