Cape Town – The DA has welcomed the decision by the Supreme Court of Appeal (SCA) to set aside the Preferential Procurement Regulations of 2017 and declare them invalid.
The judgment will help to combat corruption and end the uncompetitive exclusion of suppliers, the DA said, as state-owned firms can no longer disqualify prospective contractors who are not majority black-owned without first considering the price and proposition of the tender.
The SCA said in its judgment: “Any pre-qualification criteria which is sought to be imposed must have as its objective the advancement of the requirements of section 217(1) of the constitution. The prequalification criteria stipulated in regulation 4 and other regulations do not meet this requirement.”
DA finance spokesperson Geordin Hill-Lewis said in a statement on Tuesday the application of the so-called “pre-qualification criteria” was one of the biggest drivers of corruption in public procurement, ’’under the fig leaf of BBBEE and empowerment“.
In an appeal case brought by NPO Afribusiness, the SCA found that the Minister of Finance (Pravin Gordhan at the time) acted illegally and exceeded his powers when he used section 5 of the Preferential Procurement Policy Framework to introduce the Preferential Procurement Regulations of 2017.
The regulations were therefore declared invalid as a result of their inconsistency with the provisions of the procurement policy framework.
’’The judgment has far-reaching consequences for public procurement in South Africa as it casts doubt on the continued use of BBBEE pre-qualification criteria.
’’Business owners with competitively priced high-quality products have repeatedly been denied the opportunity to do business with government because of the exclusionary requirement to meet a pre-determined threshold of BBBEE scores.
’’In addition to engendering exclusion, the use of pre-qualifying criteria has in the past resulted in the arbitrary application of BBBEE criteria, inflation of prices from the limited pool of suppliers and corruption.
’’Some suppliers have continued to use BBBEE’s exclusion criteria to constantly benefit from government tenders whilst denying access to new entrants,'’ Hill-Lewis said.
Commenting on the ruling, AfriBusiness (now known as Sakeliga) CEO Piet le Roux said: “It is an important step in the right direction, namely, to judge tenders based on business measures and value for the public, instead of race and other political considerations.’’
He said since 2017, organs of state could set their own discretionary and arbitrary minimum BEE requirements a contractor must meet.
IOL