PUBLIC PROCURMENT ACT, 2024

The long-awaited Public Procurement Bill was finally assented to by the President on 18 July 2024 and is now an Act of Parliament, called the Public Procurement Act, 2024. This Act introduces critical transparency measures to the procurement process, aiming to tackle corruption that has long plagued this space. Reference is made in the preamble to the Act, to sections 195, 216, and 217 of the Constitution, which emphasize the efficient, and economical use of public resources, to ensure transparency, and uniform treasury norms and standards, in accordance with a system which is fair, equitable, transparent, competitive and cost-effective. It is important to note that, in terms of section 69(1), the Act will only come into effect on a date to be determined by the President. 

The Act seeks to achieve its objectives through the assessment of costs, benefits, and risks associated with procurement decisions. It seeks to combat corruption by providing access to procurement information, enhancing transparency in tender processes, and ultimately stimulating economic growth in the country. 

Although the Act comprises 7 chapters and various parts, we touch on just some of the provisions of the Act in this piece. The schedule referred to in section 67 shows that 17 pieces of legislation are affected. The following are wholly repealed: State Tender Board Act, 1968; National Supplies Procurement Act, 1970; and the Preferential Procurement Policy Framework Act, 2000.  

Chapter 4 of the Act places a significant focus on preferential procurement, mandating that procuring institutions prioritize certain historically disadvantaged groups when awarding contracts. These groups include black people, black women, women in general, black people with disabilities, people with disabilities, and military veterans. In addition, the Act extends preferential treatment to small enterprises owned by individuals from these groups, as well as youth, recognizing the importance of empowering younger generations in the economy and creating jobs for them. 

The provisions outlined in chapter 4 aim to enhance access to procurement opportunities for previously marginalized groups, ensuring that they have a fair and equitable chance to participate in and benefit from public procurement processes. The intention goes beyond merely promoting transparency in tendering – it seeks to actively address systemic inequalities and create an inclusive environment in which disadvantaged groups can thrive. 

Most importantly, the Act strives not only to advance the previously disadvantaged but also to stimulate job creation and contribute to the overall growth of the economy. By leveling the playing field and increasing access to economic opportunities, the Act aims to promote long-term socio-economic development and aims to build a more inclusive and equitable society. It is left to be seen whether these objectives are actually achieved. 

Measures In Place To Prevent The Abuse Of Procurement System 

Section 26 of the Act outlines comprehensive measures aimed at preventing the abuse and manipulation of the procurement system, ensuring that fairness, transparency, and accountability are maintained in the management of public resources. The responsibility for enforcing these measures is placed squarely on the accounting authority or officer of the procuring institution, who must take proactive steps to prevent non-compliance with the Act and any form of abuse within the procurement system. 

This section imposes strict penalties for violations. It clearly states that if any allegations arise against an official or any role player regarding improper conduct or failure to comply with the procurement system, the accounting authority or officer must take appropriate action. These actions include initiating steps against the offending individual and informing both the Public Procurement Office (established in terms of section 4) and the relevant provincial treasury of these steps. Any conduct that may constitute a criminal offence must be reported to the South African Police Service. 

In terms of supplier vetting, the Act is explicit – it stipulates that a bid must not be awarded if the recommended bidder has made any misrepresentation, submitted false documents, or has been convicted of an offence involving corruption, fraud, collusion, or coercion in competing for a contract. Furthermore, the Act empowers the relevant authorities to cancel any contract awarded to a supplier if it is discovered that the supplier has engaged in such activities during the bidding process or execution of the contract. This provision ensures that suppliers who engage in unethical or illegal practices are held accountable, safeguarding the integrity of the procurement process. Debarment of a bidder is provided for in section 15 of the Act. 

Dispute Resolution 

Chapter 6 of the Act details the procedures for reconsidering a decision to award a bid. If a bidder is dissatisfied with a procuring institution’s decision, they must apply to the institution within 10 business days of being notified of the outcome. Failure to submit the application within this timeframe may result in its dismissal, and no court or tribunal will review the decision until the bidder has exhausted the internal processes set out by the institution. 

However, in exceptional circumstances, the Tribunal or court may exempt a bidder from exhausting these internal remedies if it serves the interest of justice.  

