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GUIDE – GOVERNMENT CONTRACTING AND PUBLIC PROCUREMENT IN SOUTH AFRICA

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BOWMANS

Contents

04 Introduction

05 OurFirm

06 OurFootprintinAfrica

07 OurGovernmentContractingandPublicProcurementServiceLine

08 GovernmentContractingandPublicProcurementinSouthAfrica:

•Overview •Scopeofapplication •Applicableprocedures •Evaluationandaward •Changestoanexistingcontract •Enforcement •Reform

16 KeyContacts

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Guide to Government Contracting and Public Procurement in South Africa

This is the first edition of our Guide to Government Contracting and Public Procurement in South Africa.

Itisintendedtoanswersomeofthemostfrequentlyaskedquestionsrelatingtopublic

procurement,andtoprovideaconciseoverviewofissuespertainingtogovernmentcontractingandpublicprocurementinSouthAfrica.

Inparticular,thisguideprovidesabroadoverviewofthelegislativeregimeapplicabletopublicprocurementinSouthAfrica,andconsidersthescopeofapplicationofthislegislativeregimetoentities,contracts,privatisationsandpublic-privatepartnerships(PPPs).

Theguidealsoprovidesanoverviewoftheapplicableproceduresforpublicprocurement,theevaluationandawardoftenders,changestoexistingcontracts,andenforcement,aswellasthereformsthatareexpected.

Claire Tucker

HeadofPublicLawandRegulatory

The contents of this guide are for reference

purposes only and should not be considered to

be a substitute for detailed legal advice. If you

require further information or specific advice,

please contact one of the key contacts listed

at the end of this guide.

Introduction

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Our Firm

WithsevenofficesinfiveAfricancountriesandover400specialisedlawyers,we

drawonouruniqueknowledgeofthebusinessandsocio-politicalenvironmenttoadviseclientsonawiderangeoflegalissues.

Everywherewework,weofferclientsaservicethatuniquelyblendsexpertiseinthelaw,knowledgeofthelocalmarketandanunderstandingoftheirbusinesses.Ouraimistoassistthemtoachievetheirobjectivesassmoothlyandefficientlyaspossiblewhileminimisingthelegalandregulatoryrisks.

Ourclientsincludecorporates,multinationalsandstate-ownedenterprisesacrossarangeofindustrysectorsaswellasfinancialinstitutionsandgovernments.

Ourexpertiseisfrequentlyrecognisedbyindependentresearchorganisations.WewererankedfirstbydealvalueandsecondbydealcountinMergermarket’s2018Africaleaguetablesforlegaladvisors.WereceivedawardsinfiveoutofsixcategoriesattheDealmakersEastAfricaAwardsfor2018:toplegaladviserinM&Aforbothdealflowandvalue,toplegaladviserinGeneralCorporateFinanceforbothtransactionflowandvalue,andadvisedontheDealoftheYear.IntheDealmakers SouthAfricaAwardsfor2018,wewereplacedfirstfordealflowintheGeneralCorporateFinancecategory.

WewerenamedSouthAfricanLawFirmoftheYearfor2018intheChambersAfricaAwardsforExcellence.Wealsoreceivedthe2019awardsforTransportationandInfrastructureTeamoftheYearandTMTTeamoftheYearattheAfricanLegalAwardshostedbyLegal Week andtheCorporateCounselAssociationofSouthAfrica.

Bowmans exists to help our clients overcome legal complexity and unlock opportunity in Africa. Our track record of providing specialist legal services, both domestic and cross-border, in the fields of corporate law, banking and finance law and dispute resolution, spans over a century.

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Our Footprint in Africa

WeprovideintegratedlegalservicesthroughoutAfricafromsevenoffices

(CapeTown,DaresSalaam,Durban,Johannesburg,Kampala,MokaandNairobi)infivecountries(Kenya,Mauritius,SouthAfrica,TanzaniaandUganda).Weworkcloselywithouralliancefirm,AmanAssefa&AssociatesLawOffice,inEthiopia,andourbestfriendsinNigeriaandMozambique(UdoUdoma&Belo-OsagieandTacianaPeãoLopes&AdvogadosAssociados,respectively).WealsohavestrongrelationshipswithotherleadinglawfirmsacrosstherestofAfrica.WearerepresentativesofLexMundi,aglobalassociationwithmorethan160independentlawfirmsinallthemajorcentresacrosstheglobe.Thisassociationgivesusaccesstothebestfirmsineachjurisdictionrepresented.

