New rules for tenders in April
PPR to impact businesses
THE LONG-awaited changes to the South African Preferential Procurement Regulations could have a significant impact on the way government tenders are put out, according to Claire Tucker, partner specialising in public procurement at Bowmans law firm.
National Treasury published the changes on Friday and they will take effect from April 1.
Tucker said the changes to the Preferential Procurement Regulations (PRR) made now were mostly of a technical nature and that more comprehensive reform was still expected when an overarching Public Procurement Act is published for comment later this year.
However, the changes to the regulations will impact on those companies doing business with the State.
She said that the PRR governed the manner in which government departments and state entities such as Eskom and Transnet used black ownership and Broad-Based Black Economic Empowerment (B-BBEE) contributor status level when considering tenders and deciding who to buy goods and services from.
“As a general principle the PRR require that price is the dominant basis on which government makes procurement decisions, but the regulations allow organs of state to include B-BBEE contributor status level as criteria for a small percentage of the overall scoring and ranking of tenders,” said Tucker.
She said the changes required organs of state to award 20 points out of a total of 100 for B-BBEE contributor status level for all tenders valued at less than R50 million.
For tenders that are above this value only 10 points out of 100 may be awarded for this criterium.
Tucker said the main changes to the existing rules included clarity on when black ownership can be used as a “pre-qualification” criteria; the exclusion of 51 percent black ownership of large businesses as an acceptable pre-qualification criteria; additional requirements for applying a “functionality” threshold; the regulation of price negotiation; the regulation of sub-contracting for contracts above R30m; and a requirement that any objective criteria relied are published in the tender documents.
There were also areas where the National Treasury failed to provide clarity on matters which have been the subject of debate and conflicting court judgments in the last few years.
These included whether the criteria specified for cancellation of a tender constituted a closed list and whether a threshold for local content could be published in a tender in the absence of standards to be published by the Department of Trade and Industry.
There was also no clarity on how sub-contracting arrangements for large construction contracts should be treated for black economic empowerment purposes.