Summary of the 16 Feb 2022 Constitutional Courts decision Minister of Finance v Afribusiness

On 30 May 2022, The Constitution Court confirmed that the suspension period initiated by the Supreme Court of Appeal continued from 16 February 2022. The 2017 Preferential Procurement Regulations therefore are valid and must be complied with until 25 January 2023.

Yeah this started uh when the 2011 preferential procurement regulations were really questions in terms of how effective they are and the task team was put together by national treasury department of trade industry enterprise development economic development and public enterprises and that resulted in then a update to the regulations which we now call the professional

Preferential becoming regulations 2017 and already when they were issued in draft every business started to complain and contest and eventually tried to get the carting high court at the cartoon high court to set aside the 2017 regulations um they were unsuccessful in that one they tried to appeal the appeal was dismissed so they took it to the supreme court of

Appeal which heard that um the argument’s eighth of september and then the second of november 2020 the supreme court of appeal declared the entire 2017 regulations invalid but they suspended that order in validity for 12 months they appealed it to the constitutional court the hearing happened on the 25th of may and yesterday at 10 am the decision was handed down

And the minister finance the appeal by the minister finance was dismissed with costs that’s that’s where we we stand at the moment if we if we then take that i think there’s a bunch of questions that um your people are asking these are what we we’re getting from a number of people what does this mean does it mean we refer to the 2011 regulations do we now wait

For national treasury to to revise the regulations how does this affect the tenders that were issued or closed since the 2nd of november 2021 what about the tenders that are still active not yet closed what about the tenders that we’re going out today tenders and quotations can we still pre-qualify and is it fee if feasible must we still sub-contract if it’s more

Than 30 million rand what happens to the local production and content circulars um why the frequent reference in the act to section 2-1 of the triple pfa and are there any changes that we need to make to our policies a couple of questions and just to try and give us some structure what i uh discussed with prof keo is let’s try and just follow these these five

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Yeah just the highlights of the case where do we stand now in the legal process people are already saying well this is going to be appealed can it be what does this mean for the tenders and quotations that are out why the reference to 2-1 of the act and what are the sem policy implications and then we can discuss briefly the unintended consequences of this prof

Please chip in if i misinterpret anything going through now just picking out a couple of points in the case so this is the minister finance and afri business um fidelity service group and afghan national security employers association with two intervening parties you’ll see throughout the judgement there’s reference to them but i’m not going to spend time on

The conclusions about their request to intervene in the minority part of the judgement they basically outline the the key questions that that are being asked of the constitutional court whether the minister acted beyond the scope of his powers when he promulgated the impugned regulations this question requires the court to consider the following issues whether

The 2017 regulations are inconsistent with the procurement act they’re referring there to the triple pfa what is the scope of the minister’s regulatory powers in terms of the act and lastly whether the 2017 regulations are inconsistent with section 2171 of the constitution such that they are invalid there were two it was not unanimous the minority judgment was um

Was four of the justices um penned by justice maslanta in fact read by him by justice mclandler and the majority judgment was read by justice madalanga they agreed with all of the minority judgment decisions except the one on the minister having the power to make the regulation is that right prof yes more or less yes so so they agreed they agreed on all the

Procedural matters which i don’t think need to train us yeah but it’s on the substance of the appeal where where they actually disagreed and they took a much narrower view and decided basically on the merits of the appeal on one single basis thanks let me quickly share the results of those that are online about 23 of you have read it in entirety 36 have not read

It and 41 of you have have actually scanned so there we’ve got a good um good number of of you that have actually at least scanned it and looked at it so um in the minority judgment um there is a number of points that are made the constitution itself empowers the state to adopt procurement policies that prefer certain contracts be allocated to persons that were

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Previously disadvantaged by unfair discrimination you’ll see throughout i’m not going to go through these in much detail but throughout the minority and majority judgment there’s a lot of references to two one seven two and three and the interplay between 2172 and 2171 and um really talking a lot about the references in the constitution to policy and to framework

And if you’re not familiar with those then important to have a look at that the conclusion from the minority was that they would have set aside the supreme court of appeals decision and really dis dismissed it with costs that was not what the majority went with here are some summary points that i think would be of relevance to people in the public procurement

Space my view the impugned regulations are not necessary we’ll come back to necessary um the impedance regulations are meant to serve as a preferential procurement policy throughout the first judgement uh section two one of the procurement act provides that an organized state must determine its preferential procurement policy and implement it within the framework

Throughout the majority’s judgment there’s this reference to to one of the procurement act to one of the preferential procurement policy framework act the act is plain in that national legislation invested in section 2173 of the constitution and is provided for in that section the object of the act is to achieve what is contained in section 2172 of the constitution

So what is necessary for the purpose of the pregnant act and by extensive purposes of 217 to the constitution is provided for in section 2 1 of the procurement act preferential procurement policy must be determined by each individual organ of state and it must be implemented with the framework that is set out in section two and then prof the the whole thing then

Moves towards the whole issue of necessary and expedient and the difference between the interpretation of the minority judgment and the majority judgment on that issue of necessary and expedient and 116 it can neither be necessary nor expedient for the minister to make regulations that seek to achieve that which can already be achieved in terms of section 2

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1 of the pregnant act happily both the first judgment and this judgment and indeed the minister understand the impune regulations to do what is investigated in section 2172 of the constitution the procurement act in particular 2 1 gives effect to section 2173 which provides that the preference in vision section 2172 must be provided for in national legislation

The minister cannot just because she or he feels that her or his idea of preferential became a policy is not being introduced by organs of state arrogate to her himself a power that she or he does not have under the procurement act and this perceived need for a particular type of preferential policy is is simply not enough and then the concluding statement the

Procurement act has stipulated the means of or adopted a plan for determining a preferential pigment policy the minister is now adding different means or varying the adopted plan he cannot do that there’s just two concluding sections interesting question that arises around the first judgment’s approach assuming that a preference become a system created by the

Minister by regulation conflicts directly with one created by an organ of state which one will take precedence and why and then interestingly it goes on to say that although there might have been some reason to have the regulation the question is that does the minister have the power to issue the regulations and concluded no and i think that’s the the summary

There prof here um the upshot is that the following order is made i’ll just jump through one and two the leave to appeal is granted so they can appeal to the constitutional court and the appeal is dismissed with costs including the cost of two council that’s where we stand third of november national treasury issued an advisory to everybody and said the following

The appeal to the constitutional court suspended the aca judgment should the constitutional court dismiss the appeal by the minister of finance and uphold the decision of the sea the constitutional court will in its judgment indicate the period of suspension of invalidity to allow the minister time to amend the regulations therefore while awaiting the judgment

Institutions must continue to comply with the preferential became regulation 2017 in their procurement processes until further notice

Transcribed from video
Summary of the 16 Feb 2022 Constitutional Courts decision Minister of Finance v Afribusiness By Public Procurement and SCM Collaboration Platform