Public Procurement Bill: Negotiating Mandates & National Treasury response

Meeting report

The Chairperson welcomed all those who were present. He indicated that Mr Sigwela would act as the Committee Secretary, and Mr Mangweni would be absent for the entire week.

He asked if any apologies were recorded.

Mr Lubabalo Sigwela (Acting Committee Secretary) indicated that the Committee received an apology from Ms Nchita.

The Chairperson explained that the Committee would hear the negotiating mandates from each province and then discuss the department’s responses to them. He felt that, for the most part, the mandates overlapped with much of what the Committee had discussed. Several of the new issues raised in them would be considered during the clause-by-clause deliberations.

As he was concerned with the limited time left, he proposed that the Committee extend its sitting for Thursday so that it could complete its deliberations, send the draft Bill to stakeholders for them to submit additional comments by Monday, vote on it on Tuesday, and then table it in the House on 9 May for a vote. He did not want the process extended until the 7th Parliamentary Administration.

After making those brief remarks, he asked the Eastern Cape (EC) to present its negotiating mandate to the Committee.

Mr Sigwela asked that the Committee allow the EC to present later in the meeting as the representative from the province had not yet joined the platform.

He asked which document the Secretariat should flight for Members, given that several documents were received.

The Chairperson suggested that he only flight the negotiating mandate. After the presentations, the department would be given an opportunity to provide its responses.

Ms M Mamaregane (ANC, Limpopo) supported the proposal.

The Chairperson asked for the Free State (FS) to prevent its mandate to Members.

FS Legislature Mandate

Mr M Moletsane (EFF, Free State) presented the province’s mandate. He said that the Portfolio Committee on Public Accounts and Finance, as designated by the FS legislature, voted in favour of the Bill, subject to the consideration of the following: the Bill must ensure that the process of debarment is fair and ensures the efficient and timely sharing of information to ensure that the debarred suppliers do not continue to do business with the government; two, the Bill must require the Minister to establish an appropriate and differentiated procurement framework; three, the department consider placing clauses, such as Clause 18 (5)(c), which deals with procedural matters, in the regulations; four, the Minister must be empowered by the Bill to prescribe regulations and/or frameworks.

Gauteng Legislature Mandate

Mr D Ryder (DA, Gauteng) presented the province’s mandate. The provincial legislature made several recommendations. One is that the department should clarify the possible erosion of the separation of powers since it is proposed that some parts of Chapter 4 would apply to other arms of the state.

Second, the department must account for the Bill's impact on oversight and accountability since the executive would oversee and monitor its implementation.

Third, the department should clarify how it intends to overcome a potential conflict of interest caused by housing the Public Procurement Office (PPO) within the NT, as it is also a procuring institution.

Fourth, the department should define the newly introduced term ‘debarment’ in line with legislative drafting norms and conventions.

Fifth, the department should provide sufficient guidance on how the preferential procurement policy would interact with the preferential procurement regime provided for in the Broad-Based Black Economic Empowerment (B-BBEE) Act and the codes of good practice.

Sixth, the department should differentiate between the accounting authority and the accounting officer of a procuring institution within the Bill.

Seventh, the department should make provision for emergency procurement in the Bill.

The Provincial Committee of Finance noted that most of its members supported the principle and detail of the PP Bill. However, a minority report was compiled expressing a minority of members' dissatisfaction with the Bill, citing a lack of adequate provisions for assessing and ensuring cost-effectiveness, a disregard for the implications of donor funding, overarching powers of the Public Procurement Officer to issue instructions on preferential procurement on other spheres of government, inconsistencies of preferential procurement with the provisions of Section 217 of the Constitution, and the implementation of race-based preferential procurement without compromising fairness, transparency, aligned with constitutional principles of non-discrimination.

Having said that, he indicated that the province voted in favour of the PP Bill, subject to the recommendations made.

EC Legislature Negotiating Mandate

Mr Z Mkiva (ANC, EC) presented the province’s mandate. He said the province voted in favour of the Bill, noting the following issues: one, technical tender documents must be user-friendly and must be in different languages for people to understand what is required; two, the urgent need for the department, provincial treasuries and other relevant government institutions to empower, capacitated and develop black people in the construction industry so that they can be upgraded to higher grades, like 7 to 9, as most of the work in this industry is outsourced; three, that regulations must be developed as soon as possible to ensure the implementation of the Bill once it becomes an Act.

The Chairperson asked if any committee chairperson from the provincial legislatures was present in the meeting.

Mr Sigwela was unsure.

KwaZulu-Natal Negotiating Mandate

The Chairperson presented the mandate on behalf of the province. He indicated that the province voted in favour of the Bill, noting the following issues: one, that the definition of ‘black people’ be amended to qualify, and that it does not just align with the definition in the B-BBEE Act. This was raised, he explained, because stakeholders were concerned that collectivising black Africans, Coloureds and Indians into one group had disproportionately benefited people of Indian descent – even though statistics show that this was not true.

