The Treasury must address issues raised by a Zondo commission report and a ruling by the Constitutional Court before it publishes the draft Public Procurement Bill, finance minister Enoch Godongwana said in parliament on Thursday.
The draft bill, which aims to codify the entire government procurement process, was initially scheduled to be published with Wednesday’s national budget but was held back by these two developments, Godongwana told members of four parliamentary committees before a budget briefing by Treasury officials.
The first report of the Zondo commission of inquiry into state capture dealt extensively with the limits of the existing public procurement system, and last week the Constitutional Court ruled that the minister had exceeded his legislative powers by excluding businesses that are not black-owned from tendering for government contracts. The court held that each organ of state must determine its own procurement policy.
The case was brought by business lobby group Sakeliga.
“In the light of that, we want to take a look at the current public procurement bill after studying those two new developments,” Godongwana said.
The aim of the proposed bill is to eliminate the fragmentation in the laws that deal with public sector procurement, including the Public Finance Management Act and a raft of Treasury regulations on supply chain management.
It will create a single regulatory framework for procurement by national, provincial and local governments, as well as state-owned entities (SOEs), and will open the way for a revamped system of preferential procurement.
There’s a plethora of laws dealing with public procurement, which has led to uncertainty about which law is applicable, and inconsistency in interpretations. The system is seen by the Treasury as inflexible and incoherent, and has hampered development and service delivery.
The draft bill will also contain a framework for preferential procurement. It was published for public comment and the Treasury received more than 4,000 submissions that it had to work through.
Godongwana told MPs that the Treasury will issue new instructions in the next 14 days giving more flexibility and power to accounting officers. “It enhances the reporting requirements to national, provincial treasuries and the auditor-general,” Godongwana said.
He and his team were questioned by MPs on a wide range of issues. On the introduction of a basic income grant, Godongwana said there is a need to review the entire grant system and then consider what is appropriate.
“If such a review leads to a higher [amount] than what we are currently funding, South Africans must be prepared to pay taxes. It is a decision which is going to be biting on us as we will have to pay the taxes in order to support that. We hope that by the time we have reached the MTBPS [medium-term budget policy statement] we would have canvassed a view in cabinet which we can place on the statement.”
Godongwana conceded that the fuel price is a problem, with more than 40% of it consisting of administered prices. The government was looking at this.
He also said the cost of e-tolls could not be added to the fuel price as this “blunt instrument” would add another “massive” 74c on to the petrol price.
Different options had to be looked at for e-tolls, but Godongwana insisted that, in his personal view, the user-pays principle must be adhered to.
On SAA, the minister said that the Treasury is evaluating the submission by the department of public enterprises for R2.7bn for the airline.
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