Mozambique

Kenya

Tanzania

South Africa

Nigeria

Uganda

Mauritius

Best friends

Bowmans offices

Significant transaction or advisory experience

Alliance firms

Ethiopia


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Our Government Contracting and Public Procurement Service Line

F airness,equitability,transparency,competitivenessandcost-effectivenessarethe

guidingprinciples,requiredbytheConstitutioninrelationtoallpublicprocurementinSouthAfrica.

Wehavehadmanysuccessesinguidingbothpublicandprivatesectorclientsthroughthecomplexregulatoryregimeofpublicprocurementprocesses.

Onthepublicsectorside,weassistwiththedesignandimplementationoffairtenderprocessesthatmeetthestipulatedconstitutionalprinciples.

Ontheprivatesectorsideweadviseclientsontheprocurementofgoodsandservicesbyorgansofstateandassistwithchallengingtenderprocesseswhichdonotmeetconstitutionalstandards.

Weadvisecorporateclientsandgovernmentbodiesontheapplicationandinterpretationoflawsandonadministrativeaction.Wealsoregularlyrepresentclientsinproceedingsbeforestatutorybodiesthatregulatediverseareasofeconomicandsocialactivity.Ourcollectiveexpertiseinconstitutionalandadministrativelawmakesusleadingpractitionersinjudicialreviewproceedings.

Government Contracting and Public Procurement in South Africa

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OVERVIEW

1. What legislative framework is applicable

to government contracting and

public procurement?

TheprinciplepieceoflegislationthatregulatespublicprocurementistheConstitutionoftheRepublicofSouthAfrica,1996(Constitution).Section217oftheConstitutionrequiresthatwhenanorganofstatecontractsforgoodsandservices,itmustdosoinaccordancewithprinciplesoffairness,equitability,transparency,competitivenessandcost-effectiveness.

Thisconstitutionalrequirementisechoedinsection51(1)(a)ofthePublicFinanceManagementAct1of1999(PFMA),whichstatesthatanaccountingauthorityfor,amongothers,anationalorprovincialdepartmentorpublicentitymustensurethattheparticulardepartmentorentityhasandmaintainsanappropriateprocurementandprovisioningsystemwhichisfair,equitable,transparent,competitiveandcost-effective.ThePFMAisimplementedthroughtheregulationspublishedunderit,namelytheNationalTreasuryRegulations(TreasuryRegulations).

TheConstitutionpermitsorgansofstate(suchasdepartmentsofgovernmentandpublicentities)toimplementapreferentialprocurementpolicythatadvancespersonspreviouslydisadvantagedbyunfairdiscrimination.Section217(3)oftheConstitutionprovidesforlegislationthatwillprescribeaframeworkwithinwhichthepolicymustbeimplementedtobeenacted.Inlinewithsection217(3)oftheConstitution,thePreferentialProcurementPolicyFrameworkAct5of2000(PPPFA)andtheregulationspublishedunderitin2011(PPPFARegulations)prescriberequirementsregardingblackeconomicempowerment(BEE)considerationsforstatetenders.

TheLocalGovernment:MunicipalSystemsAct32of2000andtheMunicipalFinanceManagementAct56of2003(MFMA)regulate,amongothers,themannerinwhichmunicipalpowersandfunctionsareexercisedandperformedandthemanagementofthefinancialaffairsofmunicipalitiesandotherinstitutionsinthelocalsphereofgovernment.Theserequirethattheentitiestowhichtheyapply,adheretothePPPFA.

SouthAfricaisafoundingmemberoftheWorldTradeOrganisation(WTO)andisclassifiedas

adevelopedcountry.Despitethis,SouthAfricahasbeenabletonegotiatefavourableconditionsandextendedimplementationperiodsforsomeofitssensitiveeconomicsectorsintheGeneralAgreementonTariffsandTrade(GATT).

SouthAfricaisalsoasignatorytotheWTOAgreementonGovernmentProcurement(GPA)withcertainreservations.

2. Is there a regulatory authority that is

responsible for public procurement enforcement?