Second, there is a need for appropriate definitions for pre-qualifications, set-asides, functionality, and complementary goals.

Third, the trumping clause of the Bill should be reconciled with the B-BBEE Act.

Fourth, the PPO should be given independence to operate.

Fifth, persons in categories should be registered on procuring entities’ developmental programmes.

Sixth, amend Clause 28 of the Bill to specify where the procurement function should be located in the procuring institution. This could be done by changing the terminology to ‘units’ rather than ‘function’.

Seventh, amend Clause 29 (1) to exclude support staff to municipal office bearers as members of bid committees.

Eight, insert a time frame in Clause 33 (2)(b) as the phrase ‘as quickly as possible’ was open to interpretation.

Limpopo Negotiating Mandate

Ms Mamaragane presented the mandate on behalf of the province. She said the province voted in favour of the Bill.

Mpumalanga Negotiating Mandate

Ms D Mahlangu (ANC, Mpumalanga) presented the mandate on behalf of the province. She stated that the province voted in favour of the Bill.

Northern Cape Negotiating Mandate

Mr W Aucamp (DA, Northern Cape) presented the mandate on behalf of the province. The province was concerned that it only received one written submission on the Bill, and no stakeholders made inputs. Be that as it may, it voted in favour of the Bill, subject to the following recommendations. First, it recommended that local content be expanded in Clause 20 to ensure the minimum requirement for local content is realised as there is no misrepresentation.

Second, the ICT procurement systems should be expanded beyond the Construction Industry Development Board (CIDB) and State Information Technology Agencies.

Third, hierarchical options should be expanded in the Bill when disputes at the tribunal are unsuccessful.

Fourth, the law of subsidiary should be highlighted in the Bill as it is currently silent.

North West Negotiating Mandate

Mr F Du Toit (FF+, NW) presented the mandate on behalf of the province. He indicated that the province voted in favour of the Bill, subject to the following recommendation: a new clause, clause 4, be added under the functions of the PPO. This clause states that the office must also ensure compliance with different procurement institutions regarding planning to avoid allocated funds being returned unspent.

Western Cape Negotiating Mandate

Ms L Moss (ANC, WC) presented the mandate on behalf of the province. She informed Members that the province did not vote in favour of the Bill.

The Chairperson noted that the province’s reasons were provided for in another document. However, the Committee would not go through it due to time constraints.

Mr Aucamp raised a point of order.

The Chairperson asked what his point of order was.

Mr Aucamp felt the Committee should allow the WC to go through its recommendations as all other provinces had.

The Chairperson believed that Ms Moss was unfamiliar with the rule as she is a relatively new Member of the Committee. He asked the Secretariat to flight the report.

Thereafter, he asked if he should present the recommendations.

Mr Aucamp said that he should.

The Chairperson noted that the report made five recommendations. First, the Bill must explicitly respect and uphold provincial autonomy in setting procurement criteria, particularly for services within their areas of responsibility. This includes involving provinces in legislative processes to safeguard their constitutional self-governance rights.

Two, a comprehensive review must be done to ensure the Bill aligns with constitutional guidelines for public procurement. This includes adherence to principles of preferential procurement, value for money, and a cohesive regulatory framework in line with constitutional standards.

Third, the establishment of the Procurement Regulator should be as either an independent entity or part of the NT, with assured operational independence. The process for appointing the head of the regulator, along with their responsibilities and qualifications, needs a clear definition. He asked the department to respond to this proposal.

Fourth, the provisions for fair representation from each province in the Public Procurement Tribunal should be made crucial. This included creating roles for provincial chairpersons and forming standing panels to facilitate efficient tribunal operations.

Fifth, the Bill addresses the need for capacity-building and professional development in public procurement, especially for new roles undertaken by provincial treasuries and local governments like enforcement and internal reviews. While detailed capacity-building plans may exceed the Bill’s scope, it should mandate resource allocation and training requirements. Responsibilities for enhancing competency levels and providing necessary resources should be.

After that, he went through the list of specific amendments and detailed comments. Some of these were the integration of the legislature’s amendments and detailed comments into both the constitutional/legal and technical areas of its submission into the mandate; ensuring the proactive involvement of provinces and local governments in shaping regulations under Clause 64 – which they will have the opportunity to do; and eliminate the trumping clause to avoid conflicts with existing financial management and governance legislation, among others.

Then, he outlined the minority view of the ANC, which believed that the Bill was needed to close the gaps in past public procurement processes, stabilise the public procurement space, ensure political stability and certainty, and bring alignment between the Bill and procurement framework to the country’s industrialisation and localisation policies to ensure industrial capability within the economy.

