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How South Africa's Procurement Bill Levels the Playing Field for Small Businesses

admin558698
Aug 5, 20244 min read

1. Introduction

South Africa's new procurement bill is a game-changer for small businesses. This article explains why small business owners must pay attention to this new legislation and how it benefits them by creating a more equitable business environment. Passed by Parliament on July 18, 2024, and signed into law by President Ramaphosa on July 23, 2024, this bill marks a significant step towards inclusive economic growth. The commencement/start date has not been confirmed yet.


The procurement bill relies on section 217(1) of the Constitution of the Republic of South Africa, 1996, which instructs that “contracting of goods and services by organs of state in the national, provincial and local sphere of government, and other institutions identified in national legislation, must occur in accordance with a system which is fair, equitable, transparent, competitive and cost-effective”.

2. Why the New Procurement Bill Matters

The new procurement bill is set to revolutionize how government contracts are awarded. It is intended to

  • Regulate public procurement.

  • Prescribe a framework within which preferential procurement must be implemented.

  • To provide for matters connected therewith.


3. Key Benefits for Small Businesses

Simplified Procurement Processes: The bill introduces a more streamlined bidding process, making it easier for small businesses to participate without the burden of excessive paperwork and compliance costs.

Quotas and Set-Asides for SMEs: The bill makes mandatory allocations for small businesses, ensuring guaranteed opportunities to win government contracts and fostering growth and sustainability.

Increased Transparency and Fairness: Small businesses can compete on a level playing field with fair evaluation and selection processes, knowing that the procurement system is designed to be equitable and transparent.

4. Important Sections of the Bill for Small Business

Small business owners should pay careful consideration to the following sections of the new procurement bill:

1. Chapter 2, Section 7: Decision-making for Procuring Institutions:

This section outlines the responsibility of accounting officers or authorities in making procurement decisions. The National Treasury remains responsible for providing all instructions, guidelines, and codes of conduct in public procurement under Section 32.

2. Chapter 3: Procurement Integrity and Debarment

Emphasize maintaining ethical standards and transparency and ensuring a fair, competitive environment. Including the following Codes of Conduct and Fair Practices: Sections 9 (Codes of Conduct) and 10 (Conduct of Persons Involved in Procurement).

3. Chapter 4, Section 17: Set-Aside for Preferential Procurement

 SME Quotas: This section mandates specific quotas for small and marginalized businesses, ensuring they have a fair chance to win government contracts.

4. Chapter 4, Section 19: Subcontracting as Condition of Bid

Subcontracting Opportunities: This provision allows or mandates subcontracting to small businesses, providing more opportunities even if they are not the primary contractors.

5. Chapter 5, Section 24: Procurement System and Methods

Streamlined Processes: Understanding the various procurement methods and systems will help small businesses prepare and participate more effectively in procurement activities.

6. Chapter 6: Dispute Resolution

 Provide mechanisms for resolving disputes, ensuring small businesses have recourse in case of unfair practices. The Fair Appeal Processes: Sections 35 (Reconsideration by Procuring Institution) and 36 (Establishment of Tribunal).

5. The Tender Process

The tender process under the new procurement bill is designed to be more transparent and accessible for small businesses. Here are the key steps involved:

1. Advertisement of Tenders:

   Tenders are publicly advertised through various platforms, ensuring that all interested parties have access to information about available opportunities.

2. Submission of Bids:

   Small businesses must prepare and submit their bids according to the specified guidelines and within the deadlines. The bill simplifies the submission process, reducing the administrative burden.

3. Evaluation of Bids:

   - Bids are evaluated based on predefined criteria. The new bill ensures a fair and transparent evaluation process, providing equal opportunities for all bidders.

4. Awarding of Contracts:

   - Contracts are awarded based on merit, considering the bid's quality and compliance with the requirements. Provisions for quotas and set-asides for small businesses are applied at this stage.

5. Post-Award Processes:

   Successful bidders must comply with the contract's terms and conditions. The bill includes measures to ensure accountability and performance monitoring.

6. Leveling the Playing Field

The bill addresses historical imbalances by reducing the dominance of large corporations and empowering small and marginalized businesses. This empowerment instills a sense of confidence and capability in small business owners. By promoting competition and innovation, it creates a more vibrant and diverse market. Additionally, the bill's support for local economic development through increased SME participation fosters a sense of connection and responsibility in small business owners, strengthening local economies and fostering community growth.

7. Practical Steps for Small Businesses

To take full advantage of the new opportunities, small businesses should:

Understanding the New Bill is crucial. Familiarizing themselves with key provisions and requirements will ensure small business owners feel informed and prepared, enhancing their eligibility and compliance.

Small businesses should assess and enhance their business capabilities to meet the standards set by the new bill. This proactive approach will position them to take full advantage of the new opportunities it presents, making them feel prepared and ready for the changes.

8. Disadvantages of the New Bill

 Implementation Challenges:

Implementing the new bill’s provisions may be challenging, especially for smaller municipalities and institutions that lack the necessary resources, technology, and expertise.


Potential for Misuse:

Despite enhanced transparency measures, there is still a risk of misuse or manipulation of the system, mainly if oversight mechanisms are not implemented correctly.

9. Conclusion

South Africa's new procurement bill is a significant step towards leveling the playing field for small businesses. By simplifying processes, ensuring fair competition, and providing support for local economic development, the bill offers numerous benefits that small business owners must pay attention to. Proactively engaging with this new legislation will open up opportunities and drive sustainable growth for small enterprises.

10. Additional Resources

Visit the Parliament of South Africa at for a copy of the new Procurement bill [https://www.parliament.gov.za/storage/app/media/Acts/2024/Act_No_28_of_2024_Public_Procurement_Act.pdf].







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