State-owned rail and ports operator Transnet has temporarily scrapped BEE-based qualification criteria in its procurement processes pending clarification on the Constitutional Court’s ruling on preferential procurement, or the passing of new regulations, whichever comes first.
Transnet, which is implementing a wide range of reforms including establishing the National Ports Authority as an independent subsidiary, says it has been left with “no other option” than to temporarily halt its preferential procurement requirements.
This is “in order to meet immediate operational requirements and economic objectives” in light of confusion over the legality of the provisions of the Preferential Procurement Policy Framework Act (PPPFA).
“Waiting for either of these decisions in order to proceed with procurement events at Transnet would have huge ramifications for the business and its ability to service its customers,” the company said in a statement.
The rail operator’s action follows a decision in March by the National Treasury to exempt it from provisions of the act that aim to favour black-owned businesses in the awarding of government contracts.
This was after the Constitutional Court ruled that state organs must determine their own preferential procurement policy and it was not in the finance minister’s power to make regulations on this.
While acknowledging that the current preferential procurement legislation that aims to promote BEE had only enjoyed minimal success, Transnet said the ruling in the absence of a new or better mechanism for ensuring the participation of black business was regrettable.
“As is common cause, Transnet and the SA economy cannot afford to stop all procurement while waiting for the new regulations or an alternative ruling by the Constitutional Court in order to avoid our procurement being interdicted,” it said.
Pending the Treasury’s application to the court to determine the effective date of the judgment, director-general Dondo Mogajane issued a note to all organs of state advising them that all tender processes be put on hold, apart from those advertised before February 16.
Draft amendments to the PPPFA to ensure they are in line with the court’s judgment were published for public comment by the Treasury on March 10. As soon as the new regulations are promulgated, “Transnet will ensure full compliance”.
“Transnet’s view remains that least-cost procurement militates against transformation and re-industrialisation, and the company will aggressively pursue all available mechanisms to effect transformation, empowerment and localisation as the legislative landscape shifts,” it said.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.