The envisaged law aims to improve efficiency in the procurement environment and eliminate corruption, among other things.
According to media reports, South Africa loses between R25-billion and R35-billion each year to corruption in government procurement. Treasury would be developing guidelines to assist municipalities on how to apply municipal supply chain regulation 32 by July 2016, said Mr Gordhan in a written reply to a parliamentary question by Democratic Alliance spokesman for local government Kevin Mileham.
Mr Mileham had asked Mr Gordhan what was being done to prevent the widespread abuse of this section, which allows municipalities and other government entities to piggy-back on the tenders awarded by other entities.
Mr Mileham said he did not object in principle to the participation by a government entity in the contract of another one, but there had to be tight controls to prevent abuse.
He cited the case of the Amatole district municipality in the Eastern Cape using the sanitation contract, which was awarded to construction company Siyenza Group in the Northern Cape. The R631-million Amatole project was much larger than the Northern Cape one, but the price and specifications of the Northern Cape contract were replicated by the Amatole municipality without considering whether this was the most cost-efficient option and without offering local businesses the work.
Earlier this year the Amatole municipality cancelled its contract with Siyenza Group.
Mr Gordhan said the Treasury guidelines would assist municipalities to follow due process and thereby prevent any potential misuse of this provision in the municipal supply chain management legislative framework.
"Further efforts will be made to speed up the process of reviews of section 32 and to stop the abuse that is prevalent in this regard," the minister said.
This article first apeared on bdlive