Transversal contracts are a cornerstone of South Africa’s public procurement system. They are centralised agreements that the National Treasury facilitates for the goods or services that multiple government institutions require.
Within the context above, “transversal” means “across” or “spanning multiple entities”. So, a transversal contract spans multiple government departments or institutions.
The practical advantage of these contracts is that various government bodies can use them, rather than each one having to negotiate its own separate deal for the same or similar goods or services. Essentially, they aim to streamline procurement, significantly reduce costs, and promote standardisation, contributing to efficiency and transparency.
This post provides an overview of transversal contracts in South Africa, exploring their legal framework, implementation process, benefits, and key principles. By the end of this post, you’ll understand how transversal contracts operate, their role in public procurement, and their contribution to efficiency, transparency, and socio-economic development in South Africa.
Legal and policy framework
- Authorisation: The Public Finance Management Act (PFMA) and the State Information and Technology Agency Act (SITA Act) provide the legal basis for transversal contracts.
- Constitutional alignment: Procurement through these contracts must adhere to Section 217 of the Constitution, ensuring fairness, equity, transparency, and cost-effectiveness.
- SITA’s role: The SITA facilitates transversal term contracts for IT goods and services through competitive bidding.
Use and implementation
Government departments must use transversal contracts, though they are available to all public bodies.
Departments can directly engage with suppliers listed on the contract panel. However, to maintain fairness, they must approach all potential suppliers for procurements exceeding R500,000.
Procuring these contracts employs strategic sourcing methods to maximise cost savings through bulk purchasing.
Departments wishing to participate in a transversal contract must obtain written consent and then may not procure similar goods or services from other sources during the contract. Further, before resorting to the open market, departments are encouraged first to explore the possibility of sourcing goods or services internally.
Oversight, monitoring, and reporting
- National Treasury’s role: The National Treasury oversees the tendering process, contract management, and monitoring of spending against transversal contracts.
- Collaborative approach: Cross-functional teams representing various state organs contribute to the process.
- Specifications: Contract specifications must prioritise cost reduction, standardisation, competition, efficiency, and support for small businesses and BBBEE objectives.
- Transparency and compliance: The entire process must be transparent and compliant with regulations, and any deviations could potentially lead to legal challenges.
Benefits and principles
Transversal contracts are designed to boost efficiency and cost savings by:
- streamlining the procurement process;
- eliminating redundant efforts; and
- taking advantage of bulk buying power.
Moreover, they champion fairness and transparency by encouraging open competition and ensuring adherence to the principles outlined in South Africa’s Constitution. Plus, these contracts play a vital role in transformation and development by supporting small businesses and contributing to broader economic empowerment objectives.
How ITLawCo Can Help
Navigating the complexities of transversal contracts can be challenging. ITLawCo, with its expertise in IT and procurement law, can help you in various ways:
- Understanding and compliance: Understand the legal and regulatory framework surrounding transversal contracts and ensure your procurement processes are compliant.
- Tender preparation and evaluation: Prepare tender documents and evaluate bids, ensuring fairness and adherence to regulations.
- Contract Negotiation and Drafting: Support negotiating and drafting contracts that protect your interests and align with the transversal contract framework.
- Dispute resolution: We offer legal representation and guidance to resolve issues effectively.
For all your transversal contract needs, contact us today.
