Godongwana’s procurement reform must be quickly embraced - Businesslive

3 November 2022 - ANC ministers, officials and supporters get annoyed when you point out that SA’s constitution is federal and devolutionary in nature. This is a reality they do not want to accept.

Martin van Staden

ANC ministers, officials and supporters get annoyed when you point out that SA’s constitution is federal and devolutionary in nature. This is a reality they do not want to accept.

But finance minister Enoch Godongwana’s announcement of a federal reform to procurement confirms that it is true. It is an opportunity municipalities and provinces governed by opposition parties and coalitions must embrace without delay.

Section 217 of the constitution makes unambiguous provision for municipalities, provinces, public universities, government departments and so on — individual “organs of state”, in other words — to exercise discretion when deciding whether to implement preferential procurement policies.

All organs of state must implement “fair, equitable, transparent, competitive, and cost-effective” procurement policies. But they may, if they so choose, also implement policies that give preference to “persons, or categories of persons, disadvantaged by unfair discrimination” (so-called preferential procurement).

National legislation — in this case, the Preferential Procurement Policy Framework Act — must create a framework for those organs of state that do exercise their discretion in favour of having such policies. However, contrary to the constitution, section 2(1) of the act implies that organs of state must adopt a preferential procurement policy and have no scope to exercise discretion.

This provision appears unconstitutional if read superficially. However, a closer reading suggests the act applies only if the organ of state in question has decided to implement a preferential procurement policy, in accordance with its constitutional discretion. This is buttressed by a seeming acknowledgment of discretion in relation to racial procurement found in section 2(1)(d) of the act.

The federal nature of the SA constitution is borne out by the fact that the constitution establishes a domain of authority at the provincial and local levels that is not reliant upon permission from Pretoria. If SA were a unitary state there would be no talk of any provincial or local organ of state being able to deviate from what the central government demands, including in the procurement space.

In his 2022 medium-term budget policy statement (MTBPS) Godongwana deviated from his scripted speech and confirmed the constitutional position with crystal clarity. “Every organ of state must have its own procurement policy, not be getting permission now and again from Treasury. We are giving you that authority; each organ of state is to have its own procurement policies. No-one will then say if I don’t deliver on time I’m delayed by Treasury.”

The minister also mentioned that new regulations, replacing the racial regulations Sakeliga succeeded in having declared unlawful by the Constitutional Court earlier in 2022, will be adopted soon. According to the minister these new regulations will recognise the discretion of individual organs of state.

What could this mean in practice? It will allow any organ of state to make price, quality and the ability to deliver paramount in its procurement processes, without having to include irrelevant and complicated racial considerations in the decision. While racial points usually account for just 10 or 20 out of 100 points in public tendering, their very presence distorts decision-making and opens the door for non-value-adding intermediaries.

As the Zondo commission report found, the “national interest is best served when the government derives maximum value-for-money in the procurement process”. Considerations of racial social engineering should be excluded entirely.

It is unfortunate that the now ubiquitous phrase — “[those] disadvantaged by unfair discrimination” — found in section 217 of the constitution, has been perverted by the ANC. On a reasonable reading this phrase would mean service delivery to factually disadvantaged communities must be prioritised when procurement contracts are awarded.

Under the ANC’s rule it has come to mean that wealthy elites with political connections are awarded lucrative tenders. These elites then often provide hopelessly inadequate services to the very disadvantaged communities section 217 was intended to uplift.

It is naïve at this stage to believe the ANC will move away from its racial, command-and-control ideological commitments. Quite possibly, Godongwana’s reform will be “workshopped” into something else entirely by Luthuli House, robbing it of its promise.

Opposition-controlled municipalities and provinces must — even if the new Preferential Procurement Policy Framework Act regulations are unsatisfactory — therefore take ownership of the federal discretion unambiguously vested in them by section 217 of the constitution, and begin awarding tenders exclusively on price, quality and the ability to deliver.

Even Cape Town and the Western Cape, long governed by the opposition, have racialised procurement policies without being compelled to do so. This must change. The opposition can no longer allow the discredited ANC government to set its agenda.

One also hopes maverick executives in struggling state-owned institutions such as Eskom will exercise their constitutional discretion to ignore racial considerations in favour of quality service delivery. Being a cash cow for the politically connected will never serve the national interest.

As SA’s political landscape starts to change radically, with talk of the ANC’s single-party dominance coming to an end, the time is ripe for the federal character of the SA constitution to shine through the destructive and unnecessary centralism that has guided us up to now.

Governments perform best when they are accountable to the people they serve, not some higher tier of the state with an ideological agenda.

Van Staden is deputy head of policy research at the Institute of Race Relations and an adviser to the Free Speech Union SA. He is pursuing a doctorate in law at the University of Pretoria.