On 17 September, the Constitutional Court set aside the Public Procurement Act as being invalid and unconstitutional.

NEASA welcomes this judgment.

The reason for the Court's decision is primarily based on the fact that the legislature failed to provide adequate opportunity for public participation and comment and also failed to consider all comments received, particularly after the introduction of a material chapter in the Act dealing with preferential procurement.  

The purpose of the Act was to centralise Government’s tender and procurement processes and to allow for the establishment of preferential pre-qualification criteria.  

This would have introduced a racially exclusive preferential public procurement regime, whereby entities who wish to do business with the state would have had to satisfy mandatory racial pre-qualification requirements in order to qualify for tenders. In the Constitutional Court’s own words, the Act sought to “institutionalise a system in which categories of bidders would be routinely excluded from participation as a matter of law.”

This would have had the effect that businesses who did not comply with predetermined BEE requirements would have been automatically excluded from bidding before factors such as capability, functionality or even price were considered.

The natural effect of this would have been the shrinkage of the supplier base in procurement and less competition in the market, which would have inevitably led to higher contract pricing.

The concept of pre-qualification criteria has previously been struck down as being unconstitutional by the courts, yet Government, in its wisdom, elected to persist with this folly. 

Society can never be reengineered based on an arbitrary racial basis. The economy has to grow by creating more businesses, skills, and infrastructure. Government must prioritise creating more competition among businesses owned by all races and focus on value-for-money and the delivery of services in its tender processes.

While there is a dire need to tighten controls in our procurement system, which is fraught with corruption, price gouging, and non-performance by contractors, redesigning the system along racial lines will only exacerbate this problem.

The obvious solution is to award tenders to the most qualified, trusted and cost-effective supplier to the benefit of the entire country and not only a few, normally politically connected, individuals.

Exclusionary race-based tendering has, at least for now, been put to a halt.