Public Procurement Bill: Proposed amendments & deliberations

NCOP Finance

02 May 2024
Chairperson: Mr Y Carrim (ANC, KZN)
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Meeting Summary


The Select Committee on Finance convened virtually to continue deliberations on the Public Procurement (PP) Bill.

Members focused on refining the language of the Bill to ensure that the provisions supported the aim of opening up state procurement to a wider range of participants, and were aligned with some of the submissions received from stakeholders. Members also emphasised the importance of clarity and effectiveness in the clauses to ensure that the implementation of the Bill is seamless for national and provincial departments and municipalities.

The meeting also covered provisions related to emergency procurement, the delegation and financial misconduct clauses, and the proposed list of offences related to procurement. There was a debate about including the term ‘public opening’ in the Bill and its relevance to current practices. Furthermore, there was a proposal to omit the requirement for setting market-related price ceilings for procurement, with concerns about the potential impact on competition and the cost of doing business for the government.

National Treasury also took Members through the proposed amendments to various procurement-related acts, including the Construction Industry Development Board Act, Arms Corp Act, and Broad-Based Black Economic Empowerment (B-BBEE), emphasising the necessity of alignment with the Public Procurement Act.

The Committee Chairperson said the committee's biggest issues were the Bill's financial implications, the department’s capacity to implement, and the deferment of many issues to the regulations. One of the reasons it asked for the Bill to be reviewed within twenty-four months was that it believed the NT would have had enough time to discover how to improve the Bill and what changes needed to be made. Two, the regulations would be clearer. The Committee’s report will request that the new committee consider circumscribing some of the Minister’s regulating-making powers. Nevertheless, he was pleased that the department would gazette the regulations, write a consultation report and table them in Parliament for scrutiny. The level of scrutiny on the regulations in Parliament depended on the strength of the Committee at the time.

Stakeholders will be sent the draft text on Friday afternoon and can make written submissions by Monday.

The Committee is expected to vote on the Bill next Tuesday.

Meeting report

The Chairperson welcomed all those who were present. Afterwards, he asked if the Committee received any apologies.

Mr Lubabalo Sigwela (Committee Secretary) indicated that an apology was received from the chairperson of the Northern Cape Portfolio Committee on Finance, Economic Development and Tourism.

The Chairperson asked if other provincial committee chairpersons were present.

Mr Sigwela asked the committee secretaries of the eight other provinces whether the chairpersons were present in the meeting.

The Chairperson, noting that no responses were forthcoming, said the secretaries could indicate this at any point during the meeting.

He then outlined the agenda to Members.

While he was confident that the Committee would conclude its deliberations on the draft Bill during today’s proceedings, he indicated that if it did not, then Members would have to sit the following day. Members from the DA will be allocated an hour to provide input during the meeting as they cannot attend the entire session.

He recalled that in a previous meeting, the FF+ asked the department whether a sunset clause for B-BEE would be included in the Bill. Even though the Committee recognised that affirmative action could not continue forever, it disagreed with the proposal because it was unclear whether a reasonable degree of empowerment had occurred thus far. Instead, he suggested that the Committee recommend in its final report that once a certain measure of empowerment has occurred, consideration should be given to phasing affirmative action out.

The Chairperson asked for NT’s presentation to be flighted.

NT responses to the provincial mandates

Mr D Ryder (DA, Gauteng) mentioned that he had a few points to make. First, he felt the processing of the last two Bills was a useful exercise to remind Members of the depth required to interrogate future bills and how to approach the processes.

Second, while he appreciated the department's work on the Bill, he also noted that the time given for public comment was short in the National Assembly (NA) and National Council of Provinces (NCOP), particularly for the provinces. Even though this placed questions on the process, it would be up to the Constitutional Court to decide if any objections are raised in the future.

Third, he did not believe that the department’s responses reflected the depth of the public submissions received, particularly those from the Eastern Cape (EC), KwaZulu-Natal (KZN) and Western Cape (WC), which were substantial. He asked the department to look into the full content of the submissions made by the provinces, such as the one made by the EC, which called for the contracting process to be user-friendly. This submission was important, he felt, because the procurement process was far from user-friendly, especially for municipalities and smaller entities procuring on behalf of the government at a local level. Having a user-friendly document for the government and services providers would assist the process, and was needed, he stressed.

