BEE in Public Procurement Regulations

State procurement regulations made in 2017 by the Minister of Finance represented a watershed moment in procurement and BEE in South Africa. Before 2017, companies tendering for state contracts could be penalised at most by 10% to 20% if they did not meet BEE requirements. This was damaging enough. Since the 2017 regulations, however, organs of state have gone much further: tender requirements began to outright exclude companies based on BEE criteria, for example, if a company was not 100% black-owned. After a legal battle of 5 years, Sakeliga was able to have the minister's 2017 regulations declared invalid and unconstitutional, with the final order in the Constitutional Court. The victory is the first comprehensive rollback of BEE through litigation. The Constitutional Court found in favor of Sakeliga on February 16, 2022, that the Minister of Finance at the time, Pravin Gordhan, acted ultra vires (beyond powers) by regulating as though he had legislative authority. This victory follows Sakeliga's earlier success in the matter before the Supreme Court of Appeal. • The court case is one of the most influential on state affairs in the last three decades. • The independence of state organs to determine their own procurement policies – with or without BEE and other political considerations – and to undertake value-for-money procurement has been restored. • The judgment has caused procurement practitioners at all levels to rethink state procurement and to focus on value for money. • The momentum of the government to strengthen BEE and other political requirements in state procurement has been broken.