The Public Procurement Act 28 of 2024 (“the Act”) was signed into law by the President on 23 July 2024. The Act represents a significant shift in how goods and services are procured by state organs. Its introduction marks a decisive effort to address systemic issues within the procurement process and establish a cohesive framework for public procurement. The act repeals the State Tender Board Act, the National Supplies Procurement Act as well as the Preferential Procurement Policy Framework Act and accordingly, creates a single statutory framework for public procurement.
The Act welcomes noteworthy regulatory amendments to enhance integrity and transparency to the public procurement processes.
Aim of the Act
One of the Act’s primary objectives is to establish a single, comprehensive framework governing the procurement of goods and services across all organs of state. This unified approach aims to streamline procurement processes and enhance the consistency and fairness of procurement practices as well as provide for a more coherent and inclusive procurement strategy. The Act supports developmental procurement strategies that contribute to broader economic growth and development.
By consolidating various procurement regulations and statutes into one framework, the Act seeks to facilitate procurement, including preferential procurement in a more transparent and controlled manner, with the aim of reducing the risk of corruption and ensuring that procurement decisions are both equitable and accountable. This should address past weaknesses that the previous fragmented approach resulted in. The Act therefore supports the advancement of various categories of suppliers.
Furthermore, the Act also supersedes temporary measures that were implemented in January 2023 following a significant legal ruling. In early 2022, the Constitutional Court's decision in Minister of Finance v Afribusiness NCP invalidated the Finance Minister’s previously prescribed procurement regulations, citing that they contravened Section 217 of the Constitution. The Court found that the regulations accompanying the Preferential Procurement Policy Framework Act were beyond the Minister’s powers. The Act remedies the legal gap by providing a robust and constitutionally compliant framework, ensuring a more stable and legally sound approach to procurement.
The Act also aims to protect officials who may be directed by a person in authority to act in a manner that is not consistent with the Act. This inclusion seems to be as a direct result of the findings made by the State Capture Commissions wherein officials had no safe avenue to deliver complaints or objections regarding the procurement process.
Constitutional Compliance of the Public Procurement Act
The Act is a pivotal step towards ensuring compliance with Section 217 of the Constitution. This constitutional provision mandates that the procurement of goods and services by state organs must adhere to principles that are "fair, equitable, transparent, competitive, and cost-effective."
By creating one statutory framework, the Act embodies these principles and replaces previous interim measures that were found to be unconstitutional, aligning procurement practices with constitutional standards. By integrating these core principles into its provisions, the Act aims to foster a more accountable and efficient procurement environment, ensuring that state resources are utilised in a manner that upholds the highest standards of constitutional compliance.
Impact of the Public Procurement Act on Existing Legislation
The Act introduces significant changes that impact several existing pieces of legislation. Some of the changes are:
1. Public Finance Management Act (PFMA)
The deletion of Sections 38(1)(a)(iii), 51(1)(a)(iii), 76(1)(k) and 76(4)(c): The Act revises the provisions of the PFMA and repeals the sections which previously authorised various bodies, such as National Treasury, Accounting Authorities or Accounting Officers to implement regulations and/or ensuring appropriate procurement and provisioning systems which were fair, equitable, transparent, competitive and cost-effective were in place, and will be dealt with in terms of the Act.
2. Municipal Finance Management Act (MFMA)
The Act also impacts the MFMA with specific amendments:
Deletion of Section 2(f): This section previously provided for the MFMA to establish norms and standards with regards to supply chain management. This section has now been deleted, which implies that supply chain management will be regulated by the Act.
Substitution of section 14(5): This section now aligns with the Act in that any disposal of a capital asset must be done in a fair, equitable, transparent and consistent manner in terms of the Act, instead of in terms of section 111 of the MFMA.
3. Municipal Systems Act (MSA)
Section 62(6): this sections also align with the Act in that the appeal process in terms of section 62 will not be applicable if the dispute is provided for in terms of the Act.
4. Treasury Guidelines
The Act impacts existing Treasury guidelines by integrating them into a more cohesive and standardised procurement framework. The Act consolidates various procurement practices and guidelines into a single system, which simplifies compliance and enforcement. This integration ensures that Treasury guidelines are aligned with the new legislation, facilitating more consistent and transparent procurement processes across all levels of government.
In summary, the Act significantly modifies existing legislation to create a unified and transparent procurement system. By aligning with and updating the PFMA, MFMA, MSA, and Treasury guidelines, and other pieces of legislation, the Act ensures a streamlined approach to procurement that enhances fairness, equity, and cost-effectiveness across the public sector.
Dispute Resolution under the Public Procurement Act
The Act includes a dispute resolution mechanism which brings a notable change to the previous legislation, where an alternative remedy was not always available. Accordingly, this change marks a significant shift from previous practices, aiming to streamline and enhance the efficiency of resolving procurement-related disputes.
Specifically, the Act provides that a bidder may submit an application for reconsideration to the procuring institution if the bidder is not satisfied with the award of a bid. Submission of reconsideration application results in a “stand still process” which prohibits organs of state from concluding contracts with the successful bidder, if the decision is under reconsideration.
The Act also establishes a Public Procurement Tribunal, which will be considered internal remedy to be followed before the higher courts may be approached to review the award of a tender.
In conclusion, the Act marks a shift in the regulatory landscape governing public procurement processes. This new legislation is designed to enhance integrity, streamline procedures, and promote transparency across the public sector. The Act aims to create a more transparent and equitable procurement environment.
The introduction of a unified framework and the repeal of outdated legislation reflect a decisive move towards modernizing procurement practices. Additionally, the Act's emphasis on internal dispute resolution mechanisms promises to enhance efficiency and reduce the burden on the court system. Collectively, these changes are poised to restore public confidence, promote fair competition, and ensure that state resources are used effectively, setting a new standard for procurement practices across the public sector.
By Hannah Hilson & Saiantha Naicker [under supervision of Naadiya Vania]
Comments