Fourth, he did not feel that the department’s response to the submission made by the EC, Free State (FS), North West (NW) and WC on the need for the Construction Industry Development Board (CIDB) to assist in upskilling contractors and sub-contractors in improving their grade levels went far enough. He wondered if the Select Committee on Appropriations could request that the Department of Public Works and Infrastructure respond to questions about what is being done with the money allocated to the CIDB.

Fifth, he noted a submission from the KZN that looked at the substantial impact of the bill on provincial and municipal structures, specifically regarding the composition of departments and the change of job descriptions. He proposed that maybe the provinces had to be given an idea of what the rollout process would have to be, as changing an organogram in a municipality had to be timed in accordance with the budgetary and Integrated Development Planning (IDP) cycle. Thereafter, it must be taken through public participation before it can be adopted.

Considering this, he believed that cascading the Bill and its various requirements downwards may, in certain instances, occur over a two-year period.

Sixth, the provinces made requests for workshops and further information. Earlier in the process, this was touched on by the Chairperson, who said this used to be the norm where before public participation, site visits were conducted with people making presentations on the Bill so that the public participation process was enriched through empowering the participants with a deeper understanding of a bill.

Seventh, he agreed that the department could not, through the legislation, tackle the issue of the construction mafia. As such, he recommended it be addressed by the South African Police Services (SAPS). However, a shortage in capacity and staff in police stations may make this difficult. Given this, he proposed that the department establish a point of contact where a procurement officer can contact someone in the central Public Procurement Office (PPO) who can engage with the SAPS so that proper action is taken.

Eight, he said KZN, Limpopo, and the WC submitted that the dispute resolution mechanisms were overly complex and centralised and that more work had to be done on them.

Ninth, he thought there was potential for the Committee or department to dismiss the WC recommendations because they were contrary to the view of the majority party.

The Chairperson intervened and said that was untrue. He also felt that the comment was unfair, as the Committee had conceded to all of the provinces requests for an extension.

Mr Ryder admitted that he had been too harsh.

Nevertheless, he indicated that the EC and WC provided constructive suggestions on how procuring institutions could make the bidding process more transparent by providing feedback on why they were rejected by unsuccessful bidders. Not doing so prevented bidders from improving the standard of their bids or their capacity to be successful in a future bid. Moreover, he believed that the Bill did not touch on mechanisms to make the bids more transparent in the bid committees, which was a problem repeatedly raised over the years.

He thought the department had not comprehensively responded to the requests for a proper implementation and communication strategy on resource allocation to provinces and the systems to be implemented.

Having said all of that, he was disappointed that the Gauteng Provincial Legislature's engagements were not as in-depth as the other provinces. In addition, he was concerned that the department’s document did not refer to public participation in some of the provinces. This may be a signal that it thought the process was not substantial.

Mr W Aucamp (DA, Northern Cape) mentioned that only one public submission was received in the Northern Cape. He believed that due to its size and the distance between towns, members of the public were not able to attend the public hearings. Moreover, they could not log onto the hybrid meetings due to the poor reception in many areas. With this in mind, he proposed that rural provinces look into new methods to improve public consultations going forward.

Mr Willie Mathebula (Chief Procurement Officer at the NT) highlighted that the KZN provincial legislature did not invite the NT to participate in its public participation sessions. As a result, the department was unaware of what was discussed. In addition, it received the province’s submission a bit later in the process.

During the public hearing sessions, the WC submitted a long submission to the department, to which it responded in detail. The department also held a session with the Committee on 22 March 2024, taking it through the WC’s submission. Most, if not all, of the issues submitted in the WC provincial mandate, were similar to the original submission made to the department, which Members would be forwarded.

The Chairperson noted the assurance.

Mr Mathebula indicated that the department also responded to the Gauteng Provincial Legislature’s submissions on 8 March 2024, which it could share with the Committee.

Initially, the NW said it did not require the department’s participation in its public hearing sessions. Only after the department had committed to attending those of other provinces, like the WC, did the NW come back and ask for it to participate in five areas in the province.

Except for KZN, the department briefed all the provincial legislature committees. The NT tried to physically attend all of its engagements with the provinces – it managed to do so in sixteen areas of the EC.

During its briefing to the Committee on Tuesday, the department outlined that the report picked up on the key themes in the submissions from various provinces.

In response to the provincial requests for workshops, he pointed out that the department would offer workshops on implementing the Bill once it is passed.

