“With all the media attention around the Supreme Court of Appeal’s ‘scrapping’ of the regulations around preferential procurement at the end of 2020, and recent media statements by the Democratic Alliance that they wish to have B-BBEE removed as criteria from government tendering, one can be excused for being uncertain what role B-BBEE will continue to play in state tendering.”

In November 2020 the Supreme Court of Appeal found that the provisions in the Regulations to the Preferential Procurement Policy Framework Act 5 of 2000 relating to the application of B-BBEE requirements in tender criteria should be set aside and declared invalid, and the Minister of Finance was provided 12 months to correct this position. The Minister appealed this decision and on 16 February 2022, the Constitutional Court dismissed the appeal.  

In a last-ditch effort the Minister brought an application to the Constitutional Court to have the order set aside or varied, claiming the order was unclear and led to uncertainty. The Constitutional Court dealt with this squarely and dismissed the application in May 2022. This means that the current position is as follows:

•    Section 18(1) of the Superior Courts Act suspended the operation of the Supreme Court of Appeal’s 12-month suspension of the invalidation of the 2017 Regulations. This means the countdown of the 12-month period of suspension commenced immediately after the date of suspension. The countdown, was however halted by the lodgement of the application for leave to appeal in the Constitutional Court and resumed again on 16 February 2022, when the Constitutional Court dismissed the Minister’s appeal against the Supreme Court of Appeal’s order.

•    Accordingly, the 2017 Regulations are still valid and will remain in place until 15 February 2023 unless new regulations are promulgated before that date.
In March 2022 government introduced for public comment new draft Preferential Procurement Regulations aiming to potentially clarify the role of B-BBEE in the awarding of government contracts. But have they?

The most important change introduced by these draft Regulations is the removal of the regulations dealing with pre-qualification criteria for tenders which focused on transformation objectives and which the court had found where outside the powers of the Minister to regulate. Organs of state, however, are obliged to formulate their own preferential procurement policies and through such policies may again emphasize such objectives.

So, does this clarify the exact role B-BBEE will continue to play in state tendering? Not really. It does confirm that government still views B-BBEE as an integral part of a tender award, but what exactly the criteria and goals are that will be applied, still remains unclear. We will have to wait and see how the story unfolds further.

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