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