Social Policy Choices and the International and National Law of Government Procurement: South Africa as a Case Study

• Jurisdiction: South Africa
• Citation: 2009 Acta Juridica 123
• Published date: 15 August 2019
• Date: 15 August 2019
• Pages: 123-167

Social Policy Choices and the International

and National Law of Government

Procurement: South Africa as a Case Study

CHRISTOPHER McCRUDDEN*

Oxford University; University of Michigan Law School

I INTRODUCTION

My recently published book, Buying Social Justice,

1

examines how govern-

ments use their purchasing power to advance conceptions of social justice

and human rights, particularly equality and non-discrimination goals.

Throughout the book I use the term ‘linkage’ to describe this particular

use of procurement. Let me give just one example: in India there is

currently an important domestic debate about whether to extend the

system of public sector employment reservations (aff‌irmative action) for

lower castes into private sector employment, particularly given that the

public sector is shrinking and the private sector is expanding. One of the

options being considered by federal and state governments is whether to

require such reservations through public procurement. That is, whether

to require those f‌irms receiving government contracts to adopt such

reservations. This is one example of what I mean by ‘linkage’. In this

paper, based substantially on parts of the book, I examine the relationship

between these domestic social policy choices and international rules on

government procurement, with particular reference to the position in

South Africa, up to mid–2006. I have not signif‌icantly updated this

research, and the discussion should therefore be viewed as a case study up

to that date.

II PRELIMINARIES

Before getting into my main theme, a few preliminaries are necessary. In

order to focus the discussion, I will concentrate on procurement as an

instrument of social justice and human rights in a fairly narrow sense, as

concerned with status equality. This is, however, merely one example of

the social justice and human rights uses of procurement, which in turn is

merely one of several political and economic uses of procurement

linkages, both currently and historically.

* Professor of Human Rights Law, University of Oxford; Overseas Aff‌iliated Professor,

University of Michigan Law School.

1

C McCrudden Buying Social Justice: Equality, Government Procurement and Legal Change

(2007).

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2009 Acta Juridica 123

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The roots of current equality-based procurement linkages are to be

found in the late nineteenth and early twentieth centuries, where pro-

curement was already being used in North America, Australasia, and

Europe to address a wide variety of policies: to further aspects of national

industry policy (through such policies as ‘Buy American’, under which

US government purchasers were required to favour American made

goods), to foster the creation of jobs to relieve unemployment, to

promote fair labour conditions, and (following the end of the First World

War) to promote the increased use of disabled war veterans in employ-

ment. These uses of linkages were (and are) deeply controversial, not least

because there are real dangers in exploiting the clout of the State’s power

in this way.

It is chilling to recall, for example, that one of the instruments that the

new National Socialist government used to try to reduce unemployment

in 1930s Germany was to link the award of government contracts to a

f‌irm’s willingness to hire the unemployed (a relatively common policy at

the time and one adopted by Franklin D. Roosevelt in the United States).

In Germany, however, Nazi party members had priority. So, too, in the

United States a convincing case can be made that one of the motivations

that led to the adoption of federal legislation requiring a form of

minimum wage on federal contracts was to prevent black American

workers from the South undercutting white American workers in the

Northern states. And yet, for all its complexity and risks, the presence of

the State in the market does present unique opportunities for it to

inf‌luence market behaviour to further social justice. When countries

began to develop domestic anti-discrimination and equality policies, such

as prohibiting race and sex discrimination, or requiring the integration of

disabled workers in employment, or requiring the adoption of aff‌irmative

action measures to improve the position of minorities in the economy,

these policies were increasingly linked to the procurement function. We

can identify two main forms that these procurement linkages originally

took: ‘contract compliance’, and ‘set-asides’.

Contract compliance emerged f‌irst. This originated as a tool for

tackling employment discrimination on the basis of race, beginning in the

United States during the Second World War, and continuing during the

1950s and 1960s, mutating into a mechanism for securing aff‌irmative

action. The expansion of this approach to cover other groups was not

long in coming. In particular, during the 1970s and 1980s, the Federal

Government used procurement to encourage the development of aff‌ir-

mative action for women, and to encourage the adoption by employers of

measures to ensure that disabled workers had access to information

technology. A type of procurement linkage that mirrored the approach

adopted in the United States was developed also in Canada. There are

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several Canadian federal and provincial schemes that link the award of

government contracts with attempts to secure ‘employment equity’ for

visible minorities. Variations on these types of linkages have increasingly

also been adopted in European Community countries and in South

Africa. Nor is this approach solely conf‌ined to the domestic level. From

the mid 1970s, the International Labour Organisation has commended

this contract compliance approach.

A second, rather different, approach also links the award of contracts to

programmes that advantage particular status groups that are considered to

be economically disadvantaged. Whereas contract compliance focuses on

the relationship between contractors and employees from the disadvan-

taged group, set asides give preferences to businesses that are owned or

controlled by such groups, for example by setting aside a proportion of

government contracts for minority-owned businesses. In the United

States, these programmes developed f‌irst in the late 1960s for black-

owned businesses and later women-owned business. In Canada an

equivalent, if somewhat later, development of set asides favoured

Aboriginal-owned businesses. These set-asides have proven particularly

important in Malaysia and South Africa, and are currently under discus-

sion in India and Brazil.

Over time different countries developed their own approaches, and on

the basis of a comparative study of the equality and human rights uses of

procurement, we can identify f‌ive relatively distinct current types of

equality linkages: f‌irst, the use of procurement as a method of enforcing

anti-discrimination law in the employment context; second, the use of

procurement to advance a wider conception of distributive justice,

particularly aff‌irmative action in employment; third, the use of procure-

ment as a method to help stimulate increased entrepreneurial activity by

disadvantaged groups. These uses ref‌lect the original contract compliance

and set aside policies. Weshall see subsequently that all have been adopted

in South Africa since the fall of apartheid and it is these approaches we

shall consider in detail. More recently, however, we can identify two

additional uses of procurement linkages that attempt to address some of

the consequences of the liberalisation of many western economies, and

the impact of globalisation: fourth, the inclusion in procurement con-

tracts of requirements to ensure fairness and equality when services are

transferred from the public sector to the private sector; and, f‌ifth, the use

of procurement as a means of putting pressure on companies operating in

other countries to conform to equality norms that the procuring body

wishes to see adopted, for example, requiring products bought by

government to conform to fair trade or ethical trading standards. The f‌ifth

use of procurement linkages has strong South African associations since

the adoption of this form of linkage in the United States arose out of

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SOCIAL POLICY CHOICES AND THE LAW OF GOVERNMENT PROCUREMENT

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