Towards a competitive law of public procurement in South Africa

Abstract

Collusion among firms is widely recognized as a serious violation of competition law globally. Bid rigging, a form of collusion, is particularly concerning in public procurement, leading to the OECD's adoption of Guidelines for fighting Bid Rigging in Public Procurement in 2009.1 Collusive tendering is significant because it affects public spending, impacting the South African economy's production and supply of goods and services.2 The substantial sums involved in public procurement make it susceptible to corruption.3 Recently, a Public Procurement Bill was introduced in Parliament in May 2023, aiming to establish a comprehensive national law governing public procurement, including preferential procurement. Simplifying the legal framework is a crucial step the government can take to enhance the public procurement system. The research aims to analyse South Africa's current public procurement process and address concerns related to anticompetitive practices. Following South Africa’s transition to a constitutional state, key reforms were introduced, including establishing constitutional principles governing public procurement and creating a unified national legislative framework through the Public Finance Management Act (PFMA),4 and the Local Government: Municipal Finance Management Act (MFMA).5 A competitive public procurement system is not only constitutionally mandated but also vital for the proper functioning of the government and the delivery of services, which are crucial for the country’s advancement, development, and social welfare. The report will specifically examine the legal landscape of public procurement in the construction sector and seeks to contribute to the promotion of effective competition in South Africa’s public procurement process by exploring how the development and implementation of procurement procedures can enhance the competitive nature of public procurement law in the country. To achieve this, it's essential for the government to take action to ensure that the procurement process is characterized by openness, transparency, and fairness for all bidders. Developing procurement procedures that emphasize fairness, openness, and competitiveness is essential in mitigating unwarranted limitations on competition in South Africa. This can be accomplished through practices such as transparent and open tender processes, the use of clear and objective evaluation criteria, support for small and medium-sized enterprises (SMEs), and the adoption of e-procurement systems.