Over 100 state entities granted exemption from preferential procurement legislation

More than 110 organs of state have been granted exemption by National Treasury from the provisions of the Preferential Procurement Policy Framework Act (PPPFA).

These exemptions were granted following the Constitutional Court’s decision in February that the 2017 Preferential Procurement Regulations (PPR) issued by the minister of finance were unlawful.

National Treasury on Friday highlighted the steps it has taken to ensure that public procurement is not delayed and service delivery is uninterrupted.

It stressed: “National Treasury has never prevented nor prohibited organs of state from procuring goods and services.”

Economic activity imperative

Economist Dr Roelof Botha previously warned that if government entities waited before putting out a tender or spending money “they are postponing economic activity and ultimately that is going to impact GDP growth in 2022”.

The Constitutional Court’s declaration of the invalidity of the 2017 PPR was suspended for 12 months, but the majority judgment was silent about the date on which the suspension expires.

To address this uncertainty, the minister of finance lodged an urgent Constitutional Court application on March 4 to seek confirmation and establish whether the 2017 regulations remain valid until February 15 2023, unless repealed sooner, or are no longer valid from February 16 2022, the date of the Constitutional Court judgment.

National Treasury said on Friday the registrar of the Constitutional Court had advised that the application is receiving the court’s attention and the parties will be advised when the judgment will be handed down.

Following the declaration of invalidity of the 2017 PPR, National Treasury advised organs of state on March 3 that, while awaiting clarity from the Constitutional Court:

• Tenders advertised before February 16 2022 be finalised in terms of the 2017 regulations.

• Tenders advertised on or after February 16 2022 be held in abeyance.

• No new tenders must be advertised and made available on National Treasury’s website.

National Treasury stressed it was only advising organs of state – and not instructing or directing them – and its advice was to curtail the risk of awarding tenders based on regulations that may no longer be valid.

Urgency recognised 

It said on Friday that it recognised the urgency of the requests for exemption in terms of Section 3 of the PPPFA and rapidly put internal processes in place to ensure that the requests were dealt with expeditiously.

“Once the minister has made his decision on the exemption requests, the acting chief procurement officer communicates the decision to the organ of state concerned. This process generally takes 72 hours from application to response,” it said. “Organs of state that are granted exemptions may procure goods and services using their procurement policy.”

National Treasury added that the exemption process will continue until new regulations are in place or the Constitutional Court has provided clarity on the matters put before it, and that it has never prevented or prohibited organs of state from procuring goods and services.

New regulations

The new draft Preferential Procurement Regulations were published in the national and provincial gazettes for public comment on March 10, with a closing date of April 11.

National Treasury said it is considering all the public comments received on the draft regulations and, after due process, including seeking clarity where required, will publish the new regulations in the Government Gazette and on its website.

National Treasury confirmed to Moneyweb on April 26 that 111 organs of state had to date been granted exemption from the provisions of the act as at March 29.

It said it was unable to divulge the names of the organs of state “due to confidentiality reasons”.

Transnet

Transnet previously confirmed that it had requested and was granted an exemption from the application of the provisions of the act effective from March 11.

Transnet spokesperson Ayanda Shezi said at the time that waiting for the new regulations to take effect or for confirmation by the Constitutional Court of the effective date of the judgment before proceeding with procurement events at Transnet “would have huge ramifications for the business, and its ability to service its customers”.

Shezi said Transnet is not able to use preference during this exemption period, including the 80/20 and 90/10 preference points system, or to issue tenders with preferential procurement prequalification criteria, which would not be in compliance with the constitution.

Sanral

The South African National Roads Agency (Sanral), which has experienced delays in the adjudication and awarding of 258 projects valued at R31.7 billion, previously confirmed to Moneyweb it had applied to National Treasury for an exemption on March 29 but was awaiting feedback on its application.

Sanral has not confirmed whether its exemption application has been approved.

However, Sanral spokesperson Vusi Mona said last month that going forward, all Sanral contracts will be subject to the road agency’s internal procurement policies and not the PPPFA and will continue to be guided by Sanral’s transformation policy.

In its transformation policy statement, Sanral commits to, among other things, maximising the participation of black contractors, professionals, suppliers and designated groups in all its projects, capitalising on the redress provisions in the Constitution and prevailing legislative frameworks.

“Sanral will continue to follow its transformation policy to advance its transformation objectives,” Mona said.