The party expressed support for the Bill, he added.

After presenting the report, he asked the department to walk the Committee through its responses to the comments.

NT responses to the public comments submitted to the Committee on the PP Bill

Mr Willie Mathebula (Chief Procurement Officer at the NT) took Members through the responses.

One concern raised was that most departments were not adhering to the thirty-day rule for paying service providers, which he pointed out should be included in the Bill. In response, the department said that the thirty-day payment requirement was regulated by the Public Finance Management Act and Municipal Finance Management Act, not the Bill.

Another issue raised was the alleged misalignment between the B-BBEE Act and the Bill, which the provinces advised must be resolved through the Bill to achieve the transformation agenda. The department proposed an amendment to the preamble and Chapter 4 of the Bill to align them with the B-BBEE Act.

Stakeholders also submitted that many of the main service providers contracted are from far and outside areas, with local businesses only benefitting from subcontracts. In response, the department pointed out that Chapter 4 provided preference measures for persons and categories within a particular geographical location.

Concern was raised around the barrier for companies to obtain tenders on higher grades, such as 7, due to the experience requirement. This meant that they would remain small and medium-sized businesses. The department indicated that the bill allowed the PPO to collaborate with the CIDB to review the grading system.

Mr Ryder thought the department had rushed through the document, which did not allow members who had only received it this morning to engage fully on the matters raised. He asked if they would have an opportunity to return to some of the issues raised.

The Chairperson explained that the department submitted the document late because it had much work to do over the past few days. He also pointed out that many of the issues raised in the document had already been covered by Members. Members would be given the opportunity to engage on all matters during the clause-by-clause deliberations on the Bill.

As a compromise, he proposed that the Members deliberate on the matters the department skipped during Thursday’s meeting.

He asked that the Secretariat place all the issues which did not fall directly within the framework of the Bill in the Committee’s report. One such issue was the concern raised on CIDB grading.

Mr Mathebula outlined that stakeholders urged the establishment of an ombudsman on procurement issues. In response, the department said the Tribunal would play the role of an ombudsman, and panels would be constituted closer to the dispute.

They also recommended that tender documents be translated into all the country's languages to be user-friendly. The department agreed and indicated it would consult with the Pan South African Language Board and other relevant bodies to consider this requirement for inclusion in the regulations.

The Chairperson mentioned that Parliament has failed to publish bills translated into different languages due to the high costs. Nonetheless, he proposed that the Committee report highlight its support for the proposal but use sensible qualifications to the extent possible. Furthermore, the Committee noted NT’s intention to consult with the Board and that the incoming committee should follow up on that.

Mr Mathebula said the department required further clarity on the KZN Legislature’s proposal for the Bill to amend the definition of ‘black people’ to qualify so that it did not just align with the definition in the B-BBEE Act. If the department accepted this proposal, it would have implications for other parts of the Bill, including Chapter 4.

The Chairperson disagreed that it was not clear, as it was well-known that many black African emerging entrepreneurs feel like they cannot compete with established Indian entrepreneurs, who are also classified as black. As such, they felt that the collective use of the term ‘black’ disadvantaged them. This is also a debate within the ANC, he added.

He took interest in the submission’s request for preferential procurement that would benefit black Africans proportionally without excluding Indians.

He recommended that the committee express its support in its report that a reasonable proportion of benefits should go to black Africans to ensure the proportional representation of the population in the economy. Moreover, it should be stated that the proposal needs more debate, as the changes requested could not be effected in this Bill. For now, the definition should be retained, he felt.

He asked if any Member objected to his proposal.

Mr Ryder indicated that he objected to the entire principle of preferential procurement based on race.

The Chairperson warned that if black Africans were not included in the economy, then there would be social upheaval in KZN.

Mr Mathebula thanked the Chairperson for the clarity.

He said one of the submissions recommended that the roles of the Office of the Chief Procurement Officer (OCPO) and Public Procurement Officer be clarified in the Bill. The department responded that the Bill did not provide for the OCPO, only the PPO. Thus, the OCPO will cease to exist once the bill is adopted.

Stakeholders also highlighted that the Bill did not protect procuring officials against intimidation by business forums that demand a percentage of a project. In response, the department said protecting officials from intimidation was a criminal matter that law enforcement agencies (LEA) should report to and deal with. This matter affected all provinces and became serious.

The Chairperson agreed that the issue had become a serious problem in the country and could not be dealt with in the Bill. As such, he proposed that the Committee report urge the police and relevant authorities to do something about this, as foreign businesses were fleeing the country.

He said the main impediment to resolving this issue was the links between the so-called construction mafia and politicians. Nonetheless, Parliament had to say something.

