When a municipal procurement officer in Cape Town opened his inbox on Monday, the first thing he saw was a court judgment that erased a law that would have overhauled how government bodies award contracts. The Constitutional Court declared the Public Procurement Act of 2024 unconstitutional, meaning the draft rules that were set to govern tender processes across the country will not take effect.
The Act was intended to create a single set of rules for national, provincial and local governments when they spend public money on goods and services. It would have given the national Minister of Finance the power to enforce strict, one-size-fits-all regulations, including mandatory race-based set-aside quotas that could exclude bidders who did not meet the prescribed criteria.
According to the Western Cape Government (WCG), the law was rushed through Parliament without adequate public participation. The government said the National Assembly made major edits to the bill but failed to give the public a reasonable chance to comment, treating consultation as an afterthought. The trade union Solidarity echoed this view, arguing that the race requirements would force the exclusion of bidders based on race rather than value for money.
Both the WCG and Solidarity brought the matter before the court. The Constitutional Court agreed that the National Assembly had not fulfilled its constitutional duty to allow meaningful public participation after significant changes were made to the legislation. In its judgment, the court noted that the lack of proper consultation violated Parliament’s responsibilities.
For provincial and municipal authorities, the decision removes a potential new layer of red tape. Cape Town Mayor Geordin Hill-Lewis warned that the Act would have slowed down service delivery and infrastructure investment, making it harder for municipalities to respond quickly to urgent water, sanitation, electricity, waste and environmental needs. He said the city’s infrastructure spend of R12.2 billion in the last year, 75 % of which benefits lower-income households, would have been hampered by the new rules.
From a small-business perspective, the ruling keeps the current procurement landscape intact. Many local suppliers rely on the flexibility to bid for contracts without being automatically disqualified by race-based set-asides. The Western Cape already reports that 57.15 % of its procurement spend goes to black-owned businesses without the need for mandatory quotas. The court’s decision therefore preserves the ability of SMEs to compete on price and capability rather than on meeting prescribed demographic targets.
Solidarity Deputy Chief Executive Anton van der Bijl called the judgment a blow to a “house of cards” that has embedded race considerations into every corner of the economy. While the union’s language is colourful, the practical effect is that the specific race-based exclusion criteria in the Act can no longer be used immediately.
What remains unclear is how the government will proceed with a national procurement framework. The court did not order Parliament to rewrite the legislation, only to respect the constitutional requirement for public participation. This leaves the door open for a revised bill that could address the participation concerns while still aiming for greater efficiency and transformation.
Businesses that monitor government tenders should keep an eye on any new drafts that may emerge. In the meantime, the existing provincial and municipal procurement policies continue to apply, and suppliers can focus on meeting the current criteria for value, capacity and compliance.
What the decision means for local suppliers
Without the mandatory set-aside quotas, companies can bid for contracts based on their ability to deliver, rather than on meeting a prescribed demographic percentage. This is likely to keep tender processes faster, which is crucial for urgent projects such as water pipe repairs or waste-management upgrades. Suppliers should continue to maintain robust compliance records and be ready to demonstrate value for money, as those remain the core evaluation points under the current system.
For entrepreneurs looking to expand into the public-sector market, the judgment also underscores the importance of engaging early with provincial and municipal procurement units. The Western Cape’s experience shows that proactive dialogue can help shape procurement outcomes before they become law.
Readers who need help navigating procurement compliance can use our compliance document generator to draft the necessary paperwork for tender applications.
Source: BusinessTech. Court: Constitutional Court. Category: Retail & Consumer.
