Public procurement legislation: implementation and challenges of oil and gas companies listed on the Johannesburg securities exchange

Abstract

Public procurement is recognized as the process for the purchase of goods and services by government or public entity to satisfy their requirement, with emphasis on the achievement of value for money, while seeking to award the transaction on the best possible terms. Scholars agree that public procurement constitutes one of the most important business processes for governments being the vehicle through which public infrastructure projects and service delivery are implemented. Global, public procurement is estimated at over 9.8 trillion US dollars, accounting for approximately 15% to 22% of the global gross domestic product (GDP) (World Bank Global Procurement Database), and therefore plays a significant role in the economic life of all nations and a major source of business opportunities with significant effect on a country’s gross domestic product (GDP). Due to its importance, there is an imperative for public procurement to be affectively legislated and managed to ensure positive impacts on many aspects of the social and economic life of nations. Statistics show that the global trend applies in South Africa, as public procurement is estimated to account for 22% of GDP with annual spend of about billion Rands. Unfortunately, in spite of the large spend profile, recognized by World Bank as one of the largest public procurements spend amongst sub-Saharan African countries, and a long list of legislation to support it, public procurement impact on the social and economic development of the majority of South African citizens seems invisible. Scholars have blamed this failure on sub-optimal implementation of and noncompliance with legislation and corruption. It is against this background that this study been undertaken. This study has therefore investigated the challenges associated with the implementation of public procurement legislation, and how such implementation has affected the meaningful participation of previously disadvantaged persons in public procurement. The study has been conducted with reference companies listed on the oil and gas sector of the Johannesburg securities exchange and adopted the qualitative research method.