Emergency tendering regulations applicable under COVID-19 outbreak

This article was supplied by Gerrit Davids, a Lead Consultant at TaranisCo Advisory.

Subsequent to the President of South Africa declaring a state of disaster under the National Disaster Management Act of 2002 on 15 March, and then announcing the national lockdown on 23 March (due to go into effect from midnight on 26 March for 21 days), it is now necessary for organs of state to procure goods and services on an emergency basis while also complying with existing enabling legislation.

According to the Regulations issued on 18 March 2020 and in terms of Section 27(2) of the Disaster Management Act, 2002, emergency tenders and procurement will only be allowed if done under the prescripts of the Public Finance Management Act (PFMA), 1999 (Act No. 1 of 1999) and the Municipal Finance Management Act (MFMA), 2003 (Act No. 56 of 2003), respectively.

In terms of the Section 76 of the PFMA, all organs of state are directed to implement a tendering system in line with the provisions of Section 217 of the Constitution, which “is fair, equitable, transparent, competitive and cost-effective”, even when applying the allowance to procure goods and services in such an emergency.

The PFMA and MFMA also highlight the avoidance of “fruitless and wasteful, unauthorised and irregular expenditure” in relation to all types of procurement.

Treasury’s instructions and in particular Regulation 16A6.4 affords organs of state to conduct a process of “deviation” from the standard rules of compliance when having to procure goods in an emergency situation.

At a local government level, organs of state are directed by Municipal Supply Chain Management Regulations, Section 36, which creates an allowance for officials to dispense with the standard procedures when there is a need to procure goods and services on an emergency basis.

These allowances still demand that, under such circumstances, officials show their full responsibility and required accountability.

Despite allowing organs of state to deviate from the standard procedures when issuing tenders on an emergency basis, officials still have to ensure that the five pillars of procurement are considered before awarding a contract. These include showing that the organ of state received “value for money” and the accompanied “accrued benefits”, as well as that all the principles of “ethics and fair dealing” and that “accountability and reporting structures are in place”, prior to awarding such a contract.

These Regulations are also very clear in stipulating that such emergency procurement should not be used to deliberately circumvent the standard procedures.

Suppliers to government have a right to obtain the reasons from an organ of state as to the “motivations” recorded by the Accounting Officer, as to why there was a need to dispense with the standard procurement procedures, and they could do so using the Promotion of Access to Information Act (PAIA), 2000.