New rules for ten­ders in April

PPR to im­pact busi­nesses

The Star Early Edition - - BUSINESS REPORT - Joseph Booy­sen

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.

Sta­tus level

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.

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