ANC STATEMENT ON THE SCA RULING ON PREFERENTIAL PROCUREMENT
The African National Congress is dismayed by a recent ruling of the Supreme Court of Appeal (SCA), which declared the Preferential Procurement Policy Framework (PPPFA) Regulations to be "invalid and unconstitutional". This ruling is to our minds an anomaly because it conflicts with a previous ruling by our apex court, the Constitutional Court (CC), to the effect that Broad Based Black Economic Empowerment (B-BBEE) and its concomitant instruments, such as the PPPFA Regulations, are constitutionally sound and legal.
It is noted that the ruling of the SCA that it is "invalid and unconstitutional" to apply pre-disqualification criteria (such as black economic empowerment requirements to tenders in public procurement) in terms of the B-BBEE Act, still permits the State and public entities to set B-BBEE qualifications for procurement, and other economic activities.
However, the SCA ruling removes an important instrument to pre-disqualify tenders that do not comply with the qualification criteria of 51% black ownership under the B-BBEE Act. This will make the process of implementing the 51% black ownership provision far more cumbersome, and will certainly slow down the overall process of Black Economic Empowerment.
It is also very important to realize that while, without the PPPFA Regulations, the state can still take black ownership and BEE in general into account, it can do so only as part (approximately 10% - 20%) of the total points based on which tenders are awarded. Thus, a very critical Black Economic Empowerment (BEE) instrument has been removed by the SCA ruling.
It is evident that this was exactly the intention of the white, Afrikaner dominated, business group, Sakeliga, who was the leading party in bringing the application against the PPPFA Regulations before the SCA. Its Chief Executive, Mr. Piet le Roux, described the PPPFA Regulations as a "harmful extension" of black economic empowerment, which allowed the State "to disqualify tenders in advance, simply because a company was not 51% black owned". Le Roux described the SCA ruling as a "step in the right direction", namely that ultimately state procurement must no longer be based on the criteria of Black Economic Empowerment.