LETTER: Reason prevails in procurement ruling

In 2017 then-finance minister Pravin Gordhan issued regulations that allowed state-owned enterprises (SOEs) to refuse to award tenders to companies that were not BEE compliant (regardless of all other considerations). This led Sakeliga (AfriForum's business wing) to take the matter to court, which in 2020 resulted in the Supreme Court of Appeal (SCA) setting aside the minister’s regulations.

In doing so it stated that SOEs "cannot disqualify prospective contractors who are not 51% black-owned without first considering the price and proposition of the tender".

This ruling was amplified by explaining that SOEs have to comply with section 217(1) of the constitution, which enjoins "organs of state to contract goods or services in accordance with a system that is fair, equitable, transparent, competitive and cost-effective".

Unfortunately, the Constitutional Court, which heard the government’s appeal earlier this month, appears to have been concerned about being branded "anti-transformation" and took what appears on the face of things to have been the easy way out.

This it did by deciding that it was not necessary to rule on  whether BEE could be the sole criterion and that all that really  mattered was that Gordhan — a member of the executive branch of government — had usurped the legislature’s powers (thereby violating the separation of powers clause).

As a result, the Constitutional Court, which awarded costs to Sakeliga, has taken some of  the sizzle out of Sakeliga’s victory while also creating a situation in which many people are likely to assume it is only a matter of time before the legislature achieves what Gordhan was trying to achieve.

I would like to suggest that this is not the case; that it is highly significant that the Constitutional Court — represented by nine black judges — had the opportunity to disagree with the SCA  on the importance of considering factors other than BEE, and failed to do so. Finding a bench that believes BEE should be the only consideration is therefore likely to be an exceedingly tall order.

Perhaps the time has come for Ace Mageshule and the rest of the transformation-at-all-costs brigade to throw in the towel and hang up their gloves. Reason seems, at last, to have regained the upper hand.

Terence Grant, Cape Town

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PS: Readers may be interested to note that in terms of existing legislation , a company that is not BEE compliant loses a maximum of 20% of its points on tenders that are worth less than R50m (and 10% on tenders worth more than R50m). This usually succeeds in preventing BEE companies from charging exorbitant prices for their goods and services.