New Preferential Procurement Regulations 2022

Background:

In 2020 AFRI business took the Minister of finance to court to challenge the Preferential Procurement Regulations 2017 (PPR 2017), specifically Regulations 4 and 9. These two Regulations, when applied by Organs of State, forced bidders to comply with specific B-BBEE requirements and/or forced bidders to subcontract at least 30% of the value of a tender to certain Designated Groups. AFRI Business reasoned that these two Regulations was unfair and in contravention of the Constitution of South Africa Paragraph 217.

The High Court judged that it was unfair and gave the Minister of Finance 12 months to amend the Regulations. The Minister of Finance appealed but eventually the Constitutional Court upheld the judgement on 30 May 2022. This meant that the Minister had to amend the Procurement Regulations by 16 February 2023. The Preferential Procurement Regulations 2022 was published on 4 November 2022 and will take effect on 16 January 2023.

The new regulations:

The new Preferential Procurement Regulations 2022 has completely done away with the compulsory B-BBEE requirements. The new Preferential Procurement Regulations 2022 only addresses which Preferential Points system (either the 80/20 or 90/10 Preference Point system) must be used in evaluating tenders. These two Preference Points systems are based on the value of the tender.

In the Preferential Procurement Regulations 2022, B-BBEE has been replaced by the original phrase used in the Preferential Procurement Policy Framework Act (PPPFA) which is “specific goal”. So instead of B-BBEE counting 20 or 10 points (or a portion there of), the “specific goal” set by the Organ of State issuing the tender will count towards the 20 or 10 points (or a portion there of).

The question is: What could these specific goals be that you, the bidder, will have to achieve? We can only speculate, but past accounts suggests that B-BBEE will still be applied. Seeing that no provision has been made in the Preferential Procurement Regulations 2022 for the following, it can be argued that it will be re-phrased as a “specific goal”:

• Only bidders with a specific B-BBEE Level of Contributor will be able to respond (PPR 2017, number 4a & 4b)
• Bidders will have to subcontract 30% of the value of the tender to certain Designated Groups PPR 2017, number 4c and PPR 2017, number 9)
• Bidders will have to comply with Local Content requirements (PPR 2017, number 8).

The next step?

The Preferential Procurement Regulations 2022 have been implemented on 16 January 2023. Be prepared by attending our training sessions. We will address all the new Preferential Procurement Regulations 2022 and show the differences between the old and the new Regulations.

To learn more about this and other tender conditions attend our “Become a Tender Expert” 2-Day webinars online or live workshops presented in Johannesburg and various other cities throughout South Africa. Book and pay online at https://howtotender.co.za/workshops/#comprehensive

Contact us at questions@howtotender.co.za should you require more information.

You can purchase a Tender Manual (Handbook) and various other tender products on our website https://howtotender.co.za/ should you be unable to attend one of our training sessions.