Making public funds work for all South Africans

Dear Fellow South African,

In the report of the Commission of Inquiry into State Capture, Chief Justice Raymond Zondo described corruption in procurement as “the centrepiece of state capture”. He consequently made a number of recommendations on how to prevent corruption in the procurement of goods and services by government.

A few days ago, as part of the extensive work we are undertaking to prevent corruption and consign state capture to the past, I signed into law the Public Procurement Act.

This law eliminates the problem identified by Chief Justice Zondo of fragmentation in procurement laws by creating a cohesive regulatory framework.

Among other things, the law establishes a Public Procurement Office in the National Treasury, which must put in place measures to ensure the integrity of the procurement process. All the members of this office must perform their functions impartially and without fear, favour or prejudice.

The Public Procurement Office must promote standardisation in procurement and modernise the system through technology and innovation. The law focuses on the people who are involved in procurement, requiring them to comply with a code of conduct and receive professional development and training.

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. This is an important provision because many of the abuses that took place during the state capture era involved political office bearers, business people and others putting pressure on managers to flout procurement regulations.

The law specifically prohibits any person from interfering with or trying to influence any procurement, or trying to tamper with any tender bid after its submission or award. Suppliers who are found to abuse the procurement system or otherwise commit fraud and corruption are prevented through a ‘debarment order’ from participating in any procurement processes for a specified period.

Certain categories of people are automatically excluded from submitting bids to the State. These include public office bearers, public servants in any sphere of government, officials in Parliament and provincial legislatures, special advisers and employees of public entities. In other words, people who work for the state may not do business with the state.

The Act will also make the procurement system far more transparent. It provides for the use of technology to disclose procurement information, including awards of bids, the process followed and suppliers awarded. This follows our decision in 2020 to make information on all COVID-related contracts available online. No longer will tenders be awarded in dark corners far from public scrutiny.

Public procurement is about getting the best value for the state. It is also an opportunity to promote transformation of the economy and society. The new law therefore provides for set-asides in the allocation of contracts to advance companies owned by people historically disadvantaged by unfair discrimination. These include black South Africans, women, youth, persons with disabilities and military veterans.

The approach in the Act is in line with the Constitutional requirement that public procurement must be done in accordance with a system which is fair, equitable, transparent, competitive and cost-effective. The Constitution also says that this should not prevent procurement policies that provide for the protection or advancement of people disadvantaged by unfair discrimination.

The Act will enable and encourage the procurement of goods that are produced and services that are provided in South Africa. It will enable government and public entities to use procurement more strategically and effectively to promote the growth of local industry and to create jobs to meet the needs of the state.

As we intensify our collective efforts to build an inclusive economy that creates jobs, the Public Procurement Act allows us to make best use of public funds to support transformation and local development.

At the same time, by implementing measures to prevent the abuse of public procurement, the Act will help to ensure that public funds are put to the uses for which they are intended.

The report of the State Capture Commission shone a bright light on the weaknesses in our public procurement system. We are now fixing the problems the Commission identified and are making public procurement a more effective instrument for social and economic change.

With best regards,