The fight against procurement legislation that prioritises black-owned businesses is not benign, according to court papers filed by Finance Minister Tito Mboweni, who contends that Sakeliga seeks to resist measures aimed at reversing economic inequality.
The case, set to be heard in the Constitutional Court next week, relates to the 2017 preferential procurement regulations, which set out prequalification criteria for bidders on government tenders. One such requirement is that bidders be at least 51% black-owned.
In 2017, Sakeliga, then named Afribusiness, unsuccessfully challenged the regulations in the high court. The organisation contends that the regulations “ushered in a new era of race-based procurement”. Sakeliga argued that the regulations mean bidders are judged based on race and gender before the tender point system, which determines whether a bid passes muster.
Last year, the supreme court of appeal ruled in favour of Sakeliga. The appellate court found that the regulations went against the constitutional mandate of fair, equitable, transparent and cost-effective procurement. The court declared the regulations invalid, but gave the minister 12 months to remedy their defects.
Mboweni is now asking the constitutional court for leave to appeal the judgment. The Free Market Foundation and the Economic Freedom Fighters have been admitted as friends of the court.
Counsel for the minister, Ngwako Maenetje, notes in his heads of argument that Sakeliga has always presented its case as a benign defence of effective public procurement practices. “However, it is apparent, we submit, that the true concern underlying their case lies elsewhere.”
Maenetje contends that Sakeliga has always been concerned that the regulations exclude exclusively white entities from winning government tenders. The regulations are not aimed at race-based exclusion but at redressing past inequalities, he argues.
‘Not black and white’
But Sakeliga says its application is not a question of white against black. In his heads of argument, JG Bergenthuin SC accuses the minister of playing the race card. “Truth is that the application concerns merely a question of transparency and fairness against all, including primarily black people, who must bear the brunt to benefit a few selected beneficiaries.”
Bergenthuin later states that the minister has attempted to discredit Sakeliga by suggesting the organisation is advancing a political agenda and “narrow parochial or racially-based interests”.
There is no foundation for the minister’s contention that Sakeliga represents the interests of Afrikaans people at the expense of the general public, Bergenthuin states. He calls this suggestion “totally irrelevant” and an attack on the organisation’s integrity.
Advocate Mark Oppenheimer, for the Free Market Foundation, argues in his submission that the court must draw from the principle of nonracialism when interpreting the legislation. “The narrow focus exclusively on the race of the owners flies in the face of the value of nonracialism, which is entrenched in the Constitution.”
Oppenheimer further contends that the requirement of race in the procurement process will distort the state’s ability to determine market prices by limiting the pool of tenderers able to bid.
“By limiting the state’s ability to determine actual competitive market prices by excluding businesses which are less than 51% ‘black’ owned from tendering, the minister has shifted the focus of procurement from benefiting the public at large to a narrow set of empowered businessmen with a particular race,” he argues.
The EFF challenges the appellate court’s finding that the regulations deviate from the Constitution.
Advocate Mfesane ka Siboto notes that the court overstated the application of section 217(1) of the Constitution — which endorses fair, equitable, transparent, competitive and cost-effective procurement — while understating section 217(2). The latter section states that the Constitution does not prevent organs of state from implementing procurement policies that advance the interests of persons disadvantaged by unfair discrimination.
Any other interpretation errs on absurdity, Ka Siboto contends. “It seems sensible that an organ of state must state in advance any minimum B-BBEE [broad-based black economic empowerment] status level it requires for a tender should it wish to invoke the preferential procurement policy in terms of the constitution,” he argues.
“That is the very essence of an invitation to bid — prerequisite qualification criteria with an aim of limiting the bids an organ of state is interested to consider in line with its policies. This is common practice.”
*A previous version of this article incorrectly stated that Sakeliga is the business wing of AfriForum. Sakeliga is an independent non-profit organisation and not affiliated to AfriForum.