ARTICLE
20 December 2024

New Public Procurement Act Ushers In An Era Of Transparency And Efficiency In South Africa

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Fairbridges Wertheim Becker

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Fairbridges Wertheim Becker was formed by the coming together of two longstanding, respected law firms, the first being Fairbridges established in 1812 in Cape Town, the second Wertheim Becker founded in 1904 in Johannesburg. This merger makes Fairbridges Wertheim Becker the oldest law firm in Africa, with its strong values and vision, it also makes them the perfect legal partner to assist you in achieving your business objectives.
On 23 July 2024, President Cyril Ramaphosa signed the Public Procurement Act 28 of 2024 ("the Act") into law, fulfilling the constitutional mandates of sections 195, 216, and 217.
South Africa Government, Public Sector

On 23 July 2024, President Cyril Ramaphosa signed the Public Procurement Act 28 of 2024 ("the Act") into law, fulfilling the constitutional mandates of sections 195, 216, and 217. The Act aims to transform South Africa's public procurement landscape by consolidating and streamlining the procurement system under one comprehensive piece of legislation. It modernises procurement practices to promote accessibility while enhancing accountability and transparency within procurement institutions, which have previously been plagued by high levels of corruption and mismanagement.

This legislative change follows public and civil society calls for procurement reform, notably highlighted in the Zondo Commission's report, which detailed various procurement shortcomings and provided recommendations for improvement in South Africa's procurement practices.

Before the enactment of the Public Procurement Act, public procurement in South Africa was primarily governed by broad principles of administrative justice enshrined in the Constitution, such as reasonableness and rationality. These principles were interpreted alongside various pieces of legislation, including the Promotion of Administrative Justice Act 3 of 2000 ("PAJA"), the Preferential Procurement Policy Framework Act 5 of 2000 (now repealed by the Public Procurement Act), the Public Finance Management Act 1 of 1999 ("PFMA"), and the Municipal Finance Management Act 56 of 2003 ("MFMA").

Understanding the Changes:

The Act is the first of its kind in the South African procurement landscape and includes many oversight and anti-corruption mechanisms and sets clear goals, standards and guidelines for procurement institutions to hinder any corruption associated with public funds and to address various short-comings and inadequacies previously experienced by procurement institutions.

This Act applies to all public procurement institutions across state departments as well as public entities as envisioned in the PFMA, and municipalities as envisioned by the MFMA. Certain chapters of the Act notably extend the Act's applicability to Parliament and provincial legislatures as well.

The Act establishes a public procurement office to act as a "watchdog" to ensure and maintain the integrity of procurement practices and to provide support and guidance to procurement institutions where necessary. It is interesting to note that this office can issue binding instructions to all state procuring institutions with the exception of municipalities to which the office only has a mandate to issue non-binding circulars and guidelines.

Despite the public procurement office being restricted to issue non-binding circulars and guidelines for municipalities, the Act as a whole is still very much applicable to municipalities who must ensure compliance with all provisions of the Act, read with the Local Government: Municipal Systems Act 32 of 2000 and the MFMA.

To ensure transparency and accountability, a significant addition to the Act is the introduction of strict penalties for corrupt practices.

The Act further places onerous obligations and duties on the procurement institution's accounting officer to ensure compliance with the Act by having the accounting officer develop the institution's procurement processes, systems and policies in line with section 24 of the Act. Additionally, provision is made for ongoing training and development of procurement officials in line with the Act and any regulations and processes/ procedures that arise therefrom.

Stringent reporting requirements are introduced for the procurement institution as a whole but most specifically the institution's accounting officer. The Act also seeks to overhaul current public procurement practices – which is mostly paper-based presently – by introducing various digital tools and technology in order to improve efficiency of procurement and simplify previously unnecessarily over-complicated bidding processes with the use of standardised tender documents and increased advertising of procurement opportunities, which will be a welcome change to many bidders.

The Act further introduces provisions aimed at promoting and supporting local small and medium sized businesses and requires procurement institutions to develop and implement preferential policies specifically to advance certain categories of persons envisaged in the Constitution.

The Internal Review Procedure Explained:

A uniform internal review procedure is established for all procurement institutions which provides that a bidder will have 10 days from the date of being informed of the procuring institution's decision (which can be extended to 15 days if the application raises public interest considerations), to submit an application for review to the Tribunal established in terms of chapter 6 of the Act.

It must be noted however that the Act specifically makes reference to the PAJA so as to ensure that the two acts are complementary. As such, parties that are dissatisfied with the outcome of the tribunal in the internal review application may still approach the courts to institute judicial review proceedings in terms of PAJA.

The Act demonstrates the South African legislature's genuine efforts to reform procurement practices previously plagued by corruption. It introduces several measures to increase transparency and accountability within procurement institutions, most notably the establishment of a public procurement office under the Minister of Finance. Additionally, the Act enhances current procurement processes by incorporating technology to improve the efficiency and effectiveness of procurement in South Africa.

Originally published 31 July 2024

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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