The Public Procurement Act 2024: A Strategic Roadmap for South African SMMEs

On July 23, 2024, President Cyril Ramaphosa signed the Public Procurement Act (Act No. 28 of 2024) into law, effectively sunsetting the fragmented procurement regime of the last two decades. This isn't just a minor administrative update; it is the most significant overhaul of South African public sector sourcing since the dawn of democracy. For years, the procurement system was a labyrinth—fragmented across the Preferential Procurement Policy Framework Act (PPPFA), various National Treasury notes, and a patchwork of local municipal regulations. This complexity didn't just cause delays; it created a barrier to entry for Small, Medium, and Micro Enterprises (SMMEs) who simply didn't have the legal teams to navigate it. The new Act changes that landscape entirely by creating a unified national framework.

For the SMME owner, this legislation represents a move toward 'transformed value.' It shifts the focus from purely selecting the lowest bidder to a system that actively uses the R1 trillion annual government spend as a lever for socio-economic development. In this guide, we break down what Act 28 means for your business, the new roles of the Public Procurement Office, and how you can position your company to benefit from mandatory set-asides and pre-qualification criteria.

The End of the PPPFA Era

To understand the new Act, one must first recognize the 'policy vacuum' created by the abolition of the PPPFA. Under the old 80/20 and 90/10 points system, the focus was overwhelmingly on price. While B-BBEE status provided a preference, it was often not enough to help a small business beat a large, established player with better economies of scale. Furthermore, a 2022 Constitutional Court ruling in several high-profile cases highlighted that the Minister of Finance had overstepped by prescribing how organs of state should implement preference. This led to a period of uncertainty where every department seemingly made its own rules.

Figure 1: Understanding the shift from fragmented local rules to a unified national framework.

The Public Procurement Act 2024 solves this by centralizing the rule-making power. It creates a single 'Golden Thread' of procurement law that applies to all three spheres of government—national, provincial, and local. Whether you are bidding for a contract to supply desks to a school in Limpopo or providing IT services to the City of Cape Town, the fundamental legal protections for SMMEs will now be the same. This reduction in 'red tape' is the first and most immediate benefit for small business owners who previously had to re-learn the procurement rules for every new client they approached.

3 Key Changes Every SMME Must Understand

The new Act is a massive document, but for the average contractor, it boils down to three major structural changes designed to foster inclusivity and efficiency. These pillars form the basis of the new 'fair, equitable, transparent, competitive and cost-effective' system required by Section 217 of the Constitution.

1. The Public Procurement Office (PPO)

Gone are the days when a single procurement officer in a remote municipality could interpret the rules however they saw fit without oversight. The Act establishes a powerful Public Procurement Office (PPO) within the National Treasury. This office is the new 'sheriff in town.' Its job is to issue binding instructions, set standardized procurement templates, and monitor compliance across every government entity. For SMMEs, this means there is now a central body responsible for ensuring that the prompt payment of suppliers is actually enforced and that tender specifications aren't 'rigged' to favor large incumbents.

2. Mandatory Set-Asides and Pre-Qualification

One of the most exciting aspects of Act 28 is the provision for 'Set-Asides.' This allows the Minister of Finance (or specific organs of state) to designate certain contracts only for specific groups. This includes SMMEs, youth-owned businesses, women-owned enterprises, and businesses located in specific districts or townships. 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 aren't competing against multi-national corporations; you are competing against your peers.

3. The New Dispute Resolution Tribunal

Historically, if an SMME felt a tender process was unfair, they had two choices: accept it or go to the High Court. Considering court cases can cost hundreds of thousands of Rands and take years, most small businesses simply walked away. The 2024 Act introduces a dedicated Public Procurement Tribunal. This is a specialized, faster, and more affordable forum for resolving disputes. It levels the legal playing field, giving small businesses a realistic way to challenge unfair disqualifications without bankrupting the company.

The New Procurement Journey

The journey to winning a government contract has been redefined. It is no longer just about having the best price at the end; it's about proving your capacity and compliance at the beginning. The Act moves toward a system where 'Pre-Qualification' is the most critical gatekeeper for any bidder.

Figure 2: The 5-step journey to winning and managing government contracts in 2024.

As shown in our 'New Procurement Journey' flowchart, the process begins long before the bid document is submitted. It starts with your status on the Central Supplier Database (CSD). The Act places higher importance on data accuracy. If your CSD profile isn't meticulously maintained—with verified BEE status, tax compliance, and CIDB grading where applicable—the new automated systems will filter you out before a human even sees your proposal.

Pro-Tip: Moving Beyond the 'Tick-Box'

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A Summary of the Legislative Shift

For those who have been operating under the PPPFA for years, this summary table highlights the key differences that will define your operations going forward. Understanding these shifts is essential for your 2024/2025 business strategy.

The Road Ahead: Is Your Business 'Act 28' Ready?

The implementation of the Public Procurement Act will be phased, with various sections coming into effect throughout 2025 and 2026. However, the 'regulations'—the specific rules that tell departments how much to set aside for SMMEs—are being drafted now. This is the time to prepare. You should not wait for the first 'Act 28' tender to appear on your dashboard before you act.

At Tenders-SA, we recommend a three-step 'Readiness Audit' for your company:

1. Deep Compliance Check: Go beyond a basic BEE affidavit. Ensure your ownership structure is clearly documented and that your SARS status is 'Green' daily. The Act's transparency rules mean gaps will be caught instantly.
2. Sector Specialization: Because the Act allows for industry-specific set-asides, you should focus your efforts on 2-3 specific commodity codes on the CSD rather than being a 'generalist' supplier.
3. Digital Transformation: The new framework heavily favors digital procurement. Ensure your team is comfortable with e-tendering platforms and digital document signing, as paper submissions are being phased out in many sectors.

The Public Procurement Act 2024 isn't just a change in law; it is a fundamental shift in how South Africa does business. By stripping away the layers of confusion and replacing them with a centralized, transparent system, the Act gives every honest, hardworking SMME a better chance to grow. It is an invitation to move from the sidelines of the economy to the center stage. Stay informed, stay compliant, and let's build South Africa together.