The Preferential Procurement Policy Framework Act (PPPFA) will be repealed in favour of a Public Procurement Act, owing to various shortcomings in the existing Act, President Jacob Zuma has said.

Speaking at the Black Business Council Awards in Johannesburg, he said that, in the past five years, as part of advancing broad-based black economic- empowerment procurement, government had amended the PPPFA regulations to provide for black economic-empowerment preference points.
“We thought this would work and would make an impact. However, [it has been] pointed out that it does not work. We are now aware of the shortcomings. We agree that the preference points system prescribed in the PPPFA is rigid and not responsive to government objectives,” he stated.
Zuma noted that the preferential procurement regulations had failed to substantially reshape the skewed ownership and control of the South African economy.

He added that the Public Procurement Bill is now going through the different government stakeholder engagement processes before it is tabled in Parliament in early 2017. In the interim, government will produce regulations that will improve the PPPFA to make it more responsive to economic transformation imperatives.

One of the main changes contained in the proposed new preferential procurement regulations is the introduction of a compulsory subcontracting clause.

“It will be compulsory to subcontract a minimum of 30% of the value of the contract for all contracts above R30-million to small and emerging enterprises owned by women, youth, black people or persons with disabilities.”

Zuma added that government has designated implementation of the policy on the 30% set aside for the public procurement budget for small business, a workstream to be led by Small Business Development Minister Lindiwe Zulu.

He pointed out that the BBC may want to focus on high-value sectors where it wants to break the prevailing dominance patterns, in taking advantage of the set-asides.

“The intention is to finalise the preferential procurement regulations for approval during October, and for these to be promulgated by November 1,” Zuma said.