A South African Airways Airbus A320. Picture: SAA
A South African Airways Airbus A320. Picture: SAA

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MILITARY veterans, rural dwellers, disabled people and black women are to be given preference alongside black-owned companies to supply South African Airways (SAA) with jet fuel.

SAA, which is insolvent and has cash flow constraints, advertised the tenders last month, with several others that also provide preference to groups that it has designated.

However, the law, in the form of the Preferential Procurement Policy Framework Act, allows for only a maximum 10% weighting for black empowerment and does not permit nonprice criteria other than empowerment to be used in scoring tenders.

Women, military veterans, rural dwellers and the disabled will also receive preference when bidding to supply uniforms for SAA cabin, flight and ground crew, as well as preprinted stationery for the national carrier.

However, only black-owned, women-owned and small and medium enterprises will get preference in SAA’s tender to provide dry snacks to caterer Air Chefs.

Asked about the legal framework that was used for preference of certain groups, SAA spokesman Tlali Tlali said this week SAA policies on procurement and transformation were derived from constitutional principles of equity and fairness, and government policies.

"The basis for giving preference to the designated groups is founded in addition to the constitutional principles of equity and fairness, on the government’s transformation and empowerment objectives that have since been translated at SAA into various supply chain-related policies," he said.

Mr Tlali said it was "nothing new" for organs of state to give preference to designated groups.

Asked for its view on the legality of the SAA tenders, the Treasury did not respond. However, when asked a week ago whether SAA procurement policies were in keeping with the law, chief procurement officer Kenneth Brown said it was for this reason that contracts of more than R10m in all state-owned enterprises were being scrutinised by the Treasury.

SAA has been in trouble with the Treasury before over its procurement policy.

Last year, in his state of the nation speech, President Jacob Zuma said that in the future, the government would seek to "set aside" 30% of all procurement for black-owned companies.

However, the Treasury warned of the unintended consequence of such a move, as it would add a premium to what the government pays for services by introducing middlemen into transactions. When SAA nonetheless implemented the policy, on the basis of the president’s call, the Treasury told the airline that it should desist as no legal basis for "set-asides" had been established.

Asked where the legal framework for "set-asides" had arisen, Yakhe Kwinana, MD of Kwinana and Associates and chairwoman of SAA’s audit and risk committee, confirmed in a meeting in Parliament in November that the company had implemented it on the basis of the president’s call.

However, deputy finance minister Mcebisi Jonas, who was also present at the meeting, said there was no legal framework in existence to make set-asides possible.