Business

Unsolicited bids rise amidst regulatory uncertainty

Decision time: The Finance Ministry has traditionally discouraged the consideration of unsolicited bids, but new legislative amendments have provided room
 
Decision time: The Finance Ministry has traditionally discouraged the consideration of unsolicited bids, but new legislative amendments have provided room

Despite growing calls for the private sector to take a leading role in driving development, the rise in unsolicited proposals is exposing gaps in the procurement framework. Officials say that whilst the Public Procurement Act of 2021, administered by the Public Procurement Regulatory Authority (PPRA), promotes competition and transparency, it does not clearly define a structured process for assessing unsolicited bids.

During the Procurement Pitso this week, Ministry of Transport and Infrastructure permanent secretary, Pius Seone, said government continues to experience a year-on-year increase in the number of unsolicited bids, with most of them being difficult to assess due to the stated preference for competitive and transparent bidding in the PPRA Act of 2021.

“There remain a lot of grey areas in the current procurement act, one of them being around procurement processes such as unsolicited bids,” said Seone, who is also the accounting officer. “The Act prioritises competitive bidding that is transparent, and whilst there are provisions for unsolicited bids, it only acknowledges them for helping with the creation of a procurement plan, not for a direct award of a tender or procurement.”

Section 53 of the Procurement Act calls for open competitive bidding, but also opens room for other procurement methods such as unsolicited bids. The Act, however, is not clear in what instances an unsolicited bid can result in a direct award for a project.

“Except as otherwise prescribed, a procuring entity shall conduct procurement by means of open domestic bidding.” “A procuring entity may use a method of procurement other than open domestic bidding to accommodate the circumstances of the procurement concerned, but shall seek to maximise competition to the extent practicable,” reads the Act.

According to Seone, competitive bidding remains the default approach, and direct procurement is tightly restricted to specific conditions such as emergencies or where only one supplier exists.

Unsolicited proposals, however, fall somewhere in between being recognised in principle, but not fully governed in practice.

As a result, procuring entities are left to interpret the law.

In many cases, unsolicited bids introduce project concepts that government may not have formally planned or budgeted for, effectively shaping future procurement pipelines. This is particularly evident in sectors where infrastructure gaps are significant and public finances are constrained, forcing authorities to consider externally driven proposals.

But the absence of a clear framework raises questions around consistency and fairness.

In 2021, the government previously revealed that it had received unsolicited proposals for funding worth a total of $40 billion, with some of the potential funders disguising their offers as grants that would later turn into loans and others demanding impossible guarantees such as a portion of the country’s diamond revenues.

The debate goes on even as the head of state has revealed his preference for direct tender awards, citing that the current procurement process is litigious, long and filled with red tape, adding more nuance to the debate on how public procurement should be managed.

Vice President Ndaba Gaolathe, who is also the Minister of Finance and responsible for overseeing procurement, said government was reviewing the current Act to identify structural gaps and introduce agile procurement as the cornerstone of procurement regulations.