Treasury brings South Africa to a standstill after BEE loss in court

Doctors at the clinic could soon find themselves without essential equipment and firefighters without protective gear due to a ‘notice’ issued this week by the National Treasury following its Loss of the Constitutional Court on BEE procurement rules.

In mid-February, Sakeliga said he had won a significant victory in his campaign against Black Economic Empowerment (BEE) policies.

The Constitutional Court ruled that BEE regulations issued by former finance minister Pravin Gordhan in 2017 were invalid and unconstitutional.

These regulations, issued under the Preferential Procurement Policy Framework Act, allowed state bodies to disqualify bidders from a tender if they were not 100% owned by Black.

Previously, all bids submitted in accordance with the tender specifications were considered and the bidder’s BEE status accounted for part of their final score, usually 10% or 20%.

Following the Constitutional Court’s decision, the Director General of the National Treasury, Dondo Mogajane, issued a circular to ministries stating that:

  • Tenders published before February 16, 2022 must be finalized in accordance with the public procurement regulations canceled by the ConCourt
  • Tenders published on or after February 16, 2022 will be suspended
  • No new calls for tenders will be published.

Sakelige CEO Piet le Roux called the instruction circular illegal.

However, on Thursday, Le Roux revealed that Mogajane acknowledged that the circular was not binding in response to their questions.

Piet Le Roux, CEO of Sakeliga

Despite Mogajane’s assurance that the circular was merely “advisory”, the city governments of Cape Town and Johannesburg said it put them in a difficult position.

Afrikaans Language Journal Report reported that in Cape Town tenders worth hundreds of millions are suspended.

Quoting Cape Town Mayor Geordin Hill-Lewis, the newspaper wrote that the metropolitan municipality had hoped to complete a tender for essential medical equipment by March 22.

It includes new blood pressure monitors, blood glucose sensors, stethoscopes and other medical devices for clinics around the city.

Another example of a vital tender stuck in limbo is that of waterproof jackets and flame retardant clothing for the city’s firefighters.

Johannesburg spokesman Nthatisi Modingoane told Rapport that R1.3 billion tenders are still pending in South Africa‘s economic hub.

Modingoane warned that the Treasury embargo would have a massive impact on service delivery, the city’s procurement plan for the year and the targets of its integrated development plan.

Hill-Lewis and Modingoane also warned that various monthly renewed contracts would eventually have to be canceled if the Treasury moratorium drags on.

In the Western Cape, provincial finance minister David Maynier noted The Mogajane circular would immediately halt 86 tenders worth R1.85 billion scheduled for March 2022.

Maynier said he had written to National Finance Minister Enoch Godongwana asking the Treasury to urgently withdraw the note.

So far, Mogajane has refused to withdraw the circular and instead wrote to Sakeliga to clarify that the memo was purely an “advisory document”.

Sakeliga warned that the National Treasury was creating a semblance of legality for the continued enforcement of BEE-based pre-tender disqualification.

“This comes as the Constitutional Court finally upheld the invalidity of the BEE-based pre-disqualification under the Finance Minister’s 2017 regulations,” Sakeliga’s Le Roux said.

“Today’s letter from the Director-General to Sakeliga has removed the need for urgent litigation and means that government institutions can now proceed with procurement regardless of the National Treasury’s view of the judgment. in favor of Sakeliga rendered by the Constitutional Court on February 16. ”

Sakeliga said he was ready to resort to legal action again if the National Treasury or other government institutions tried to circumvent the judgment of the Constitutional Court.

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