Prioritising transformation or value for money in public procurement was a major issue of debate on Wednesday in public hearings on the draft Public Procurement Bill aimed at establishing a national procurement framework.
The push for transformation to take priority was advocated by various stakeholders such as the Black Business Council, the Association for the Advancement of Black Accountants of Southern Africa and the SA Black Technical and Allied Careers Organisation (Sabtaco) and supported by ANC and EFF members of parliament’s finance committee, which held public hearings on the bill over the past two days.
Supporters of this view said it is grounded in the constitutional provision dealing with transformation in procurement.
On the other hand the SA Institute of Race Relations (SAIRR) and Corruption Watch were adamant transformation cannot come at the expense of value for money, which must be prioritised otherwise it would be a case of enriching the rich. If two bidders are equal on price then race could be considered next, said SAIRR analyst Gabriel Crouse.
Crouse said the large sums spent on preferential procurement over many years would have been better spent on social services for the poor. He said the bill does not give priority to value for money.
Sabtaco past president Clint Koopman argued value for money has to take account of transformation and is not necessarily the lowest price. The two are not contradictory.
Preferences cited in the bill, which aims to establish a consolidated national framework for public procurement include those disadvantaged by discrimination, small enterprises, enterprises in townships, rural or underdeveloped areas, black people, women, people with disabilities, and youth. They must include preferences relating to categories of goods and services produced and provided in SA.
Independent body
In terms of the bill, preferential procurement points and 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 the procurement policies.
Another point raised by Corruption Watch legal researcher Motlatsi Komote is the independence of the Public Procurement Office (PPO), which she said should be an independent body with its own budget appropriated by parliament rather than being housed in the National Treasury as proposed in the bill. This is because of the central role of the office in overseeing public procurement across government, including Treasury. It should be able to act impartially without fear or favour, Komote said.
The Budget Justice Coalition and Imali Yethu were also concerned about the independence of the PPO housed in Treasury given its extensive powers as well as the transparency and monitoring provisions in the bill.
The amaBhungane Centre for Investigative Journalism advocacy co-ordinator Caroline James highlighted the need for greater transparency at all stages of the procurement process as the lack of this facilitates corruption. The PPO is insufficiently independent and too much of the detail of the preferential procurement policy is left to regulations which is undemocratic, she said.
Stellenbosch University law professor Geo Quinot speaking for the African Procurement Law Unit stressed the bill must clearly assign to the minister of finance the authority to prescribe preferential procurement policy through regulations rather than this being left to procuring institutions whose role should simply be to implement rather than create policy.
On Tuesday, lobbyists of various industries advocated giving priority to localisation. Others stressed the importance of state procurement from women.
In their submission on Wednesday Cosatu and the SA Clothing and Textile Union supported the proposal that local production be a prequalifying criterion and wanted the bill to include a clause on whistle-blowing, which they said should be incentivised.
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