New draft Public Procurement Bill, going back to the future
20-11-2023
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Taranis
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The latest version of the draft Public Procurement Bill was presented by the National Treasury to Parliament on 17 November 2023 and there are some of the key proposed clauses which could impact on what bidders may have to comply with in future.
However, it is safe to say, that bidders for government tenders need to be prepared for any outcome, especially pertaining to their B-BBEE Status and the points allocation proposed in the draft Bill.
The draft Bill prescribes that a spouse, civil or life partner, children, and stepchildren as well as parents and siblings of a public office bearer should automatically be excluded from submitting bids.
It also proposes that organs of state should have the authority to debar entities or persons from tendering based on information at hand which gives enough reason for such a debarment.
The Minister should prescribe how organs of state must implement their respective procurement policies which will promote an effective and efficient procurement system.
Further that such a policy must be in line with Section 217(2) of the Constitution, which allows for preferential procurement policies to promote the protection or advancement of persons disadvantaged by unfair discrimination.
According to the draft Bill, organs of state should be allowed to apply set-asides for preferential procurement in accordance with prescribed thresholds and conditions, excluding the application of the proposed preference points systems, when doing so.
These set-asides should favour categories of persons and must be limited to small enterprises owned by black people, black women, women, black people with disabilities, people with disabilities, black youth, youth, within a particular geographical area, or in general.
These small enterprises must be owned by citizens of the Republic in accordance with the prescribed percentage.
Bids that are set aside for preferential procurement should first be evaluated based on adherence to terms and conditions and then be further evaluated on price and preference points.
If functionality was part of the criteria, then a bid must first meet the minimum threshold i.e., 75% and then be evaluated further in terms of price and preference points, with the highest score, being awarded the contract.
On the aspect of Pre-Qualification, the draft Bill proposes that for purposes of preferential procurement organs of state could advertise bids with specific conditions that only certain “qualifying bidders” may tender.
These may include, that a bidder must have a stipulated minimum B-BBEE status level of contributor, and or be a small enterprise, respectively.
Organs of state should also be allowed to include a stipulation that principal bidders commit themselves to subcontracting a “stipulated” minimum percentage to one of the listed designated groups only, which is at least 51% owned by citizens of the Republic.
If a bid fails to comply within any of the listed pre-qualification criteria, it will be declared an “unacceptable bid”.
In respect of the preference points systems, the draft Bill proposes that organs of state must indicate at tendering stage, which preference point system would be applicable.
In addition to the 90-10 and 80-20 preference points systems, it is now recommended that two additional equations are allowed in the form of the 70-30 and the 60-40, respectively.
It is important to note that for the 90-10 preference points system, it is recommended that a maximum of 10 points may be afforded in line with the B-BBEE status level of contributor, points table, as prescribed.
However, for all the other thresholds the preference points may be allocated for “Complementary Goals”, and it does not make any reference to the B-BBEE status level of contributor of a bidder.
As before, the highest component of the preference points system will be afforded to the lowest acceptable bid.
National Treasury is also of the view that subcontracting as a condition of tender, where feasible, should be inserted again into the new Bill.
It recommends that where it is “Feasible to subcontract for a contract above a prescribed amount, the institution must apply subcontracting to advance persons or categories of persons” and therefore the bidder must indicate its compliance to subcontract the prescribed minimum as stipulated in the bid document.
The onus will be on bidders to identify and select the “subcontractors” and if the bid is not compliant to the prescribed minimum, the bid will be declared as “unacceptable”.
The draft Bill also aims to re-introduce the application of local production and content for sectors which are designated by the Minister of trade and industry.
Regarding disputes between bidders and organs of state, the draft Bill proposes that aggrieved bidders should be compelled to first seek to exhaust all internal remedies before being allowed to approach the courts.
Procuring institutions may also be allowed to implement measures to promote job creation, labour absorption, beneficiation, innovation, and small enterprise development in specific geographical areas.
After listening to input from a wide array of public stakeholders, Parliament has decided that the National Treasury must go back to the drawing board and return within a week to finalise its presentation, taking into consideration the submissions made by the former.
Contact: Gerrit Davids. Lead Advisor | TaranisCo Advisory CC
Mobile. +27 (0) 82 496 1657 E-mail: gerrit@taranisco.co.za
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