Navigating New Procurement Rules and Their Impact

In the complex world of tenders and procurement, every action triggers a reaction, and recent developments have certainly set the stage for significant change.

The South African National Roads Agency (SANRAL) has recently made headlines with the suspension of its Chief Financial Officer and Head of Supply Chain Management. Allegedly, these suspensions are tied to concerns about the new procurement policy that the SANRAL Board introduced in May 2023. This policy brought about a noteworthy shift by placing greater emphasis on factors such as black ownership and subcontracting.

Traditionally, SANRAL used a bidder’s B-BBEE rating to assign 10 or 20 points to assess compliance with the State-Owned Enterprise’s preferential procurement requirements. Companies achieving a Level 1 B-BBEE rating, the highest and most sought-after empowerment status, were automatically granted the maximum points. However, in May, SANRAL revamped the scoring system, elevating the importance of black ownership and subcontracting. Under this new system, black ownership and subcontracting now account for five points (or 10 points in the case of an 80/20 scoring model) and four points (or eight points in the case of an 80/20 model), respectively, in tenders using the 90/10 scoring regime. This change effectively diminishes a bidder’s B-BBEE rating to just one point for a 90/10 tender (valued at over R50 million) or two points for an 80/20 tender (valued between R30,000 and R50 million). SANRAL, however, staunchly defends its new tender scoring system, citing its commitment to constitutional economic transformation and its goal to foster growth among black-owned construction companies, thereby improving their CIDB grading and advancing 100% black-owned firms within the construction industry.

The South African construction sector, which has invested billions over the past decade to enhance its empowerment profiles and engage with the government, finds itself facing unique challenges. This industry, now only 20% of its former size due to economic weaknesses, is grappling with turbulence. For instance, in July, construction firm Haw & Inglis (H&I) secured an interdict preventing SANRAL from awarding two tenders for which H&I had submitted bids. In a follow-up application, supported by WBHO and 11 other construction companies, including Raubex and Stefanutti Stocks, H&I has challenged the new scoring system on the grounds that it was implemented without proper consultation and is unconstitutional and irrational. In response, SANRAL maintains that it had the authority to modify the scoring criteria and that the list in the act was not exhaustive. Asithandile Ben-Mazwi, the Acting Head of Supply Chain Management, emphasized that it falls within the prerogative of state entities to determine criteria and their relative weights in tender documents. SANRAL asserts that its decision to abandon the previous scoring system in favor of the new one was made after careful consideration, grounded in legislative and policy considerations. Additionally, SANRAL argues that if the courts side with the construction firms, it could signify an overreach of judicial authority.

Meanwhile, on a different front, the National Treasury has presented a new Public Procurement Bill to Parliament, which opened for public comments last week. This bill seeks to revamp the preferential procurement system by allowing for the implementation of “one or more preference points systems.” It also permits certain contracts to be earmarked for designated groups to promote localization and subcontracting. Stakeholders are encouraged to submit written feedback on the bill by 11 September 2023. The bill’s summary highlights the fragmentation of public procurement regulations across various laws governing public administration in South Africa.

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About Debbie Wessels

I started at Leads 2 Business in April 2008 in the tenders Department and transferred to the Projects Department during the same year. I was appointed Head of Department for Projects from February 2011 to March 2022. April 2022 I started a new adventure as Content Regulator.

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The Future of Tenders & Procurement


Did you notice that since 25 February 2022, there has been a drop in the number of new Tender Notices being published? Although not a complete stop…

What is this a result of?

The previous Preferential Procurement Regulations gazetted in 2017 under the PPPFA of 2000 stipulated that only companies that complied with certain criteria, including a minimum B-BBEE status, could apply for tenders. However, Afribusiness challenged these criteria, advising that it was unconstitutional and also resulted in inflated pricing and poor delivery as many businesses with competitively priced and high-quality products were excluded from tendering.

The Constitutional Court has upheld the SCA’s (Supreme Court of Appeal) 2020 findings that the regulations were inconsistent with the framework for preferential procurement in the PPPFA and the Constitution. The ConCourt and SCA decisions have big implications, especially as procurement by governmental, parastatal and state-owned entities totals about R2-trillion annually.

On 25 February 2022, it was issued that Tenders advertised before 16 February 2022 be finalised with Tenders advertised on or after 16 February 2022 be suspended and No new tenders are advertised. On 03 March 2022, an Advisory Note was published that mentioned tenders of a value less than R30 000 were excluded from this. Further to this exemptions may be requested but are restricted to those who cannot wait for either the new regulations or the ConCourt’s guidance.

The Draft Procurement Regulations were published for comment on 11 March 2022, and the deadline for comment is 11 April 2022. These regulations restore the previous rules, where BEE criteria accounted for a maximum of 20% share in the evaluation of tenders.

What is the current state of affairs?

IT Web notes that “This state of affairs has had a significant impact on government tenders and National Treasury’s offer of exemptions for urgent requirements is unlikely to make much of a difference over the coming weeks.”

At Leads 2 Business we have seen a push for Government Departments and Municipalities to communicate their decisions to potential tenderers. Whether this is to suspend, withdraw or cancel until further notice; or to just postpone and extend dates; in a bid to avoid having to readvertise; various strategies have been employed to meet various procurement needs.

We have also seen errata recognising the Preferential Procurement Regulations ambiguity, and removing these criteria from current tenders. Hence these criteria no longer apply when these tenders will be evaluated and adjudicated.

In summary, some tenders are currently being published whether that be without the regulations in question or to the value of less than R30 000.

Where to from here?

The Draft Procurement Regulations will be referred for review and Cabinet will need to approve the revised Bill before it can be submitted to Parliament. Approval from both the National Assembly and the National Council of Provinces will be required before it can be sent to the President to sign into law.

It’s anyone’s guess how long the processes will take and for the Procurement landscape to return to “normal”. At this point, we haven’t noticed any change in the publication of Award Information and perhaps this lull will allow some Departments and Municipalities to work through any backlog they might have or to plan for when this legal knot has been untied. Award Information that is available is being published and providing value to relevant industry players.

Leads 2 Business continues to check our usual sources and the media to keep abreast of the situation, and are updating the tenders with any pertinent information. As Industry leaders for over 20 years we remain committed to providing valuable information for the Building and Construction Industry.


Claire Donaldson | Head of Department Leads 2 Business Tenders


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