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Sanral backtracks on new preferential procurement policy after taking legal advice

Home Infrastructure Construction & Civils Sanral backtracks on new preferential procurement policy after taking legal advice

THE board of the South African National Roads Agency announced yesterday that it was withdrawing its new preferential procurement policy adopted by the board on May 23, 2023. Sanral’s board chairperson, Themba Mhambi says the decision to withdraw the new preferential procurement policy (PPP) was taken by the board after careful consideration of developments since it was adopted.

“Following our adoption in May 2023 of a new PPP for Sanral, there have been a number of legal challenges to the policy which were launched by construction companies in various courts across the country,” said Mhambi. “The legal challenges to the new PPP have regrettably resulted in Sanral being prevented from proceeding with the processing of close to 80 tenders worth billions of rands, with significant negative consequences for the fulfilment of the constitutional and statutory mandate of Sanral.

“The board of Sanral has adopted the decision to withdraw the new PPP because of the negative impact these court challenges have, including the fact that we anticipate that the lengthy court processes will cause significant delays to the work of Sanral.”

Implications

Sanral said it’s advised by senior legal counsel that in light of the change in the scoring formula, it is necessary to commence the tender process afresh. Sanral will therefore be cancelling all existing advertised tenders that have not yet closed, issue new tender adverts, and subsequently adjudicate all tenders within the confines of the interim policy. Sanral intends to expedite the re-advertisement of tenders and processing thereof within this current financial year.

The board proposes, as an interim measure, pending the adoption of a finalised policy, to adjudicate all tenders in accordance with a scorecard, that contains an Allocation of specific goals. Insofar as subcontracting is concerned, Sanral requires, as a condition of contract, that successful bidders be required to ensure compliance with contract participation goals for targeted enterprises in targeted areas and labour as per the formula applied by the CIDB in terms of Government Gazette No. 4127 published in November 2017, as was applied before the introduction of the policy which is being withdrawn. In this regard, Sanral will be inviting representations from stakeholders to make submissions on the content of the draft interim policy. The date and time when such representations should be made shall be announced shortly.

Sanral’s chief executive officer, Reginald Demana, said that infrastructure development is critical to South Africa’s economic growth and, in the wake of the Covid-19 pandemic, the country could not afford further disruptions towards the expansion and maintenance of the national road network and key arteries across the country’s provinces. “Road and rail infrastructure are the lifeblood of our economy and as such, any disruption to its maintenance, as well as any disruption to our extensive programme of new infrastructure projects, is a threat to our country’s economic growth,” said Demana.

Procurement system

Demana said Sanral’s operating model was based on ensuring that the road network is maintained, improved, strengthened, expanded and rehabilitated at all times, using private sector contractors and engineers to provide the services for road design and construction. The roads agency’s procurement policy is based on an open tender system which is provided for in Section 217 of the Constitution which requires public procurement to be fair, equitable, transparent, competitive and cost-effective. The Constitution, the Public Finance Management Act (PFMA) and Preferential Procurement Policy Framework Act (PPPFA), the Broad-Based Black Economic Empowerment (B-BBEE) Act, and Sanral’s procurement framework, policies and procedures, combined with directives from National Treasury, form the basis of Sanral’s procurement system. All relevant policies, legislation, regulations and directives will be used to continue to champion the transformation of the construction industry in consultation with its stakeholders.

Sanral said that it will continue to consult all its stakeholders to consider and work on a new procurement policy, to build and transform the economy of the country. This process will be undertaken as soon as possible and within a reasonable time and will undergo a public consultation process.

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