Most importantly, public procurement is constitutionalised. Section 1 of the Constitution requires procuring entities to procure goods and services in a manner that is fair, equitable, transparent, competitive and cost-effective. Procuring entities are allowed to implement procurement policies that provide for "categories of preference in the allocation of contracts" 37 and "the protection or advancement of persons or categories of persons disadvantaged by unfair discrimination".
The Preferential Procurement Policy Framework Act PPPFA 39 was enacted in to provide a framework for the implementation of preferential procurement policies and revised Regulations to the Act were released in The aim of the latter Act is, inter alia, to establish a legislative framework for the promotion of black economic empowerment BEE in South Africa. Aside from the procurement clause in the Constitution section and the PPPFA and its Regulations, there is also a wide array of legislation and policy documents that regulate the procurement practices of procuring entities.
From an organisational point of view, the National Treasury is tasked with overseeing government expenditure and thus also procurement. As seen, section of the Constitution mandates the use of procurement for horizontal purposes. Thus far, this use has been confined primarily to addressing past apartheid policies and practices. It will also be necessary to analyse the PPPFA and its Regulations since this is the legislation that provides a national framework for the implementation of horizontal policies. In particular, attention will be given to certain key stages in the procurement process to determine whether the current legislative regime leaves scope for the incorporation of innovation.
Barriers to the use of procurement to drive innovation will be identified and suggestions will be made on how these barriers could potentially be addressed. On a reading of section , it is clear that using procurement as a means to address past apartheid injustices is of the utmost importance. This is clear from section 2 b in particular, which allows procuring entities to implement procurement policies that provide for "the protection or advancement of persons or categories of persons disadvantaged by unfair discrimination".
Of importance, however, is that section 2 a speaks of a much broader use of procurement for horizontal purposes; it provides simply for the implementation of a procurement policy providing for "categories of preference in the allocation of contracts". It is clear, therefore, that in the same way that the protection of the environment could, for example, be read into section 2 a of the Constitution, 49 the use of procurement to drive innovation could similarly be read into this provision.
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Section 2 a leaves scope for procuring entities to incorporate environmental considerations into the procurement process and in the same way it can be argued that section 2 a leaves scope for procuring entities to incorporate innovation-related criteria into the procurement process.
A few years ago, for example, the government introduced a "reservation scheme". This was done in terms of Regulation 9 of the PPPFA Regulations, which allow procuring entities to give preference to "locally produced goods, services or works or locally manufactured goods, with a stipulated minimum threshold for local production and content". The Department of Trade and Industry subsequently designated industries, sectors and sub-sectors for local production at a specified level of local content.
It is clear that this reservation scheme falls neatly under section 2 a of the Constitution, which as noted above provides simply for "categories of preference in the allocation of contracts". In a similar fashion, therefore, section 1 a provides scope for the incorporation of innovation-related criteria in the procurement process. Having determined that section of the Constitution provides scope for the use of procurement to drive innovation, it needs to be determined whether scope is provided also in the legislation.
Barriers in the legislation will be identified and possible solutions will be offered. As noted, the PPPFA and Regulations provide a national framework for the implementation of preferential procurement policies. In particular, section 2 1 d of the PPPFA deals with the goals that "may" be pursued by means of preferential procurement policies. Of importance is that this provision, by using the word "may" as opposed to "must" is drafted in broad terms. The goals for which preferential procurement "may" be used are not restricted to the goals specifically mentioned, ie contracting with persons or categories of persons historically disadvantaged by unfair discrimination on the basis of race, gender or disability; and implementing the programmes of the Reconstruction and Development Programme.
Section 5 1 of the PPPFA further provides that "[t]he Minister [of Finance] may make regulations regarding any matter that may be necessary or expedient to prescribe in order to achieve the objects of this Act". The Minister is thus given the authority to promote innovation in procurement. In what follows, specific attention will be given to the role if any that innovation currently plays in the PPPFA and Regulations.
Where relevant, attention will also be given to other procurement-specific legislation and government documents. The three main stages of the procurement process will be analysed, ie the planning stage, the evaluation and award stage, and the contract performance stage. In particular, the focus will be on the following key events: 1 the determination of a need and the communication of that need to suppliers; 2 procurement procedures or methods of procurement and whether these are conducive to the use of procurement to drive innovation; 3 the consideration of unsolicited offers; 4 the evaluation of quality or functionality; 5 award criteria; and 6 contract performance conditions.
