State procurement budget key to redress, transformation

FINANCE Minister Tito Mboweni has mounted a strong defence at the Constitutional Court of the government’s pledge to empower black businesspeople previously disadvantaged by apartheid.

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

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 subsections,” 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 which is fair, equitable, transparent, competitive and cost-effective.

It 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.

The Constitution also provides for national legislation that must prescribe a framework within which such policies must be implemented.

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

“The 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 the 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.

He told the court the reason for promulgating the regulations were undisputed in the high court including that the government identified public procurement as a tool to leverage socio-economic redress and transformation.

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.

Sakeliga has argued that the Constitution requires public administration to be governed by democratic values and principles including efficient, economic and effective use of resources.

The organisation told the apex court that the Constitution further guarantees that everyone is equal before the law and may equally benefit from the law without discrimination based on race, although legislative and other measures designed to protect or advance persons, or categories of persons, disadvantaged by unfair discrimination, may be taken and the right to trade and freely participate in the economy and opportunities offered by organs of state.

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