Dear employer
On 18 July 2024, the President signed the Public Procurement Act into law. Nearly two years later, on 16 April 2026, the National Treasury has now published the Act’s draft General Public Procurement Regulations and invited public comment.
The Public Procurement Act is not yet in force and will come into operation on a date yet to be proclaimed by the President in the Government Gazette. However, the Act is also currently the subject of pending litigation and faces a slew of serious legal challenges at the Constitutional Court.
Notwithstanding, draft regulations have now been published for public comment which pose to fundamentally change South Africa’s public procurement regime.
According to the proposed regulations, contracts are now to be categorised by their estimated value which triggers new distinct mandatory pre-qualification requirements under the Public Procurement Act.
Contracts below R20 Million:
- The procuring institution (government) must set aside the bid for exclusively identified categories of persons. These categories include black people, black women, women, persons with disabilities, military veterans, youth, and small enterprises within a geographical area.
- To qualify for a set-aside, a bidder must demonstrate 100% ownership by members of that specific category. Partial ownership will not be sufficient.
This requisite effectively means that tenders for contracts of this value will be reserved or set -aside for only a certain category of people to the exclusion of others regardless of whether persons who fall outside the requirements are available to bid and can actually do the work.
Contracts Between R20 Million and R100 Million:
- A bidder qualifies to tender either by demonstrating that at least 40% of its prior procurement spend was with enterprises that are at least 51% owned and managed by black persons; or
- by committing to subcontract at least 30% of the estimated contract value to enterprises or cooperatives that are 100% owned by citizens of the Republic falling within an identified category.
In effect, this means bidders who do not satisfy this pre-qualification criteria will be automatically excluded from bidding from the get-go before factors such as capability, functionality or even price are considered.
Contracts Above R100 Million:
- Government makes subcontracting a mandatory condition of the bid. Therefore, the successful bidder must subcontract at least 25% of the total contract value to one or more enterprises or cooperatives in the identified categories of persons, with those subcontractors being 100% owned by citizens of the Republic.
What this proposed law effectively means is that the state will force entities who want to do business with the state into subcontracting with only 100% black-owned companies.
In all the categories of contracts mentioned above, if no qualifying bids are received by the procuring institution, it must cancel and re-advertise it for another identified category of persons or, as a last resort, proceed with no preferential procurement, but only after a report is submitted to the Public Procurement Office.
These proposed regulations are exclusionary and baffling to say the least, especially as there is serious pending litigation that challenges the constitutionality of the very Act upon which the regulations are created.
It is also apt to mention that the Courts have previously ruled that the government cannot reject tender applications purely on the basis of a pre-qualification racial criterion and categorisation.
Businesses should consider how this new procurement regime, if implemented, may affect their ability to tender.
NEASA encourages businesses to submit written comments on these draft regulations. Submissions must be directed to the National Treasury and submitted via email to: DraftGeneralProcurementRegulations@treasury.gov.za by no later than 15 June 2026 and copy NEASA (info@neasa.co.za) in the email.
For more information
NEASA Media Department
media@neasa.co.za
