IRR calls on finance minister to unblock tenders by exempting bidders from racial criteria

28 February 2022 - In an extraordinary memo to “all organs of state”, National Treasury’s Director General Dondo Mogajane advised that “no new tenders be advertised” in South Africa and asked that tenders advertised from February 16 to be put in “abeyance”.

In an extraordinary memo to “all organs of state”, National Treasury’s Director General Dondo Mogajane advised that “no new tenders be advertised” in South Africa and asked that tenders advertised from February 16 to be put in “abeyance”.

This unusual move comes after a Constitutional Court judgment upheld the invalidation of Treasury’s 2017 regulations, issued when Pravin Gordhan was Minister of Finance. The 2017 regulations used racial criteria to exclude some businesses from applying for government contracts. The regulations have been declared invalid.

Treasury claims that the court’s order is confused or has an effect that is “not what the Constitutional Court seemed to intend” and has therefore asked the court for clarification about whether the invalid regulations should remain in place for another year, while cancelling all tenders in the meantime.

Said IRR Head of Campaigns Gabriel Crouse: “The Treasury’s legal argument seems dubious at best. But even if Treasury is in real doubt about which regulations have been invalidated, how can it possibly think the best thing to do while awaiting clarity is to cancel all new tenders across the country? It is as if the Treasury is trying to hold the country to ransom while approaching the court.”

Treasury’s strategy seems to render ordinary citizens, who depend on cost-effective construction and maintenance of basic infrastructure, a mere afterthought.

Fortunately, a simple remedy is to hand, as noted in the IRR’s statement last week, on the eve of the Budget Speech: “The Preferential Procurement Policy Framework Act (PPPFA) empowers Minister Godongwana to ‘exempt any organ of state from any or all the provisions’ of the framing Act’s racial preferencing if ‘it is in the public interest’”.

The IRR argues that Minister Godongwana should use his exemption power to allow all organs of state to put cost-effectiveness above racial preferencing. This accords with Deputy Chief Justice Zondo’s observation that “the primary national interest is best served when the government derives the maximum value-for-money in the procurement process”.

The IRR is writing to the Finance Minister, calling on him to use his exemption power to put cost-effectiveness above racial preferencing for government tenders.

It is clearly not in the public interest to suspend all new tenders while resolving the Treasury’s uncertainty. But it is clearly in the public interest to go forward on a maximum value-for-money basis, untainted by racial profiling, in the meantime.

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