An evaluation of the implementation of the preferential procurement policy framework act (No 5 of 2000) with reference to selected municipalities in the province of the Eastern Cape

Background and Rationale: South Africa is in its second decade of democracy. Since the introduction of democracy in 1994, the South African government and its citizens are making strides into overhauling the country to make it one of the best habitable countries in the world. All these changes are accompanied by challenges regarding the types of resources required to accomplish this when delivering services to the communities. In order for the government to accomplish this, systems and procedures which are supported by legislation and operational frameworks should be developed, implemented, monitored and reviewed when necessary. Legislation which has been developed to guide and regulate public procurement includes the Preferential Procurement Policy Framework Act (Act 5 of 2000). The previous procurement approaches had various fallacies. For example, there was no accountability, no transparency, no equitable distribution of economic resources and no supporting structures to oversee the process. The government then realised the need for having an integrated approach towards public acquisition of goods and services. The public service should operate in an environment where there will be fair, equitable, transparent, competitive and value for money in procurement. 2 The objective of the Preferential Procurement Policy Act (Act 5 of 2000) is to give effect to section 217(3) of the Constitution of the Republic of South Africa (Act 108 of 1996). Section 217 (3) stipulates that national legislation must prescribe a framework within which the procurement policy may be implemented. Preferential Procurement Policy Framework Act (Act 5 of 2000) aims at redressing the past racial imbalances, where race and gender were used to control productive resources. In order to address the shortfalls of the previous systems which failed to provide equal competition opportunities to all the people of South Africa, the mandate, as stipulated in the amended Section 217 of the Constitution of the Republic of South Africa (Act 108 of 1996), has been implemented. This section calls on government and organs of the state to apply a preference point system to enhance and give preference to the historically disadvantaged individuals or designated groups, who in the past, were victims of unfair discrimination on the basis of race, gender or disability. The Preferential Procurement Policy Framework Act (Act 5 of 2000) and its related regulations and systems emanate from Section 217 (3) of the Constitution of the Republic of South Africa, (Act 108 of 1996). The government has, since 1995, started engaging in a number of initiatives with the purpose of restructuring the procurement. One of the initiatives was the development of the Green Paper on Public Sector Procurement Reform in South Africa in 1997. This paper is a discussion document which contains various proposals aimed at achieving the objectives of good governance, developing and utilising the country’s human resources potential to the full, and encouraging a well-developed and competitive business sector (http://www.info.gov.za/greenpapers/1997/publicproc.htm). 3 Subsequent to the Green Paper on Public Sector Procurement Reform the government published the Preferential Procurement Regulations in 2001, in terms of Section 5 of the Preferential Procurement Policy Framework. The government’s aim was to elicit contributions and discussions from role- players and interested parties. These inputs are crucial in a country that is committed to democracy. It can be deduced that the Preferential Procurement Policy Framework is a tool that is intended to provide direction and guidance to public officials when they engage in the acquisition of goods and services whilst giving leverage and preference to those who have been victims of the past imbalances. There is a perception that business opportunities favour individuals and businesses that are well established and the emerging business owners are marginalised. The reforms in the procurement processes that have been put in place are intended to ensure that there is equality, transparency and accountability in the allocation of business opportunities. Preference has to be afforded to the previously marginalised people to play a role in the public sector procurement and enhance income generation. The aims of the Preferential Procurement will be defeated if there are no systems to control and monitor the engagement of historically disadvantaged individuals. The affirming of such business owners should be viewed as a tool for the distribution of wealth, job creation and a poverty alleviation strategy from the side of government. The rationale for the research, therefore, is to establish whether the historically disadvantaged individuals’ lives are improving and bringing about sustainable economic development in their live