SCA rules against BEE policies in public tender procurement
The Supreme Court of Appeal (SCA) has ruled in favour of Sakeliga’s bid to consider preferential procurement regulations for public tenders as invalid.
On Monday, the court overruled an earlier judgment by the High Court in Pretoria.
The SCA judgement states that state-owned companies cannot disqualify prospective contractors who are not majority black-owned without first considering the price and proposition of the tender.
In an appeal case brought by the non-profit organisation, the SCA found that then Finance Minister Pravin Gordhan acted illegally and exceeded his powers when he used Section 5 of the Preferential Procurement Policy Framework to introduce the Preferential Procurement Regulations of 2017.
“The amendment to the regulations in 2017 introduced a novel power to state-owned entities and after that they were allowed to introduce arbitrary pre-disqualification criteria in the tender process so since 2017 it was possible for Eskom, and municipalities and any other SOE to set minimum BEE requirements and say that if you don’t comply with these requirements, you’re not even going to quality to be considered,” says Sakeliga CEO Piet le Roux.
He adds the tendering process must be based on merit and not race.
“This ruling opens the door for businesses to tender again to state-owned entities, be it SOEs or municipalities, because the door was closed on many occasions now if you were not sufficiently black-owned.
“This ruling is very important because it found, amongst other things, that ministers should not go beyond their powers and start doing what only Parliament should do and this case in 2017 minister Pravin Gordhan acted ultra vires,” Le Roux adds.
Listen to le Roux below:
The Democratic Alliance (DA) has welcomed the ruling.
“The judgment will help to combat corruption and end uncompetitive exclusion of suppliers,” says the party’s Geordin Hill-Lewis.
“In addition to engendering exclusion, the use of pre-qualifying criteria has in the past resulted in the arbitrary application of BBBEE criteria, inflation of prices from the limited pool of suppliers and corruption. Some suppliers have continued to use BBBEE’s exclusion criteria to constantly benefit from government tenders whilst denying access to new entrants.”
Government has 12 months to amend the regulations.
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