The past week saw the introduction of two Private Member’s Bills proposing to amend the Public Procurement Act.
The Congress of South African Trade Unions (Cosatu) has been deeply involved in the development of the Act and will be equally active in engagements on these two Bills.
The Zondo Commission of Enquiry into State Capture and Commission initiated by President Cyril Ramaphosa, shone a painful spotlight into how public procurement has been this cancer’s epicentre.
This is not a matter that can simply be left to bureaucrats or politicians. It has been workers who lost jobs, salaries and pensions to this cancer.
It has been the working class that paid the price with frontline public and municipal services devastated by this cancer. It has been society and the economy at large that have born the brunt of billions of badly needed public funds lost to enrich the pockets of a parasitic tenderpreneur class.
It is precisely for this and the need to ensure public funds are mobilised to support locally produced goods and services, that Cosatu actively campaigned for the Public Procurement Act, one of the most important interventions by the African National Congress led administrations in the war against state capture and corruption.
This matter became all the more urgent in 2022, Sakeliga successfully challenged Treasury’s Preferential Procurement Regulations in court on the basis of the absence of an Act empowering it to do so.
This created a crisis for the ability of government to utilise public procurement to support historically disadvantaged persons, emerging entrepreneurs and local procurement. It collapsed the legal regime for Treasury to put in place a guiding framework for procurement across the state. In short, it plunged public procurement into anarchy akin to the Wild West where anything goes.
In 2023 after years of campaigning by Cosatu, Treasury tabled the Public Procurement Bill to address the crisis created by Sakeliga’s court case and put in place a single public procurement system.
Extensive engagements were held at Nedlac between government, Business, Labour, civil society and some of the nation’s leading procurement experts. These produced, however imperfect, a comprehensive and progressive Bill.
The Bill was further enriched by robust engagement in Parliament despite incredibly tight timeframes. Parliament agreed this will be the first phase of public procurement reforms and that Treasury would need to revert back with further proposed amendments to address outstanding issues.
It is never easy to forge consensus in a robust democracy, let alone amongst constituencies with competing interests. Yet the Act achieved that to a great degree.
Cosatu was particularly pleased with progressive provisions in the Act we secured after hard fought negotiations that would create badly needed jobs, support local industries, in particular those run by historically disadvantaged persons, and to tackle the debilitating cancer of state capture and corruption and save scarce public funds.
The Act provides for a single public procurement system for the state. This is key to ensure uniform standards and set benchmarks on what is and is not acceptable across government.
Public procurement information, including who is awarded what tender must be made publicly available on the relevant institutions’ websites. This is key to ensuring corruption is exposed and the media amongst others are empowered to ask hard questions about dodgy tenders.
Politically influential persons are prohibited from doing business with the state and other politically exposed persons must be disclosed in a publicly available registry. This was a hard-fought victory for Cosatu and a key recommendation of the Zondo Commission.
Persons found to have been involved in corruption must be banned from doing business with the state and listed in a publicly available registry.
Public procurement worth R1 trillion annually must be utilised to support historically disadvantaged persons, emerging entrepreneurs and locally produced goods and services. This is key to overcoming the legacies of over 350 years of systemic discrimination and disempowerment. It is key to protecting local jobs and businesses, and tackling our devastating 43.8% unemployment rate and unlocking economic growth.
The Act empowers Treasury’s Public Procurement Office (PPO) to act when state institutions fail to comply with these progressive provisions.
There are parts of the Act Cosatu is not happy with, in particular that it is not binding upon municipalities, who in many instances show no pretence of good governance.
State-owned enterprises have asked for procurement flexibility to enable them to effectively compete in the economy. There is merit to this request and a fair balance needs to be found between enabling SOEs to have the agility to compete in the economy and to ensuring that pandemic of corruption and state capture is surgically removed from these state-owned companies.
The current court challenge to the Act by the Western Cape Provincial Administration and the City of Cape Town, is extremely worrying if successful. A rational out of court settlement must be found that will protect this existential Act.
Treasury must move with speed to finalise the Act’s Regulations and commence its rolling out across the state.
Proposed amendments to the Act by the Honourable, Mr. G. Michalakis, to replace Based Black Economic Empowerment (BBBEE) with the United Nations’ Sustainable Development Goals (SDGs), are misplaced. The SDGs should be utilised as a measure for the BBBEE path of Equity Equivalent Investments, however the other BBBEE routes of Worker Ownership Programmes (ESOPs) and 30% partnership with HDIs too have an important role to play and cannot be abandoned.
Proposed amendments to the Act by the Honourable, Mr. A. Beasley, to further empower the PPO and the Special Investigations Unit to act when state institutions fail to debar persons involved in corruption must be supported and adopted.
The Public Procurement Act provides an important opportunity to fix the state and deal a decisive blow against state capture and corruption and to ramp up local procurement.
What is needed now is implementation. We simply cannot afford any further delays in fixing public procurement, in particular across our highly dysfunctional municipalities.
Solly Phetoe is the general secretary of Cosatu.