Regarding the powers conferred onto the Minister to make regulations, he stated that the drafting of regulations would include other stakeholders. Once drafted, the regulations would be tabled in Parliament. There are only two sections, Sections 38 and 51, in the Public Finance Management Act (PFMA) that refer to a fair and equitable procurement system. From these sections, the department has developed Treasury regulations in terms of Section 76. Even the public entities listed develop their own procurement processes from Section 51 of the PFMA.

Clause 25 of the Bill requires the Minister to prescribe a system from which procuring institutions will develop their own procurement policies. Clause 64 lists the regulations that must be developed, similar to Section 76 of the PFMA.

On the question related to the construction mafia, he asked for guidance from the Committee on what could be done.

The report presented to the Committee on Tuesday identified key themes in the provincial mandates submitted but did not necessarily address them.

Adv Empie Van Schoor (Chief Director: Legislation, NT), on the question related to the changes to the organograms of provincial and municipal institutions, indicated that this was dealt with by the proposal to remove the clause that sets out what should form part of the procurement function and that it must be left to the accounting officer or authority to determine where functions are performed. Thus, it would not necessarily result in changes to the organograms.

Concerning the question of transparency in bid committees, she told the Committee that Clause 32 of the Bill dealt with access to procurement processes, which permits any unsuccessful request for reasons for rejection.

The Chairperson, in response to the concern related to the processing of the Bill, wondered how the Committee could have processed the Bill differently given that it usually deals with Section 75 Bills, where poor attendance at hearings and no submissions made are common. Also, he asked Members to remember that this was a contentious Section 76 Bill with more submissions than any other.

The Committee followed the historical parliamentary process when dealing with this Bill. There was not much the Committee could do as the NA had greater powers when dealing with Section 75 Bills. Certain committees since 1998 have allowed public participation through written representations till the last day.

Thus far, the Committee has spent 31 hours on the Bill, which is the same amount of time it would have afforded other Bills. While Members noted that the Bill was submitted so late to the NCOP, they recognised they had to complete the work.

He felt that the stakeholders had enough time to respond to the Bill as they received it on 6 December. However, stakeholders would always argue that they did not have enough time when they opposed a bill or felt they had a more expert opinion on the matter.

Touching on the matter of provinces, he indicated that during discussions with the Parliamentary Legal Advisors (PLA), he was informed that an extension had never been sought before. When the WC legislature wrote to the Committee, a response was provided within two days. When the Chairperson called the previous Member of the Executive Council on Finance and Economic Opportunities to discuss the matter, he informed him that he was busy at the time and never returned his call.

Regarding the proposal from the provinces to host workshops, he outlined that workshops used to be conducted when dealing with the Rates and Local Government Bills.

He was pleased with the department’s response to Mr Ryder's questions, most of which he felt related to issues around capacity and implementation, not necessarily the content of the Bill.

He applauded the department for its work in processing the Bill so far.

Regarding the concern of the bid committee process, he agreed with the suggestion that more transparency should be made. One such way to do so was to broadcast bid processes live on television, as is done in some countries. However, he assumed that the department would argue that this would violate the Protection of Personal Information Act (POPIA) and scare the market.

He also highlighted the department’s capacity to implement the Bill and the number of matters left to the regulations as serious concerns. As such, he asked the department to provide the Committee with a paragraph explaining why so much had been prescribed to the Minister by Friday. In addition, he asked Mr Ryder to draft a proposal on how he believed the construction mafia could be tackled.

The FS had requested until 17:00 to submit its final mandate document, while the Committee still awaited KZN’s submission.

He said the committee had addressed the changing of organograms in provincial and municipal areas. The committee's biggest issues were the Bill's financial implications, the department’s capacity to implement, and the deferment of many issues to the regulations. One of the reasons it was asking for the Bill to be reviewed within twenty-four months was that it believed the NT would have had enough time to discover how to better the Bill and what changes needed to be made. Two, the regulations would be clearer.

The Committee’s report will request that the new committee consider circumscribing some of the Minister’s regulating-making powers. He had never encountered a Bill, apart from those on local government, that had given the Minister so much authority to regulate.

Nevertheless, he was pleased that the department would gazette the regulations, write a consultation report and table them in Parliament for scrutiny. The level of scrutiny on the regulations in Parliament depended on the strength of the Committee at the time.

In addition, he expressed his support for the checks and balances on the Minister’s prescription.

