How fair must government tenders be?

11 April 2019 373
“My business is growing and I have a good BEE scorecard. It makes sense that I should start looking at getting government work. I’ve been avoiding it because it seems to me that the government entities  award tenders to whomever they like. If I go to the trouble of tendering I’d at least like a fair shot at getting the work. Is it worth looking at tenders or should I rather leave it?”

It’s difficult to answer the question of whether you should consider government work. One can point out that our Government spends billions annually through tendered work, and if your business can add value, has a good BEE scorecard and could potentially qualify for tenders there is definitely prospects in exploring tender opportunities.

What I can say is that Section 217(1) of the Constitution of the Republic of South Africa, 1996 requires that when an organ of state in the national, provincial or municipal sphere of government or other government institutions tender for goods or services, it must do so in accordance with a system which is fair, equitable, transparent, competitive and cost-effective.

These Constitutional principles are further fledged out in Preferential Procurement Policy Framework Act 5 of 2000 (“PPPFA”) and its accompanying regulations. Further legislation regulating various government entities (such as the Public Finance Management Act and the Municipal Finance Management Act for example) determine that such entities must have supply chain and procurement policies which regulate their procurement processes. Such policies must meet the requirements of the Constitution and the PPPFA as well as any further regulating legislation, including the provisions of the Broad-Based Black Economic Empowerment Act. 

What flows as a golden thread through all the procurement principles applicable to government entities is that they are obliged to provide all interested bidders an equal opportunity to be considered and must therefore follow competitive tendering processes to award tenders. Such processes must also include fair and transparent evaluation and award processes to ensure that any bidder is not unfairly prejudiced or benefitted as against other bidders. 

An organ of state, when contracting for goods or services, is therefore required to ensure that the principles enshrined in section 217 of the Constitution are complied with. In ensuring compliance with these principles, there is an obligation which is placed on an organ of state to provide all interested bidders an equal opportunity for consideration. The organ of state must therefore follow a competitive bidding process before selecting a preferred service provider. In short the process and criteria must be fair, objective and impartial and the stipulated procedures as laid out by the relevant policies and governing legislation must be applied consistently.

What this means is that you should in principle have a fair shot at tendering for government work provided you can meet their requirements and criteria and follow the correct procedures. It would also be wise to undertake a study of the relevant procurement policies of the various government entities you may consider to tender for to ensure that you follow their procedures fully and understand their criteria. But are tenders always awarded objectively and fairly? Probably not, but that is why our courts are approached on a regular basis to help determine whether government has fairly applied its mind and to provide bidders an avenue to challenge any tendering processes that they feel did not meet our Constitutionally enshrined principles for public procurement.