Manufacturing

The recently signed Public Procurement Act is expected to reduce bureaucratic delays and curb corruption while also ensuring that taxpayer money is used responsibly.

“It is a good move for many reasons,” says Kamogelo Mampane, the Executive Chairman of the Supply Chain Council (SCC).

President Cyril Ramaphosa assented the act that aims to create a single framework that regulates public procurement, in July.

“It is a consolidation of all guidelines, practice notes and procurement guidelines that were found in other regulations into one legislative framework. The Procurement Act introduces standardised procedures that streamline the procurement process, making it more efficient and transparent. This will significantly reduce bureaucratic delays and curb corruption, ensuring that taxpayer money is used responsibly and effectively,” Mampane told SAnews.

The SCC is a non-profit association that was set-up in 2010 to provide quality and professional supply chain services to organisations across the globe. The association helps organisations to make improvements in supply chain processes.

The act also complies with the Constitution’s Section 217 that states that the contracting of goods and services by organs of state in all spheres of government must occur in accordance with a system which is fair, equitable, transparent, competitive and cost-effective, among others.

According to the Presidency, the act also responds to the acknowledgement that legislation regulating procurement by organs of state is fragmented and constrains the justified advancement of persons or categories of persons who could provide goods or services.

Mampane said the act also creates clarity on what is legal, possible and creates many possible options for state organs to drive economic transformation while also forming a basis for investments in technology and best sourcing practices.

Recently, National Treasury indicated that the provisions of the act are not in force yet and that the President will bring the provisions of the Act into operation through a new proclamation in the government gazette.
The Public Procurement Act, 2024 (Act No. 28 of 2024) was approved by the President and published as an Act in the Government Gazette on 23 July 2024. 

According to Treasury, Section 69 of the Act enables the President to bring the provisions into operation on different dates (phased approach) and to determine different dates for different categories of procuring institutions such as national and provincial departments, national and provincial public entities and municipalities and municipal entities.

Public Procurement Tribunal 

Chapter 6 of the Act makes provision for a dispute resolution mechanism and a Public Procurement Tribunal to review decisions taken by procurement institutions. 

Asked about his thoughts on the tribunal, Mampane said that small businesses often lack the resources to engage in prolonged legal battles.

“The tribunal offers a more accessible and cost-effective platform for resolving disputes, ensuring that their grievances are heard and addressed promptly. By upholding transparent procurement practices, the tribunal also assists small businesses to understand the criteria and processes used in awarding contracts.”

He added that this clarity can help small business to better prepare and compete for future opportunities. 

“We foresee a tribunal receiving a huge number of applications in the beginning as small businesses seek a hearing.”

“The tribunal will also hold procurement officials accountable for their actions, encouraging them to adhere to the Act and code of conduct. This can lead to more diligent and conscientious behaviour in the execution of their duties. 

“It is our view public procurement officials did not have a place to go if they felt threatened by people in authority, politicians, or suppliers. The tribunal will be a place to go as an independent body that can listen to their challenges,” he explained.

Asked about what type of individuals must sit on the tribunal, Mampane said this institution must be chaired by a retired judge supported by individuals with many years of experience in public procurement. This also includes someone who has experience in contract management and Broad-Based Black Economic Empowerment (BBBEE) to ensure the consistency of the application of the rules. 

According to the Act, a member of the Tribunal holds office for a period of five years, or the shorter period that the Minister of finance determines.

Additionally, a member of the Tribunal may be re-appointed at the expiry of a term for a further term not exceeding three years. 

Transformation 

In the year that marks 30 years of freedom and democracy in South Africa, the act is cognisant of the need to continue to foster economic transformation.

The act contains set asides for designated groups like women and persons living with disabilities who have historically been disadvantaged.

According to the chairman, this inclusive approach is expected to level the playing field and provide equal opportunities for all businesses to compete and thrive.

“Our economy is not growing, unemployment remains a challenge, youth unemployment is an indication of a non-productive economy. In any developing country like South Africa, SMMEs [small, medium, and micro-enterprises] play a crucial role in developing the economy, creating jobs and reindustrialisation. The protection and advancement of designated groups is crucial in creating sustainable projects in our communities.”

He added that the setting aside of opportunities for the productive sector of the economy will encourage innovation and investment by local and international organisations.

“A key aim of the bill is to drive economic transformation by mandating that a substantial portion of procurement contracts be awarded to historically disadvantaged individuals and SMMEs, the bill promotes inclusivity and equal opportunity. This is a major win for economic empowerment and growth.” 

In an earlier media release, the SCC said a highlight of the act is its strong support for local production and manufacturing. 

“The law stipulates that government entities prioritise locally produced goods and services in their procurement decisions. This provision aims to boost local industries, create jobs, and stimulate economic growth within the country. 

“Supply chain professionals will need to cultivate robust relationships with local suppliers, ensuring that the procurement of locally manufactured products meets quality and cost-efficiency standards,” it said.

Reducing bureaucracy

Asked about whether the act will reduce government bureaucracy, Mampane said the Act provides a clear framework for efficient, fair and sustainable development for the more than 700 state organs, government departments and municipalities.

“The implementation of electronic procurement platforms to facilitate online submission and processing of bids, reducing paperwork and speeding up the procurement cycle will reduce bureaucracy of public procurement. 

“Some processes were completely unnecessary e.g. having to go to National Treasury to ask for permission for minor deviations. The need to submit manual reports to National Treasury even though some were hardly ever used or perused by National Treasury, was also onerous.”

Concerns

Chapter 6 of the Act which speaks to dispute resolution, also refers to the Stand Still Process which speaks to the “prohibition on concluding contract during reconsideration or review proceedings”. 

According to the process, if a procurement process is subject to a reconsideration in accordance with section 37, a procuring institution may not conclude a contract with the successful bidder within 10 days after completion of the reconsideration or review process.

Section 37 (Reconsideration by procuring institution) of the Act states that a bidder may submit an application for reconsideration to the procuring institution if that bidder is not satisfied with a decision to award a bid by that institution.

Mampane expressed concern over the process saying that in its current form, the clause creates “an automatic stand still, as it requires an organ of state not to conclude a contract with the successful bidder prior to completion of the review process by a Tribunal.”

“Projects will be stopped even if the request is frivolous and has no basis. The prima facie rule is ignored by this clause. We are extremely concerned that this will create inefficiencies in the process,” he said.

Taking supply chain forward

Asked about what the act means for the supply chain sector as a whole, Mampane is of the view that the act elevates the profession.

“This is a boost to the supply chain professionalising agenda as it elevates the profession to its right full place, i.e. a strategic function to assist government in achieving their social and economic objectives.

“Supply chain professionals must be at the forefront of driving this change, leveraging their expertise to assist their organisations in delivering their strategic objectives. Supply Chain professionals must build on this foundation that is created by this Act and build strong cases for SMME development, increase spend on locally produced products and deliver tangible value to their organisations and communities,” he said. -SAnews.gov.za

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