The Preferential Procurement Policy Framework Act (PPPFA) and its related regulations gives effect to section 217 (3) of the Constitution.

The following principles are implied within the context of the PPPFA and its regulations:

1. Section 217 (1) of our Constitution prescribes that the public sector procurement system must be fair, equitable, competitive, transparent and cost-effective. When implementing the prescripts of the PPPFA, the system allows for preferences in the award of tenders to Historically Disadvantage Individuals (HDIs), while set-asides are not allowed. We endorse this principle.
2. The principle is further established that when awarding a tender, Government is prepared to give preferences to HDIs, but not at all cost. The maximum "premium" Government is prepared to pay for achieving these procurement objectives, is 25% in the case of the 80/20 point system, and 11,11% before the 90/10 point system. From a macro-economic point of view, this should be sufficient and the percentage in this regard should not be increased.

When evaluating the success of the implementation of the PPPFA and its regulations, the following deficiencies surface:

1. The PPPFA and its regulations are only applicable to national and provincial departments, and not to the public entities and local authorities. Although public entities and local authorities are classified as "Organs of State" in terms of section 239 of the Constitution, the PPPFA and its regulations will only be applicable to these institutions after they have been "recognised by the Minister by notice in the Government Gazette as an institution or category of institutions to which the Act applies" (section 1 (i) (f) of the PPPFA).
2. There is a total lack of measurable norms regarding the involvement of HDIs in public sector procurement. Some institutions take it as a norm that if HDI involvement in a contract is more than 50%, the contract is a fully recognised HDI contract. Other institutions regard this norm as 30% while other institutions regard only the involvement of HDIs, irrespective of the percentage involvement, as HDI-contracts. Against this background we should doubt if there is any reliable information available regarding the success of the implementation of the PPPFA and its regulations.
3. The PPPFA also prescribes that points may be awarded for achieving specified RDP goals. Various possible goals are listed under paragraph 17 of the regulations. Although all the goals listed in the regulations are beyond any doubt RDP-goals, it is very difficult if not impossible to quantify some of these goals and to make implementation measurable. An example in this regard is the last goal listed in the paragraph, i.e. "The upliftment of communities through, but not limited to, housing, transport, schools, infrastructure donations, and charity organisations."
4. Being a framework, the decision to elect specified goals to be promoted is the responsibility of the accounting officer or the delegated officials. The accounting officers should be instructed to align these specified goals to national targets or goals. The diverse system presently used cannot be regarded as a proper orderly system. Setting national targets to be achieved will have a much better impact.
5. The Strategy for Broad Based Black Economic Empowerment (BBBEE) overlaps with the PPPFA in the objectives it wants to achieve. It does not focus on preferential procurement in the same way as the PPPFA and establishes a much broader view, e.g. BEE is defined as a process, while HDIs relate to individuals. The idea of setting targets is captured in the BBBEE, but nothing definite has surfaced as yet. It is of utmost importance that these two documents should be aligned.

1. an efficient and effective system of public sector procurement; and
2. in the broadest possible way, to advance Black Economic Empowerment objectives, with particular reference to
1. combating joblessness;
2. developing entrepreneurship; and
3. aligning businesses with the demographics of the country.

1. economic endeavours being switched to other areas;
2. decreased outputs, with concomitant job losses for, inter alia, members of previously disadvantaged groups; and
3. the creation of fronting opportunities.

1. The principles as detailed in the PPPFA and its regulations are supported.
2. The setting of national targets, which may vary from industry to industry, is an urgent necessity.
3. Standardised norms to measure the outcomes of the procurement policy must be established.
4. The contents of the PPPFA and its regulations and the contents of the BBBEE must be aligned.
5. Investigation of the incidents of possible fronting and the institution of necessary action against such businesses should take place.