IPAP 2: Departmental dispute jeopardises plans to overhaul public procurement

Government’s plans to bolster the domestic economy through procurement reform as set out in the Industrial Policy Action Plan (IPAP2) are in danger because the Department of Trade and Industry (DTI) and National Treasury reportedly disagree on the scope the proposals should have.

“We are concerned that implementation remains a challenge due to an apparent lack of common ground between Treasury and the DTI,” said Business Unity South Africa (BUSA) CE, Jerry Vilakazi, in a statement.

Reports indicate that the disagreement pivots on the IPAP2’s “point matching” scheme, which would give domestic suppliers a second chance to lower their prices if a foreign vendor wins a contract, which contravenes government’s existing tender practices. National Treasury fears this policy is unconstitutional, while the DTI is a strong advocate as it offers to significantly bolster local procurement.

Vilakazi said implementing local purchasing policies would provide South African suppliers with short and long-term opportunities in sectors such as freight and commuter rail and aerospace. Urgent action must be taken for the IPAP2 to be a success, he said.

The industrial policy released in February said current public sector procurement was “ad-hoc” and does not “deliver adequately on either value-for-money or key industrial policy objectives”.

In its formal response to the IPAP2 proposals, BUSA expressed concern that plans need to recognise the constraints to growth that the South African economy faces.

“The need for coordination cannot be overemphasised. The implementation of the industrial policy action plan will require that all government departments act in tandem,” said Vilakazi.

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