A bidder may also request that their application be considered even if it is filed after the stipulated 10-day period, but only if valid public interest concerns are raised. In such cases, if the application is not dismissed, the procuring institution is required to conduct an investigation into the matter. The institution must then make a decision within 30 days, notifying the bidder whether their application is dismissed or granted, either in whole or in part. The notification must also include the reasons for the decision and any corrective action that should be taken to address the issue. 

Functions Of Public Procurement Office  

Chapter 2 of the Act focuses on the roles and responsibilities of the Public Procurement Office, provincial treasuries, and procuring institutions. Section 5 specifically outlines the functions of the Public Procurement Office, emphasizing its role in promoting compliance with the Act. These functions include ensuring compliance with the Act by developing and supporting systems that uphold procurement integrity; guiding and supporting officials and procuring institutions through training and professional development to ensure adherence to procurement processes; promoting transparency; standardization; and the use of technology and innovation in procurement; and intervening when necessary to address material breaches of the Act. 

Code Of Conduct 

The Act includes provisions for codes of conduct, outlining how accounting officers and officials involved in procurement must adhere to the prescribed standards. It requires these individuals to comply with the established code of conduct. Should an accounting officer, member of a bid committee, or any official contravene the code, such action would constitute misconduct. The Act specifies the appropriate steps to be taken in response, in accordance with the applicable procedures, to address and rectify the breach. 

Declaration Of Interest 

Section 11 of the Act mandates that the procuring institution take appropriate measures to identify persons who are automatically excluded from procurement activities, as well as their immediate family members and related persons. These measures include requiring all bidders (in the case of bids) and all applicants (for registration on a database created by the Public Procurement Office) to submit a declaration of interest. 

Failure to submit this declaration, or submitting a false one, renders the bid invalid. 

Furthermore, if any person related to an accounting officer, other official, member of an accounting authority, bid committee, or Tribunal involved in procurement has or plans to acquire a direct or indirect personal interest in a procurement matter, the official must disclose this interest immediately after receiving the agenda or meeting notice of the bid committee. The official is prohibited from being present at or participating in the deliberations or decision-making process of the procuring institution. Such disclosures must be recorded in the minutes of the relevant meeting or in any document seeking a decision. 

The Effect Of The Act In The Procurement Sector 

The effect of the Act on the procurement sector is significant, aiming to address any previous gaps, particularly in preventing exploitation within the system. As vital as tender processes are for a developing country like South Africa, it is crucial to safeguard the sector with robust legislation. It is left to be seen whether the implementation of the Act achieves its goals. 

The Act enhances the procurement sector by aiming to increase transparency at every stage of the procurement process. This transparency is intended to help reduce favoritism and manipulation, ensuring that the process is fair and equitable. By providing clear guidelines on accountability and sanctions, the Act aims to ensure that bidders adhere to its prescripts, thereby holding them accountable for their actions. 

One of the key benefits of the Act is its focus on job creation and economic advancement. It seeks to support the growth of businesses, particularly those owned by historically disadvantaged groups, and aims to contribute to broader economic development. 

The Act streamlines dispute resolution by providing a structured process for bidders to challenge decisions made by procuring institutions. Instead of immediately resorting to court for reviews, bidders are required to exhaust further internal processes first. This approach not only provides clear guidance on how to address grievances but also alleviates the burden on courts, reducing the pressure and volume of tender-related disputes. However, a big part of this burden will shift to the newly formed Tribunal. 

Conclusion 

The Act serves as a reminder that our legal framework is continually evolving. For bidders, it establishes stringent expectations and guidelines for navigating the tender process. Similarly, procuring institutions benefit from a defined scope of responsibilities, including how to manage and address defective bids. 

We wait with great anticipation to see what regulations the Minister makes, as required in terms of section 63 of the Act. There is a wide range of issues listed in section 63 that require regulations. Different regulations for different categories of procuring institutions and for different types of procurement are provided for in section 64. The making of regulations regarding procurement of infrastructure and capital assets, are a mandatory requirement. Only once the regulations are promulgated, will the Act be capable of, and will hopefully reach its full potential. 

Ultimately, the Act aims to strike a balance between bidders and procuring institutions, addressing and filling the gaps that previously existed within the procurement landscape. By creating a more structured and transparent environment, it will hopefully foster fairness and accountability, benefiting all stakeholders involved in the procurement process.