Barriers that currently hinder the promotion of innovation will be highlighted and suggestions will be made on how these could potentially be addressed. To promote innovation a procuring entity would, during the planning stage, have to identify the need for an innovative product or service that cannot be met through buying goods or services already available in the market. The procuring entity would further have to stipulate the expected outcome or end result of the procurement process and not how the end result of the procurement process will be or should be achieved.
The procuring entity would, in other words, have to make use of "functional specifications" as opposed to "technical specifications" when communicating its need to potential suppliers. Insofar as could be determined, no express provision is made in the legislation for the procurement of innovative goods or services. The legislation also does not expressly encourage procuring entities to do so.
The legislation moreover simply refers to the term "specifications". The MFMA SCM Regulations do, however, note that specifications must "where possible be described in terms of performance required rather than in terms of descriptive characteristics for design". To identify the need for an innovative product or service and to subsequently evaluate offers received a procuring entity would clearly require the necessary expertise, or it would require the assistance of third parties, which may be quite costly.
Given the monetary implications of using the assistance of third parties and moreover the lack of knowledge, skills and capacity of procurement personnel in South Africa, 55 the identification of innovative needs may be particularly challenging in South Africa. Even in developed countries there is doubt as to the ability of procurement personnel to identify innovative needs and subsequently evaluate offers received. In the EU, provision is made for a "preliminary market consultation" with third parties prior to the identification of an innovative need.
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Provision is made, however, for how to guarantee that competition and equal treatment is not distorted, which goes some way in dispelling the concern that prior consultations with a future bidder will result in the award of the contract to such a bidder. What this signifies is that using procurement to drive innovation depends largely on communication with suppliers. This, once again, ties in with the need for procurement personnel in South Africa to have the necessary knowledge, skills and capacity. As noted in paragraph 2 above, an innovative procurement process can assist in the procurement of innovative products and services.
In this respect, the current procurement procedures provided for in South Africa are not conducive to the promotion of innovation in procurement. A distinction is generally drawn between four types of procurement: petty cash purchases, verbal or written quotations, written price quotations and competitive bidding. The general rule is that no negotiations may take place between procuring entities and bidders.
Procuring entities are, as a rule, required to draft detailed specifications and must evaluate offers with reference to pre-determined specifications. The timescales for the existing procurement procedures are, moreover, around days. Provision is made, however, for exceptions to the prescribed use of the standard competitive bidding process.
The award of such contracts is examined in greater detail in paragraph 3. It is submitted that in order for there to be effective procurement of innovative goods and services, it is important for a specific procurement procedure to be in place that allows close contact between a procuring entity and the potential supplier s. It is only this "close contact" that will make it possible for innovative procurement to take place. It is submitted that the two-stage bidding process provided for at local government level 66 could potentially be used for the procurement of innovation, provided of course express provision is also made for it in the legislation that applies to procuring entities at national and provincial government level.
The two-stage bidding process at local government level is intended for large, complex projects; projects where it may be undesirable to prepare complete, detailed technical specifications; or long-term projects with a duration period exceeding three years. In the second stage, final technical proposals and priced bids should be invited. At present very little information is provided in the Regulations themselves on how precisely the two-stage bidding process is supposed to operate in practice.
The National Treasury's Supply Chain Management Guide for Accounting Officers of Municipalities and Municipal Entities, 68 however, provides guidance on the use of the procedure and in doing so does leave room for the use of the procedure to procure innovations. The process also appears to comply with the requirements in section of the Constitution. It is nevertheless submitted that to combat possible abuse it is important for proper safeguards to be put in place when use is made of this procedure. In particular, provision should be made for records to be kept by procuring entities that specifically deal with two-stage bidding.
Records should be required to reflect, inter alia, the following: the different occasions on which use was made of two-stage bidding; the reasons for having used two-stage bidding as opposed to a single call for tenders; the number of suppliers who were invited to submit proposals and the details of such proposals; the number and names of the suppliers who were ultimately invited to submit tenders; the details of the winning supplier's tender; and the reasons for its selection.
An alternative to using the two-stage bidding process expressly provided for at local government level may be to introduce a completely new procurement procedure. It is submitted that given that the UNCITRAL Model Law on Public Procurement is a framework law and is intended to be used by countries that are reforming their procurement systems, the "request for proposals with dialogue" procedure as opposed to the "innovation partnership" procedure in the EU may be a more suitable option.
