ANNOUNCED AS TEMPORARYNo
Public procurement localisation
Similar to the Preferential Procurement Regulations 2011 (Regulation 2011), the Preferential Procurement Regulations 2017 (Regulation 2017) empower the Department of Trade and Industry, in consultation with the National Treasury, to designate sectors, subsectors, products and industries for public procurement bids to comply with a set of local production requirements stipulated with a minimum local threshold. Such requirements are imposed on all state entities specified in Preferential Procurement Policy Framework Act, section 1, i.e. "a national or provincial department as defined in the Public Finance Management Act, 1999; a municipality as contemplated in the Constitution; a constitutional institution as defined in the Public Finance Management Act; Parliament; a provincial legislature."
The National Treasury of South Africa stated in a media release that the issuance of a new revised Preferential Procurement Regulation was to a large extent influenced by: "the need to provide for a mechanism to empower certain categories (Small Medium and Micro Enterprises (SMME) also classified as EMEs or QSEs, Co-operatives, Township and Rural enterprises) through procurement."
Regulation 2017 sets out a number of changes including advancing the participation of small and black-owned businesses by changing prequalification criteria in the bidding process of public procurement tenders and in doing so limiting the participation of "well-established companies"; tenders worth more than R 30 million (USD 2.21 million) must impose a "specific tendering condition that the successful tenderer must subcontract a minimum of 30% of the value of the contract" to small and black-owned businesses; and changing the point system which determines the awarding of tenders in public procurement to favour B-BBEE status level of contributors - B-BBEE status level is determined from the participation of black people at a company in specific function and roles.
All sector designated and minimum threshold determined for local procurement under Regulation 2011 remain in force under Regulation 2017. The 2017 Regulation enters into force on 1 April 2017 and replaces and repeals Regulation 2011.
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