South African National Roads Agency withdraws tenders worth R11 billion

The South African National Roads Agency Limited (Sanral) has made the decision to withdraw a controversial new Preferential Procurement Policy (PPP) determining how tenders are awarded, leading to all existing advertised tenders being cancelled.

The roads agency has 80 advertised tenders as of the time of this decision, which are valued at a combined R11 billion, and all of these tenders will now have to be re-advertised, according to Daily Maverick.

Starting over

The PPP was first introduced in May 2023 and includes a scoring system that would favour companies with a better Broad-Based Black Economic Empowerment profile with regard to awarding tenders.

Not long after, Sanral faced court action by the construction industry over the new policy, where contractors labelled the PPP as unconstitutional and irrational, and that it would lead to “obvious and avoidable” disadvantages for potential tenderers, wrote MoneyWeb.

This included construction firms like H&I Construction and SMEC South Africa, who managed to obtain interim orders from the Gqeberha and Pretoria high courts, respectively, to halt Sanral’s evaluation of new tenders using PPP.

This week, the roads agency announced that the new policy had been successfully challenged by the construction industry and that it would withdraw the PPP to avoid further legal action.

The road agency’s board chair, Themba Mhambi, said that the legal dispute had “regrettably resulted in Sanral being prevented from proceeding with the processing of close to 80 tenders worth billions of rands, with significant negative consequences for the fulfilment of the constitutional and statutory mandate of Sanral.”

The agency’s board said that it plans to consult the construction industry about reworking a new policy, but that it would revert to previous guidelines as a temporary measure to allow for the issuing of advertised tenders to ensure the expansion and maintenance of roads within its domain.

All of the state-owned entity’s existing tenders that were advertised on this policy have therefore been cancelled and will need to be re-assigned – a process that Sanral said it intends to expedite and carry out within this financial year.

The affected tenders account for 80 of the 200 currently issued by Sanral, which means that roughly R11 billion of the agency’s R33 billion will need to be re-advertised.

Tenders will instead be issued if successful bidders are compliant with the contract participation goals for targeted enterprises in targeted areas and labour, as per the Construction Industry Development Board found in the Government Gazette No 4127 published in November 2017 – which was in use prior to the introduction of the PPP.