South Africa has a robust legal framework for public procurement, aiming to ensure fairness, equity, transparency, competitiveness, and cost-effectiveness. This framework is grounded in the Constitution of the Republic of South Africa, 1996, and includes various acts, regulations, and guidelines that public entities must adhere to when contracting for goods and services.
Constitutional provisions
Section 217 of the South African Constitution grounds public procurement law in South Africa. This section mandates that when an organ of state in the national, provincial, or local sphere of government, or any other institution identified in national legislation, contracts for goods or services, it must do so following a system that is:
- fair
- equitable
- transparent
- competitive
- cost-effective
The Constitution also allows for preferential procurement policies that provide for:
- categories of preference in the allocation of contracts.
- the protection or advancement of persons, or categories of persons, disadvantaged by unfair discrimination.
Key legislation
1. Public Finance Management Act 1 of 1999 (PFMA)
The PFMA aims to secure transparency, accountability, and sound management of revenue, expenditure, assets, and liabilities of the institutions to which it applies. It sets the framework for procurement processes and the management of public finances.
2. Preferential Procurement Policy Framework Act 5 of 2000 (PPPFA)
The PPPFA establishes the framework within which preferential procurement policies must be implemented. It includes a points system for evaluating bids and criteria for setting specific goals to advance historically disadvantaged individuals.
3. Municipal Finance Management Act 56 of 2003 (MFMA)
The MFMA regulates financial management in the local government sphere, ensuring that municipalities conduct procurement processes in a manner that is fair, equitable, transparent, competitive, and cost-effective.
4. Broad-Based Black Economic Empowerment Act 53 of 2003 (B-BBEE)
The B-BBEE Act aims to advance economic transformation and enhance the economic participation of black people in the South African economy. It influences procurement by encouraging public entities to procure from B-BBEE-compliant suppliers.
5. Public Procurement Act 28 of 2024 (PPA)
The PPA introduces new measures to enhance transparency and accountability in public procurement processes. It emphasises using electronic procurement systems to improve efficiency and reduce corruption.
Key provisions include:
- Electronic procurement: Mandating electronic procurement systems for all public procurement processes.
- Transparency and reporting: Strengthening requirements for disclosing procurement information and reporting on procurement activities.
- Capacity building: Providing training and development to procurement officials to ensure effective implementation of procurement laws.
- Sustainability: Promoting sustainable procurement practices that consider environmental and social impacts.
Principles and procedures
Five constitutional principles
- Fairness and equitability: Ensuring that all potential suppliers have an equal opportunity to compete.
- Transparency: Procurement processes and decisions must be open and clear to all stakeholders.
- Competitiveness: Encouraging competition to obtain value for money.
- Cost-effectiveness: Ensuring that procurement processes achieve the best possible outcome for the money spent.
Preferential procurement
- Preference points system: Bids are evaluated based on a points system that considers price and other criteria such as B-BBEE status.
- Specific goals: Objectives such as the promotion of small businesses and the development of local industries are included in procurement evaluations.
Municipal procurement
- Municipalities must follow the constitutional principles and regulations set out in the MFMA and ensure that goods and services are procured in a manner that complies with the five principles and the PPPFA.
Public-Private Partnerships (PPPs)
- PPPs are regulated to provide value for money, appropriately allocate risk, and use private sector resources to achieve public service delivery objectives.
Remedies for non-compliance
- Public procurement law provides for remedies in cases of non-compliance, including the invalidation of procurement processes, interdicts, contract awards, and damages.
How ITLawCo can help
At ITLawCo, we offer legal services to assist public entities and private companies navigate the complexities of public procurement law in South Africa.
Our team of experienced legal professionals can provide:
- Detailed public procurement Law reports: Reports outlining the legal framework, compliance requirements, and best practices for public procurement.
- Compliance audits and assessments: Evaluations of procurement processes to ensure adherence to legal and regulatory standards.
- Policy and procedure development: Assistance in drafting and implementing procurement policies and procedures that align with constitutional and legislative mandates.
- Training and workshops: Customised training sessions for procurement officials and stakeholders on legal requirements and effective procurement practices.
- Dispute resolution and litigation support: Representation and advisory services in procurement disputes or legal challenges.
Our goal is to help you achieve procurement excellence through legal compliance, strategic insights, and practical solutions. Contact ITLawCo today to learn more about how we can support your public procurement needs.