Modernised state procurement in the offing
It has taken a long time to bring to fruition but the draft Public Procurement Bill approved by the cabinet proposes to introduce a more flexible, strategic and differentiated system of procurement than the one-size-fits-all one at present.
However, the approval is not the end of the road. The bill is still in draft form as the state law advisers have to certify it and make the technical changes wanted by the cabinet. And then the bill only proposes a framework for procurement with critical issues still to be determined by the finance minister in regulations.
Two of the main issues which will be dealt with in regulations are the one or more preference point systems and thresholds for preferential procurement from specified categories of individuals or enterprises and a procurement system for the strategic sourcing of infrastructure and capital assets.
Another important leg of the proposed procurement system is the successful rollout by the Treasury of the long-delayed and costly integrated financial management system, which will integrate the fragmented financial systems of national and provincial governments. This is expected to take more than a year.
The process for the proposed legislation began in 2014 when the cabinet directed the Treasury to accelerate the modernisation of a public procurement system. The cabinet approved a draft bill in 2020 for public comment, which generated 4,000 submissions. These were considered in the revision of the draft and a revised bill was prepared in 2020/21 which was submitted to the National Economic Development and Labour Council last April.
Acting director-general Ismail Momoniat made clear the need for a new procurement system in a presentation to parliament’s two finance committees last week when he said the current system was not working. It is complicated, fragmented, inflexible, incoherent and inconsistent with legal prescripts. It results in the government not being able to deliver services efficiently and effectively and often overpaying for them.
The proposed bill will establish a single regulatory system and oversight authority with jurisdiction over the whole public procurement system including organs of state. It adopts a strategic and differentiated approach that is more pragmatic and flexible and will establish a public procurement tribunal to resolve disputes instead of costly and time-consuming court processes.
Organs of state will be able to determine their own procurement policies. These will have to include a system of preferences determined on the basis of regulations. While the beneficiaries of the preferences are laid down in the draft bill, it provides flexibility and choice in the allocation of points on the basis of what is critical to that particular organ of state.
How procurement experts respond to the proposals will be unknown until the public hearings by parliament’s two finance committees on this crucial piece of legislation, but there is no doubt that further revisions are in store.