No.Thereisnospecificregulatoryauthorityinrespectofpublicprocurement.Mostgovernmentdepartmentsorpublicentitiesdetermineandregulatetheirprocurementsystemsinternallyinaccordancewiththeregulatoryrequirementsforsuchasystem.However,atprovincialleveltherearebuyingofficesinoperationincertainareas.

PublicprocurementisgovernedbytheprinciplesofadministrativejusticeandanunfairdecisioncanbetakenonreviewtotheHighCourt(see17).

3. What are the overriding principles applicable

to public procurement?

Theoverridingprinciplesapplicabletopublicprocurementaretheconstitutionalrequirementsof:fairness,equitability,transparency,competitiveness,andcost-effectiveness.Thesefiveprinciplesarethestandardsagainstwhichallprocurementbyanorganofstateismeasured.

Fairnessandequitabilityrequirethataprocurementprocessbeprocedurallyfairandareconcernedwiththemannerinwhichtheprocessisconducted.Forexample,allparticipantsmustbegiventhesameinformationandopportunities.

Transparencyrequiresopennessandaccountability.Thismeansthattheprocessmustbeconductedpubliclyandnotbehindcloseddoors.Itmeansthatprocurementinformationmustbegenerallyavailable,procurementrulesandpracticesshouldbestandardisedandmadeknown,andinformationregardinggovernmentcontractsandtheirawardshouldbeaccessible.

Competitivenessandcost-effectiveness,whichrevolvearoundcost,requirethatanorganofstatemust,whiletakingintoaccounttheotherprinciples,trytoprocuregoodsorservicesatthelowestpossiblecostandderivevalueformoney.


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Whilenotinherentlycontradictory,thereisatensionamongthefiveprinciplesandtheremaybecircumstanceswheretheachievementofoneprincipleisnotpossibleunlessanotherissacrificed.Therefore,whenevaluatingwhethertherehasbeencompliancewithsection217oftheConstitution,thefiveprinciplesmustbelookedatasawholeratherthanseparately.

4. Are any industries subject to

specific regulation?

Thereisnoindustryspecificregulationunderthelegislativeregimeoutlinedabove.However,therearesomegovernmentpoliciesrelatingtoprocurementwithincertainindustries.Forexample,theDefenceIndustrialParticipation(DIP)policyismandatoryfortheDepartmentofDefenceandparastatalorganisationsinthedefenceindustry.

Thispolicyusespurchasesandleasesbyorgansofstateinthedefenceindustryasleveragetoobligeaforeignsellerofdefencecommoditiesorservicestododefence-relatedbusinessinSouthAfrica.Thisisdoneonareciprocalbasisinordertoadvancemilitarystrategicanddefence-relatedindustrialimperatives.ThepolicyappliestoallforeigndefencepurchaseandleasecontractsaboveUSD2million.

TheDIP,whichonlyfocusesonthedefenceindustry,isavariationoftheNationalIndustrialParticipationProgramme(NIPP)whichappliestoallpurchaseorleasecontractsbystateorgansandparastatalorganisationsthathaveanimportedcontentofUSD10millionorabove.

5. What role does local content play in the

procurement process, if any?

Arecenttrendinpublicprocurementincludesanincreasedfocusonlocalcontent.ThishasseenthesigningoftheLocalProcurementAccordon31October2011undertheNewGrowthPathadoptedbythegovernment.TheAccordistargeting75%ofpublicandprivateprocurementtoacceleratejobcreationandtheattainingofthegoalsoftheIndustrialPolicyActionPlan.

ThePPPFAprovidesthattherecouldbespecificlocalcontentrequirementsinatenderwhichmustbemetforthetendertoqualifyforcompetitiveadjudication.Thesewillbesetoutintherequestforproposal(RFP)document.

6. Is there a procurement portal and is

it accessible?

InApril2015asingleeTenderportalandcentralsupplierdatabasewaslaunched.OperatedbyNationalTreasury(seewww.etenders.gov.za),itaimstosimplify,standardiseandautomatetheprocurementprocess.Theportalcarriestendernotices,accompaniedbyofficialtenderdocumentsandrelevanttermsofreferenceofotherdescriptionsoffunctionalityasapplicable,andawardnotices.Theportalisaccessibletothepublic.

Allcompaniesthatwishtodobusinesswithgovernmentmustberegisteredonthecentralsupplierdatabasefortransactionswithnationalandprovincialgovernmentandtheirentities,aswellasmunicipalities.

