Master Builders South Africa (MBSA) yesterday welcomed the decision by the board of South African National Roads Agency Limited (Sanral) to withdrew its new controversial Preferential Procurement Policy to avert lengthy court battles, despite the parastatal cancelling all existing advertised tenders that had not yet closed.
MBSA is the leading national representative body in the building and construction industry in South Africa.
The new policy was adopted by the Board on May 23, but came to loggerheads with the construction industry, which said the new policy would cost the economy billions of rands. Subsequently, numerous legal salvos were fired by various parties.
Sanral said in a statement yesterday that it intended to commence a process on a date soon to be announced, where it sought to engage the construction industry and all relevant stakeholders to address meaningful transformation imperatives of the sector.
Sanral said it was advised by Senior Counsel that in light of the change in the scoring formula, it was necessary to commence the tender process afresh, a decision which had been reached with much angst in light of the urgent need for the services to be rendered.
“Sanral will, therefore, be cancelling all existing advertised tenders that have not yet closed, issue new tender adverts, and subsequently adjudicate all tenders within the confines of the interim policy. Sanral intends to expedite the re-advertisement of tenders and processing thereof within this current financial year,” it said.
Themba Mhambi, the chairperson of the Sanral board, said, “The board of Sanral has adopted the decision to withdraw the new Preferential Procurement Policy because of the negative impact these court challenges have, including the fact that we anticipate that the lengthy court processes will cause significant delays to the work of Sanral.”
Sanral’s board proposed, as an interim measure, pending the adoption of a finalised policy, to adjudicate all tenders in accordance with the scorecard.
Sanral would require, as a condition of contract, that successful bidders be required to ensure compliance with contract participation goals for targeted enterprises in targeted areas and labour as per the formula applied by the CIDB, as was applied before the introduction of the policy, which was being withdrawn.
The CIDB is required in terms of the Construction Industry Development Board Act to establish the Register of contractors and Register of Projects. The register of contractors grades and categorises contractors according to their capability to carry out construction projects.
Sanral’s CEO, Reginald Demana, said that infrastructure development is critical to South Africa’s economic growth and, in the wake of the Covid-19 pandemic, the country could not afford further disruptions towards the expansion and maintenance of the national road network and key arteries across the country’s provinces.
“Road and rail infrastructure are the lifeblood of our economy and, as such, any disruption to its maintenance, as well as any disruption to our extensive programme of new infrastructure projects, is a threat to our country’s economic growth,” said Demana.
He said a protracted legal battle between Sanral and the construction industry would have dire consequences not only for Sanral’s projects, which run into billions of rands, but would also be detrimental to the entire economy.
Demana said, “Clearly, it is not in the interest of Sanral, nor is it in the national interest, to delay our infrastructure build programme.
Roy Mnisi, the executive director of MBSA, said yesterday that the withdrawal of the policy by Sanral might sound regressive, but it was necessary to address the gaps that might have caused some of the legal challenges launched by various construction companies.
“A policy that is subject to constant court challenges is not a good one for the entity and for the construction sector and it most definitely required some attention for a variety of reasons. Court challenges adversely affect the procurement and construction process that we dearly need to keep the sector alive. It is on that basis that we view the decision by the board of Sanral as a progressive one which should be supported rather than being frowned upon,” he said.
However, Mnisi said the concerning part was the financial impact of cancelling of all existing advertised tenders that had not yet closed.
“Construction companies that have already prepared their tenders stand to lose their money spent in responding to those tenders. Putting together tender documents for procurement of work of the size of Sanral tenders cost a lot of time and money and we believe that they may be consideration for those who may have submitted their tenders before the announcement by Sanral,” he said.
MBSA said, as a construction sector, “we would appreciate a meaningful consultation to have our inputs on the process and development of the new Procurement Policy of Sanral. We have always been committed to work closely with state-owned companies and agencies involved in infrastructure development”.