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- The processing of the Public Procurement Bill kicked off in Parliament on Tuesday.
- There is no clarity yet on a new scoring system, which will be determined in regulations
- The new preferential procurement system will allow for new categories of preference, including job creation.
- For more financial news, go to the News24 Business front page.
The premium state entities will pay to buy goods and services from previously disadvantaged and other preferred groups will not be decided until after the Public Procurement Bill is passed and regulations drafted, National Treasury officials told MPs on Tuesday.
The Public Procurement Bill, which will establish a single procurement framework for all state entities and set out a new preferential procurement policy, was tabled in Parliament on 30 June. It will now be processed by the Standing Committee on Finance, including holding public hearings.
MPs briefed on the bill said that they were not prepared to "compromise on transformation" and wanted clarity on what the premium would be that would enable designated groups to get a leg up in government contracts.
Section 217 of the Constitution says that government procurement must be done through a system that is "fair, equitable, competitive, and cost-effective". It also says that state entities can implement a procurement policy that allows for categories of preference. Parliament must pass legislation to prescribe how this must be done.
Under current legislation, regulations under the Preferential Public Procurement Framework Act state that in state contracts of less than R50 million, entities must allocate 20 out of 100 points for preferential procurement when scoring tenders. In contracts over R50 million, 10 out of 100 points can be earned from preferential procurement.
The new bill states that procuring entities must implement a preferential procurement policy that includes "one or more scoring systems" but does not indicate the weighting for preference. Treasury officials said that this would come later when regulations were drawn up.
Chairperson of the committee, ANC MP Joe Maswanganyi, said: "Transformation cannot be compromised. We are not in this struggle for cosmetic purposes. We are in this struggle to transform this economy. The issue of transformation through preferential procurement should come out very clearly."
The EFF's Mzwanele Manyi said that he was "not convinced" by the emphasis in the bill on value for money. Said Manyi:
Chief director in the Treasury Willie Mathebula said as the Preferential Procurement Framework Act would be repealed, the 90:10 and 80:20 system "was history". But he said he could not talk about a new points system.
"Unfortunately, we cannot say here and now what the premium would be; it all depends on the capacity of the fiscus to accommodate those things. But the long and short of it is that as we draft regulations, we will come up with an indication of the possible premium."
The regulations would be subject to parliamentary process, he said.
READ | Godongwana 'misread' order on preferential procurement for government tenders - ConCourt
The EFF's Floyd Shivambu said that if the 90:10-80:20 system was not amended, then "you are not changing anything".
The Public Procurement Bill provides more preference categories than previous legislation, which only allowed preference on the grounds of BEE. Preference can also be made for goods and services that are produced in SA. These measures were contained in the 2017 regulations to the previous act, which were struck down by the Constitutional Court in 2022.
The bill also enables procuring entities to take measures to set aside and sub-contract portions of state contracts to preferred groups.
In addition to using procurement to promote empowerment, entities can use it to promote beneficiation, industrialisation, job creation, labour intensity and economic development.
