South Africa’s new Public Procurement Act, simultaneously a blessing and a curse?

Those with an interest in science will know that light has a dual nature – it is both particle and wave.

Is the same true of South Africa’s new Public Procurement Act, simultaneously a blessing and a curse? A welcome cure-all for state corruption, or and an ill-advised legislative trickery that will cause more harm than good? Or a bit of both?

In the last week we have heard the Act both vilified and endorsed, by politicians who just a few weeks ago were all singing from the same GNU hymn sheet. Now it seems they can’t agree even as they navigate the first stumbling block -- and one of the most important: how to clean up public administration. 

In his latest newsletter President Cyril Ramaphosa insists the Act is a genuine attempt to avoid another Gupta disaster where public officials were placed under immense pressure to violate procurement processes (in the interests of politically-connected benefactors) – a problem identified by the Zondo Commission. “No government official may be directed, either verbally or in writing, to violate the required procurement processes, and no official can be victimised or suffer ‘occupational detriment’ for reporting any unlawful instruction,” Ramaphosa says.

Partly this will be achieved by creating a procurement office within the Treasury, with accompanying measures to ensure process integrity. A more cohesive approach, centralising procurement within a single office, will reduce opportunity for pilfering, Ramaphosa says.

Or will it? 

Many within Ramaphosa’s GNU see it differently. Among them is Western Cape Premier Alan Winde who says the Act is not only unfair but unconstitutional. By centralising procurement within a single office -- and effectively putting all its eggs in one basket -- the Act ‘usurps the autonomy of the provinces’, Winde says. In as much as the Act centralises decision-making within the treasury, it also centralises potential malfeasance should treasury fail to protect its basket of goods. 

Other commentators have highlighted the potential dangers of the single procurement framework approach that dictates ‘set-asides’ for designated groups and rules around mandatory subcontracting and legal procurement. They say the Act seeks to advance the economic wellbeing of set-aside groups at the expense of the best value-for-money option, at a time of scarce public expenditure. As such the Act amounted to a further tax on the poor and contradicts the aim of expenditure control. 

Contestation over the Act should provide yet another litmus test for the new government. Will there be transparency and consultation when finalising measures to ensure it is indeed a public service, or a national liability? Can it be salvaged in some shape or form to assist government’s stated anti-corruption drive? 

It is common cause that government needs to mitigate against another Gupta-scale disaster.

There is also broad consensus that South African needs centralised policy principles and rules to streamline governance. 

But is the Public Procurement Act in its current form in the best interests of all citizens? If the intention is to circumvent value for money, to benefit a few, then in effect there is less money for government service delivery, and taxpayers are being shortchanged. This would surely contradict government’s constitutional obligation to defend what is best for its citizens. 

Centralised execution, while neat in principle, often ends up being messy in practice. Too many tenders to process. Too much variety to cope. Gvernment’s track record point of centralised processing points to colossal bottlenecks, delays, queries and disputes. 

What guarantee do we have that public procurement will not become another public service disaster, such as visa administration or commuter rail? Has there been sufficient implementation and risk analysis? Procurement underpins government delivery and is far too vital to fail.

Scientists agree reality is to a certain extent within the eye of the beholder. But there is also no denying objective truth that depends upon experimentation and hard evidence. 

Only time will tell whether the Procurement Act is friend or foe, or a bit of both. If it is found to be flawed it should be replaced with something more effective. 

Whether light is a wave or a particle when we see it at the end of a long tunnel, let it rather be the proverbial new dawn and not an oncoming train. 

John Lawson
CEO of the Cape Chamber of Commerce and Industry