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CAASA NEWSLETTER JULY 2024

The motivation behind this monthly newsletter is to provide better and more frequent communication to CAASA members, and to solicit suggestions and responses to the contents. We need input from you to ensure that the content of this newsletter, our webinars and annual conference remain both topical and relevant.

Any comments, suggestions or proposals please forward to secretary@adjudicators.co.za

CONTENTS:
Public Procurement Bill (Act 28 of 2024)
CAASA Update
CAASA AGM

PUBLIC PROCUREMENT BILL (ACT 28 OF 2024)

The Act came into law on 18 July 2024 when signed by President Ramaphosa. However it will only come into effect at a later date after publication in the government gazette. The Act makes reference to a variety of subordinate documentation, regulations, frameworks, instructions, guidelines, codes of conduct and policies that will be developed and issued by various authorities to give substance to the Act. It is possible that the Bill will be enacted in stages as the subordinate documentation is published. Until such time existing legislation applies.

The Act will replace the Preferential Procurement Framework Policy Act 2000 (PPPFA). It establishes a Public Procurement Office housed in National Treasury which will issue binding instructions and non-binding guidelines on all procurement matters.

National Treasury established the Chief Procurement Officer function many years ago. He was primarily tasked with centralizing procurement for government to leverage its buying power, which is estimated at around R 1 trillion per year. I had some interaction with the Chief Procurement Officer during my time as President of SAFCEC. Like a lot of initiatives it started out quite promising – easy access and assistance, but gradually petered out. Too many lobbyists with competing interests.

Prior to the PPPFA procuring authorities set their own criteria for transformation and empowerment, there was little uniformity. I recollect SANRAL’s Northern, Southern and Eastern regions issuing tenders for road construction, each with different criteria. It is a cause for concern that this new legislation could go the same way.

Chapter 5 Item 24 of the Act requires:

“The Minister must prescribe a framework within which a procuring institution must develop and implement its procurement system which includes:
(a) The promotion of strategic procurement[1] ;
(II) for infrastructure, capital assets and goods or services related to the maintenance and services for infrastructure and capital assets.
(b) types of procurement methods;
(c) the requirements and procedure to be followed for each prescribed method; and
(d) the criteria for evaluation of bids, which must include, but are not limited to, cost-effectiveness, capability, functionality and technical requirements, without limiting new entrants or emerging suppliers or both.

The Act makes provision for “set asides” for certain categories of people such as black people, black women, women, disabled persons and SMME’s. In addition it allows for prequalification criteria to promote the allocation of contracts to categories of previously disadvantaged groups.

Subcontracting as a condition of bid (where feasible) is promoted where a procuring institution will prescribe a minimum level of subcontracting in relation to a bid. While “where feasible” is emphasized we all know the impact of the blanket subcontracting requirement of 30% of the contract value as per the PPPFA, with little or no investigation as to whether it is feasible or not.

Furthermore a Public Procurement Tribunal will be established specifically to review decisions taken by a procuring authority, including debarring a bidder or supplier.

Chapter 6 Dispute Resolution

35. 1) A bidder may submit an application for reconsideration to the procuring institution if that bidder is not satisfied with a decision to award a bid by that institution. (2)(a) Subject to paragraph (c), the Tribunal or a court may not review a decision to award a bid unless the bidder has exhausted the internal remedy envisaged in subsection
(3) An application referred to in subsection (1) must be submitted to the procuring institution within 10 days of the date the bidder is informed of the decision to award a bid.
(4) A procuring institution may dismiss an application for reconsideration if the application was not submitted within 10 days of the date the bidder is informed of the decision to award a bid.
6) Unless the application is dismissed as envisaged in subsection (4) or withdrawn by the bidder, the procuring institution must—
(a) immediately institute an investigation; and
(b) make a decision and inform the bidder within 30 days.
(7) A decision referred to in subsection (6)(b)—
(a) must state whether the application is granted or dismissed, in whole or in part;
(b) must state the reasons for the decision; and
(c) may state any corrective measures to be taken.
(8) If the decision of the procuring institution in terms of subsection (6)(b) results in the withdrawal of the original award, the awarded bidder if not satisfied with the decision of the procuring institution, may file an application for review with the Tribunal.

Considering the number of enquiries issued by the various spheres of government, constitutional institutions, public entities such as Eskom, Transnet and SANRAL, on a daily , weekly and monthly basis I am concerned that the Tribunal will be flooded with complaints resulting in projects being put on hold while the application for review is assessed.

Incidentally in a similar manner the CIDB is pushing for the appointment of an ombudsman to deal with construction industry disputes and to dispense with adjudication and arbitration which are seen as too expensive and time consuming for the medium to small contractor. Again this could create a huge bottleneck in project delivery.

A critical success factor for the Act will be transparency. The current procurement process has little credibility. It is unashamedly used to further the interests of a few at the expense of the majority. In the past the provinces had Tender Boards comprising a diverse group including government officials and industry professionals, to ensure integrity in the evaluation of bids and the award of contracts. I would like to see something similar called for in the regulations to accompany this Act.

As always, the devil is in the detail and, until such time as the subordinate documentation is published, we will be in the dark as to the success or failure of this critical piece of legislation.

I have no doubt that there will be legal challenges along the way. Already the Western Cape Government has raised an alarm stating that the Act reduces a province’s autonomy to set its own transformation goals, and may not pass constitutional muster.

[1] ‘‘strategic procurement’’ means a comprehensive approach to procurement that aligns with the strategies and objectives of a procuring institution, thereby enhancing cost-effectiveness

CAASA UPDATE

Training & Mentoring
I hope that those of our members who attended the “Adjudication Conundrums” session on 5th July came away with some useful advice on how to deal with the “out of the ordinary” in an adjudication.

It is important to realise that adjudication is quite distinct from arbitration and litigation. Once he has accepted his appointment an adjudicator has a duty to provide a reasoned decision on all matters in dispute within the stipulated time. Provided an adjudicator observes the rules of natural justice he has a great deal of leeway in conducting the adjudication. We should not let ourselves be sidetracked by those attorneys and/or counsels who cannot resist turning adjudication into litigation.

CAASA AGM

By now you will all have received notice of our AGM to be held on Thursday 29th August 2024 at 16h00 on line. Please diarise this date.

We need to amend and update our Constitution. The proposed amendments will be circulated closer to the AGM for consideration.

We have also called for nomination to serve on our Executive Committee for the 2024/25 financial year. South Africa is at a breakpoint in its recent history with the formation of the Government of National Unity and the promise by both the President and the Minister of Public Works to turn the country into a construction site. Serving on the CAASA Executive Committee takes a little of your time, but the more voices we have the better we can serve our members