Itisalsonowcompulsorytoprocureroutinegoodsandservicesthroughthecentrallynegotiatedcontractsinplace.TheprocessismanagedthroughthegCommerceportalwhichautomatesorderingandallowsforbulkdiscounts.Theautomationprocessisexpectedtoreducecorruptionbyreducingtheriskofhumaninterventiontooverrideestablishedprotocols.

SCOPE OF APPLICATION

1. Which entities must comply with the

procurement rules? Are there any exemptions?

ENTITIES COVERED

Intermsofsection217oftheConstitution,allorgansofstateinthenational,provincialandlocalsphereofgovernmentoranyinstitutionidentifiedinnationallegislationmustcomplywiththeprocurementrules.

OnthenationallevelthePFMAappliestospecificinstitutionsincluding:

• NationalandprovincialstatedepartmentsasdefinedinthePublicServiceAct103of1994.

• Listedmajorpublicentities,nationalgovernmentbusinessenterprisesandotherpublicentities.

• Listedconstitutionalinstitutions.• Provinciallegislatures.

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OnthelocalleveltheMFMAappliestothefollowing:

• Allmunicipalities.• Allmunicipalentities.• Nationalandprovincialorgansofstateto

theextentoftheirfinancialdealingswithmunicipalities.

ThePPPFARegulationsareapplicabletoorgansofstatedefinedasincluding:

• Nationalandprovincialdepartments.• Municipalities.• Constitutionalinstitutions.• Parliament.• Provinciallegislatures.• Otherorgansofstatethatareincludedin

section239oftheConstitutionandarerecognisedbytheMinisterofFinanceasinstitutionstowhichthePPPFAapplies(nosuchotherorgansofstatehavebeenrecognisedbytheMinisterofFinance).

ThePPPFAalsoappliestothespecificpublicentitieslistedinthePFMA.

EXEMPTIONS

Therearenoparticularexemptionsfromprocurementrulesbutthereisameasureofflexibility.Forexample,anorganofstatemayrequestexemptionfromanyoftheprovisionsofthePPPFAforreasonsincludingthattenderersarelikelytobeinternationalsuppliers,amongothers.

Thisexemptionprovisionisdesignedtoworkonacase-by-casebasisandexemptstheorganofstatefromprovisionsofthePPPFAinrespectofaspecifictender.ManyofthepublicentitieslistedinthePFMAwerespecificallyexemptedfromtheprovisionsofthePPPFAuntil7December2012,afterwhichtheexemptionlapsed.

Section92ofthePFMAallowstheMinisterofFinancetoexemptentitiesfromspecificprovisionsofthePFMAortheTreasuryRegulations,whilesection177oftheMFMAallowstheMinisterofFinancetoexemptanymunicipalityormunicipalentityfromspecificprovisionsoftheMFMA.

2. What contracts do procurement rules cover?

Are there any specific thresholds?

CONTRACTS COVERED

Publicprocurementrulesapplytocommercialcontractsbyorgansofstateforthe:

• Acquisitionofgoodsandservices.• Disposalandlettingofstateassets,including

thedisposalofgoodsnolongerrequired.• ConclusionofPPPs.

AccesstostateregulatedassetsisregulatedthroughPPPagreementsorthroughtheregulationswhichareapplicableinthespecificsector.Forexample,inthemineralsandpetroleumsectorapplicationstoexploitsuchassetsaregovernedbysectorspecificlegislation.

However,theprocurementrulesdonotprescribetheformatforprocurement.Forexample,opentenderingisnotrequirediftherearecompellingreasonsnottoconducttheprocessinthismanner.

SPECIFIC THRESHOLDS

Therearenospecificthresholdstodeterminewhetheracontractissubjecttothepublicprocurementregimeornot,buteachentityisrequiredtohaveitsowninternalpolicythatdeterminesthresholdsfortheapprovalsrequiredforvarioustypesoftransactions.

3. Are privatisations and PPPs subject to the

procurement regime?

PRIVATISATIONS

Therearevariousprovisionsacrosspublicprocurementlegislationdetailinghoworgansofstatemustdisposeofpublicassetstoprivateentities.TheNationalTreasuryhasmaderegulationsrelatingtohowdepartments,constitutionalinstitutions,andcertainpublicentitiesshouldalienate,letorotherwisedisposeofstateassets.

