It is well understood that South Africa’s public procurement system is littered with fragilities and weaknesses. These were brought to the forefront through disturbing revelations of government corruption in the 2010s. It is also well understood, and broadly accepted, that the country requires a complete overhaul of its public procurement system.
A critical concern has been the fact that the public procurement system is regulated through a patchwork of overlapping laws and policies. There are several pieces of legislation governing public and preferential procurement — the Preferential Procurement Policy Framework Act 2000, the Public Finance Management Act 1999, the Local Government: Municipal Finance Management Act 2003, Broad-based Black Economic Empowerment Act 2003 and Prevention and Combating of Corrupt Activities Act 2004.
This complex array of often conflicting public procurement policies has resulted in a system that is vulnerable to abuse and corruption.
Given that public procurement accounts for a significant portion of government expenditure, the lack of an overarching legal framework governing public and preferential procurement is a cause for major concern.
To attend to this, in 2020, the government embarked on a process to establish a single legal framework for governing public procurement, which saw the introduction of the Public Procurement Bill to parliament in June 2023. Since then, the bill has been passed by the National Assembly in December 2023 and is now with the National Council of Provinces, which is soliciting public comments.
The bill provides much needed progress in terms of improving and strengthening public and preferential procurement practices. Some of the important achievements include concise clauses on preferential procurement (chapter 4 — albeit some clarity needs to be made regarding the interplay between bid requirements, price and the use of the BBBEE scorecards in tender evaluations), improved governance on general procurement requirements (chapter 5) and adequate dispute-resolution mechanisms (chapter 6).
Regrettably, the bill has regressive aspects which limit its overall usefulness. The biggest concern is the reckless over-empowerment of the Public Procurement Office (PPO).
Chapter 2 of the bill establishes the PPO in the treasury which, among other functions, is responsible for the promotion of compliance to the bill and the maintaining of procurement integrity. The PPO is empowered to guide procurement officials and institutions on compliance and enabled to issue binding instructions on all procurement activities.
All seems well, until one digests clauses 15,16, 26, 50 and 51 of the bill, which give the PPO extensive powers in relation to issuing prohibitions on procurement practices it deems improper (on its own initiative); unilateral powers of debarment and determinations on methods of access to procurement information by the general public and civil society organisations (which include limits placed on access to information and investigatory powers (which include search and seizure).
The minister is also empowered to create secondary law that will determine procurement methods and the procedures for bid specification, invitation, submission, opening, evaluation, adjudication, the awarding of bids and requirements for all emergency procurements.
One must remain wary of empowering a departmental office to such a great extent as the bill does the PPO. In effect, the way the bill has empowered the PPO heightens risks of possible vested interests taking control of the institution, which will be tantamount to the capture of the entire public procurement governance architecture.
Nowhere in the bill is it clearly articulated how the PPO will account for its operations to the constitutional bodies designated to provide oversight of key institutions — such as parliament.
Perhaps the most concerning element is clauses 50 and 51 of the bill, which enable the PPO to investigate suspected procurement irregularities and search the premises of any bid winner for investigative purposes at its own initiative.
Undoubtedly, this is characteristic of regulatory overlap, particularly considering that South Africa has already in place competent investigative authorities who are empowered to do this work — such as the Hawks and the South African Revenue Service.
Such sweeping investigatory powers awarded to the PPO will effectively undermine the powers of the police department, while empowering the treasury with investigative powers for which it has minimal institutional capacity, from a knowledge perspective, to effectively execute. Not only will this lead to uncertainty and clashing mandates but it will also expose procurement investigations to potential abuse, partiality and prejudice.
It is also concerning that the bill relies on secondary legislation to provide clarity to its often vague and haphazard clauses. Here, the PPO and the minister, who are agents of the executive wing of government, are given powers to create public procurement policies which, in theory, ought to align to the overall clauses of the bill.
In practice, however, the reliance on secondary law effectively takes away powers of law-making from the legislative wing of government and places them in the hands of the executive who are enabled to determine important aspects of the bill without due legislative oversight.
Because executive law-making processes are far less rigorous than legislative processes, in terms of debate, negotiations and public participation, there remains the high risk of policies being passed which lack sufficient democratic engagement and scrutiny. In a constitutional democracy such as South Africa, this is unpalatable and raises many red flags.
The government must reconsider the powers and functions of the PPO to ensure that it does not become a rogue unit of government operating on its own initiative but instead an agent of government functioning within a clearly defined legal framework characterised by accountability, transparency and good governance.
Siseko Maposa is a director of Surgetower Associates, a management consultancy with a focus on government, corporate and foreign affairs. The views expressed are his own.