Procurement reform raises questions for South Africa’s infrastructure sector

Public procurement is the primary mechanism for infrastructure and service delivery in South Africa and underpins the government’s ability to deliver services to the country’s nearly 66 million citizens. The National Treasury estimates that total public procurement spending in 2026 will be approximately ZAR 1 trillion (approx. US$60 billion), equivalent to around 15% of the country’s GDP. 

Nearly two years after president Cyril Ramaphosa signed the Public Procurement Act into law, South Africa’s National Treasury published the first draft Public Procurement Regulations (102 pages / 2.1 MB PDF) on 16 April 2026.

The Act consolidates and replaces multiple pieces of fragmented legislation to establish a coherent legislative framework for an efficient procurement system across South Africa’s multiple spheres of government. 

The draft regulations give practical effect to the Act by establishing an implementation framework for substantive reform within South Africa’s public procurement system. A central consideration within the proposed regulations is the promotion of ‘beneficiation’ and innovation, with an explicit policy preference for local economic benefits over the procurement of imported goods in alignment with the government’s overarching Black economic empowerment (BEE) policies. This ensures that services are provided by South African entities or citizens and incentivises suppliers to propose innovative solutions to meet these local sourcing requirements.  

The proposed regulations also position public procurement as a tool for broader socio‑economic development. Procuring institutions are encouraged to advance job creation through mandatory policy measures included in bid documentation that are aimed at improving labour absorption and fostering the growth of small enterprises within defined geographic areas. This is reinforced through compulsory local participation mechanisms, including the requirement that a specified minimum percentage of the contract value be subcontracted to qualifying local small, medium and micro enterprises. 

To be eligible to bid, the draft regulations state that a bidder must subcontract at least 30% of the estimated contract value to South African citizens and should disclose the names of the proposed subcontractors in the bid documents. The bidder must also demonstrate that at least 40% of prior procurement spend was on enterprises that are at least 51% owned and managed by Black people. 

The proposed regulations reflect South Africa’s long-term strategy to bolster reform and transformation by prioritising local interests and establish a strong framework for a more efficient and transparent tender process that integrates small businesses into the procurement system from the outset. These are important goals which are likely to be welcomed by a wider range of industry stakeholders. However, the government must also ensure it is adequately equipped to implement such a sophisticated procurement model and complex evaluation framework.  

The draft regulations impose several obligations on bidders which may, in practice and if not effectively administered, impact the efficient provision of public services. For instance, under the current draft regulations prospective bidders would be required to undergo extensive due diligence, including verification of ethical track records, beneficial ownership interests and financial standing – such as the submission of audited financial statements – as well as disclose all proposed subcontractors at the bidding stage.

Bidders would also be expected to undertake more expansive pre-bid decision making, incorporating assessments of long-term national interests alongside more rigorous, project life cycle financial appraisals.

While these measures may enhance transparency and strategic alignment, their cumulative effect is also likely to lengthen procurement timelines and increase compliance costs. In a country already grappling with significant infrastructure and service delivery backlogs across multiple sectors, if there are delays in these processes then it could risk slowing the roll-out of critical projects. 

Given the complexity and impact of these regulations, the National Treasury has extended the consultation process for public comments until 15 June 2026. 

Stakeholders participating in public procurement should assess the potential impact of these draft regulations on eligibility, bid strategy and project delivery, and consider engaging in the consultation process ahead of the deadline. This is particularly important in instances where contracts may require local subcontracting, disclosures in bid documentation, and procurement strategies aligned to asset lifecycle planning and lifecycle costing.

Prospective bidders may wish to review the proposed framework closely given its stated reform and transformation objectives and express any concerns they may have around its proposed implementation. 

A significant consultation process could go a long way towards ensuring that considerations are balanced and that a strong framework is put in place that achieves the regulations’ goals. Both of these factors are critical to securing the successful delivery of these projects for South Africa’s infrastructure sector.