Page 9 - Q&A

New Public Procurement Bill intends to change
government tendering BEE

February 2020
“Our company is heavily reliant on government tenders for work. There have
been rumours about government intending to introduce new legislation that will
change the tendering environment. Can you shed any light on these rumours?”

You are right in that Government is indeed considering an overhaul of the
current public procurement regime. To this end National Treasury published a
Draft Public Procurement Bill (“the Bill”) on 19 February 2020 for public comment
until 31 May 2020.

On a reading of the Bill, it appears that one of the objectives of the Bill is to ensure
that Government utilises procurement, to advance economic opportunities for
previously disadvantaged people, women, youth, people with disabilities as well
as small businesses, whilst also promoting local production. Other objectives
include providing for procurement that is developmental, ensuring effective
use of public funds, expanding the economy and encouraging investment
and competition and the use of technology in the procurement process.
Furthermore, the Bill aims to incorporate categories of preference in the
allocation of tenders as well as to protect categories of persons who have been
disadvantaged by unfair discrimination.

The Bill aims to do this by simplifying procurement processes and creating a
single unified regulatory framework for public procurement to so eliminate the
fragmented procurement environment that is currently the default position with
public tendering.
To do so the Bill aims to repeal the Preferential Procurement Policy Framework
Act which currently regulates government tenders, and with such repeal also
the preference points system currently being applied. The preference point
system applying a 80/20 point system for tenders up to a value of R50 million
and a 90/10 point system for tenders exceeding R50 million, is proposed to be
replaced by the Minister who must prescribe a framework which includes a
preference point system and applicable thresholds.
The Bill will further enable the Minister of Finance to prescribe a framework for
public procurement, which framework will incorporate the provisions of the
Broad-Based-Black Economic Empowerment Act. In its present form the Bill does
not however provide an indication on how such a preference point system will
be constructed or what constraints will be applied, leaving uncertainty on how
this framework will be applied.
The Bill also requires the Minister to put measures in place to reserve certain
contracts for limited categories of persons or businesses that will be allowed to

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