South African Public Procurement Bill becomes law

Recently signed into legislation but yet to take effect, the Public Procurement Act aims to create a single regulatory framework for public procurement, streamlining the contracting of goods and services across government departments with a greater focus on process efficiency, cost-effectiveness and integrity.

A date for when the Act will take effect has not yet been announced.

According to construction law experts Thethe Mokele and Arvitha Singh of Pinsent Masons, the new legislation will help solve ongoing corruption issues with South Africa’s procurement process.

“This is a positive step towards rooting out state capture and corruption, which has pervaded the national procurement framework for years,” Mokele said.

The Act applies to all procurement carried out by a procurement institution - including procurement through donor or grant funding - any person who submits a bid or has been awarded a bid, and all procurement carried out by any person on behalf of a procuring institution.

Among its many provisions, it includes a list of persons who may not submit bids, which includes public office bearers, employees of the South African parliament or provincial legislatures, and officials or employees of public entities, constitutional institutions, municipalities and municipal entities.

According to Mokele and Singh, other noteworthy provisions in the Public Procurement Act include Section 4 of the Act which establishes a Public Procurement Office with the National Treasury. The office is expected to promote compliance with the Act, take appropriate steps where there is a material breach by a procuring institution and ensure the compliance and effective implementation of the Act.

In addition, Section 31 of the Act allows for dissatisfied bidders to submit an application for reconsideration of an award within ten days of the award. The procuring institution will then be expected to immediately investigate and ensure that a decision is made, with the bidder informed within the prescribed timeframes. Under Section 32 of the Act, a new Public Procurement Tribunal will be established which will preside over review applications from dissatisfied bidders and disqualified persons.

Mokele and Singh also pointed to Chapter 3 of the Act - which provides measures to ensure integrity is maintained throughout the procurement process, lists prohibitive practices and provides for debarment in the event of a contravention – as being worthy of note.

The framework provided for in the Act is intended to enhance efficiency and effectiveness in the procurement of goods and services using state resources, in addition to assisting with the advancement of persons or categories of persons who can provide goods or services, but who would not ordinarily have had such an opportunity. This has many benefits, including the advancement of transformation and broadened economic participation.

Mokele added, however, that the ability to challenge awards provided for under Section 31 and 32 could lead to an abuse of the process by unsuccessful bidders who may seek to delay tender awards and interfere with the process.

She also highlighted Section 48 of the Act, which allows for judicial reviews of orders given by the Public Procurement Tribunal relating to the Promotion of Administrative Justice Act or any applicable law.

“Section 48 provides that a party to proceedings may file with a court of competent jurisdiction a certified copy of the Tribunal’s order and, provided that no review proceedings have been commenced or such proceedings have been finally disposed of, the order on being filed will have the effect of a judgment in civil proceedings and can be enforced as if lawfully given in that court,” she said.

“This raises the question as to how the Procurement Tribunal’s activities will be reconciled with the court’s inherent jurisdiction to preside over such matters. Consideration will need to be given to this issue which will no doubt come to the fore once the Act comes into effect.”

The Act will be administered by the Minister of Finance and apply to government departments, constitutional institutions, municipalities, municipal entities, and public entities. It also contains a limited number of clauses applying to Parliament and provincial legislatures.

While the Act has been received positively, some commentators are of the view that the Act could severely restrict state entities' procurement choices, which could increase costs, diminish service quality and potentially facilitate corruption.

According to Mokele, the Act imposes a number of measures on accounting officers of procurement institutions to safeguard against corruption. These include a requirement to investigate any allegations of corruption, improper conduct or non-compliance and, where necessary, take the appropriate steps, including notifying the Public Procurement Office and reporting conduct that may constitute a criminal offence to the South African Police Service.

Further measures include requirements that accounting officers reject the recommendation of an award of a bid or cancel a contract after award if they become aware that the bidder has submitted false documents or information or has been convicted of any offence involving corruption, fraud, collusion or coercion in competing for the bid or during execution of the contract

The Act also imposes a requirement that officers take necessary steps to prevent non-compliance with the Act. To this end the Public Procurement Office is required to develop an information and communication technology system for all procurement in order to enhance efficiency, effectiveness, transparency and integrity and to combat corruption. 

“The effective implementation of these measures will be the key driver in determining the success of the Act in achieving its desired purpose,” Mokele said.