Following the Constitutional Court judgment in February 2022 where the 2017 Preferential Procurement Regulations were declared invalid, there has been a misconception that this court decision has resulted in the wholesale scrapping of BEE when it comes to public procurement. Now with the new Preferential Procurement Regulations taking effect as of 16 January 2023, many tenderers are unsure of the extent to which BEE will still apply in public procurement.

Firstly, the Constitutional Court judgment did not invalidate BEE in public procurement, but rather declared the setting of pre-qualification criteria that excluded certain tenderers from the onset as contained in the 2017 Regulations as invalid and demanded that the Minister of Finance correct the position.

The result has been the passing of new Preferential Procurement Regulations, which now provide for the setting of “specific goals” in tenders as envisaged in the Preferential Procurement Policy Framework Act (PPPFA), and which specific goals may include contracting with historically disadvantaged persons and the implementation of programmes of the Reconstruction and Development Programme. These specific goals must be included in the tender documentation and must form part of the point-scoring mechanism of either 80/20 or 90/10.

In this way the setting of specific goals could be seen as providing a wider scope to organs of state to decide on specific goals for a tender, including of course BEE goals, than merely setting certain pre-qualification criteria.

Whether and how in practice this will happen, will have to be seen now that the new regulations are effective. Additionally, a new Public Procurement Bill set to replace the PPPFA in the near future may also have a direct impact on the scope and extent to which BEE will continue to feature in public procurement. Is the writing on the wall for BEE in public procurement? I think not, and businesses would be prudent to continue preparing and planning for ensuring their BEE compliance should they wish to continue to participate in providing goods and services to the public sector.

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