He asked for the department to provide the Committee with reasons why so much had been prescribed

Nothing stopped the Members from commenting on the Bill until the closure of the process.

Mr Ryder still believed that the Bill required a deeper engagement.

The Chairperson proposed that the Members go through the Bill from the beginning once more to address some of the proposed amendments they did not cover on Tuesday.

Clause-by-clause deliberations on the draft PP Bill

Chapter 1: Definitions, Objects, Application and Administration of Act

Clause 1

Adv Van Schoor mentioned that the department proposed an amendment to the heading of Clause 1.

Mr Ron Grace (Financial Director at the National Research Foundation) asked if he could comment.

The Chairperson declined his request as this time was allocated for Members only. Stakeholders will be sent the draft text on Friday afternoon and can make written submissions by Monday.

He asked if Members thought Mr Grace should be allowed to speak at this stage. No responses were received, so he decided to give Mr Grace the platform.

Mr Grace proposed that the word ‘written’ be removed from the definition of bid to accommodate for unsolicited bids.

The Chairperson asked if he had more recommendations to submit.

Mr Grace noted that the department’s proposed amendment had already covered his proposal.

The Chairperson mentioned that the Committee would write a response to the Institute for Race Relations by Friday. All stakeholders were informed by letter that the deadline for submissions was Monday. If the Committee decides, Mr Grace could be given the opportunity to participate at the end of the meeting.

Adv Van Schoor indicated that the department proposed inserting ‘local municipality’ in the geographical area definition.

Mr Ryder asked if a metropolitan municipality qualified as a local municipality.

The Chairperson agreed and asked why the department omitted metropolitan municipalities.

Mr Ryder said Chapter 7 of the Constitution spoke of municipalities, so he wondered why local municipalities were included.

The Chairperson acknowledged his point.

Ms D Mahlangu (ANC, Mpumalanga) stated that Members agreed that the geographical spread should include all three spheres of government: national, provincial and local municipalities. The latter included local, district and metropolitan municipalities.

Adv Van Schoor said Ms Mahlangu had answered the question. However, the department could remove district and local and only refer to municipalities if the Committee wanted.

The Chairperson asked who decided whether it was local or district.

Adv Van Schoor mentioned this would be the responsibility of the accounting officer.

The Chairperson asked if that was made clear in the Bill.

Adv Van Schoor believed it was as if the bill provided a procuring institution with the ability to deal with set-asides and pre-qualifications in its policy.

The Chairperson thought that the Committee should review the proposal it made last week because Parliament always seeks to use the words in the Constitution when drafting legislation. He proposed that all three categories of municipalities mentioned in the Constitution be included in the Bill. He asked the PLA to confirm if his suggestion was correct.

Adv Frank Jenkins (Senior Parliamentary Legal Advisor) confirmed that the Chairperson’s proposal aligned with how Parliament drafted legislation. The Committee had to look at the word within the context of the legislation to see if its inclusion was justified.

Adv Van Schoor highlighted that the Constitution only refers to category A, B, and C when referring to the three tiers of municipalities.

Chapter 2: Public Procurement Office, Provincial Treasuries and Procuring Institutions

Part 2: Provincial Treasuries

Adv Van Schoor informed Members that the department proposed that the instructions by the PPO must be made by notice in provincial gazette

The Chairperson asked Mr Ryder to submit the list of clauses he wanted reviewed to the Committee later in the day.

Chapter 3: Procurement Integrity and Debarment

Clause 14: Codes of conduct

Adv Van Schoor stated that the department proposed an amendment to Clause 14 (2)(c) to remove ‘his’ and ‘her’ and add ‘the’ before the words ‘line manager’ to make it gender-neutral after advice from the State Legal Advisor.

Subsection (3) proposed a new provision that if the line manager is informed of the allegation as per subsection (2)(c) and does not initiate an investigation, the PPO or relevant provincial treasury must investigate the matter.

Mr Ryder clarified that he asked if an investigation would still be needed when a line manager can resolve the alleged misconduct speedily, without requiring a lengthy investigation. After reading through the PFMA earlier, he was pleased with this clause.

Chapter 4: Preferential Procurement

Adv Van Schoor mentioned that not many amendments were made to Chapter 4.

Ms Lienda Pietersen (Director: Supply Chain Management, Legal Advisory Services at the NT) explained that the provisions in Chapter 4 are meant to be implemented in a staggered manner. The set-aside provisions in Clause 17 are meant to achieve representation of the economically active population by providing an entry point for them to the economic activities within the public sector.

