Image: ID 176255265 | Constitutional Court © Jacek Sopotnicki | Dreamstime.com
By Sarah Meny-Gibert
[First published in News24]
The Public Procurement Act has been set aside by the Constitutional Court on procedural grounds, but its return to Parliament represents a second chance to stop graft at its source and equip the state to deliver.
Public procurement should be the engine of an effective South African state. Instead, it’s mired in corruption, inefficient, and weak at developing new suppliers and procurement markets. A new procurement act that plugs the leaks in the fiscus and gives the state this muscle is thus desperately needed.
But the process of finalising the act has been agonisingly slow. A new act was first mooted by the finance minister for introduction in Parliament in 2018, consulted upon during Covid, and enacted pre- coalition government in 2024, yet, by 2026, the Public Procurement Act was not yet in force.
It has just been set aside by the Constitutional Court – on the grounds of inadequate public participation. This setback presents a chance to get the framework for public procurement right.
A wide range of organised interests have raised different and sometimes competing concerns about the act – reflecting the pivotal and contested role of public procurement in our post-apartheid political economy.
The act does not yet create a sufficiently clear, principle-based framework to guide the management and governance of public procurement. But it does signal some real and positive shifts that should be kept in focus when debate on the act resumes.
First, it reveals the state’s intention to move away from conceiving public procurement as a financial management and clerical function towards understanding it as a strategic and operational function. If this new paradigm is appropriately crafted in law, it could support the state in obtaining value for money and using procurement as a lever for developing markets and emerging suppliers over the long term.
The act also contained some promising commitments to increasing the transparency of the public procurement system, through digitisation of procurement data, enhanced public access to procurement data, and civic oversight of procurement processes. It contains clauses directing the professionalisation of supply chain management.
Paradigm shift
But the draft regulations, released for public comment in April, suggest that the government is still muddled on precisely how to develop this new paradigm in practice.
As my colleague at the Public Affairs Research Institute (PARI), Ryan Brunette, has argued, the regulations would have created unworkable procedural complexities that undercut their own ambitions for strategic procurement. And significantly, the regulations did not properly give effect to key transparency commitments in the act – genuine procurement transparency can be properly regulated and managed to be an asset for oversight and operational efficiency, but doing so requires a paradigm shift in thinking not yet demonstrated by the state.
The regulations for Chapter 4, on preferential procurement, were difficult to understand, challengeable in court on constitutional grounds, and if implemented could have had major costs for the state – with unclear prospects of developing the kinds of procurement markets that can support genuine economic transformation.
The Constitutional Court ruling should be used as an opportunity to fine-tune the act through a proper deliberative process, and also to engage procurement and related professionals on how the regulations can best give substance to a more strategic, efficient and transparent public procurement system. Only
Parliament and National Treasury will then have a very difficult task on their hands, charting a course through many competing opinions on the act – not all of these sympathetic to the goal of using public procurement for meaningful economic transformation, which is a social imperative and a goal supported by the Constitution.
Parliament and the National Treasury must also ensure that the participation process is substantial but moves efficiently towards a new regulatory regime, because the country desperately needs one.
Public procurement regulation is in crisis – the statute is fragmented, its anti-corruption mechanisms are flawed, and its processes are not geared towards empowering professional end-users within the bureaucracy.
For over a decade now, PARI has engaged with public servants who have been substantially constrained in their ability to procure in innovative, strategic or simply more efficient ways, weighed down by anxiety about falling foul of the Auditor-General, who in turn adjudicates on compliance with a regime that no longer provides clear guidance for practitioners or oversight institutions.
At the same time, unscrupulous officials are defying checks and balances in ways amply illustrated at the Madlanga Commission. While addressing such looting requires reform well beyond the scope of a new procurement act, a de-professionalised procurement system is ripe for corruption.
For all these reasons, this legislation deserves the full attention of the senior ranks of the National Treasury and of an informed and engaged Parliament.
That said, reform to the public procurement system should not, and need not, wait for a new Act: an obvious area where the state can proceed is to build new digital infrastructure for public procurement.
Limited coverage
Tech solutions are hardly a panacea for the governance problems our procurement system is significantly entangled in. But advances in technology can be used to enable greater transparency for oversight, including experiments with ‘real-time’ civic oversight of procurement: social audits could be expanded for procurement contracts delivering basic services, while technically proficient civic observers could support the oversight of big-budget infrastructure procurement.
PARI has argued that the water sector offers a good place to experiment in this direction. An appropriate digital system can also bring valuable clarity and efficiency to suppliers.
Over the last decade, the OCPO has slowly increased the amount of procurement data in the public domain for oversight (including a new Procurement Payments Dashboard), and it has moved a portion of the tendering process online – the Central Supplier Database and the e- procurement system. But the coverage of these systems remains limited, especially for local government and public entities, with a crucial part of “the procurement cycle”, contract management, still largely offline.
Developing a fit-for-purpose digital system for managing and tracking public procurement has exacting technical and governance requirements. It is not just a tech intervention, but a reform mechanism in itself. It needs to serve public procurement practitioners, suppliers, and oversight actors. It needs to set technical standards, at a minimum, for data across all spheres of government. It needs to account for the diverse capacities and willingness of procuring institutions to use and engage with such a system. But there is an argument to be made for this project becoming the centrepiece of the state’s efforts to incrementally digitise government – joining initiatives like MyMzansi, an interface for managing citizens’ engagement with government services.
Trillions channelled through
Public procurement is a system through which roughly a trillion rand is channelled annually and is fundamental to service delivery and the economy.
The Integrated Financial Management System – decades in the pipeline and now abandoned despite millions lost – ambitiously aimed to overhaul the entire financial ICT system for the state. Somewhat ironically, it fell prey to some of the same serious problems that afflict government’s ICT procurement more generally (including the inefficient model used to manage the State Information Technology Agency’s support for state departments).
Advances in technology, including those under the banner of “interoperability”, provide an opportunity to take smaller bites out of the elephant – piloting and building a system that is modular in form. This approach could give the state some protection against “vendor capture” (a persistent risk in state contracting for ICT). Any public- private partnerships would be subject to stringent transparency requirements to forestall accusations of capture. Tender processes will need to be carefully monitored, at higher transparency standards than seen to date. Such a project would need strong technical expertise, ample budget, and the watchful eyes of Parliament and civil society.
Other more spectacular crises tend to loom larger in the minds of politicians, bureaucrats and citizens than the complexities of procurement processes. But fixing the state’s ability to do its work efficiently while driving the economy forward is arguably just as pivotal a task.
