Public Procurement Act: What government suppliers must know now
By Adrian Ephraim
SOUTH Africa’s public procurement system has just undergone its most significant overhaul since the dawn of democracy, and for the thousands of businesses that sell goods and services to government, the rules of engagement have fundamentally changed.
For years, the procurement system was a labyrinth, fragmented across the Preferential Procurement Policy Framework Act, various National Treasury notes and instructions, and a patchwork of local municipal regulations. Now, the Public Procurement Act 28 of 2024 consolidates and replaces much of this complexity with a single primary law governing public procurement. President Ramaphosa signed the Act into law on 23 July 2024, and on 16 April 2026, the National Treasury published the draft General Public Procurement Regulations for public comment, the detailed operational requirements necessary for its full implementation.
The Act is not yet fully operational, its commencement date is still to be proclaimed, but implementation is phased, with various sections coming into effect throughout 2025 and 2026. The direction of travel is unmistakable, and the window to prepare is closing faster than most business owners realise.
What has actually changed
Previously, procurement was guided by a patchwork of laws and circulars under the PFMA, MFMA, and PPPFA, making compliance cumbersome and uneven across entities. The new 34-page Act consolidates much of this complexity, though it references the earlier frameworks more than sixty times.
The most consequential change for businesses that tender is the restructuring of preferential procurement. The draft regulations introduce a tiered structure, with contracts categorised by estimated value, each tier triggering distinct mandatory requirements.
For contracts below R20 million, the procuring institution must set aside the bid exclusively for one or more identified categories of persons, including black people, black women, women, persons with disabilities, military veterans, youth, and small enterprises within a geographical area. To qualify for a set-aside, a bidder must demonstrate 100% ownership by members of that specific category.
Partial ownership is not enough.
Previously, set-asides were often treated as ‘nice-to-have’ suggestions. Under the 2024 Act, they become a central tool for economic rebalancing. If a tender is set aside for SMMEs, you are not competing against multinational corporations. That is good news for qualifying businesses. But the documentation requirements are correspondingly tighter.
A contested reform
The regulations are not without controversy. A joint stakeholder engagement involving the B-BBEE Commission and the Black Management Forum, presented to National Treasury this month, argued that public procurement should not merely be viewed as an administrative function, but as one of the state’s most strategic instruments for driving economic transformation, industrialisation, job creation, localisation, and broad-based black economic empowerment.
B-BBEE Commissioner Tshediso Matona acknowledged the significance of the reforms: “The Public Procurement Act and the Draft General Public Procurement Regulations present an opportunity to strengthen governance, improve efficiency, and modernise procurement administration across the public sector.” But stakeholders also warned that procurement reform must not create a system so rigid and centrally controlled that it becomes fertile ground for corruption. Procurement Performance Institute CEO Nduduzo Ngema called for a more decentralised and responsive support system that “strengthens capacity at provincial and municipal levels and improves accessibility for local businesses, deepens participation in township and rural economies, and creates a procurement ecosystem that is more inclusive and responsive to local development needs.”
Adding further complexity, a Public Procurement Amendment Bill, B7-2026, is already in Parliament, proposing to repeal the provisions related to set-asides and prequalification criteria. The pace of change is such that businesses are being asked to adapt to a framework that is still being debated.
What Western Cape businesses need to do now
Procurement specialists advise a practical three-step approach: go beyond a basic BEE affidavit and ensure ownership structures are clearly documented with a current SARS status; specialise on two to three specific commodity codes on the Central Supplier Database rather than being a generalist supplier; and use the current consultation period on the draft regulations to understand which tier your typical contract value falls into.
MEC for Economic Development James Vos has noted that the City’s Business Hub supplier development programmes have been “hugely successful, with many of the smaller vendors gaining insight into how they can position themselves to successfully compete in the bidding process.”
South Africa’s public procurement market, estimated at over R800 billion annually, remains one of the most significant commercial opportunities available to local businesses. The Act changes how that opportunity is accessed. For businesses that prepare now, it may also be more accessible than it has ever been.
