Emergency Public Procurement under Covid-19 (Part 2)

07 July 2020,  Mulalo Mokgoro 1190
While Part 1 in this series of blogs highlighted the necessity of businesses and organisations becoming aware of protocols and policies put in place for procurement of goods and services in their respective sectors during the Covid-19 pandemic, Part 2 focuses on the provisions of instruction No. 05 of 2020/21 as issued by the National Treasury (the “Instruction”).

With various restrictions in place due to the national lockdown, private businesses and organs of state find themselves in a predicament of not knowing which processes to follow in as far as procurement and supply of goods and services are concerned. To provide guidance to public entities during this period, National Treasury issued the Instruction which is applicable to all national and provincial departments, constitutional institutions and public entities listed in schedule 2 and 3 of the Public Finance Management Act, 1999. Local government institutions and municipalities also have similar directives regulated by the Municipal Finance Management Act Circular 102 as amended. 

In the main, the Instruction justifies the use of emergency procurement procedures to deal with the Covid 19 virus and specifically instructs public entities to avoid the abuse of the supply chain management systems in these times. The Instruction specifically deals with the aspects of emergency public procurement as summarised below:

Variation and Expansion of Contract Amounts

The Instruction has increased the thresholds of varying a contract amount for construction-related goods and services from 20% or R20 million to 30% or R30 million, and increased the threshold for all other goods or services from 15% or R15 million to 25% or R25 million of the original contract value. This is a large relaxation of the ordinary variation and expansion rules, as it provides entities 10% flexibility to vary and expand contract amounts.

Procurement of Personal Protective Equipment (“PPE”) and Cloth Masks

The Instruction provides the maximum prices at which public entities must procure PPE items and cloth masks. The Word Health Organisation (WHO) and the National Department of Health have developed specifications to which the PPE items must conform, while the Department of Trade, Industry and Competition together with the National Department of Health have developed specifications to which the cloth masks must comply to ensure that transmission of the virus is contained and managed. The supply of PPE items will be open to all suppliers who conform to the directives as set out in the Instruction.

Transversal Contracts

Organs of state which have been party to any transversal contract are permitted to procure PPE items listed in the Instruction through such transversal contracts without obtaining approval from the National Treasury Transversal Contracting Unit. Notwithstanding this, the prices of the suppliers in respect of the transversal contracts must default to the maximum prices provided for in the Instruction. 

Public Procurement Processes Briefing Sessions

Organs of state are advised to, as far as possible, avoid convening briefing sessions. To assist organs of state in this regard the Instruction permits organs of state to extend the tender response periods from 21 days to no more than 40 days. However, if a briefing session cannot be avoided, the briefing session must be arranged by other means such as teleconferencing, Microsoft Teams, Zoom and similar enablers. Public bid-opening must be done in compliance with the 2020 Regulations issued under the Disaster Management Act of 2002. This is a direct response to the call for social distancing, and to this effect National Treasury intends to ensure that all unnecessary physical meetings are avoided, thereby reducing the spread of the virus.

Reporting Requirements of Procurement Plans

All institutions subject to the Instruction must amend their procurement plans to reflect their planned Covid-19 related procurement and available budget. It is important for public entities to realise the potentially devastating impact the virus could have on its planned procurement budget and to respond accordingly to such a possibility.

The Instruction contains annexures which detail the PPE items price list (updated as at 3 July 2020), RT64 Transversal Contract List and small busines development suppliers list.

Should you be unclear on any aspect regulating emergency public procurement in these times, our office is available to guide you accordingly.
Related Expertise: Public Procurement
Related Sectors: Local Government, Public Sector
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