Regulation16A.7oftheTreasuryRegulationsstatesthatdisposalofassetsmustbeatamarket-relatedvalueandcanbedonebyquotations,competitivebidsorauction;whicheveristhemostadvantageousforthestate.Thedisposalofassetsmustbeapprovedbytherelevanttreasuryinaccordancewithregulation19.6oftheTreasuryRegulations.


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TheMunicipalAssetTransferRegulations,publishedundertheMFMA,regulatehowmunicipalitiesandmunicipalentitiesmustdisposeofstateassets.Apublicparticipationprocessisrequiredwheretheassetsarehighvalue,toallowthemunicipalcounciltomakedeterminations.Themunicipalcouncilmustapprovethedisposaloftheasset.Inreachingthedecisiontoapprovethedisposalofanasset,themunicipalcouncilmusttakeintoaccountaconsiderablenumberoffactorslistedinregulation7,including:

• Therisksandrewardsassociatedwithoperationorcontroloftheasset.

• TheviewsandrecommendationsofNationalandProvincialTreasury.

• Theinterestsofanyaffectedorgansandthelocalcommunity.

• Compliancewiththelegislativeregimethatappliestothedisposal.

PPPs

Inthecontextofnationalorprovincialgovernmentdepartments,PPPsareregulatedbyregulation16oftheTreasuryRegulationswhichstatesthatPPPagreementsmustbeprocuredinaccordancewithapplicableprocurementlegislation.TheTreasuryRegulationsdealwithhowPPPsmustbeimplementedandsetoutthestepstobefollowed.

Theprinciplessetoutundersection217oftheConstitutionapplytoPPPswhentheyperformapublicfunctiononbehalfofanorganofstateintermsofaPPPagreement.

Regulation16oftheTreasuryRegulationsprovidesforstrictnationalorprovincialtreasurysupervisionofPPPtransactions.Thesetaketheformofapprovals,basedonlistedcriteriathatmustbeobtainedfromtheNationalandProvincialTreasury.

PPPsenteredintobymunicipalitiesareregulatedbysection120oftheMFMAanditsPublic-PrivatePartnershipRegulations.TheseRegulationsprovideforhowmunicipalitiesmustgoaboutconcludingPPPs.Thisinvolves:

• Conductingfeasibilitystudies.• Solicitingtheviewsandrecommendations

oftheNationalandProvincialTreasuryregardingthePPP.

• Complyingwithsection33(ieregardingcontractshavingfuturebudgetaryimplications)and120(6)(ieregardingtheactionstobeundertakenafterafeasibilitystudyhasbeencompleted)oftheMFMA.

APPLICABLE PROCEDURES

1. What procedures do regulated entities use

when carrying out procurements? When is it

appropriate to use each procedure?

AVAILABLE PROCEDURES

TheinternalSupplyChainManagementPolicyofeachdepartmentorentitymustbefollowed.TreasuryGuidelinesandCircularsconstrainthecontentsoftheseandtheTreasuryRegulationsalsoimposespecificrequirementsoncertainentities.

Forcertainvaluethresholdsthereareprescribedprocedures.Thisincludesquotationsorbiddingprocedures.

Thelegislativeregimeallowsforadegreeofflexibilityandforexemptionstobegrantedifthesecanbejustified.Anyexemptiongrantedmustadheretotheconstitutionalprinciplesoffairness,equitability,transparency,competitivenessandcost-effectiveness.

COMPETITIVE TENDERING

AcompetitivetenderprocessisgenerallyconsideredmostlikelytomeettherequirementsoftheConstitutionbut,dependingonthecircumstances,itisnotrequiredbylaw.

TheSupremeCourtofAppealhasstatedthatfairnessisinherentinanopencompetitivetenderprocedure,theverypurposeofwhichistoensurecost-effectivenessandcompetitivenessinatransparentmanner.Itisforthisreasonthatatenderprocessisgenerallyconsideredtobethemostsuitablemethod,astheconstitutionalrequirementspermeatetheentireprocedureforawardingorrefusingtenders.

Nevertheless,solesourceprocurementmaybejustifiedwithreferencetothebusinessneedsoftheentityordepartmentandthepracticalproblemsthatsuchaprocesswouldpresentinthecircumstances.

