Solidarity challenges South Africa’s Public Procurement Act in court over "automatic exclusion" BEE mandates

Trade union Solidarity takes the South African government to court over new BEE rules requiring 40% procurement from black-owned firms for state contracts.

By: AXL Media

Published: Apr 21, 2026, 12:57 PM EDT

Source: Information for this report was sourced from Daily Investor

Constitutional Showdown In Pretoria

A major legal battle over the future of South Africa’s economic transformation policies is set for the Pretoria High Court on May 18 and 19, 2026. Trade union Solidarity has confirmed it will move forward with its challenge to the Public Procurement Act, a piece of legislation signed into law by President Cyril Ramaphosa in 2024. The union contends that the Act’s framework for preferential procurement violates constitutional principles of fairness and accountability. This legal escalation comes just days after the National Treasury opened public comments on draft regulations intended to bring the Act into full effect, a move Solidarity has labeled as an "audacious" attempt to bypass judicial oversight.

The 40 Percent Procurement Threshold

At the center of the dispute is a stringent new requirement for companies seeking to do business with the state. Under the draft General Public Procurement Regulations issued on April 16, 2026, prospective contractors must prove that at least 40% of their prior procurement spending was directed toward enterprises that are at least 51% owned and managed by black persons. Failure to meet this specific threshold will now constitute grounds for automatic exclusion from all state contracts. Solidarity argues that these mandates are significantly more aggressive than previous Broad-Based Black Economic Empowerment (B-BBEE) rules, removing the flexibility that formerly allowed non-compliant but cost-effective firms to participate.

Warnings Of Inflated Public Spending

Economists at the Solidarity Research Institute have raised alarms regarding the potential for massive fiscal waste under the new system. Researcher Theuns du Boisson pointed to National Treasury’s own estimates, which suggest that up to 40% of public procurement is already lost to fraud, inflated pricing, and intermediary structures. By narrowing the pool of available suppliers to only those who meet the 40% BEE threshold, Solidarity argues the state is effectively granting a monopoly to a small group of compliant firms. This lack of competition, they claim, allows "tenderpreneurs" to charge artificially high prices, with the ultimate financial burden falling on South African taxpayers.