For years, black business has expressed deep unhappiness with the Preferential Procurement Policy Framework Act (PPPFA), which it views as unsupportive of government’s stated policy of social redress and economic transformation.
Through Black Business Council (BBC) lobbying, it has been decided that the legislation, which allows for tenders worth more than R1-million to be evaluated 80% on price and 20% on black economic empowerment (BEE), and tenders more than R10-million to be evaluated 90% on price and 10% on BEE, will be reviewed.
But the head of the African National Congress’s Economic Transformation Committee, Enoch Godongwana, has urged organised black business to sharpen its arguments with regard to how the PPPFA could be made more supportive of economic trans- formation, while warning that it was inadequate for black business to simply reject the legislation.
“As business, you have to present a sophisticated argument,” Godongwana said at a recent BBC conference, adding that lobbying efforts could not be reduced to slogans such as “Away with the PPPFA”.
He said the ANC government would review the legislation, mindful of the fact that the Constitution insisted that public institutions conducted procurement in a fair and transparent manner.
“But the very same Constitution does not preclude you from positive discrimination – in other words, a discrimination which is intended to redress the imbalances of the past.”
He urged the BBC to develop arguments around how South Africa’s procurement system could apply such positive discrimination within the bounds of the Constitution.
The draft regulations circulated to government departments recently suggest that tenders up to R10-million would be evaluated 50% on price and 50% on BEE, women’s empowerment and other criteria, including the size of the enterprise. Tenders over R10-million could be evaluated on an 80:20 basis.
BBC VP Sandile Zungu acknowledged that the organisation, which was re-established in 2012, owing to unease among black businesspeople about whether its views were being fully expressed through Business Unity South Africa, had failed to invest sufficiently in research capacity.
He argued that the BBC should be providing “thought leadership” on a range of issues, but that it still needed to develop the institutional capacity to provide such leadership.
Nevertheless, government’s “begrudging” acceptance of the need to review the PPPFA was chalked up as a success for the organisation.