A review of the Public Procurement Act of 2024: Ministerial regulatory powers
It is argued that the Public Procurement Act represents a significant step forward in South Africa’s attempt to adopt evidenced-based approaches to enacting subordinate legislation governing public procurement processes.
The delegating of law-making powers to the Minister
Delegated legislation, specifically regulations issued by ministers, is the most commonly used legislative instrument guiding and directing behaviour in South Africa. At the municipal level, regulations are reportedly overused, which has raised concerns about overregulation—a point discussed elsewhere in the Bulletin.
As I have argued before, despite the Public Procurement Act’s (PPA) objective to reduce the fragmentation of procurement law in South Africa, it may lead to further overregulation. This is because the Act assigns considerable lawmaking power to the Minister responsible for finance. In particular, section 63(1)(a) of the Act specifies 13 areas where the Minister is required to issue regulations. These include competency requirements for officials involved in procurement, requirements for security vetting, the use of information and communication technology in procurement, and procedures for bid specifications and invitations. Importantly, sections 30 and 31 of the Act recognise the importance of transparency, prescribing that the Minister must adopt measures for the public to access, scrutinise and monitor procurement processes.
The Act not only facilitates the enactment of numerous regulations but also empowers the Public Procurement Office (PPO) and provincial treasuries to issue instructions, which may be either binding or non-binding. The contention is that without checks and balances, there is a real risk that the procurement legislative landscape is likely to remain complex and fragmented and perhaps become even more so.
Regulatory safeguards
The argument made in this article is not against the use of subordinate legislation. In fact, the use of subordinate legislation has previously been recognised by the Constitutional Court, in Executive Council of the Western Cape Legislature and Others (para 35) as necessary for the effective implementation of legislation, considering that Parliament cannot legislate everything in detail. Indeed, subordinate legislation allows for flexibility and responsiveness within the procurement landscape, which is essential for managing the complexities of public procurement. The concern, however, lies in whether the Act establishes adequate measures to regulate the making of regulations, circulars, and instructions, given the high potential for further overregulation.
Duty to avoid conflicts
The Act does acknowledge the potential risks associated with introducing the Act into an already highly regulated sector, and the likelihood of legislative conflict. It, for example, prescribes that where a law conflicts with the provisions of the Act, the provisions of the PPA will prevail (section 3(4) PPA). Significantly, the Act also recognises that there may be overlaps and contradictions between circulars issued by the PPO and provincial treasuries – a concern I raised before. The Act qualifies the power of provincial treasuries to issue circulars by requiring that their respective circulars and instructions not conflict with the Act, including the instructions issued by the PPO (section 2(a)(ii) PPA). To mitigate further contradictions and silo-law-making, the Act requires that the Minister consult the relevant Minister who might be affected by the draft regulation, including organised local government (s 63(2)(a)-(b) PPA).
Impact assessment
The Act requires that the Minister, before making any regulations, publish the draft regulations, invite comments and provide a statement of the regulations’ intended operation, including a statement of its “expected impact” (s 63(3) PPA). The latter requirement marks a departure from previous legislative frameworks, such as the Municipal Finance Management Act of 2003, illustrating the South African Government's newfound commitment to evidence-based policymaking. The Act implicitly recognises that regulations and circulars not grounded in thorough analysis can lead to unintended consequences that may hinder effective procurement practices. To this end, the Act requires that the expected impact of circulars and instructions must also be published (section 64(1)(c) PPA).
Indeed, by mandating the Minister to publish a statement on the expected impact of the regulations, the PPA encourages a more thoughtful formulation of regulations, ensuring that all potential implications—economic, social, and operational—are assessed and addressed. This should not just be a one-line or two-paragraph statement(s). Rather, the Minister must, at a bare minimum, identify the costs of implementing the regulations and identify whether any unintended consequences are likely to arise from the implementation of the regulations. In other words, full compliance should not be assumed through a tick-box exercise.
Parliamentary scrutiny
Another significant provision of the Act is the requirement for the Minister to present any draft regulations to Parliament for scrutiny at least 30 days before their promulgation (section 63(4) PPA). By doing so, the Act seeks to enhance transparency and accountability, ensuring that any regulatory changes undergo thorough examination by elected representatives before being enacted. However, the role of Parliament, when it comes to the making of delegated legislation, is limited to the ex-ante stage and not its post-implementation stage. Inasmuch as this legislative safeguard must be welcomed, Parliament's role should not be limited to the ex-ante scrutiny of delegated legislation; it should also be extended to the ex-post review of the regulations after a set period. This would ensure that regulations remain effective, relevant and fit for purpose. By also subjecting regulations to a post-implementation review process, Parliament can assess whether the regulations have achieved their intended impact, identify any unintended consequences, and make informed recommendations for amendments or repeals if necessary. Such a dual-layered scrutiny process empowers Parliament to respond proactively to any challenges that arise from the implementation of the regulations, thereby fostering a more adaptive legislative environment.
Significantly, the Act does recognise the need for ex-post review. The Act, for example, mandates the Minister to conduct a review of the Act within 24 months of its implementation (s 68 PPA). However, despite making provision for an ex-post review, the review process is not continuous; it is limited to the first two years of the Act's operation. It is necessary to amend this provision to allow for ongoing reviews beyond the initial period. This is necessary because practitioners are likely to identify problems and implementation challenges once they have familiarised themselves with the Act and its implications. Furthermore, such reviews should not only focus on the Act itself but also include the associated regulations and instructions.
Conclusion
The Public Procurement Act empowers the Minister with significant regulatory authority but also imposes checks and balances that enhance accountability and promote informed decision-making. While these procedural measures must be welcomed, their effectiveness ultimately hinges on how well they will be implemented. There are also clear areas for improvement: for instance, clarity should be provided regarding what is meant by “the statement on the expected impact of the regulation." Is this merely a statement, or is a detailed report required to demonstrate the impact of the regulations? It is submitted that this should be a substantive reflection of the impact, including implementation costs, rather than a mere sentence or two, for example.
Additionally, the current role of Parliament in the regulation-making process appears limited and should be expanded to ensure greater accountability of the executive. One approach to enhance this accountability could be to subject regulations to an ex-post review process after their implementation. This would help strengthen Parliament's oversight role, allowing for a more rigorous examination of how regulations are implemented in practice and ensuring that they are regularly aligned with intended objectives.
By Curtly Stevens, Doctoral Researcher