Photo by: Donna Slater
Transnet's board has sided with the Constitutional Court with respect to government's broad-based black economic empowerment (BBBEE) tender regulations, opting for a policy change that will allow it to procure goods and services in line with the original iteration of the contested Preferential Public Procurement Framework Act (PPPFA).
In February the Constitutional Court ruled that the finance minister exceeded his powers in making regulations that excluded businesses that were not black-owned from tendering. While it waits for clarity from the court, Treasury released draft tender regulations that bring procurement back in line with the system that existed before 2017.
In late March Transnet temporarily suspended BBBEE criteria in tenders, remarking that it believed the current 80/20 and 90/10 preference point systems have in practice "benefited very few black-owned companies". It also asked Treasury for an exception from its procurement policy.
However, a statement from the entity released late last week said Transnet's board of directors approved an addendum to the company's supply chain management policy to allow the State-owned logistics company to include specific provisions for preferential procurement in its procurement processes.
"The board of directors resolved to continue applying the 80/20 and 90/10 preference point system provided for in section 2 of the Preferential Procurement Policy Framework Act 5 of 2000 in order to promote preferential procurement in its processes, demonstrating the company's continued commitment to transformation and empowerment," the statement said.
The pre-2017 system proposes an 80/20 BEE preference point system for the acquisition of goods with a value of up to R50-million. This means that 80% of the points scored for the tender is awarded for price, while 20% is based on the bidder’s BEE level. The 90/10 BEE preference points system are for goods valued higher than R50-million.
Transnet said the approval of the change in its supply chain management policy would allow the entity to provide certainty to bidders in Transnet's procurement process.
"The board has determined monetary thresholds for the application of the 80/20 and 90/10 preference point systems that will continue to provide certainty to bidders and Transnet's procurement processes until new Preferential Procurement Regulations are promulgated or the Constitutional Court judgment is clarified," the statement added.
Transnet said the board's decision aligns with the Constitutional Court ruling that the "policies of organs of state should take charge of driving transformation and preference in procurement to give effect to section 217 of the Constitution".