Page 34 - Q&A 2019/2020

How fair must government tenders be?

Relebogile Mogotsi
March 2019

“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?” Commercial
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

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