ConCourt confirms validity of 2017 Preferential Procurement Regulations

The 2017 Preferential Procurement Regulations (PPR), which were declared unlawful by the Constitutional Court in February this year, are in their entirety still valid.

This was National Treasury’s interpretation of the Constitutional Court’s judgment on Monday to its application seeking clarity on the court’s earlier judgment.

Treasury approached the court for clarity because its declaration of invalidity of the 2017 PPR was suspended for 12 months but the majority judgment was silent about the date on which the suspension expires.

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National Treasury subsequently granted more than 110 organs of state exemption from the provisions of the Preferential Procurement Policy Framework Act (PPPFA), including Transnet and the South African National Roads Agency (Sanral), to ensure that public procurement is not delayed and service delivery is uninterrupted.

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This followed National Treasury on March 3 advising organs of state that, while awaiting clarity from the Constitutional Court:

• Tenders advertised before February 16, 2022 be finalised in terms of the 2017 regulations;
• Tenders advertised on or after February 16, 2022 be held in abeyance; and
• No new tenders be advertised and made available on National Treasury’s website.

Treasury stressed that it was only advising organs of state – and not instructing or directing them – to curtail the risk of them awarding tenders based on regulations that may no longer be valid.

It said that according to the Constitutional Court’s judgment handed down on Monday:

• Section 18(1) of the Superior Courts Act suspended the operation of the Supreme Court of Appeal’s 12-month suspension of the invalidation of the 2017 Regulations.
• In practical terms, the countdown on the 12-month period of suspension commenced immediately after the date of suspension but was halted by the lodgement of the application for leave to appeal in the Constitutional Court.
• The countdown resumed on February 16 when the Constitutional Court dismissed the minister of finance’s appeal against the Supreme Court of Appeal’s order.

National Treasury said Monday’s Constitutional Court judgment therefore confirmed that the suspension of the declaration of the order of invalidity of the 2017 regulations is still valid for the remainder of the 12-month period – until February 15, 2023.

It said this means that:

• The 2017 regulations in their entirety are still valid.
• From May 30, 2022, all exemptions granted to deal with the period of uncertainty following the Constitutional Court’s judgment of February 15, 2022, lapse in line with the condition in the letters of exemptions.
• From May 30, 2022, all new quotations must be requested and tenders must be advertised, and dealt with, in accordance with the 2017 regulations.
• A quotation requested or a tenders advertised before May 30, 2022 must be dealt with in terms of the exemption and the internal procurement policy in place for the duration of the exemption, but an organ of state may decide to withdraw such a request for a quotation or an advert for a tender and request a new quotation or advertise a new tender that will be subject to 2017 regulations.
• The 2017 regulations will remain in place until February 15, 2023 unless new regulations are promulgated before that date.

National Treasury said it is currently considering public comments on the draft Preferential Procurement Regulations published on March 10, 2022, and will prepare final regulations that accord with the Constitutional Court’s judgment of February 16, 2016.

“Organs of state should by February 16, 2023, ensure that procurement policies in line with the Constitutional Court’s judgment of February 16, 2022, are in place or, if new Preferential Procurement Regulations are promulgated, when these regulations take effect,” it said.

Economist Dr Roelof Botha previously warned that if government entities waited before putting out a tender or spending money “they are postponing economic activity and ultimately that is going to impact GDP growth in 2022”.