Representatives of various industries lobbied strongly in parliament on Tuesday for priority to be given to localisation in preferential public procurement.
The Apparel and Textile Association of SA (Atasa), the Mining Equipment Manufacturers of SA (Memsa) and steel manufacturer Scaw Metals all made this appeal in their submissions to parliament’s finance committee on the Public Procurement Bill. The committee is holding public hearings on the bill, which will continue on Wednesday.
Another point raised in the submissions is that much of the substance of the bill has been left to regulations which will be in the hands of finance minister Enoch Godongwana. Arguments were also made for the principles of procurement contained in the constitution to be spelt out specifically in the bill.
The bill repeals the Preferential Procurement Policy Framework Act, which provides for an 80-20 and 90-10 percentage points preferential procurement system determined on the basis of price (the former) and B-BBEE status (the latter), depending on the size of the contract.
The bill is intended to provide an overarching, consolidated and national framework for public procurement for all spheres of government, replacing the plethora of fragmented laws, regulations and instructions now in place.
The bill provides for preferential procurement points. Thresholds will be governed by regulations and state organs will have to develop their own procurement policies.
Regulations will be made on one or more preference point systems and thresholds, which will be mandatory for procurement policies.
Preferences cited in the bill include those disadvantaged by discrimination, small enterprises, enterprises in townships, rural or underdeveloped areas, black people, women, persons with disabilities and youth. Preferences must also relate to categories of goods and services produced and provided in SA.
Atasa deputy chair Herman Pillay and Mining Equipment Manufacturers of SA CEO Lehlohonolo Molloyi proposed that local manufacturing be a prequalifying criteria for public procurement to steer it towards job creation and industrialisation. Scaw Metals CEO Doron Barnes said local procurement, of steel specifically, should be prioritised and given a higher rating than black ownership.
Steel and Engineering Industries Federation of SA (Seifsa) COO Tafadzwa Chibanguza said devolution of procurement practices to individual organs of state and their proliferation “will create an untenable operating environment for local companies”.
University of the Witwatersrand law professor Jonathan Klaaren, on behalf of the Joint Strategic Resource (JSR), pointed to a lack of clarity on key constitutional questions in the bill. He said it failed to locate the legal authority for determining an institutional procurement policy. This posed the risk of court challenges. It was not clear whether procuring institutions or the Treasury would be the first mover in setting up public procurement policies for procuring institutions.
Klaaren also said the bill as currently drafted fell short of the constitutional requirement for legislation that would establish a national framework for procurement. The bill should incorporate the constitutional principles for procurement, namely that procuring institutions contracting for goods or services must do so in a manner that is fair, equitable, transparent, competitive and cost-effective.
The JSR participated in a task team that assisted Nedlac with its deliberations on the bill.
SA Institute of Chartered Accountants (Saica) senior executive for ethics standards and public sector Natashia Soopal suggested that the bill include requirements for consequence management in the event of noncompliance, whistle-blowing processes and the skills required by those officials involved in procurement.
Stellenbosch University research fellow Prof Annamaria La Chimia argued for stronger preferences for women, saying preferences and set-asides should not be limited to women-owned and women-led companies, but should include considerations of broader gender issues such as the gender composition of the workforce.
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