THE CONFUSION REGARDING THE CONSTITUTIONAL COURT RULING IS UNNECESSARY

MINISTER OF FINANCE v AFRIBUSINESS (SAKELIGA)- WHAT EXACTLY IS THE CONSTITUTIONAL COURT RULING ON THE MATTER

Yesterday, on this platform, I took issue with what I considered to be one municipality's misinterpretation of the second National Treasury circular regarding the judgment of the Constitutional Court in the matter between AfriBusiness and the Minister of Finance.

Subsequently and on engagement with other government employees and reading circulars issued after the National Treasury circulars, by the various departments I noticed that the issue goes deeper and that in almost every instance, the actual ruling of the Constitutional Court has become a casualty and has been replaced by chest thumping in some instances and pure misrepresentation in others.

It looks like the propaganda machines are in full swing and not only between government and AfriBusiness but also some quarters including professional law firms. So what was the Constitutional Court's ruling on the matter and what was the issue?

Constitutional Court Ruling and the Issue

The Constitutional Court delivered "two" judgments on the matter. One minority judgment and the majority judgment that ultimately carried the day. The majority judgment, the actual judgment of the court was penned by Justice Madlanga. It is deceptively simple and straight to the point.

It can simply be paraphrased as follows: On the question of whether or not the Minister of Finance has authority to make and promulgate the 2017 Procurement Regulations, the Court answered a resounding NO. Why? Simply because the Minister, irrespective of how the specific regulation that was being challenged is written, simply has NO authority to make it.

Why again? Because the law grants that authority and responsibility to each organ of state and NOT the Minister. That is the long and short of it.

The issue of legality or plausibility of the 2017 Regulations and in particular, the so called "pre-qualification criteria" is what lawyers will call moot. It simply , according to my understanding of the judgment, does not arise or is not pertinent to the issue at hand.

Why once more? With the risk of belabouring and overkilling the point, simply because the Minister has NO authority to make any regulation relating to the advancement of persons previously disadvantaged by apartheid. Justice Madlanga is at pains to make this point clear in the majority judgment on several occasions. See for example the following: [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(1) of the Procurement Act. Happily, both the first judgment and this judgment and, indeed, the Minister understand the impugned regulations to do what is envisaged in section 217(2) of the Constitution. The Procurement Act (in particular section 2(1)) then gives effect to section 217(3) of the Constitution, which provides that the preference envisaged in section 217(2) must be provided for in national legislation.

What is the judgment against?

It is very important to understand that the Constitutional Court ruled against the notion that the Minister has the power to make the 2017 Preferential Procurement Regulations and not necessarily the so called "pre-qualification criteria" per se. Put differently, the Court's focus (the majority judgment at least) is the conduct of the Minister and his authority (or rather lack thereof) and not the content of what was "legislated" through the 2017 Preferential Procurement Regulations.

The court simply affirmed what is clearly stated in the Section 2(1) of the Preferential Procurement Policy Framework Act, which is the fact that each organ of state should undertake the creation of its own preferential procurement policy itself and not the Minister.

That much is made clear in several paragraphs in the judgment including the following: "[111] In my view, the impugned regulations are not necessary. The impugned regulations are meant to serve as a preferential procurement policy. Throughout, the first judgment says as much. Section 2(1) of the Procurement Act provides that an?organ of state must “determine its?preferential procurement policy”?and implement it within the framework laid down in the section.92?(My emphasis.) If each organ of state is empowered to determine its own preferential procurement policy, how can it still lie with the Minister also to make regulations that cover that same field?

[114] Logically,that must mean that the determination of a preferential procurement policy by a person or entity other than each organ of state is not?necessary?for the simple reason that there already is provision in section 2(1) for the determination of such policy by each organ of state. Therefore, rather than being necessary, any determination of policy by the Minister would be superfluous and not at all within the ambit of what is?necessary?as envisaged in section 5. According to the Compact Oxford English Dictionary,?“necessary” means “1.?needing?to be done, achieved, or present . . . 2. that?must?be done;?unavoidable”.?(My emphasis.) If there already is provision in the Procurement Act for each organ of state to determine and implement its preferential procurement policy, how can it ever be?necessary?for the Minister to make provision by regulation for the same thing? It simply cannot be. What the Minister has purported to do is a far cry from what is necessary.

So that's the essence of the judgment.

The National Treasury Circular of 3 March 2022

Parts of the National Treasury Circular of 3 March 2022 are odd in that it suggests that the approach to the Constitutional Court for clarity relates to whether or not there is a "grace period" to suspend the operation of the order of invalidity of the 2017 Procurement Regulations. This oddity comes from the Supreme Court of Appeal judgement in terms of which the order of invalidity was suspended for 12 months to enable the Minister to take steps to remedy the defect.

But the issue has hurried along so to speak. The Constitutional Court ruling is very clear in that the Minister has no business making the regulations in the first place. In that case, there is nothing that the Minister can practically do in the circumstances. Therefore, I do not believe that the approach to the Constitutional Court for clarity is necessary. No form of clarity or directive by the Constitutional Court or anyone will cloth the Minister with the authority to make the regulations.

In my view, the attempts to focus attention on the actual contents of the regulations found to be invalid is completely misdirected.

The Confusion and Chaos

Following the circulars issued by the National Treasury, there seem to be chaos within organs of state or at least confusion on what is supposed to happen regarding procurement of goods and services. The "advise" from National Treasury contained in the circular of 3 March 2022 seem to have worsened the situation.

My engagements with some public servants and some circulars issued by certain provincial treasuries reveal more confusion than is necessary. In some cases, the circular seem to have induced acute paralysis.

The truth is that there is nothing in law that the Minister can do except maybe a rescission application which stands next to no chance of success. It does appear that, in fact, the Minister and National Treasury have accepted the judgment which makes it rather confusing why they have adopted the language and approach in the circulars.

The confusion and the resultant chaos is unnecessary. Each organ of state should simply adopt a preferential procurement policy framework for itself as envisaged in the PPPFA, in instances where none exist already and conduct its procurement accordingly.

The 3 March 2022 circular from National Treasury is not helping and is creating a false sense of hope.

What Must Organs of State Do

They certainly should not wait for anything from National Treasury and should go on with their business of delivering whatever mandated they are required to fulfil. They need to understand that the fact that the Minister had no authority to make the regulations in the first place coupled with the Constitutional Court order declaring them invalid means that they, for all practical intents and purposes, never existed.

On the other hand, national legislation, the PPPFA, grants them (the organ of states) authority to make their own policies in this regard. Considering that the Act (PPPFA) has been in operation for many years, one would be surprised that the majority, if not all, organs of state would not have such policies already.

This, in the final analysis, is one area where top-down bureaucracy is simply not necessary and will not help. Each organ of state must get on with the work. Service delivery and the business of running government cannot wait!