Clause 17 operates within a threshold of smaller value contracts. Thresholds are meant to operate within a bracket from petty cash up to R5 million or R10 million, aligned within the exempted micro enterprise threshold. As such, if an institution is set to procure furniture valued at R7 million, that would be within the threshold of set-asides. The procuring institution will then look at the persons or categories of persons listed in the Chapter. It may happen that no one within the designated group can supply or is operating in that space. In that case, the institutions may move onto Clause 18, which can subcontract to people of those categories, or it can look at suppliers who have bought from black persons previously and their scorecard, for prequalification.

Clause 18 operates on a higher threshold. It sets out pre-qualifications for middle-value contracts. The difference between pre-qualification and set-aside is that the former does not ring-fence for disadvantaged persons. For example, if a company is owned by people who are not previously disadvantaged, that contractor can subcontract to a company owned by a black person. In this sense, preference is given to the contractor and the subcontractors for persons who were previously disadvantaged. Unlike in Clause 17, the latter is not directly being protected.

Clause 19 operates at an even higher threshold than Clause 18, as it deals with higher-value contracts where previously disadvantaged persons may not be ready to participate independently. Clause 19 outlines ways to ensure small businesses' participation and exposure to high-value and complex bids and tenders.

The clause further sets out transparency provisions, which require institutions to report if they cannot apply the provisions. The Minister is also required to periodically review the targets prescribed for the set-aside provisions.

The Chairperson appreciated the clear response.

Mr Ryder asked whether the thresholds would be determined in the regulations.

Ms Pietersen confirmed that they would be.

Mr Ryder mentioned that this was a concern raised in the provincial mandates. He felt that much work would need to be done to assist the provinces in implementing these provisions.

The Chairperson noted his views. He asked for Members to provide comments on Chapter 4.

Mr F Du Toit (FF+, North West) expressed the FF+’s opposition to including the B-BBEE clause in the Bill, especially because of how it is to be applied.

The Chairperson asked if the Committee report could provide a summary outlining the DA and FF+’s reasons for opposing the Bill.

Adv Jenkins said that would be procedurally correct.

The Chairperson asked the PLA to inform Members of the 7th Administration that they have a right to raise their objections and have them captured in the Committee reports.

He noted that Clause 15 (2) in Chapter 3 did not provide a timeframe for when a person who has been debarred must provide reasons for them not to be debarred.

Adv Van Schoor indicated the department would propose this.

The Chairperson asked what the proposal would be.

Adv Van Schoor said ten days would be a reasonable time period.

The Chairperson agreed with it.

Chapter 5: General Procurement Requirements

Adv Van Schoor remarked that the Chapter dealt with general procurement requirements. Clause 24 requires the Minister to prescribe a framework within which procuring institutions must develop and implement their procuring systems. It requires a strategic approach to procurement for infrastructure.

The Chairperson asked why the phrase ‘strategic approach’ had not been removed from Clause 24 (1)(a).

Adv Van Schoor said it was a matter for discussion.

Mr Mathebula indicated that the department was discussing what terminology should be used.

The Chairperson asked if the department would define a strategic approach in the Bill.

Mr Mathebula confirmed that the department would do so.

The Chairperson asked the department to craft Clause 24 so that it includes price but does not make it the only determining factor in awarding a tender, considering that the NA removed a reference to price in the clause. He asked how Clause 24 (1)(d) would prevent the manipulation of bid evaluations and awards.

Mr Mathebula said the regulations had to prescribe and outline how these anomalies and breaches would be prevented going forward.

Mr Ryder was pleased with the proposed amendments to Clause 24.

The Chairperson felt that the Standing Committee may take issue with the proposed Clause 24 (1)(d). He proposed that an addition be made to the state, and the Minister has to prescribe to ensure that these criteria are not used to preclude the emergence of new entrepreneurs. He asked for the department’s view.

Mr Mathebula agreed with the suggestion, as the Standing Committee argued that some issues are used as barriers to entry. There needs to be a balance between ensuring that it is provided for in the Bill and guarding against it being used as a barrier for new entrants. The department has been on record as wanting to open up state procurement to everybody.

The Chairperson proposed that it state, after the words ‘technical requirements’, ‘as prescribed by the Minister in the relevant section.’

