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Government Contracting and Public Procurement Processes and Law

- Featured article by LAWYERS-ONLINE.CO.ZA - June 2019

The South African government, when taking on a new project has a set of legislative rules to follow when procuring goods and services to aid in the completion of said project. This is known and the public procurement process for government contracting and it is done by way of tenders – where businesses are allowed to submit proposals or bids for consideration on projects.

For example, should the government decide to build a new school, they would need to go through the public procurement process. Contractors who wish to work on the project would then need to submit tenders, outlining the cost, their BEE status and other regulations as laid out by the legislative framework overseeing the process.

The primary source of legislation for this process is the Constitution of The Republic of South Africa 108 of 1996. Under section 217, government procurement is governed by the following provisions:

  • All processes of procurement must be conducted in a fair, equitable, transparent, cost-effective and competitive manner
  • However, procurement policies may be amended to include categories of preference in order to advance persons who have been disadvantaged
  • Lastly, it also calls for the prescription of a framework within which these policies must be implemented

Other legislation that applies to the procurement process also includes:

The Public Finance Management Act 1 of 1999

Under this act, the accounting officer of a department in question has a duty to create and maintain a procurement system that is in line with the stipulations laid out in the Constitution.

Preferential Procurement Policy Framework Act 5 of 2000

This act allows for the creation of requirements as it pertains to Black Economic Empowerment (BEE) when it comes to the consideration of state tenders.

As of yet, there is no regulatory authority that oversees the process of public procurement or government contracting. Currently, the regulation thereof occurs on a micro level in each department or public entity, in order to ensure that the process is in line with a legislative framework in place. So if we go back to our example of building a new school, the department wanting to build the school would have to regulate the process entirely by themselves, while making sure that they do not step outside the lines of the law. In some cases, however, there are certain government policies that may have an impact on the public procurement process, such as budget allocations.

Of course, not one to lag behind, the South African government opened up the eTender portal in 2015, as well as creating a central supplier database. The hope is that this will simplify and possibly automate the process and promote more transparency as it pertains to the process. It also makes it easier for contractors to obtain the relevant paperwork and to see if they meet the requirements of the project. It should be noted that any company that wishes to apply for a project must be registered on the central supplier database.

If you would like to know more about the public procurement process and government contracting, please reach out to us and we can put you in touch with a legal professional who will be able to answer your questions.

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