Tender shutdown was finance minister’s fault

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The government’s 2017 preferential procurement regulations — the battle over which halted all state tenders earlier this year — will remain in place until February next year, in terms of a constitutional court order issued on Monday.

In the meantime, the treasury has initiated a public comment process about amendments it had tabled to the regulations in March in accordance with an earlier court order.

The regulations were promulgated in terms of the Preferential Procurement Policy Framework Act and allowed government departments to set preconditions for tenders, which could include restricting business to companies which were more than 5% black-owned.

Their legality was challenged by lobby group AfriBusiness, which succeeded in having them set aside by the supreme court of appeal (SCA) in January 2021 on the ground that the minister had overstepped his powers in declaring the policy.

The government was given 12 months to amend the regulations and make them constitutionally compliant, but this process was delayed by a constitutional court challenge by Finance Minister Enoch Godongwana.

The appeal failed in February and Godongwana subsequently approached the court for clarification on the effect of the ruling of the 12-month time frame set by the SCA.

On Monday, the constitutional court dismissed Godongwana’s application, stating in its order that there should not have been any confusion about its judgement, which the finance minister had “misread” when he placed procurement “in abeyance” in March.

In its judgement, the court found that there had been “no confusion” about its order and that “the halting of government procurement had to be laid at the door of the minister who had misread the order”.

It dismissed Godongwana’s application with costs.

In March, all government entities apart from Eskom were instructed to hold on issuing tenders because of the confusion over the SCA ruling, while all requests for variations and procurement over R30 000 had to be authorised by the treasury.

The move caused an outcry, particularly from the Western Cape government, which went ahead with projects valued at more than R80-million despite the directive to stop procurement.

It sent procurement in departments and entities into disarray until clarifying directives were issued by the treasury at the beginning of April.

In a clarification note issued on Monday, a treasury spokesperson said the constitutional court had set aside the 12-month suspension of the invalidation of the 2017 regulations by the supreme court of appeal until 15 February 2023.

This meant the 2017 regulations in their entirety were still valid and that all exemptions granted to deal with the period of uncertainty following the February judgement had lapsed.

The 2017 regulations would remain in place until February 2023, unless new regulations were promulgated before that date.

“From today all new quotations must be requested and tenders must be advertised and dealt with, in accordance with the 2017 regulations,” the advisory note read.

Tenders advertised or quotations requested before Tuesday could either be dealt with in terms of the exemption issued, or be withdrawn and reissued or re-advertised in terms of the 2017 regulations.

According to the note, the treasury was considering public comments on the draft preferential procurement regulations published on 10 March to ensure that the final regulations accord with the court’s judgement.

Organs of state had until 16 February next year to ensure that their procurement policies were in place. If new regulations were promulgated, entities would have to ensure that their procurement policies fell in line with these.