“The new draft regulations, if they are accepted, will legalise wholesale corruption at an even grander scale than we are currently witnessing,” said Helen Zille, Democratic Alliance (DA) premier of the Western Cape Government.
Speaking on amendments to Preferential Procurement Regulations put forward by government, the premier said that amendments to the procurement law “will cause the collapse of the South African economy”.
The amendments propose changing the weighting applied to tender evaluation: tenders up to R10-million will be evaluated 50% on price and 50% on non-price, including a firm’s broad-based black economic empowerment (B-BBEE) score or other ownership factors.
The weighting on tenders above R10-million will change from 90/10 to 80/20.
According to Zille, what it means is that for certain categories of purchases (tenders under R10-million) we could be paying almost double for goods and services on the basis of the BBBEE points awarded.
“Firms that have the highest rating will get enough ‘bonus’ points to enable them to double the best market price of a firm with no rating, and still get the contract. There is a sliding scale between firms with no BBBEE status and those with ‘full’ status. If they attain only half the BBBEE status, we will pay 50% more.
“This system will cause the collapse of the South African economy. It will not result in broad-based economic inclusion. It will re-enrich those who are already entrenched; it will not lead to economic growth. On the contrary, it will destroy growth and jobs because it creates perverse incentives, rewarding inefficiency and uncompetitive pricing. And as government’s capacity to procure goods and services shrinks, firms will go out of business. People will lose jobs, while the preselected few flourish,” added Zille.
Anthea Jeffrey, head of policy research at the Institute of Race Relations, was quoted saying that the proposed amendments are “contrary to the constitution”.
The DA said the proposed amendments were “a major threat to procurement, already viewed with scepticism by the public”. It is was reported that shadow minister of trade and industry Geordin Hill-Lewis has written to Finance Minister Nhlanhla Nene requesting the withdrawal amendments.
Adapted from a report on SupplyManagement.