BACK TO THE DRAWING BOARD?: AFRIBUSINESS NPC V MINISTER OF FINANCE [2020] ZASCA 140 AND THE POTENTIAL FOR RECONSIDERATION OF PREFERENTIAL PROCUREMENT LAW & POLICY IN SOUTH AFRICA

Abstract

A 2020 judgment of South Africa’s second-highest court is the most significant in the field of public procurement law and policy since the landmark series of AllPay cases concerning the outsourcing of social grant payments. In the field of black economic empowerment more generally, where multiple and conflicting goals have been pursued, Afribusiness constitutes a distinct judicial intervention into disciplining the quite wide discretion that public bodies possess and have exercised across government since 1994 to adopt such policies in the pursuit of substantive equality and affirmative action.  The decision is best understood as part of the ongoing process of reform of South Africa’s public procurement system that began around 2012.  The Supreme Court of Appeal’s order that the procurement regulations providing for race and gender preferences are invalid has sparked interest in the upcoming hearing at the Constitutional Court both among regulatory bodies (including the broad-based black economic empowerment (BBBEE) body) and within business sectors.The court was specifically critical of the prequalification criteria mechanism but also struck down the 30% quota (mandatory sub-contracting) mechanism in the 2017 Preferential Procurement Regulations.  The judgment has some ambiguity as to whether it is based on statutory, constitutional, or a combination of statutory and constitutional grounds.  The case raises an important regulatory question:  Does Parliament or the Minister of Finance and National Treasury have authority to issue a constitutionally compliant framework for the regulation of preferential procurement policy?  Further, some components of the public procurement legislative framework are likely to be sent back to the drawing, hastening but also complicating government efforts already underway.  And state owned enterprises and other public bodies aiming to achieve competitiveness, fairness, equity, transparency, and cost-effectiveness in public procurement will need to manage the legal risks posed by the judicial remedy, finding the regulations invalid but suspending that invalidity.