The procedure is designed for the procurement of relatively complex items and services and allows procuring entities to seek innovative solutions to technical issues, such as saving energy, achieving sustainable procurement or infrastructure needs, where there may be different technical solutions. Other conditions for the use of the "request for proposals with dialogue" procedure include a prior failure of open tendering, and the procedure can be used for research and development or for the preservation of essential security interests. The request for proposals with dialogue procedure contained in the UNCITRAL Model Law would as a rule comply with the broad requirements contained in section 1 of the Constitution and is hence a potentially viable procedure that can be used to procure innovative goods and services in South Africa.
In particular, procurement may take place by other means, such as price quotations or direct negotiations if there is only one provider a sole supplier of the particular goods or services. Scope is thus provided for the award of a contract to a sole supplier for innovation-related reasons. The National Treasury has, by means of a Practice Note, 73 made provision for the consideration of unsolicited offers, i. In the Practice Note a number of requirements are laid down for the consideration of unsolicited offers by procuring entities, and one of these relates specifically to the innovative nature of the product or service.
It is important, therefore, to analyse the Practice Note to determine how provision is made for the use of procurement to drive innovation. On a reading of the Practice Note it is clear that a strict process is in place for the consideration of unsolicited offers. This is understandable given the nature of unsolicited offers they are received outside a normal procurement process and section 1 of the Constitution demands that procurement procedures be fair, equitable, transparent, competitive and cost-effective. The Practice Note makes clear that procuring entities are not under an obligation to consider unsolicited offers, but they may consider them if the following requirements are met:.
The Practice Note therefore clearly makes express provision for the consideration of offers that promote innovation. As noted, however, very strict procedures are in place. Amongst other things, the unsolicited offer must contain "a statement describing how the [offer] is demonstrably innovative and supported by evidence that the proponent is the sole provider of the innovation".
If all the requirements for consideration are met and the procuring entity decides to consider the unsolicited offer, a registered letter must be sent to the proponent confirming the procuring entity's decision to consider the unsolicited offer. Moreover, if the unsolicited offer:.
Part II. GARP: Health and economic context | Schellack | South African Medical Journal
In the case of other compliant unsolicited offers that are not of a PPP nature, 78 a comprehensive evaluation of the offer must take place, which must include, inter alia, a feasibility study, whereafter an unsolicited proposal agreement must be concluded with the proponent. Having considered the report of the Commission, the Portfolio Committee of the national Parliament endorsed this recommendation in principle. However, a number of constitutionally-mandated processes had to be followed in relation to proposed amendments to the Act.
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A final decision was expected in , however the process lost impetus. During and , in an effort to move the process along in a manner consistent with the Gambling Review Commission's recommendations, the official opposition's Shadow Minister of Trade and Industry tabled a private member's bill PM Bill , designed to establish a the regulatory framework for remote gambling. This was diametrically opposed to the Commission's report and the PM Bill, as it seeks to reinforce the current prohibition on remote gambling and more widely deals with the industry in a number of controversial ways.
Gaming in South Africa: overview
The PM Bill was rejected by Parliament. See also Reform. Definitions of gambling. What is the legal definition of gambling in your jurisdiction and what falls within this definition? General definition The Act defines a "gambling activity" as being an activity involving:. Placing or accepting a bet or wager under section 4 1. Placing or accepting a totalisator bet under section 4 2. A bet or wager occurs when a player stakes money or any other thing of value on a bet with a bookmaker on any contingency, or when a bookmaker either accepts a stake on a bet from a player or itself stakes money or anything of value on a bet with another bookmaker.
A bet or wager is also taken when any person stakes money or a thing of value on any contingency with any other person, as well as when any person expressly or implicitly undertakes, promises or agrees to do anything described in the relevant definition. A totalisator bet is taken when a player stakes money or anything of value on any event or combination of events by means of a system in which all the amounts bet or staked are pooled, with the holders of winning tickets sharing proportionately in the pool, after all deductions permitted by law have been made.
A "gambling game" is defined as a game that is played upon the payment of any consideration, with the chance that the player may become entitled to, or may receive a pay-out, irrespective of whether the result of such game is dependent on skill, or chance, or any combination of skill and chance. A gambling game includes any bet or wager that is placed in a casino and which conforms to the definition. Bets and wagers, as well as totalisator bets and amusement games are defined as being gambling activities, but are not gambling games.
Online gambling Online gambling is referred to in the Act as "interactive gaming". Interactive gaming is essentially the engaging in or making available of an "interactive game". An "interactive game" is defined under the Act as:. All games of chance or skill or mixed chance and skill played on payment of any consideration and that may result in potential or actual pay-out prize are classed as gambling games.