Mr Ryder asked if the province which made this proposal had proposed any solutions to resolve the issue.

Ms Mahlangu said this matter had been expressed in all the provincial negotiating mandates. She proposed that the parliamentary committees on police look deeper into and strategise how to deal with this matter as it prevented the government from delivering service delivery projects to communities. She was also not convinced that the matter could be resolved in the bill.

Mr Mathebula agreed with the Committee and admitted that the department did not know how to resolve the issue. After several debates, the department decided to include the term ‘extortion’ in the Bill and make it a punishable offence. However, preventative measures were beyond the Bill.

The Chairperson noted the response and repeated that the matter would be included in the Committee’s final report.

Mr Mathebula mentioned that clarity was sought as to why demand management, found in Clause 25 (c), was separate from procurement planning in Clause 25 (d), as separating these functions may impact job descriptions in each institution. In response, the department said procurement planning and budgeting are part of demand management; however, the latter is a strategic process that focuses on the demand requirements for the entire procuring institution. Therefore, planning and budgeting are informed by the outcome of the demand management process.

The legislatures also proposed inserting a timeframe in Clause 33 (2)(b), as the phrase ‘as quickly as possible’ was open to interpretation. The department disagreed and said it should remain as other processes may kick in, such as the reconsideration of the award by the procuring institution in the tribunal, which would make it implausible for the disclosure of procurement information to be done within the proposed 14 days.

He highlighted that the department's preamble did not reference the local sphere of government, so that would have to be included.

The Chairperson asked the department to respond to the WC’s proposal to include a Procurement Regulator.

Adv Empie Van Schoor (Chief Director: Legislation, NT) clarified that the WC referred to the Bill’s PPO. In its response, the department said all the officials would be employees of the NT. As the appointment of officials in all government departments is regulated by the Public Service Act (PSA), the appointment of the head of the PPO rests in the hands of the Minister of Finance (MoF). Also, the PSA and regulations, directives and determinations explained how the qualifications of positions are to be determined.

The Chairperson said the Committee would return to this matter on Thursday.

Afterwards, he asked if the department could flight the Bill for discussion.

Mr Ryder indicated that the Committee agenda did not state that the Committee would engage in clause-by-clause deliberations today.

The Chairperson remarked that he had clarified the agenda in the Committee chat group. Nonetheless, he asked Members not to worry as the Committee would not vote on the Bill.

Committee consideration and deliberation on the Draft PP Bill

Adv Van Schoor took Members through the draft Bill.

Preamble

The Chairperson asked why the Preamble, which refers to Section 217 (1) of the Constitution, did not include local government.

Mr Aucamp felt that it would be difficult for members to fully engage in the bill as they were under the impression that they would only go through the negotiating mandates of provinces.

The Chairperson noted the Members' concerns but felt they would still have the opportunity to engage fully on the Bill next Tuesday. All they would do in the meeting is fine-tune the department's additional proposals.

Mr Ryder pointed out that because the meeting arrangements consistently changed, it was reasonable for members to expect the meeting to only deal with the provincial mandates. He asked for the Chairperson to be sympathetic to their concerns.

The Chairperson acknowledged the complaints and apologised for the miscommunication.

He believed that Members would see on Thursday that there was nothing substantially different between the public comments they received and the recommendations highlighted in the provincial mandates.

Adv Van Schoor explained that in the initially tabled Bill, the department summarised Section 217 (2) and (3), but it had since proposed using the exact wording of the section.

After reflecting on the discussions with the department on B-BBEE and the proposed clauses on preferential qualification, the Committee proposed an amendment to Clause 17 dealing with set-asides. In addition, the department proposed inserting a new paragraph that spoke to the need to promote economic transformation within black people's ownership and management control and advance preferential procurement from enterprises owned and managed by black people.

The Chairperson noted the proposed amendment.

Mr Ryder asked whether defining this exclusively for black people, noting the discussions around Clause 17, which made allowance for women, youth and people with disabilities, was consistent with the rest of the Bill. He suggested that the wording be expanded to state black people and other previously marginalised groups.

The Chairperson noted the recommendation.

Mr Mathebula said the proposed paragraph was influenced by the stakeholders' advice that something linked the bill to the B-BBEE Act should be included. It also sought to address the issue raised in the Department of Trade, Industry and Competition (DTIC) presentation to the Committee, which highlighted that a company could still obtain a level 1 BEE status without meeting the requirement of being black-owned. Nevertheless, he noted the comment made by the Member.

The Chairperson felt that the department should leave the passage as is because changing it would be too complicated.

Mr Ryder said he would consider the proposal further.

Mr Du Toit recorded that the FF+ did not support this proposed paragraph as it was believed to be outright racist. It was not a political view but a fact that individuals were excluded from procuring based on their skin colour.

