The unjustifiably demands of 30% from government contracts by unknow groups will soon be criminalised, the Portfolio Committee on Trade, Industry and Competition heard on Wednesday.
A representative from the National Treasury told the committee that this had been a challenge for some time and in some instances had resulted in contractors leaving sites after finding that they are unable to complete the jobs.
The National Treasury briefed the committee on the Public Procurement Act and its role in contributing to industrialisation, inclusive growth and transformation. The departments of Trade, Industry, and Competition; and Performance, Monitoring, and Evaluation, the Accountant-General and the Auditor-General explained their roles in ensuring compliance with the legislation.
The committee heard that the Public Finance Management Act will be repealed entirely, while regulations to the new law will be tailored to suit various categories and institutions, unlike the current regime of one-size-fits-all. Local content is to be defined and goods will be produced and procured in the republic.
The Chairperson of the committee, Mr Mzwandile Masina, said the committee welcomed the interventions to end the 30% as it was intended to be an instrument that ensures SMMEs are able to participate in the economy. He said: “The requests for 30% frustrate the good intentions of government. The idea of the construction mafia that they have the right for the 30% is a wrong notion. This was a measure to ensure that small companies got work and got upskilled. It was never the intention of government that people would just come and claim and not do the work.”
He sought clarity on how the departments intended to use technology to prevent corruption and said the state must not be made vulnerable by ill-meaning individuals.
Members of the committee asked various questions about the availability of procurement skill to enforce this legislation and reducing the administrative and regulatory burden in the public service, among other things.
Committee member Mr Lufefe Mkutu emphasised that the committee supported the Public Procurement Bill. “It is an important intervention in relation to ensuring that the state intervenes in the economy to ensure broader representation in the economy and allocation of resources. This intervention is very welcome in breaking the racialised structure of the economy,” he said.
He said deregulation of the markets will not work and that it is a neoliberal approach anchored in market fundamentalism that everything that is efficient and productive is in the market and not the state.
“We must regulate because they will never transform out of their own volition. We are insisting on regulation; we must insist on sharpening the tool of regulation. Equality levels of SA are racialized. So, this regulation is an objective tool of equalising society,” Mr Mkutu said.
Committee member Mr Malusi Gigaba noted that the biggest state procurers are the Passenger Rail Agency of South Africa, Transnet, and the South African National Road Agency; if we are looking to transform, these entities have an important role to play. He said, “We support public procurement completely, wholeheartedly, but it is too much work.” In this context, he enquired about the systems and mechanisms that were being put in place to operationalise the Bill.
“Do we have the public procurement skills in government that can support the supply chain skills programme, not only on the top level but going down to department level officials? How are we going to coordinate across the spheres to ensure there is progress made in complying with this legislation?” he asked.
Committee member Mr Toby Chance said the Bill is about intervention in the market and he fears there are conceptual problems with the Bill. “There will be constitutional challenges, beware. There are some serious issues with all strategy and designation; this creates inertia in the economy,” he said.
Representatives of the government said the Bill had been 10 years in the making. The Department of Performance, Monitoring, and Evaluation’s Mr Godfrey Mashamba said the department will support the implementation of the Act when it becomes operational, which it views as an important tool to achieve inclusive growth.
The departments were asked to revert to the committee on matters requiring written responses.
Sibongile Maputi
29 November 2024
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