Adv Van Schoor mentioned that the department would work on the exact wording of the clause.

The Chairperson indicated that the Committee sought to prevent endless debates with the Standing Committee on this clause.

Mr Ryder stated that cost-effectiveness was a specific phrase obtained from the Constitution and was not the same as price. If something is adjudicated on price, that may be considered a barrier. There has been general agreement that there will be a premium in certain instances, which will be applied to ensure broader economic empowerment. However, something can still be cost-effective while providing a certain level of empowerment. At the same time, economic empowerment cannot be achieved at all costs. There must be a limit because the benefits to end-receivers and taxpayers must be considered.

The issue was not about the lowest price. It was about where the premium is sought. The minister or relevant accounting officer must determine a premium, and it must be reasonable.

The Chairperson thought the phrases ‘which may include, where applicable’ and not ‘limited to’ qualified the matter. He advised that the Committee had to consider and compromise on the Standing Committee’s determined position on price.

Adv Van Schoor mentioned a proposal to remove contract management as one of the things a procurement system must provide for in Clause 24, which the department rejected.

Mr Grace told Members that stakeholders had been given assurance during the consultation by the department that this would be changed to be a requirement of the procurement institution and not the procurement system. It seemed that the department was going back on the assurance it gave. They felt strongly that the procurement system would be weakened when a role is included within a procuring institution where procurement officials are not trained.

The Chairperson indicated it was up to Parliament to include proposed amendments, not civil society organisations and the department. The Committee went through the documents sent on the 8th and 10th of April and the department’s matrix of the responses made by stakeholders during the public hearings.

Mr Mathebula explained that contract management had to be retained, and a procuring institution would have to decide where to place contract management.

The Chairperson asked why the department had agreed with the stakeholders in the first place.

Adv Van Schoor clarified that it related to a subsequent clause in which the department indicated what the procurement functions should consist of—the department proposed that the clause be removed.

She then took Members through Clause 26, which discussed measures to prevent the abuse of the procurement system. These measures combined what would be found under the PFMA and Municipal Finance Management Act (MFMA), specifically under the MFMA's supply chain management regulations.

The department proposed an amendment to Clause 26 (1)(d) based on stakeholders' submissions. This amendment requires the procuring institution to verify that a bidder is not an affected person who appears in the debarment register.

The Chairperson said many of the remaining clauses were fairly straightforward and did not require Members to go through them again in depth.

Clause 30: Access to procurement processes

Adv Van Schoor explained that this clause allowed the public, civil society, and the media access to procurement processes. One concern raised was that some officials might feel intimidated by having people watch over them as they execute their functions, so it was suggested that, depending on the procurement categories, people should be prohibited from attending and in others, it should be opened.

The Chairperson asked for examples.

Adv Van Schoor said that where there is a bid process to procure a service provider for social grants, the process could be made open, but a smaller tender to provide legal online services to a department does not necessarily need to be open. Thus, it could be linked to the value of the tender.

Mr Mathebula added that there will be key indicators to prescribe which tenders the public may have access to.

Mr Ryder felt that even the smaller bids had to be opened. Instead of having the public always attend the proceedings, the evaluations could be video recorded. It would make it easier for bidders to work with and within the system by exposing them to how bids are evaluated. Far too much is left to the Minster to decide at a later stage, he felt.

Adv Van Schoor said the Minister must prescribe these measures. Also, subsection (2) contained the word ‘may’, meaning it will be subject to public consultation on the draft regulations.

Mr Mathebula confirmed that those measures would be prescribed. Later in the Bill, the Minister is referenced to national security; in those instances, the Minister may want to limit access to the public. Nevertheless, he was pleased that, for the first time, provision had been made for transparency in the procurement processes.

The Chairperson agreed with both Mr Ryder and the department. As such, he proposed that the Committee state in its report that while it welcomed the measures to ensure transparency, it did not feel they went far enough. A review will have to be done in the second phase of the Bill. In addition, he said a draft summary of Mr Ryder’s suggestion would be included.

The Chairperson stressed that the Committee was surprised by the number of issues to be prescribed by the Minister.

Clause 31: Disclosure of procurement information

Adv Van Schoor stated that unlike the PFMA, which only has one line stating that a procurement system must meet certain requirements, the Bill provided specific details about what the Minister must prescribe.

Subsection (2)(a) outlines information regarding bids cancelled, the reasons for the cancellation provided to failed bidders, and the disclosure of a family member of a politician receiving a bid.

