The Public Procurement Bill, which sets out a single framework for sourcing, buying and paying for goods and services by all organs of state, has become law.
Public procurement accounts for a significant portion of the government’s expenditure, running into billions of rand a year, and is a major contributor to GDP.
President Cyril Ramaphosa has signed the bill into law, which provides for preferential procurement for defined categories of people through so-called set-asides, or preferred partners. It also promotes the procurement of locally produced goods or products with local content.
The set-asides will apply to black people, women, people with disabilities, military veterans, youth, small enterprises and co-operatives. Prequalification criteria will apply to bidders that procure from companies owned by black people or subcontract to small enterprises. Subcontracting to small enterprises, specifically those owned by black people, will be a condition of a bid where feasible.
The act also includes provisions for bids to apply a designated minimum threshold for locally produced goods or goods with local content in designated sectors of the economy.
The bill was vehemently opposed by the DA — now a member of the government of national unity — as well as by the ACDP and Freedom Front Plus during its passage through the National Assembly. The DA said it was a “disastrous piece of race-based legislation”.
The act is intended to overcome the current fragmented system of procurement across organs of state.
“The Public Procurement Act addresses weaknesses in the procurement of goods and services by organs of state that have in the past enabled various degrees of corruption, including state capture,” the presidency said in a statement.
It will be administered by the finance minister and applies to departments, constitutional institutions, municipalities, municipal entities and public entities. There are also a limited number of clauses that apply to parliament and provincial legislatures.
Procuring institutions will have to develop their own procurement policies in compliance with the act.
The presidency said the bill complied with the stipulation in section 217 of the constitution that the contracting of goods and services by organs of state in all spheres of government must occur in accordance with a system that is fair, equitable, transparent, competitive and cost-effective; and that national legislation must prescribe a framework within which a procurement policy must be implemented.
“The act foresees that economic development will be stimulated through the procurement of goods that are produced and services that are provided in SA, as well as procurement that is developmental in nature,” the statement said.
Pharmaceuticals Made in SA (Pharmisa), an industry association for local drug makers, said the act would help promote the domestic industry.
Increased local manufacturing would help reduce SA’s trade deficit for pharmaceuticals, improve SA’s security of supply and put the country in a better position in the event of another pandemic, said Pharmisa chair Stavros Nicolaou. Pharmaceuticals were the fifth-biggest contributor to SA’s trade deficit, he said.
The act signalled to investors that the government had a single procurement policy, and would help resolve the long-running tension between industrial policies aimed at supporting local manufacturers and budget-constrained government departments focused on getting the lowest price, Nicolaou said.
The health department has previously opted for cheaper imports over locally made products, such as vaccines made by state-backed Biovac. The act also complemented recent moves by the SA Health Products Regulatory Authority, which has proposed prioritising the registration of locally made products, Nicolaou said.
Update: July 23 2024
This story contains new comment by Pharmisa.
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