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2. Can an entity cancel a tender before

awarding it to a tenderer?

Regulation8(4)ofthePPPFARegulationsprovidesthatanorganofstatemay,priortotheawardofatender,cancelthetenderif:

• duetochangedcircumstancesthereisnolongeraneedfortheservices,worksorgoodsrequested;

• fundsarenolongeravailabletocoverthetotalenvisagedexpenditure;or

• noacceptabletendersarereceived.

Thisishowevernotconsideredtobeaclosedlist.

InarecentjudgmenttheSupremeCourtofAppealheldthatthedecisiontocancelatenderpriortoitsawardisnotadministrativeactionandthereforecannotbechallengedonreviewbyatenderingparty.

Incancellingatender,anentityisgenerallyconsideredtoberequiredtoactinamannerthatisprocedurallyfair.Thisincludesgivingadequatenoticeoftheintentiontocancelthetenderwhichindicatesthemainconsiderationsforthecontemplatedactiongivingtheaffectedpartiestherighttomakerepresentations.

EVALUATION AND AWARD

1. Are there any requirements concerning

technical specifications of tenders?

Theevaluationcriteriaformeasuringtechnicalspecificationsoftenders,referredtoas"functionality"inthePPPFARegulations,mustbeobjectiveandmustbespecifiedclearlyinanyinvitationtosubmittenders.

Aminimumqualifyingscoreforfunctionalitymustbeindicatedandatenderisregardedasunacceptableifthisscoreisnotachieved.TendersthathaveachievedthisminimumscorearethenevaluatedcomparativelyonBEEandprice.

2. What are the requirements relating to contract

award criteria?

WherethePPPFAapplies,contractsareawardedbasedonapreferentialpointssystem.Underthepreferentialpointssystem,pointsareallocatedasfollows:

• Contracts below ZAR 1 million:80pointsareallocatedforpriceandfunctionalityandtheremaining20pointsforotherspecifiedgoals.

• Contracts above ZAR 1 million:90pointsareallocatedforpriceandfunctionalityand10pointsforotherspecificgoals.

ThePPPFAhasbeenalignedwiththeBroad-BasedBlackEconomicEmpowermentAct53of2003(BBBEEAct),sothatatendererthathasachievedlevel1statusintermsoftheBBBEEActcanearnthemaximumpointsforspecifiedgoalsunderthepreferencepointsystem.(ItshouldbenotedthatfromMarch2015,anewmethodofcalculatingtheBEEstatuslevelofanenterpriseundertheBBBEEActapplied,whichhasmadeithardertoattaina‘good’BEEstatuslevel.)

Atenderisawardedtotheoverallhighestpointscorerunlessthereareobjectivecriteriathatjustifytheawardtoanothertenderer.Wheretwotendershaveequalscores,theonewiththehighestBEEratingmustbeawardedthecontractandwheretheBEEratingsarealsoequal,theonewiththehighestfunctionalitypointsmustbeawardedthecontract(unlessthereareobjectivecriteriathatjustifytheawardtoanothertenderer).

TheMinisterofFinancecanexemptcertainorgansofstatefromtheprovisionsofthePPPFAonrequest.Certainprocurementprocessesobtainstandaloneexemption(suchastheIndependentPowerProducerProgrammesoftheDepartmentofEnergy).


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CHANGES TO AN EXISTING CONTRACT

1. Does an extension or amendment of an

existing contract require a new

procurement procedure?

Therearevaluethresholdssetfortheextensionoramendmentofcontracts.Anextensionoranamendmentofanexistingcontractmayrequireanewprocurementproceduredependingon,amongothers:

• Thetermsoftheoriginalagreement.• Theextentoftheextensionoramendment.• Theconsequencesforthecontractorand

othertenderers.

Recentlythecourtshaveheldthatwhereapublicprocurementagreementhasaprovisionforrenewal,thecontractcanbeextendedonthesametermswithouttheneedforanewprocurementprocedure.

However,whereanamendmentorextensionofaprocurementcontractdepartsfromwhatwasoriginallyputouttotendertotheextentthatthecontractorbenefitssignificantlyorothertenderersmayhavetendereddifferently,anewprocurementproceduremayberequired.

ENFORCEMENT

1. Who can bring a claim for non-compliance

with procurement legislation?

