Treasury director-general Dondo Mogajane says his circular issued last Friday to organs of state not to issue any new tenders pending a Constitutional Court clarification on its judgment on procurement regulations, was “not an instruction issued in terms of any legislation, but advice”.
This concession is contained in a letter to business lobby group Sakeliga, which Business Day has seen.
Mogajane’s circular was interpreted as an instruction to bring all procurement by organs of state to a standstill until the outcome of an urgent application to the Constitutional Court by finance minister Enoch Godongwana, for clarity regarding the suspension of procurement regulations. Western Cape MEC for finance David Maynier, among others interpreted the circular as such.
Maynier said on Monday that the prohibition would immediately halt 86 tenders worth R1.85bn planned for March and that he had written to Godongwana to request the immediate withdrawal of the notice.
In the notice, Mogajane ordered that no new tenders be advertised, tenders advertised on or after the February 16 judgment of the Constitutional Court be held in abeyance and tenders issued before that date be finalised in terms of the procurement regulations.
In his letter to Sakeliga, Mogajane notes that his communication to organs of state was “not an instruction issues in terms of any legislation but advice to organs of state” as procurement decisions are made by accounting officers/authorities of organs of state.
“As to your [Sakeliga’s] assertion that organs of state may issue tenders in terms of the Preferential Procurement Policy Framework Act, please note that section 2(1)(b) and (c) require the amounts and a formula to be prescribed by regulation. To this end, new draft regulations are envisaged to be published for comment in the week of March 7.”
Sakeliga, which successfully applied to the Constitutional Court to contest the procurement regulations, said in a statement that Mogajane’s letter was in response to its pointing out to him that he did not have the authority to give such instructions to organs of state. Also, that organs of state acting in accordance with his circular would render themselves liable to litigation because the Constitutional Court had ruled that the BEE-based pre-disqualification criteria in the regulations were invalid.
“There is no reason for the advertising or awarding of tenders to be suspended, provided it is done within the ambit of the Preferential Procurement Policy Framework Act (PPPFA) and, consequently, no BEE pre-requirements are imposed,” the Sakeliga statement said.
“Today’s letter by the director-general to Sakeliga has removed the need for urgent litigation and means that government institutions may now proceed with procurement.”
In his circular, Mogajane said clarity was needed from the Constitutional Court as to whether the invalidity of the regulations had been, and continues to be, suspended, which would mean that they continued to be of full force and effect.
The case arises from litigation initiated by Afribusiness NPC (which later changed its name to Sakeliga) which contested the validity of the procurement regulations.
The Constitutional Court did not rule on the suspension for 12 months of the invalidity of the regulations imposed by the Supreme Court of Appeal when it found in Sakeliga's favour.
“The legal position — though not what the Constitutional Court seemed to intend — is that the suspensive period of invalidity has been re-engaged and the procurement regulations have been and continue to be of full force and effect,” Mogajane said in his notice.
“The minister will, on an urgent basis, be seeking confirmation from the Constitutional Court that the invalidity of the procurement regulations has been, and continues to be, suspended. In other words, guidance is required as to whether the procurement regulations remain valid until March 15 2023, unless repealed sooner.”
The procurement regulations introduced pre-qualification criteria to be eligible to tender, among other things. These criteria serve to promote BBBEE and the advancement of designated groups.
The Supreme Court of Appeal held that the preliminary disqualification by a tenderer was impermissible and that the correct approach to evaluating tenders was to first determine who scored highest, and thereafter organs of state may award the tender to a tenderer with a lower score if there were objective criteria to justify the award.
It ruled that the minister’s promulgation of the regulations was unlawful.
The Constitutional Court declared that an organ of state must determine its own preferential procurement policy and it was not in the minister’s power to make regulations on this.
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