This article seeks, inter alia, to examine the effectiveness of the legislative and policy measures employed by the state and its organs in achieving the transformation goals aimed at those who were previously economically excluded by reason of colour, sex and disability.
The article further examines the legal evolution through case law and how the courts have dealt with the application of Preferential Procurement Policy Framework Act 5 of 2000 (Procurement Act) in advancing the transformation goals identified by the Procurement Act.
The article further examines whether the organs of state have developed policies which are adequate for the achievement of same, and if so, whether such policies have been fairly and effectively applied, and thus achieve the intended purpose.
Lastly, the article looks at whether more needs to be done at policy and legislative level to give effect to the full realisation of the transformation goals.
‘You are not making a gift of what is yours to the poor man, but you are giving him back what is his. You have been appropriating things that are meant to be for the common use of everyone. The earth belongs to everyone, not to the rich’ – St. Ambrose.
Procurement of goods and services in South Africa by state and organs of state draws its genesis from s 217 of the Constitution. Section 217 of the Constitution accordingly provides as follows:
‘(1) When an organ of state in the national, provincial or local sphere of government, or any other institution identified in the 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.
(2) Subsection (1) does not prevent the organs of state or institutions referred to in that subsection from implementing a procurement policy providing for –
(a) categories of preference in the allocation of contracts; and
(b) the protection or advancement of persons, or categories of persons, disadvantaged by unfair discrimination.
(3) National legislation must prescribe a framework within which the policy referred to in subsection (2) must be implemented.’
It can be accepted without contestation that the Preferential Procurement Policy Framework Act is the national legislation referred to in subs (3) above.
The Preferential Procurement Policy Framework Act provides, inter alia, for the Minister of Finance to promulgate regulations regarding any matter that may be necessary or expedient to prescribe in order to achieve the objects of the Procurement Act.
The Preferential Procurement Regulations, 2022 are the Minister’s offering contemplated in s 5(1) of the Procurement Act.
With the legislative and policy framework having been set by the Constitution, it now begs the question as to whether these measures adequately respond to the transformation agenda against the set goals.
The trajectory of the case of the Minister of Finance v Afribusiness NPC 2022 (4) SA 362 (CC); 2022 (9) BCLR 1108 (CC) best sets the test in this regard. It is apposite to set out the trajectory of this case to demonstrate the different perspectives and opinions of our courts and the role players involved therein in determining the adequacy and the effectiveness of the legislative and policy measures to drive and achieve the transformation agenda in this context.
The journey begins in 2017 when the Minister of Finance promulgated the Preferential Procurement Regulations, 2017 (2017 Regulations). The promulgation of these regulations resulted from the complains by largely black entrepreneurs who had complained that the Preferential Procurement Regulations, 2011 (2011 Regulations) favoured their white counterparts in winning government tenders based on price owing to the fact that they have been beneficiaries of the system throughout and as such, they are well equipped financially to easily meet the pricing criteria set in s 2 of the Procurement Act and the 2011 Regulations.
This then prompted the Minister to promulgate the 2017 procurement regulations. In these regulations, the Minister had put the pre-qualification criteria that the tenderer must first meet, apart from the criteria set in s 2 of the Procurement Act.
As regards the pre-qualification criteria set in the 2017 Regulations, they provided, inter alia, that an organ of state must determine whether the pre-qualification is applicable to the tender as contemplated in regs 4 and 9 which encapsulated the pre-qualification criteria that tenderers must meet for eligibility to tender and sub-contract.
Aggrieved by the Minister’s promulgation of the pre-qualification criteria, Afribusiness launched an application in the High Court challenging same alleging that the Minister had acted beyond the scope of powers conferred on him by both the Procurement Act and s 217 of the Constitution and that the 2017 Regulations should be declared invalid and set aside.
The High Court dismissed Afribusiness’s application finding, inter alia that, the pre-qualification criteria are acceptable because the Procurement Act envisages that before tenders are evaluated, they must first qualify by meeting the requirement of acceptable tender.
Afribusiness then appealed the High Court’s finding with the Supreme Court of Appeal (SCA) where the SCA found that in promulgating the 2017 Regulations, the Minister had acted beyond the scope of his powers under s 5 of the Procurement Act because the framework set out in the Constitution and the Procurement Act requires that, when evaluating tenders, a tenderer who scores the highest must be determined and then followed by the objective criteria which justifies the award of the tender to a lower scorer. The SCA further held that the framework does not allow for preliminary disqualification.
Aggrieved by the SCA’s decision, the Minister appealed to the Constitutional Court where his appeal was dismissed based on the grounds that the impugned regulations are not necessary since each organ of state is empowered to determine its own preferential procurement policy and as such, it cannot lie with the Minister to make regulations which cover the same field.
From the aforementioned, it appears that pursuit of the transformation agenda is confined to the framework prescribed by the Procurement Act, and beyond that, there are no other available avenues to expand.
The Procurement Act places a lid on any possible rising from the dungeon of limitations regarding transformation save for what is contained in it.
Of concern is that the specific goals for which a tenderer may be scored, do not really attract much scoring. In other words, the value placed on them, despite their fundamentality, is undesirably minimal.
In order to fully realise the transformation goals and to bring into full effect the Procurement Act, the Procurement Act must be amended to include or set the specific goals contemplated in s 2 as the first qualification criteria along with pricing and not only fall under the objective criteria after scoring on price.
In its current form, the Procurement Act does not adequately cater for the full transformation regarding the historically disadvantaged.
Stephen Monyela LLB (UL) MBA (MANCOSA) PLT (Edupark) PMT (Edupark) is a legal practitioner in Polokwane.
This article was first published in De Rebus in 2025 (Jan/Feb) DR 33.
