Public Procurement Office: Investigation and prosecutorial powers

In terms of section 4 of the Procurement Bill, the Public Procurement Office (PPO) is to be an office established within National Treasury that must perform its functions without fear, favour or prejudice.

18 Mar 2024 4 min read Dispute Resolution Alert Article

The primary function of the PPO will be to promote compliance with the Procurement Bill by procuring institutions, such as public listed entities, including Eskom, Denel, Transnet, the South African Post Office, national and provincial departments, municipalities, and constitutional institutions such as the office of the Public Protector.

Section 5(1) of the Procurement Bill envisages that the PPO to must, among other things, promote and implement the necessary measures to maintain the integrity of procurement and guide and support official and procuring institutions to ensure compliance with the Procurement Bill.

The PPO has an overarching function in that it must promote, guide, support, ensure compliance, and take the required steps if there is material breach in the procurement of goods and services by a procuring institution. Where there is procurement of goods and services, there is unfortunately also opportunity for corrupt activities between officials who abuse positions of authority to unduly benefit from state contracts and service providers who want to secure contracts without going through a fair and equitable appointment process. In anticipation of this, one of the objectives of the proposed public procurement legislation, as stated in section 2 of the Procurement Bill, is to “advance ethical conduct and combat corruption through access to procurement information and other transparency measures and introducing enforcement and appropriate sanctions for transgressors”.

The proposed legislation empowers the PPO to, as stipulated in section 5(2)(a), “issue binding instructions” in accordance with the Procurement Bill. The nature and force of such binding instructions are not defined in the Bill and this clarity will be required to determine the consequences of non-compliance with the instructions. What has been clarified in the proposed legislation, however, is the investigative and prosecutorial authority which vests with the PPO.

Investigation and prosecutorial powers

In terms of section 56 of the Procurement Bill, the PPO will investigate any alleged non-compliance with the Procurement Bill if requested by a relevant treasury, a procuring institution, a member of the public, or on its own initiative. Furthermore, in the event that the investigation reveals non-compliance with the Procurement Bill, the PPO is empowered to instruct the procuring institution to take the necessary steps to stop and prevent non-compliance, or it can refer the matter to the relevant law enforcement agencies. Such powers are limited to the offences outlined in section 61 of the Procurement Bill, which include instances where a person knowingly gives false or misleading information under the Bill, interferes in the tender process, or connives or colludes to commit a corrupt, fraudulent, collusive or coercive or obstructive act related to procurement under the Procurement Bill.

For the purposes of exercising its duties under the proposed procurement legislation, the PPO is granted powers to enter and search the premises of the procuring institution, the official(s) involved in procurement of the procuring entity, or the premises of the winning bidder or supplier itself. The power to enter and search premises is restricted and must be done with prior consent or with a warrant issued by a judge or a magistrate as per section 58 of the Procurement Bill, which details the procedure for obtaining warrants.

Upon a reading of section 57, it is evident that this section envisages dawn raids, which are unannounced inspections of premises by authorised officials of the PPO at the premises of procuring institution or private residences, in order to obtain incriminating evidence as a precursor to regulatory proceedings.

The PPO does not have prosecutorial powers, but one of its powers is to ensure compliance with the proposed legislation, which includes the power to investigate irregularities of the procurement process and to make the necessary submissions and recommendations to the National Prosecuting Authority, the Public Protector and the South African Revenue Service to further investigate and, where necessary, criminally prosecute if they conclude that there were irregularities and activities such as corruption in the procurement of goods and services.

Requirements for the success of PPO investigations

The success of the PPO and investigations into non-compliance will depend on building a team that is skilled to investigate complex and multi-faceted procurement matters with efficiency. Alignment with the abovementioned authorities is necessary to ensure that allegations of non-compliance with the proposed legislation is comprehensively addressed with publicised outcomes. This will ensure that the PPO is seen to be effective and deter parties from actions that violate the principles of fairness, equitability, transparency, competitiveness and cost effectiveness, which must be upheld in public procurement as stipulated in section 217 of the Constitution

The information and material published on this website is provided for general purposes only and does not constitute legal advice. We make every effort to ensure that the content is updated regularly and to offer the most current and accurate information. Please consult one of our lawyers on any specific legal problem or matter. We accept no responsibility for any loss or damage, whether direct or consequential, which may arise from reliance on the information contained in these pages. Please refer to our full terms and conditions. Copyright © 2024 Cliffe Dekker Hofmeyr. All rights reserved. For permission to reproduce an article or publication, please contact us