He was also worried that the department had still not mentioned when the sunset clause would be introduced. To him, it did not make sense for the ruling party to admit that B-BBEE had not achieved its goals yet continued to support the policy.

Ms Mahlangu said, as argued last week, this was the government of the day’s policy, and it believed it to be relevant.

Ms Moss indicated that the government of the day would not implement policies it did not believe were necessary. The introduction of BEE was necessary to transform the economy. Instead of replacing it, she thought more oversight mechanisms should be put in place to prevent people from abusing the policy.

The Chairperson stated that the Committee would highlight the DA and FF+’s opposition to B-BBEE and BEE in its final report. The fact was that B-BBEE was introduced to address some of the failures of BEE, he continued.

He urged Members to accept their fundamental differences on the Bill.

Chapter 1: Definitions, Objects, Application and Administration of the Act

Adv Van Schoor elaborated that there was a clause in the Bill which required for everything to be done in writing, so the department thought to amend the word ‘definition’ to ‘interpretation’.

The Chairperson asked if the title of Chapter 1 would still retain the word ‘Definitions’.

Adv Van Schoor noted this and said it would have to be amended.

Mr Ryder suggested that the title include both words as this was consistent with other laws.

Adv Van Schoor said that could be done.

She indicated that the department removed the definition of the B-BBEE status level of the contributor.

The Chairperson agreed with the proposed amendment.

Adv Van Schoor mentioned that one of the stakeholders pointed out that the Bill's definition of bid would not include unsolicited bids, so the department proposed removing ‘an invitation for procurement’ in Clause 1.

The Chairperson agreed to the proposal. He asked the department not to refer to proposed amendments it had already discussed.

Adv Van Schoor indicated that the department proposed amending the definition of ‘confidential’ to include any information that, on a request under the Promotion Access to Information Act (PAIA), ‘must’ or ‘may’ be refused.

The Chairperson asked why the department had used the words ‘must’ or ‘may’.

Adv Van Schoor explained that some of the grounds of refusal in the Act state that it ‘must’ or ‘may’ be refused for different categories.

Mr Ryder pointed out that one of the provisions in the Bill stated that debarred people would have their information placed on a public database. He asked how that would be effectively implemented and how the information would be shared between procuring institutions. Furthermore, he asked what point an individual’s right to privacy would become moot in terms of the public interest, as the register only requires the person’s first name to be initialled accompanied by their full surname

The Chairperson asked if it was correct that the individual's full name would not be published.

Mr Mathebula elaborated that the register would be similar to the one published by the Central Supplier Database (CSD) on individuals and companies blacklisted from doing business with the state. However, the question of whether the debarment register could be made public was still under discussion.

The Chairperson said there were lists of the full names of people fired for corruption in a municipality to prevent other municipalities from appointing them. He asked why this same principle could not apply in this case.

Mr Mathebula indicated that the full names and identification (ID) numbers of individuals banned from doing business with the state are public. Based on this, he believed the same principles would apply to the debarment register proposed in Clause 15.

The Chairperson asked if that meant that the full names would be published.

Mr Mathebula confirmed that they would be, with their ID numbers.

The Chairperson asked Mr Ryder why he thought the names would not be published.

Mr Ryder stated that individuals usually used the Protection of Personal Information Act (POPIA) to prevent their private details from being exposed.

The Chairperson clarified that this provision only applied to PAIA, not POPIA. Stakeholders argued that POPIA gave people too much space to use confidentiality as an excuse not to be exposed for wrongdoing. He asked the department if he was correct.

Mr Mathebula confirmed that he was.

The Chairperson asked why the department’s proposed geographical area definition included district municipalities and not local ones.

Adv Van Schoor noted this observation and said it would be included.

The Chairperson, referring to the definition of military veteran, asked if the phrase ‘liberation war’ was included in any other legislation.

Adv Van Schoor said the definition of military veteran was obtained from the Military Veteran Act (MVA).

The Chairperson asked where the department obtained the definition of public-private partnership.

Adv Van Schoor mentioned that it was used in the Treasury Regulations.

The Chairperson asked why the department had proposed removing the definition of ‘standard bid documents.’

Adv Van Schoor indicated that the term was not necessary to define as it was only used in Clause 24 (4) of the Bill.

Mr Ryder suggested that the definition of publish should replace the word ‘central’ with ‘official’ online portal to refer people to the correct website.

Adv Van Schoor agreed with the proposal.

The Chairperson mentioned that one of the provinces had an issue with the term ‘transversal term contract’.

Adv Van Schoor said the WC Legislature requested that it be omitted. The Bill provided for the relevant treasury or the NT to arrange these contracts for all procuring institutions.

The Chairperson asked why the WC Legislature would make such a recommendation.

