Undoubtedly the Preferential Procurement Regulations 2017 (“the Regulations”) are a breath of fresh air in the campaign to redress South Africa’s historical inequalities through government procurement.

Undoubtedly the Preferential Procurement Regulations 2017 (“the Regulations”) are a breath of fresh air in the campaign to redress South Africa’s historical inequalities through government procurement. There is however a view that some aspects of the Regulations, in particular Regulations 4 that seek to advance certain designated groups through pre-qualifying and setting aside tenders, may be ultra vires and therefore unconstitutional as they go beyond the narrow confines of the Preferential Procurement Policy Framework Act (“PPPFA”).

Because section 2(1)(a) of the PPPFA limits the advancement of historically disadvantaged individuals and the promotion of RDP programmes to an allocation of 10 or 20 points out of 100 in adjudicating tenders, it is argued that additional measures envisaged in Regulation 4 to carry out the aims of the PPPFA may be ultra vires the PPPFA.

The latter view however, is a narrow and restrictive interpretation of the PPPFA. There is a good base to argue that the Regulations are actually necessary and expedient to achieve the spirit and tenet of the PPPFA. The Long Title of the PPPFA provides that the object of the PPPFA is:

“to give effect to section 217(3) of the Constitution by providing a framework for the implementation of the procurement policy contemplated in section 217(3) of the Constitution”

Section 217(3) of the Constitution contemplates the passing of a legislation to give effect to section 217(2) of the Constitution and provide a preferential policy framework that must:

• specify the different categories of preference that must be applied in the allocation of contracts by organs of state;
• protect or advance the previously disadvantaged persons in how organs of state procure or allocate contracts.

Instead of section 2(1)(a) of the PPPFA ensuring that there is protection and advancement of the previously disadvantaged, it places undue weight on a price factor by allocating 90 or 80 points out of a 100 for the lowest price with only 10 or 20 points, reserved for BBBEE level contribution. This can hardly be regarded as going the full mile in protecting or advancing categories of persons disadvantaged by unfair discrimination as contemplated by section 217(2) of the Constitution.

It is on this basis that the Regulations must be viewed in a broader scheme of section 217(2) of the Constitution and the Long Title of the PPPFA, which seek to advance the promotion of socially desirable objectives of transforming our economy using government procurement as a policy tool. This line of reasoning will negate any argument that the Regulations are ultra vires the PPPFA.

Some may argue, relying on some rules of statutory interpretation, that the Long Title of the PPPFA cannot override the clear provisions of section 2(1)(a). However, our courts have rejected this restrictive form of statutory interpretation “as representing an antiquated approach to the process of statutory interpretation” (NDPP v Seevnarayan 2003 1 All SA 240 (C). The dawn of our constitutional dispensation has seen moves by our courts to consider the Long Title and Preamble of statutes to establish the object of a particular statute. Therefore, the Regulations should not be adjudged only through the narrow prisms of section 2(1)(a) of the PPPFA, rather section 217(2) of the Constitution and other elements of the PPPFA, in particular its Long Title, should be used to establish the true object of the PPPFA.

With this kind of approach, it may well be argued that the Regulations advancing certain designated sectors through pre-qualification of bidders and other measures, fall within the parameters of the PPPFA and are therefore not ultra vires.