Sakeliga achieves first significant ConCourt roll-back of BEE
16 February 2022
Sakeliga has today achieved the first significant roll-back of BEE through litigation. Organs of state should immediately cease the practise of applying BEE pre-disqualification to tenders. Failure to cease these and other practices that rely on unlawful procurement regulations would render any tender awarded by an organ of state open to judicial review and litigation.
This is the implication of a Constitutional Court judgement handed down today, in favour of Sakeliga and against the Minister of Finance, regarding the 2017 Preferential Procurement Framework Act (PPPFA) Regulations. The Constitutional Court has found in favour of Sakeliga that the Minister of Finance at the time, Pravin Gordhan, acted ultra vires, by regulating as if he had legislative powers. This victory follows Sakeliga’s earlier success in the matter before the Supreme Court of Appeal.
The 2017 PPPFA regulations represented a sea-change in procurement and BEE in South Africa. Before 2017, companies tendering to organs of state could at most be penalised 10% to 20% for not meeting BEE-criteria. This was harmful enough. However, since the 2017 regulations, organs of state went far beyond penalisation: regulations started to pre-emptively disqualify companies from tendering based on BEE criteria, for example, if a company was not 100% black owned. The court has now rejected the Minister of Finance’s pre-disqualification
Organs of state may no longer follow or give effect to the unlawful sections of the 2017 regulations in their procurement policies. It is invalid and unconstitutional for them to apply pre-disqualification criteria such as black economic empowerment to public procurement tenders.