Adv Van Schoor assumed this was because it did not want national policy to be dictated to the provinces.

The Chairperson stated that the Committee would discuss this during Thursday’s meeting.

Objects of the Act

The Chairperson proposed changing subsection 1(g) of the Objects to promote innovation, sustainable development, and the environment.

Mr Ryder suggested it state: promote innovation, sustainable development and sustainable environmental custodianship.

The Chairperson asked for the department to work around Mr Ryder’s recommendation.

Application and Administration of the Act

Adv Van Schoor, said subsection (2) applied differential procurement provisions to legislatures. Now that the department has provided criteria like price functionality, which will be prescribed by regulations, that provision will be required to apply Chapter 4. As such, the department proposed subsection 2 refers to Clause 24 (1)(d).

Chapter 2: Public Procurement Office, Provincial Treasuries and Procuring Institutions

Part 1: PPO

Adv Van Schoor said the department proposed including Clause 4 (3), which would indicate who will be responsible for the PPO, as this was not currently mentioned in the Bill. In addition, it proposed that the head of the PPO can delegate to officials in the office.

Mr Ryder thought that the proposal to remove the word ‘implement’ in Clause 5 (1)(b) would have serious implications because it would not make clear who would be responsible for the PPO’s current responsibility to implement policy.

The Chairperson recalled concerns about the words ‘develop’ and ‘implement’ in Clause 5.

Adv Van Schoor mentioned that the proposal requires the PPO to develop procurement policies and for procuring institutions to implement them.

Mr Ryder suggested that it rather state: develop, initiate and support. While he understood the difficulties in crafting the clause, he felt it was deflecting responsibility and trying to ensure that the department did not incur any financial impact from implementing the Bill.

The Chairperson said the Committee would return to this section on Thursday.

Adv Van Schoor informed Members that an amendment to Clause 5 (2)(a), which said the PPO may make binding instructions to procuring institutions by notice in the Gazette.

The Chairperson asked the department to explain subsection 2(d) to Members.

Adv Van Schoor indicated that this made it clear that the procuring institution may adopt a model procurement policy. It was not compelled to do so.

The Chairperson said he was struck by the amount of work the PPO has to do and wondered if the institution would have the capacity to carry out its functions. He suggested that the Committee report capture that it agreed with the functions set out but remained concerned about the capacity, finances and other resources needed for this.

He then asked the department to explain the proposed amendment in Clause 6 (1)(ii).

Adv Van Schoor clarified that the department provided for the enforcement function of provinces to exclude municipalities and municipal entities as it would not be constitutional. This function could only be exercised if a formal intervention exists in a municipality.

Procuring Institutions

Duties of procuring institution

The Chairperson asked the department to elaborate on Clause 8 (1)(e).

Adv Van Schoor explained that the department thought it was better to link the clause to the provision contained in Clause 26, which refers to measures to prevent the abuse of the procurement system, rather than referring to the general statement.

Chapter 3

Adv Van Schoor pointed out that the department proposed removing the words 'Prohibition of certain practices’ from the heading after a clause regarding prohibited practices was removed.

The Chairperson believed that the codes of conduct and conduct of persons involved in procurement were fairly straightforward and did not require in-depth explanations.

Undue influence

Adv Van Schoor indicated that the department proposed Clause 12 (1)(b) precludes individuals from an accounting authority officer or official of a procuring institution, PPO or NT from fulfilling their duties. The proposed amendment also removed the words ‘his or her’

The Chairperson mentioned that all legislation refers to ‘they’ to take account of non-binary identities, as the Department of Justice prescribes. He asked if ‘his or her’ could be found in the Bill.

Adv Van Schoor stated that the department would look into this.

The Chairperson said that is what he has been informed.

Adv Van Schoor outlined that subsection (3) said subsection (1) should not be misconstrued to prohibit any person from disclosing an irregularity regarding the procurement process.

The Chairperson told Members that the department was briefing them on the amendments to the Bill, and they were not engaged in a clause-by-clause deliberation.

Directions inconsistent with the Act

Adv Van Schoor explained that Clause 14 (1) was proposed to protect officials in the procurement process who refused an illegal instruction from a position of authority. Previously, the Bill only required them to report the instruction. Subsection (3) goes further and prescribes that if the supervisor to whom the matter is reported decides to do nothing about it, then the PPO or relevant treasury must initiate an investigation into the allegation.

Subsection (4) protects the reporting person from being subject to occupational detriment as defined in the Protected Disclosures Act.

Mr Ryder presumed that a line manager who is informed of the allegations in accordance with subsection 2(c) but does not initiate an investigation into them, requiring that it be handed over elsewhere, has the option to take immediate corrective action. He stressed that an investigation would not be required if that person took immediate corrective action. This would prevent processes from being drawn out, thus delaying procurement.

