Public Procurement: Legislative Framework
Frequently asked questions regarding public procurement policies and processes are posed and answered in this short editorial. Mr Dekker, attorney, expressed that on each question, there is much opportunity for more detailed answers to be given. The following Q&A with him represents concise responses to some of the most frequently asked questions on the tendering process in South Africa.
Public procurement policies and procedures in South Africa to contract for the provision of goods and services apply to all "organs of state". This includes all national departments, all the departments of the nine  provincial governments, all municipalities (226 local municipalities, 44 district municipalities and 8 metro municipalities), National Public Entities listed in Schedule 3A of the Public Finance Management Act No. 1 of 1999 and Provincial Public Entities listed in Schedule 3B.
Although general or generic procurement rules are applicable to all organs of state, each entity is required to have its own Procurement Policy. Rule No. 1 in preparing a tender/bid is to acquire the specific Procurement Policy in respect of the institutions to which the tender or bid is being submitted.
Q. What are the five  fundamental principles of public procurement?
Section 217(1) of the Constitution of the RSA provides that all public institutions must contract for goods and services in accordance with a system which is:
These five  basic or fundamental principles in the Constitution set the basis or benchmark for all public procurement rules.
Q: Does the same legislation, policies and procedures in respect of Supply Chain Management apply to all organs of state?
Acts that apply to all organs of state include:
- The Constitution;
- the Preferential Procurement Policy Framework Act No. 5 of 2000 and Regulations R501 of 08 June 2011;
- the Board Based Black Economic Empowerment Act No. 53 of 2003;
- the Construction Industry Development Board Act No. 38 of 2000; and
- the Prevention of Corrupt Activities Act No. 12 of 2004.
At National and Provincial Government level the Public Finance Management Act No. 1 of 1999 (PFMA) applies. The National Treasury issued Treasury Regulations in terms of the PFMA for National and Provincial Departments, Trading Entities, Constitutional Institutions and Public Entities – see Supply Chain Management Regulation 16A.
At Municipal Government level the Local Government: Municipal Finance Management Act No. 56 of 2003 (MFMA) and the Regulations of 30 May 2005 applies to all municipalities and municipal entities.
Q: At Municipal Government level, why are Councillors barred from serving on tender committees?
Part of the broader reform programme across all spheres of government has been to ensure that the political, executive and administrative functions are clearly articulated. Councillors are required to set policy and the administration headed by the municipal manager as "accounting officer" is required to execute that policy. Council, in discharging its oversight role, must monitor performance and hold the administration accountable for delivery.
The MFMA makes a distinction between the role of Councillors as the policy making body, and the administrative functions headed by the municipal manager and executed by the municipal staff. The acquisitioning of goods and services, whether through quotations or other means of competitive bidding, is an administrative function.
Q. Who should sit on tender committees and how should it be structured?
The Accounting Officer should appoint the following three  bid committees:
Bid specification committee - this committee is responsible for compiling the bid (tender) specifications. The specifications committee may be comprised of one or more officials from of the municipality or entity and, where appropriate, include external specialist advisors. The request for a bid must clearly indicate exactly what is required to be delivered.
Bid evaluation committee - this committee is responsible for the evaluation of bids received and to verify legal criteria and past performance history of the tenderer. Membership of this committee as far as possible should comprise officials from the department requiring the goods of services and at least one supply chain management practitioner of the municipality or entity. This committee should evaluate all bids received and submit a report and recommendation(s) regarding the award of the bid(s) to the adjudication committee.
Bid adjudication committee - this committee should comprise at least four senior managers of the municipality or municipal entity of whom at least one member is the Chief Financial Officer (CFO) (or delegate), the senior manager responsible for the bid (or delegate), at least one senior supply chain management official practitioner and technical experts from the municipality or entity. The committee should consider the report(s) and recommendation(s) made by the evaluation committee. Depending on the delegations granted by the accounting officer, the adjudication committee could make the final award of the bid, or make a recommendation to the accounting officer to make the final award. The CFO of the municipality or municipal entity should chair the adjudication committee.
The evaluation committee and adjudication committee must comprise different members to ensure that a transparent review of the evaluation and award is undertaken. Members of evaluation committees may present their reports to the bid adjudication committee and clarify any uncertainties. Such members should, however, not have any voting power on the adjudication committee.
The bid specification, evaluation and adjudication process must be within the ambit of the legislative framework set by section 217 of the Constitution as well as the provisions contained in the PPPFA and its associated regulations, and the Broad-Based Black Economic Empowerment Act, No. 53 of 2003, and its associated regulations.
Q: Can the normal SCM procedures be waived for the provision of emergency goods and services?
Regulation 36 of the Municipal SCM Regulations provides that the municipal manager as "accounting officer" may dispense of the official procurement process and may apply any "convenient process", but only in the following limited circumstances:
(i) In any emergency;
(ii) if such goods or services are produced or available from a single provider only;
(iii) for the acquisition of special works of art or historical objects where specifications are difficult to compile;
(iv) acquisition of animals for zoos; or
(v) in any other exceptional case where it is impractical or impossible to follow the official procurement processes.
A further requirement is that the accounting officer must record the reasons for any deviations and report the reasons to:
(1) The next meeting of the Council; and
(2) include the reasons as a note in the annual financial statements.
These are some of the more frequently asked questions about the public procurement system in South Africa. More practical questions which directly affects consulting firms and other bidders include: "What steps can be taken by an unsuccessful bidder who is of the opinion that the unsuccessful bidder should have been the preferred bidder?"
The best advice is to consult an attorney if this problem arises, as there are a number of legal steps that can be taken to protect the legitimate interests of the unsuccessful bidder, including a request for reasons, a request for copies of documentation, submitting an internal appeal or applying for a review of the bid by a competent Court.
Being a successful bidder is the lifeline of any undertaking. To understand the rules of bidding is thus absolutely essential. To obtain appropriate professional legal advice can be crucial before, during and after the bidding process.
ATTORNEY LEN DEKKER
Tel: 082 923 0307