The Chairperson was pleased with subsection (2)(a).

Clause 32: Documents to be made available

Adv Van Schoor mentioned that this clause requires the procurement office to keep copies of the Act, regulations, instructions, and codes of conduct on the department’s national website.

The Chairperson asked if that should be replaced with ‘official website’.

Adv Van Schoor felt that the current formulation was clear enough.

Clause 35: Reconsideration by procuring institution

Mr Ryder asked at what point the tribunal’s decision was final and how much scope was there to enable unsuccessful bidders from delaying and frustrating projects through appeals.

Mr Mathebula pointed out that it took very long for a successful contractor to establish their site, which could be from six months to even longer, depending on how quickly the courts take to adjudicate on a matter put before them. To circumvent that process and shorten it, the department, through the Bill, has provided instances where the aggrieved losing bidders do not necessarily have to go to court and can resolve the matters with the procuring institution. Therefore, this process allows the procuring institution and aggrieved bidder to engage in a fairer process; it prevents small businesses from incurring unnecessary financial, and legal costs and quickens the turnaround time for delays to service delivery. The department was confident this provision would limit the amount of cases taken to court.

However, nothing prohibited an unsuccessful bidder from taking the matter to the court.

The Chairperson hoped the department was correct that this would reduce the prospects of unsuccessful bidders going to court. He asked for a response on whether greater transparency, thus less nepotism and corruption in the decision-making process, would reduce the incentive for unsuccessful bidders to challenge a decision, as they would have more trust in the process.

Mr Mathebula agreed. He strongly believed that involving the public in the bid process would have a positive impact.

The Chairperson asked the department to provide a summary of the details of the implementation process for the Bill, which he would send to interested stakeholders. He proposed that the Committee, in its report, state that more measures had to be implemented to prevent undue challenges of bids. As such, it was believed that the transparency provisions in the Bill needed to be reviewed in two years.

Clause 37: Composition of a Tribunal

Adv Van Schoor indicated this clause set out the composition of a tribunal.

Mr Ryder highlighted that some provinces suggested establishing an ombudsman in the Bill. However, he felt convening a body of this size would be difficult.

Adv Van Schoor elaborated that if an application is received, the chairperson must convene a panel; the entire tribunal does not have to be present to hear the application.

Conduct of persons involved in the work of the Tribunal

Mr Ryder asked what the purpose of this clause was.

Adv Van Schoor explained that the proposal prevented tribunal members from sitting on a panel and undermining its work.

Clause 52: Judicial review and enforcement of Tribunal orders

Mr Grace mentioned that the Bill did not provide turnaround timelines for the Tribunal. This had an impact on the next period.

He said the standstill period remains in place when someone goes to court. He asked whether Parliament sought to have turnaround times for the tribunal.

Adv Van Schoor said prescribing a period may be risky as the circumstances of a case may be too complex for a tribunal to complete the process within that time period. Also, the standstill did not apply if the matter was taken to court unless interdicted.

The Chairperson asked if the Minister was expected to prescribe a particular number of days.

Adv Van Schoor indicated that no particular period is prescribed within which the Tribunal must decide.

The Chairperson asked if the Tribunal had a time period set.

Adv Van Schoor requested that the department check what is done with the Financial Services Tribunal and then return to the Committee.

The Chairperson agreed with Mr Grace in principle, and he asked that he put his point in writing. He proposed that the Minister could prescribe the conditions from which he would give exemptions.

Adv Van Schoor felt it should be left to the tribunal chairperson to prescribe the time period.

Clause 53: Prohibition on concluding contract during reconsideration or review proceedings

Adv Van Schoor outlined that this clause provided an exemption on emergency procurement.

Mr Grace thought the definition of emergency was narrowly prescribed and should be expanded.

Mr Mathebula pointed out that the emergency provisions did not have conditions, so if one needs to act now due to an emergency, no conditions are attached. Those same provisions are applicable in the current legislation, where the accounting officer can dispense with the open competitive bidding process.

This provision requires that if there is an emergency and a standstill, the procuring institution invokes the emergency procedures to procure whatever is needed.

Mr Grace said that the department had deflected in its answer. In the past, a distinction was made between urgency and emergency. The definition of emergency was too narrowly described for an emergency as it did not accommodate for an urgency in the sense of interdependency. The accounting officer is not permitted to utilise the emergency provisions.

