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GUIDE – GOVERNMENT CONTRACTING AND PUBLIC PROCUREMENT IN SOUTH AFRICA

Contents

04 Introduction

05 OurFirm

06 OurFootprintinAfrica

07 OurGovernmentContractingandPublicProcurementServiceLine

08 GovernmentContractingandPublicProcurementinSouthAfrica:

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

16 KeyContacts

Guide to Government Contracting and Public Procurement in South Africa

3

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

BOWMANS

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Our Firm

Bowmans is a leading Pan-African law firm. 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.

WithsixofficesinfourAfricancountriesandover400specialisedlawyers,

wearedifferentiatedbyourgeographicalreach,independenceandthequalityoflegalservicesweprovide.

WedrawonouruniqueknowledgeoftheAfricanbusinessenvironmentandin-depthunderstandingofthesocio-politicalclimatetoadviseclientsonawiderangeoflegalissues.Ouraimistoassistourclientsinachievingtheirobjectivesassmoothlyandefficientlyaspossiblewhileminimisingthelegalandregulatoryrisks.

Ourclientsincludecorporates,multinationalsandstate-ownedenterprisesacrossarangeofindustrysectorsaswellasfinancialinstitutionsandgovernments.

Ourexpertiseisfrequentlyrecognisedbyindependentresearchorganisations.

WehavebeennamedAfricanLegalAdviserbyDealMakersforthelastthreeconsecutiveyearsandSouthAfricanLawFirmoftheYearfor2016bytheWho’s Who Legal.Mostrecently,wewontheTechnology,MediaandTelecommunicationsTeamoftheYearAwardattheprestigiousAfricanLegalAwardshostedbyLegal WeekandtheCorporateCounselAssociationofSouthAfricain2017.Thefirmwasalso‘highlycommended’intheAfricanLawFirmoftheYear–LargePracticeandLitigationandDisputeResolutionTeamoftheYearcategories.

BOWMANS

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Bowmans offices

Relationship firm

Significant transaction

or advisory experience

Bowmans offices

Relationship firm

Significant transaction or advisory experience

SOUTH AFRICA MOZAMBIQUE

NIGERIA

KENYA

TANZANIA

UGANDA

Bowmans offices

Relationship firm



NIGERIA

KENYA

TANZANIA

UGANDA

WeprovideintegratedlegalservicesthroughoutAfricafromsixoffices(Cape

Town,DaresSalaam,Durban,Johannesburg,KampalaandNairobi)infourcountries(Kenya,SouthAfrica,TanzaniaandUganda).

WeworkcloselywithleadingNigerianfirmUdoUdoma&Belo-Osagie,andMozambique-basedboutiquefirm,TacianaPeãoLopes&AdvogadosAssociados.WealsohavestrongrelationshipswithotherleadinglawfirmsacrosstherestofAfrica.

WearerepresentativesofLexMundi,aglobalassociation,withmorethan160independentlawfirmsinallthemajorcentresacrosstheglobe.Thisassociationgivesusaccesstothebestfirmsineachjurisdictionrepresented.

Our Footprint in Africa

Bowmans offices

Relationship firm



NIGERIA

KENYA

TANZANIA

UGANDA

Bowmans offices

Relationship firm



NIGERIA

KENYA

TANZANIA

UGANDA

Bowmans offices

Relationship firm



NIGERIA

KENYA

TANZANIA

UGANDA


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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

BOWMANS

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BOWMANS

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

16CONTENTS PAGE

16

Key Contacts

CLAIRE TUCKER

HeadofPublicLawandRegulatoryJohannesburg,SouthAfrica

T: +27116699402E: [email protected]

SHAMILAH GRIMWOOD

HeadofBankingandFinanceCapeTown,SouthAfrica


WANDISILE MANDLANA

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

To view profiles of our lawyers,

please visit www.bowmanslaw.com


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17

CONTENTS PAGE

Cape Town

T: +27214807800E:[email protected]

Dar es Salaam


Durban


Johannesburg


Kampala


Nairobi


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