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Traditional casino games. Betting, sports betting, totalisator betting, betting exchanges and amusement games are addressed separately and are not regarded as gambling games for the purposes of interactive gaming. Online bookmaking or sports betting is licensed under provincial legislation and has been for over a decade. Betting exchanges are not licensed and cannot be licensed.
Sports pools are regulated by the Lotteries Act, No. Land-based gambling See above, General definition. Regulatory authorities. What are the regulatory or governmental bodies that are responsible for supervising gambling? The provincial licensing authorities issue licences to:. The provincial licensing authorities also license or register employees engaged in work in the gambling industry on various levels.
To avoid duplication of cost and effort, national licences can be applied for in the manufacturing sector, as well as in relation to employment licences. National licences are issued by provincial licensing authorities, but authorise the licensee to engage in the activities authorised by the licence throughout the country. It was contemplated that the National Gambling Board would regulate interactive gaming. However, this is not currently the case.
See box, The regulatory authorities. Gambling products.
What gambling products have been specifically identified by legislation, and what different requirements have been established for each? South African legislation groups gambling products according to the defining characteristics of the transactions that they involve. The key question is whether any particular product or equipment conforms to the definition of "gambling device", which is defined as meaning any "equipment, software or any other thing that is used, or at the time of its manufacture was designed to be used, in determining the result of a gambling activity".
All gambling devices must be registered on a national database, and the registration must be updated on an ongoing basis, as and when ownership or possession of such device changes hands, providing a full audit trail, and a conclusive indication of the ownership, use and location of that gambling device at any given point in time. Additionally, there are national standards regarding defined gambling devices, with which any such gambling device must comply before being exposed for play.
These devices are submitted to licensed testing agents, who must test them against the requirements of the applicable standards. After the testing process, a letter of certification must be issued and sent to the relevant provincial regulator. South African gambling legislation does not contain individual references to poker or other classes of games, such as blackjack or roulette, commonly found in the casino environment. Similarly, there is no substantive distinction drawn between the defining characteristics of betting as a generic activity and sports betting, with the exception that the tax dispensation applicable to betting on sporting events differs from that applicable to betting on horseracing.
Slot machine gaming can be offered by licensed casinos and route operators. Conversely, the slot machines offered for play outside of casinos by route operators are subject to fixed limits on the amounts that may be staked and won by players on a per-game basis. For this reason, the slot machines exposed for play by a route operator are called "limited pay-out machines" LPM. The game of bingo, which is commonly offered under authority of a separate bingo licence, is defined in national legislation, with reference to the defining characteristics of the traditional game of bingo.
However, the legislation in force in certain provinces has made provision for electronic forms of bingo. The Gambling Review Commission has recommended that EBTs must not be permitted to be offered by the holders of bingo licences, and that any provincial legislation providing the contrary must be revised and aligned with the national legislation. The licensed operator of the lottery enjoys a monopoly in the market, and is required to pay a defined percentage of the revenue generated from the conduct of the Lottery into the National Lottery Distribution Trust Fund, which is managed by the National Lotteries Commission.
A distribution agency appointed under the Lotteries Act considers applications for the allocation of a portion of such funds to various causes, including charities, projects for the development of sport and recreation, the arts and culture, among others. The National Lottery Licensee has the exclusive statutory right to conduct sports pools in South Africa.
The Gauteng Gambling Act, No. Wagering record-keeping systems used by the licensed betting industry to record and store wagering transactions, as well as electronic monitoring systems used in the casino and LPM environments are regarded as gambling devices, and must be tested against the requirements of the applicable national standards and certified as complying with such standards before they can be utilised in gambling operations. The definition of a "gambling game" under section 5 of the Act is wide and all-encompassing. Therefore, each gambling product that falls subject to definitional scrutiny as a "gambling game" does not per se have different individual requirements.
It can be accepted that for the purposes of the Act, virtually every type of game in which there is an element of skill or chance or a mixture of these elements and that falls within the scope of the relevant definition, will be subject to the Act and its regulation. Therefore, poker must be regarded as a "gambling game". Under the Gauteng Act, the definition of a "casino game" specifically includes poker. However, there are nationally applicable and enforceable technical standards in place for the following gaming and gaming-related equipment:.
These products must all be tested and certified as complying with the requirements of the relevant standards before they can be lawfully used in a licensed gambling environment. What is the licensing regime if any for land-based gambling? Each provincial licensing authority enjoys exclusive jurisdiction, within its province, to license and regulate the operations of all gambling industry sectors other than the interactive gambling sector.