Thedecisiontoawardacontracttoaparticularpartywill,inmostcircumstances,constituteadministrativeactiononthepartoftheorganofstate.ThePromotionofAdministrativeJusticeAct3of2000(PAJA)hasbroad‘standing’rulesandeffectivelyallowsanypersontoinstituteproceedingsbeforetheHighCourtforthereviewofadministrativeaction.

Thecourtcannotreviewanadministrativedecisionuntilallinternalremediesprovidedforundertheapplicablelegislationhavebeenexhausted.AninternalappealisprovidedforinthemunicipalsectorintheregulationsundertheMFMA.Theregulatedauthorityconcernedwillhavetobeapartytothelitigation.

2. What are the available review procedures?

Intheprovincialandnationalspheretherearenospecialauthoritiesthatreviewclaimsofnon-compliancewithprocurementlegislationalthoughNationalTreasury,theAuditor-GeneralandthePublicProtectorcanallinvestigatesuchclaimsandmayassist.Theregulatedauthorityinquestionmayhaveaninternalappealprocedurebut,oncethisisexhaustedthecourtsarethemainavenuetohavetheclaimheard.

Apartycanapplyfor,andbegranted,aninjunction(interdict)fromthecourttostoptheorganofstatefromcontractingwithanotherpartyortopreventtheimplementationofthecontract,pendingthereviewofthedecisiontograntthecontract.Tosucceed,suchactionmustbelaunchedwithoutanydelay.Oneofthefactorsthecourtwillconsideriswhetherthereisaprimafaciebasisforthereviewingpartytosucceedonreview.

Inmanycircumstances,ifitisfoundthattherehasbeennon-compliancewithprocurementlegislation,thecourtislikelytosetthecontractasideandmayrefertheprocurementdecisionbacktotheregulatedauthoritytore-opentheprocurementprocedure.However,thiswoulddependontheconsequencesofthisforthedeliveryoftherelevantservicebythestate.

3. Are there any associated time periods?

AnyapplicationforjudicialreviewbroughtintermsofPAJAmustbemadeassoonaspossibleandatmostwithin180daysfromthedatethe

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personwasinformedofthedecision,orthedateonwhichanyinternalproceduresareconcluded(the180-daylimitmaybeextended).Thereviewofatendercantakeonaveragefromsixmonthstotwoyears.

REFORM

1. Are there any proposals for reform of the

procurement legislation? If so, when are they

likely to be implemented?

APublicProcurementBill,whichwillconsolidatethefragmentedlegalandregulatorylandscape,alignpreferentialprocurementwithsection217oftheConstitutionandmoderniseprocurementrules,isbeingfinalisedandisexpectedtobereleasedforcommentduring2016.

Amongotherthings,itwillgivetheofficeofthechiefprocurementofficervariouspowersandfunctions,suchas:

• administeringnationallegislation;• ensuringthatpoliciesandlegislationare

implementedinanappropriate,consistentandsystematicmanner;and

• sanctioningnon-compliancewithnationalsupplychainmanagementandprocurementpolicies,regulations,instructionsandguidelines.

DraftamendmentstothePPPFARegulationswerepublishedinJune2016forpubliccomment.ItisnotyetclearwhenthefinalPPPFARegulationswillbepublished.

TheMinisterofFinancehasannouncedthattheinitiativesofthechiefprocurementofficerwillbeextendedtoincludemonitoringofstate-ownedcompanies’procurementplansandsupplychainprocessesaswellasreviewsofcontractsaboveZAR10milliontoensurevalueformoney.


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BOWMAN GILF ILL AN AFRICA GROUPBOWMANS

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Key Contacts

CLAIRE TUCKER

HeadofPublicLawandRegulatoryJohannesburg,SouthAfrica

T: +27116699402E: [email protected]

SHAMILAH GRIMWOOD-NORLEY

HeadofBankingandFinanceCapeTown,SouthAfrica


WANDISILE MANDLANA

PartnerJohannesburg,SouthAfricaT: +27116699562E: [email protected]

To view profiles of our lawyers,

please visit www.bowmanslaw.com

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Cape Town, South Africa

T:+27214807800E: [email protected]

Dar es Salaam, Tanzania


Durban, South Africa


Johannesburg, South Africa

T: +27116699000E:[email protected]

Kampala, Uganda


Moka, Mauritius


Nairobi, Kenya


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