Government is looking to change procurement regulations to make it easier for micro-businesses to implement projects.
The Department of Public Works has recommended amendments to the 30% small, medium and micro-enterprise (SMME) sub-contracting requirement in the Preferential Procurement Policy Framework Act (PPPFA) regulations because implementing it was problematic.
Wasnaar Hlabangwane, chief director of construction management at the department, says this regulation resulted in more bidders being non-responsive, many bids being awarded at higher cost, leading to community unrest. All of this also results in project stoppages and the lives of all parties involved in the project being placed at risk.
Hlabangwane told the Council for the Built Environment (CBE) Transformation Indaba this week the aim of the regulation is to transform the construction industry while uplifting the previously disadvantaged. “Inadvertently the regulation is impeding the implementation of projects due to the vast number of non-responsive bids, resulting in missed employment opportunities either as direct labour as SMMEs or as suppliers. We have huge projects currently that we cannot conclude on the basis of these processes, which could be far better handled post the award. The budget has already been allocated by National Treasury, but you cannot spend because of all these impediments, and there are other factors as well,” he says.
Hlabangwane says insisting that main contractors had to enter into agreements with SMMEs at tender stage was totally impractical. This is difficult as the list of SMME sub-contractors at this stage is bound to change, and the level of achievement would only be determined upon completion of the project. It is estimated that 30-50% of SMMEs would be changed during the construction period for some period, he said.
Agreements entered into with SMMEs created expectations when it was not known which bidder would be successful and SMMEs incurred vast cost to re-register and become active in the hope of getting some work. Hlabangwane says it is also unfair to expect the bidder to enter into agreements with SMMEs prior to the invitation of bids or even just prior to award because in most instances the services of SMMEs would only be required after six months or up to three years after the commencement of the project.