While the legislation of certain provinces limits the period of duration of certain licence types, in most cases licences are issued on an indefinite basis, subject to ongoing compliance with the law, and are renewable at regular intervals. The provincial licensing authorities issue licences for:. Route operators. Employees engaged in work in the gambling industry on various levels. Licences are also issued for the various sites on which limited pay-out machines LPMs are available.
In most cases, such site licences authorise the exposure for play of no more than five LPMs per site. However, in certain cases licences can be issued for the placement of more than five, but no more than 40 LPMs on a site. These applications must be approved by the National Gambling Board. The legislation in force in certain provinces also requires other categories of premises on which gambling activities are conducted to be separately licensed such as bingo, bookmaking and totalisator operations, or the conduct of horseracing meetings.
What are the limitations or requirements imposed on land-based gambling operators? As a result of the history of the country and the need to correct institutionally entrenched imbalances between persons of different races, national legislation earmarks black economic empowerment as a key objective to which the holders of gambling licences must conform.
The Act requires any provincial licensing authority considering an application for a licence other than an employment licence or for the transfer of a licence, to consider the commitments, if any, made by the applicant or proposed transferee, in relation to the promotion of broad-based black economic empowerment.
The relevant provincial licensing authority may impose reasonable and justifiable conditions on the licence in this regard. Additionally, the relevant commitments, as well as the achievements of the licensee regarding those commitments, must be reviewed on an annual basis and where necessary, the relevant authority may impose different or additional conditions on the licence in this context.
For licensed route operations, the regulations made under the national legislation require a phased roll-out process for limited pay-out machines LPMs , to prevent and contain possible negative social impact. In this regard, the rollout of the 50, LPMs authorised to be exposed for play in the country must be managed in three separate phases, namely:. Phase 3, which must follow the same processes as contemplated in relation to Phase 2, involving the rollout of the balance of the total number of LPMs allocated to the province. Of the 41 casino licences provided for by national legislation, 38 have been issued.
What is the licensing regime if any for online gambling? Available licences Bookmaking and totalisator licences permit online betting. South African legislation does not provide a regime for the licensing of online casinos, poker, betting exchanges and bingo. Bookmaking licences permit the placing and accepting of fixed odds or open bets on the outcome of any contingency. Totalisator licences permit the placing and accepting of stakes on the outcome of an event or combination of events by means of a system in which the total amount staked, after deductions provided for by law or by agreement, is divided among the persons who made winning bets in proportion to the amount staked by each of them in respect of a winning bet or any scheme, form or system of betting that is operated on similar principles.
Totalisator licences issued by the Gauteng province also permit the placing or accepting of sportspool-type bets. The licences are limited in number, however many licences have been issued. The number of bookmaker licences far exceeds the number of totalisator licences issued. Eligibility A South African incorporated company may apply for licences.
This does not preclude the company from having foreign shareholders.
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In principle, there is an increasing requirement for the locally licensed entity to have a more material local previously disadvantaged persons ownership percentage in terms of the BBBEE policies than previously. The BBBEE regime is complex and direct local ownership by previously disadvantaged persons is but one of the components of which the regime comprises. There are multiple types of licences from operator to employee-related licences that are issued for any successful application with different disqualification or ineligibility criteria. Generally, the personal probity enquiry that is made by the boards is very extensive and any material factor that impacts on an applicant's fitness and properness to hold a licence may result in ineligibility to hold a relevant licence.
These factors include, without limitation, if the applicant:. Is under the age of 18 years. Is a public servant or political office bearer. Is listed on the register of excluded persons. Is a family member, other than a brother or sister, of a person who is a member or employee of a regulatory authority exercising oversight over that licensee. Is not a fit and proper person to be involved in the business concerned.
Is subject to an order of a competent court holding that person to be mentally unfit or deranged. Has ever been removed from an office of trust on account of misconduct relating to fraud or the misappropriation of money. Has been convicted during the previous ten years, in South Africa or elsewhere, of theft, fraud, forgery or uttering a forged document, perjury, an offence under the Corruption Act Act No.
The exclusion of these workers from labour legislation can be seen as discrimination, which is prohibited by almost all labour legislation in South Africa. This contribution illustrates how the concept of indirect discrimination can be an important tool used to provide labour protection to these workers. The purpose of this article is to explore the scope of the extension of labour rights to non-standard workers in the context of South African labour laws and the international framework.
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