The Chairperson agreed with his input.

Adv Van Schoor suggested an amendment that escalates the investigation to either the PPO or relevant provincial treasury level rather than leaving it to the procuring institution. However, the department would have to discuss this further before deciding.

Mr Ryder indicated that if an investigation is centralised it would further delay or defer decision-making. His suggestion aimed at finding a way to streamline the process, where simple matters can be dealt with promptly without an investigation being initiated, he clarified.

The Chairperson noted his proposal, but given the complexity of the matter, he asked that it be deferred to Thursday.

He noted that the affected person was quite vulnerable, similar to a whistleblower. He asked if they were protected by the Bill.

Adv Van Schoor referred him once more to subsection (4), which protects the reporting person from being subject to occupational detriment as defined in the Protected Disclosures Act.

The Chairperson said he was aware of that, but his point referred to the risks posed to their lives when reporting a matter. He was concerned that such protections could not be provided to the affected person.

Debarment

The Chairperson felt that this section was fairly straightforward. However, he was worried about whether debarment could be implemented in practice.

Mr Ryder asked if the register of people who had been debarred would include the names of the business and all of the directors associated with the business. To him, this section did not prevent an individual who has been debarred from registering with another company and continuing their illegal activities.

The Chairperson noted that this practice was commonplace. He asked if the department could provide the Committee with a link to the register.

Mr Mathebula assured Members that the department would do so. The beneficial ownership issue will be resolved by introducing an amendment to the Companies Act. For now, the list reflects a person's name, their ID number, the company name, and the company registration number to prevent such occurrences. Currently, the department does not restrict shareholders, especially in listed companies.

Chapter 4: Preferential Procurement

Adv Van Schoor said many of the amendments in this chapter emerged from the policy discussions.

The Chairperson asked why the department had amended the title of Clause 16 to include ‘and application of provisions’.

Adv Van Schoor indicated that she would explain as she went along. The first proposed change in Section 16 (1) was to include the words ‘develop and implement’.

The Chairperson noted the importance of this section.

Adv Van Schoor mentioned that subsection (2) lists what the procurement policy of a procuring institution must provide for, which includes set-asides, in accordance with Clause 17; if this is not possible, then it must provide for a pre-qualification, in accordance with Clause 18. Subsection (3) provides that if procurement, in accordance with Clauses 17, 18 and 19, is not possible, the procuring institution must record and report the reasons to the PPO and the relevant provincial treasury.

Subsection (4)(a) goes further to state that the threshold prescribed for in Section 18 (1) must be higher than the one in Section 17 (1), while 4(b) mentions that the threshold prescribed for Section 19 (1) must be higher than the one prescribed for in Section 18 (1).

Set-asides for preferential procurement

Adv Van Schoor remarked that the Clause provided set-asides for a category of persons in subsection (3) per the prescribed thresholds and conditions. Subsection (2)(d) requires the Minister to consult on the set-asides every two years, considering the B-BBEE codes of good practice.

Pre-qualification criteria for preferential procurement

Mr Ryder pointed out that Clauses 17 and 18 differed quite substantially. He asked what the point was of separating the category of ‘black people’ from ‘black people with disabilities’ and ‘black women’ as a part of the category of persons in subsection (3)(a). Both the DA and FF+, he stressed, took issue with Clauses 16, 17, 18 and 19, as they believed that race was an outdated measure of disenfranchisement, as several people who were previously disenfranchised have been enfranchised over the past 30 years.

Both parties acknowledged that, generally, black people were the majority of people disenfranchised. However, they were not the only people disenfranchised. Given this, he felt that race was a lazy measure and too convenient, increased polarisation and was contrary to social cohesion. These criticisms would be included in the minority report.

Adv Van Schoor explained that through this provision, the department sought to point out that black women suffered more than other women, similar to black people with disabilities; hence, they were added as separate categories.

The Chairperson remembered that the department had explained this in the previous meeting.

Mr Mathebula added that when going around the country, it was clear that the conditions of black women were worse than women from other racial groups. This issue was debated extensively in the Standing Committee to the extent that some parties favoured removing ‘women’ from the category. At the end of the debate, the majority agreed that black women had suffered more than other women in racial groups during Apartheid and had to be given a separate category.

If a procuring institution advertises a tender set aside for black women to apply and does not receive any applications from that group, then the other categories of persons apply.

Members of the Standing Committee also recommended that the categories be left in place for two years, given the country's unequal conditions, until the Minister assessed the extent to which this clause addressed the inequalities.

While he agreed that these clauses may lead to polarisation, they were necessary to address the continued historical exclusion of the black African majority.