The Chairperson was slightly concerned that Mr Grace has been afforded this much time to engage in the process, as other stakeholders may take issue with it. Nonetheless, he insisted that he could come in when needed.

Mr Mathebula acknowledged that there is a difference between urgency and emergency. There are conditions attached to urgency, not to emergency.

Clause 54: Investigation by the PPO

Adv Van Schoor indicated that this clause provided for the PPO to investigate any non-compliance with the Act if requested by a relevant treasury, procuring institution, member of the public, or on its own initiative. The department proposed that it be only permitted to do so if it has reasonable cause to suspect that non-compliance has occurred.

Mr Ryder added to the earlier discussion on emergency and said the PFMA defined emergency broadly and provided the Minister with enough powers to intervene immediately. Also, he did not want every government entity to be able to decide what urgency was, as urgency results from a lack of planning. There should be a high threshold for pausing the contract while a judicial or tribunal case goes forward, as there can be a significant financial impact if the finding goes against the bidder.

The Chairperson asked the Committee Secretariat to forward Section 16 of the PFMA to Members.

Clause 57: Delegation

Adv Van Schoor said the department proposed a provision that the head of the procurement office may delegate functions, but not issue instructions.

Clause 59: Financial Misconduct

Adv Van Schoor proposed this provision as an offence in Clause 60, making it a criminal offence for an accounting officer or authority not to take reasonable steps to implement the Act. However, the department felt this was too severe and difficult to prove, so it proposed that it be considered financial misconduct.

The Chairperson said he liked the proposed provision in principle but wondered how practical it was.

Mr Ryder proposed that a subsection (3) be added, which states that criminal charges may follow based on the investigation suggested in subsection (2).

Adv Van Schoor clarified that the clause outlined what steps an institution should take in a disciplinary matter. She felt that the proposal would apply in Clause 60.

Mr Ryder agreed.

The Chairperson asked if this provision should be included in the bill.

Adv Van Schoor did not think it was necessary as there was an obligation in the various laws that if one detects a criminal offence, especially if it is corruption-related, they must report it.

Clause 60: Offences

Mr Grace, referring to subsection (1)(c), mentioned that the Bill did not mention a public opening. As such, he proposed that the phrase ‘public opening’ be removed.

The Chairperson agreed with the suggestion.

Mr Mathebula stated that there was a pre-existing practice of opening certain tenders publicly, such as those related to construction.

The Chairperson accepted the department’s explanation.

Clause 63: Regulations

The Chairperson stressed that the Committee was not pleased with the number of issues deferred to the Minister’s regulations. He reminded the department to send a summary explaining the reasons for the deferral, and the Committee would respond.

Adv Van Schoor said the department proposed the removal of subsection (1)(a)(v), which set out the need for the setting of market-related price ceilings for procurement, as it would be difficult to implement.

Mr Mathebula added that keeping this requirement was tantamount to price regulation.

Mr Ryder agreed that this did not belong in the bill because if a new ceiling is set, it would become the new baseline, effectively making the minister do the work of the bid committee.

The Chairperson thanked the department for taking Members through the draft Bill.

He asked for it to take Members through the Bills Schedule: Amendment, and repeal of legislation.

Schedule: Amendment and Repeal of Legislation

Adv Van Schoor took the Committee through the document.

The Chairperson noted that the Committee had gone through its agenda earlier than expected and would not sit for a second sitting in the morning.

He again thanked the department for the work it had put in during the whole process.

He said the Committee would have an offline engagement at 15:00.

The Committee is set to meet next Tuesday and is expected to vote on the Bill.

Mr Ryder noted that the Bill does not mention an unsolicited bid. He asked the department to respond on Tuesday about how it would be included in the bill.

Mr Mathebula highlighted that this was dealt with in the proposed change to the definition of ‘bids’, to cover unsolicited bids.

Adv Van Schoor added that the department removed an invitation for procurement from the definition of bid to resolve the matter. She believed Mr Ryder’s comment related to Chapter 4, which spoke to the minimum qualifying bids. If an unsolicited bid is accepted, the procuring institution must explain why it could not comply with Clauses 17 and 18.

Mr Mathebula said unsolicited bids have always been accepted, with certain conditions, as they speak to innovation. This would continue going forward.

The Chairperson noted the response and said a further response was not required on Tuesday.

The meeting was adjourned.


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