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Draft Public Procurement Bill Under the Spotlight

March 17, 2020

Department of Trade and Industry

The Draft Public Procurement Bill creates an opportunity to strengthen compliance on local content and the leveraging of public procurement to support transformation and economic and industrial development.

The trade and industry department emphasized this during a briefing in parliament on Local Content Policy and Designation.

The Local Content Policy flows from the Preferential Procurement Regulations gazetted at the beginning of 2017.

The regulations empower the department, in consultation with national treasury, to designate a sector, sub-sector or industry or product in accordance with national development and industrial policies for local production and content and stipulate a minimum threshold for local production and content.

The Draft Public Procurement Bill was published for comment in February 2020.

It aims to regulate public procurement and prescribe the framework for the procurement policy as envisaged in section 217 of the Constitution.

According to the draft bill’s memorandum, Section 217 of the Constitution stipulates that “procurement by organs of state and identified institutions must occur in accordance with a system which is fair, equitable, transparent, competitive and cost-effective”.

The public procurement regime in South Africa is described as currently fragmented with a number of laws regulating procurement across the public sector resulting in confusion as different procurement rules apply.

Therefore, legislation is needed which creates a single framework regulating procurement.

The Draft Public Procurement Bill aims to:

• regulate public procurement;
• prescribe a framework for procurement policy envisaged in section 217(3) of the Constitution; and
• provide for matters connected therewith.

The briefing focused on remedies for non-compliance, the designation process flow, designated products, the role of Proudly SA in support of localization, post award reporting, local content verification challenges and progress made in local content implementation.

Local content verification challenges include manipulation of the bid price to meet local content thresholds, non-compliance to local content requirements following awarding of tender, inadequate funding of local content verification and anti-competitive behaviour by some manufacturers.

In a statement, the department pointed out that the implementation of the local content policy since 2011 has so far assisted in directing R76 billion worth of public contracts to local manufacturers.

“In the absence of the local content policy, this public money could have otherwise been used to procure imported products thus externalising the South African fiscus and supporting foreign economies and jobs.”

Treasury, in a briefing on measures to ensure compliance with local content requirements and the verification thereof, indicated that it was drawing up a reporting framework in order to glean information from organs of state relating to the implementation of the requirements of the regulations.

Meanwhile, in Government Gazette 43090, the department published a Companies and Intellectual Property Commission (CIPC) practice note on the business rescue filing procedure.

The practice note 1 of 2020 sets down forms and supporting documents required by CIPC when applying for business rescue proceedings and the filing of relevant documents.

Email addresses for court orders relating to business rescue proceedings and business rescue practitioners are provided.

The practice note kicks in on 1 April 2020.