Stop Race-Based Procurement Regulations: Demand Value for Money, Accountability and Non-Racialism

1. Mandatory set-asides reduce competition

The draft regulations say a procuring institution must set aside qualifying bids up to R20 million where there are at least three qualifying suppliers in the chosen category.

They also require institutions to set aside minimum percentages of annual procurement budgets according to targets in Annexure 2.

This is dangerous because fewer bidders usually means less competition, higher prices and weaker pressure to deliver quality.

Public money should be spent through open competition wherever possible.



2. Race-based ownership rules will exclude capable South Africans

The draft regulations require certain set-aside categories to be 100% owned by members of the identified category, and bids that do not meet the ownership requirements must be disqualified.

This creates a hard exclusion system.

A capable, honest and affordable supplier may be disqualified before government even considers whether that supplier can deliver better value to the public.



3. Pre-qualification repeats past legal and policy mistakes

The draft regulations require pre-qualification for contracts between R20 million and R100 million, unless preferential procurement is not possible.

This is concerning because pre-qualification has already been legally controversial.

In the Afribusiness litigation, the Supreme Court of Appeal held that preliminary disqualification was impermissible under the PPPFA framework, and the Constitutional Court ultimately dismissed the Minister’s appeal on the basis that the Minister lacked the power to create that preference mechanism for the whole procurement system.



4. Procurement has already been abused through corruption and patronage

South Africa’s procurement system is one of the biggest corruption risk areas in government.

The MAPS assessment by the OECD, World Bank and African Development Bank found that South Africa’s supply chain management system shows systemic signs of corruption and political interference.

The Auditor-General has also recognised procurement and contract management as an area at high risk of fraud, financial loss and misuse.

The PPPFA-style preference system has too often created room for fronting, tender manipulation and politically connected “middlemen” who win contracts because of compliance paperwork rather than performance.

The answer is not more complicated preference rules.

The answer is stronger competition, open data, direct accountability and value for money.



5. The set-aside targets are too broad and quota-like

Annexure 2 includes minimum set-aside targets such as 30% for black people, 15% for black women, 18% for women, 30% for small enterprises and various targets for other groups and geographical categories.

These targets risk fragmenting procurement budgets and pushing officials to chase demographic compliance instead of service delivery outcomes.