Preferential procurement ‘is in line with Constitution’

FINANCE Minister Tito Mboweni has defended, at the Constitutional Court, the government’s use of preferential procurement legislation to empower black businesspeople previously disadvantaged by apartheid.

Mboweni is challenging the ruling by the Supreme Court of Appeal (SCA) in October last year that declared the Preferential Procurement Policy Framework Regulations 2017 invalid and unconstitutional, in favour of AfriBusiness, now known as Sakeliga.

In heads of argument filed by Mboweni’s counsel, Ngwako Maenetje SC and Mkhululi Stubbs, on April 19, the minister argues that the SCA erred in that it measured the legality of the 2017 regulations solely against the requirements of section 217(1) of the Constitution.

“We respectfully submit that the SCA’s approach is a disjointed one and fails to apply trite principles of interpretation in doing so, for two reasons, namely: first, the interpretation fails to ensure that section 217 is properly contextualised by neglecting two of the section’s three sub-sections,” the advocates state.

They also said the SCA’s interpretation fails to prefer an interpretation that best promotes the spirit, purport and objects of the Constitution and the Bill of Rights, which include the advancement of substantive equality under the Constitution.

In terms of the Constitution, when an organ of state in the national, provincial or local government, or any other institution identified in national legislation, contracts for goods or services, it must do so in accordance with a system that is fair, equitable, transparent, competitive and cost-effective.

It also states that this does not prevent the organs of state or institutions from implementing procurement policies providing for categories of preference in the allocation of contracts and the protection or advancement of persons, or categories of persons, disadvantaged by unfair discrimination.

National Treasury director-general Dondo Mogajane has described the SCA’s judgment as erroneous, and it should be overturned.

“Government has identified public procurement as a tool to leverage socio-economic redress and transformation. One of the reasons for the initiation of the process that culminated in the new (2017) regulations stems from Cabinet,” Mogajane explained in his affidavit.

Another reason cited by the National Treasury for changing the 2011 regulations was that it received submissions from companies owned by previously disadvantaged individuals complaining that they fail in practical terms to demonstrate that they empower suppliers or contractors disadvantaged by apartheid.

According to Mogajane, Sakeliga exaggerates the effect of the 2017 regulations by claiming that they are unfairly exclusionary to white people and their businesses.

In November 2018, North Gauteng High Court Judge Ellem Francis dismissed Sakeliga’s challenge to the regulations, as well as a subsequent application for leave to appeal.

Mogajane said the SCA, which ruled in Sakeliga’s favour, erred in concluding that Mboweni or his predecessors do not have wide discretionary powers under the Preferential Procurement Policy Framework Act and that it stands to be rejected.

“The remaining grounds of attack advanced by AfriBusiness (Sakeliga) are that the 2017 regulations are ultra vires (beyond the powers), irrational, unlawful, unreasonable and impermissibly unfair. I submit that these contentions are without merit,” he added.

Arguments in Mboweni’s application for leave to appeal the SCA judgment will be heard later this month.