The Chairperson felt that the Committee had discussed this matter at length. He acknowledged that the reference to ‘black people’ and the advantages given to them may polarise society, as white people may feel unfairly excluded. However, the other side of that was that there would be polarisation if black people were not uplifted from their poor economic conditions. There was a clear ideological difference between political parties, which would prevent Members from reaching an agreement.

He admitted that the failure of B-BBEE to fulfil its objectives can be attributed to the ruling party.

He clarified that, as advised by the Parliamentary Legal Advisors (PLA), no parliamentary rule required the drafting of a minority report. Nonetheless, the Committee’s final report would cover their opposing views.

Adv Van Schoor indicated that this clause referred to enterprises owned and managed by black people, in terms of the code of good practice on B-BBEE.

Subsection (2) was amended to state that the prescribed conditions in subsection (1) include a minimum of potentially qualifying suppliers. This would prevent the same suppliers from benefiting from procurement. In addition, the department sought to have this clause proposed in Clause 17 as well.

Mr Ryder wondered how that would work when only one supplier available can provide the procuring institution with a particular service.

Mr Mathebula said approaching original equipment manufacturers (OEMs) was common in procurement systems worldwide. Recently, the department has noted that several OEMs have been using the fact that they have a license as a barrier to entry. A few years ago, the DTIC believed that the market should be tested even if an OEM proclaims to be the sole supplier of a product to verify the claim and to prevent providing tenders to the same companies who purport to be the sole supplier. This clause followed this view.

Mr Ryder asked if this would be included in Clauses 17,18 and 19.

Adv Van Schoor said the department also proposed it be included in Clause 17.

The Chairperson asked if this would be prescribed by the Minister.

Adv Van Schoor confirmed that it would be.

The Chairperson asked Mr Ryder to submit a paragraph on this matter to the Committee for further consideration.

Mr Ryder noted that Clauses 18 and 19 were narrower and more restrictive than Clause 17, and he asked why this was the case.

Adv Van Schoor asked him to clarify his question further.

Mr Ryder explained that they excluded many of the categories mentioned in Clause 17.

Mr Mathebula explained that the question was why Clauses 18 and 19 were more restrictive than Clause 17.

Adv Van Schoor asked Mr Mathebula to assist her in responding to the question.

Mr Mathebula asked for Ms Lienda Peterson to assist.

Ms Lienda Pietersen (Director: Supply Chain Management, Legal Advisory Services at the NT) indicated that Clause 17 directed empowerment to previously disadvantaged groups as mentioned in the Constitution, whereas Clause 18 allowed established black businesses and previously advantaged categories of persons to participate in the procurement process only if they are willing to partner with government and allow for empowerment to take place. As this was a higher threshold, it may be that some of the vulnerable groups, like women and people with disabilities, are not able to compete directly, but they can be subcontracted.

Mr Ryder did not understand the answer, as it contradicted the Bill. To him, it seemed that procurement institutions were being set up for failure either by placing too much emphasis on one area or leaving the potential for interpretation, which meant that people would default to the strictest set of criteria and apply it across the board.

The Chairperson said the matter would be considered on Thursday. While the Committee agreed that the Bill was complex, the criteria and thresholds were set out consistently. He asked the department to be clear on those.

Subcontracting as a condition of bid

Adv Van Schoor gave Members a broad overview of the proposed amendments to Clause 19.

Designation of sectors for local production and content

Adv Van Schoor indicated that an amendment was proposed for subsection (9), the Minister to monitor the impact of a designation in terms of subsection (1), and, three years after the designation, publish a report on its impact on the website of the NT.

Mr Ryder asked what would happen if the Minister did not monitor the impact and publish a report, and the designation fell away as a result, as well as what corrective action would be implemented. He added that the Minister of the DTIC may have an issue with this provision.

Adv Van Schoor highlighted that no provision in Clause 20 said the designation would fall away if the Minister did not do as required because it was his or her obligation. He could be called to appear before Parliament for not doing what he was required to do regarding the legislation.

The Chairperson said such a provision could not be included in the bill.

Given the contentiousness of Chapter 5, he proposed that the Committee pause the briefing until Thursday. The meeting on Thursday would be held from 09:00 to 13:00 and 14:00 until 17:00 so that Members could complete their deliberations, he mentioned

The first item on the agenda for the meeting would be further consideration of negotiating mandates. Thereafter, Members would be given the opportunity to address matters they wanted to return to in the draft Bill and then proceed to Chapter 5. He asked for Members to read through the Bill before then.

He thanked the department for its tireless work in processing the Bill.

Mr Sigwela informed the Committee that it had to adopt the negotiating mandates before adjourning.

The Chairperson requested a mover to adopt the negotiating mandates.

Ms Moss moved for their adoption.

Ms Mahlangu seconded the mover.

The meeting was adjourned.