Public-sector construction tenders open to bidders from abroad

The current economic climate has slowed the development of infrastructure in many countries. In contrast, the South African government has allocated U$115 billion for the development of public sector infrastructure, and the World Bank has lent U$3.7 billion to Eskom (a South African state-owned entity) to provide funding for renewable energy projects as well as the completion of two coal-fired power plants. These circumstances afford a unique opportunity for international construction and engineering companies to expand their businesses in South Africa. Set out below is a basic introduction to how international companies can be eligible for government work, and the procedures governing government tenders. It is important to note that there is a raft of legislation governing tenders, and this introduction focuses only on the most important aspects of the relevant legislation.

The law governing tenders

Companies that tender for public-sector construction contracts need to comply with the Construction Industry Development Board Act, 38 of 2000 (the Act). This Act applies to “organs of state” that have put out tenders for “construction works”. “Organs of state”, as defined in South African law, include municipalities, government departments and state-owned entities. “Construction works” means a combination of goods and services utilized for, among other things, the development, repair, maintenance and renewal of a fixed asset, which includes building and engineering infrastructure.

In addition to the Act, there are a number of other statutes which apply to tenders. These other statutes have been created to fulfil the requirements of the South African constitution, which states that tender awards must be made in accordance with a system that is “fair, equitable, transparent, competitive and cost-effective” and acknowledges that a procurement system may provide for categories of preference and for the advancement of categories of persons. These acts include:

• the Promotion of Administrative Justice Act, 3 of 2000;
• the Preferential Procurement Policy Framework Act, 5 of 2000; and
• the Public Finance Management Act, 1 of 1999.

Nikita Lalla is a director and Jonty Sacks is a candidate attorney at Edward Nathan Sonnenbergs

Johannesburg

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Johannesburg

South Africa

2196

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