South Africa lifts 'black owned' rule on public tenders

2 June 2010

2 June 2010 | Neil Oelofse

The Western Cape provincial government in South Africa has removed the mandatory “black economic empowerment” requirement for suppliers in its tender process.

Previously, businesses tendering for public work in the province had to be 30 per cent black owned and managed.

According to economic development minister Alan Winde, the move is part of an overhaul of procurement policy. “We scrapped the entry level requirement for traditionally disadvantaged companies who now have to compete in the open market. Eighty per cent of our tenders are now awarded to historically disadvantaged companies because they are more competitive.”

The province had also opened its procurement tender system to public scrutiny. “This has had the double effect of eliminating the opportunity for corruption because no-one can take a backhander, and politicians have been removed from the process,” he told SM. “The court cases have also disappeared, saving massive amounts in legal fees.” Previously companies resorted to legal challenges to find out why their bid had been rejected.

Winde said 24,000 vendors already registered on the provincial government’s new database received text messages when a new tender was posted.

The province had also split big single contracts into a number of lots to give smaller companies business opportunities.

The move not only allows government wider options in procurement as more companies are aware of tenders on offer, it also offers companies that previously could not tender on big projects a foot in the door.

The Western Cape province issues 27,000 tenders a year and contracts for R11 billion (US$1.4 billion) of business. Winde added any future Democratic Alliance councils would also implement the reforms, and provincial premier Helen Zille will be presenting the system to South African president Jacob Zuma for possible national implementation.

In South Africa’s other eight provinces, all governed by the African National Congress, companies tendering for government business must have black ownership or management of 30 per cent or higher.

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