Treasury to rework procurement laws
The Treasury is moving ahead with the enactment of a new procurement framework, arguing that the regime is fragmented. The Preferential Procurement Policy Framework Act and its regulations are an ineffective framework for transforming the economy, it says.
The Treasury is moving ahead with a new procurement framework, arguing that the regime is fragmented.
According to the Treasury, the Preferential Procurement Policy Framework Act (PPPFA) and its subsidiary regulations are an ineffective framework for transforming the economy.
That is why a new Public Procurement Bill is being developed. The bill, with the chief state law adviser for certification, aims to overcome the fragmentation in procurement legislation. Once certified by the state law adviser, it will be submitted to the Cabinet and once approved, published for public comment. When enacted, the Public Procurement Bill will repeal the PPPFA in its entirety.
With an annual procurement budget of over R900bn, the government can be a powerful instrument for achieving economic transformation.
In a presentation to be made to Parliament’s appropriations committee on Tuesday, the Treasury says that the bill will consolidate various laws dealing with procurement into a single overarching national procurement legislative framework “to enable government to effectively use public procurement as a lever to achieve the transformation, empowerment and development for inclusive growth.
“The bill will give provinces the flexibility to determine their own transformation and empowerment strategies and programmes based on their local economic development needs within the broader national framework.”
Black Business Council secretary-general George Sebulela said the council was “very excited” about the new bill, explaining that the existing procurement regime had not succeeded in bringing about broad-based black economic empowerment because it was still strongly biased in favour of price.
Also under development by the Treasury are guidelines for management of deviations and contract extensions that will introduce stringent criteria, thresholds and proper delegations of authority. Every application for a contract deviation or extension will be mapped against submitted procurement plans. Where no procurement plan exists, no deviation will be allowed unless there is an emergency or only one source for the procurement.
The office of the chief procurement officer noted in a presentation to the committee that major deviations from contracts in 2017-18 amounted to R8bn and contract expansions or extensions to R35bn. Deviations were meant to deal with exceptional cases but had become the norm. “They have many unintended consequences, such as opening a door for corruption, promotion of anticompetitive practices, monopolies.”
The Treasury says one of the reasons for overhauling preferential procurement legislation is that the PPPFA limits the extent to which the 30% provided for in the preferential procurement regulations can be used.