Draft public procurement rules published by the Minister of Finance propose significant changes to how South African government institutions will procure travel and accommodation services, introducing new pricing rules, procurement structures and supplier requirements.
The draft is part of the Public Procurement Act signed by President Cyril Ramaphosa in July 2024 and is expected to have a direct impact on travel management companies, accommodation providers and public sector travel booking systems once it comes into force.
Government travel procurement moving towards standardized model
The draft rules require government institutions to procure travel and accommodation through a request for proposal (RFP) process for a single supplier or a framework agreement for multiple suppliers, unless a transversal contract already exists.
It aims to standardize procurement approaches across public sector entities and formalize how travel services are procured and managed.
Net pricing needed to reshape travel supplier model
A key provision in the draft requires all travel and accommodation contracts to be based on realistic cost structures.
Rates must be net and non-commissionable, excluding third party commissions and including all transaction or management fees.
This will lead to significant changes in the structure of pricing and revenue models of travel management companies within the public sector.
Strong alignment with travel policies and service delivery rules
Institutions will need to align purchasing with internal travel policies, including booking processes, approval processes and loyalty program considerations.
Service level agreements should also clearly cover refunds, unused services, insurance and emergency assistance.
The rules place greater emphasis on accountability and service delivery standards within government travel procurement.
According to Gerrit Davids, principal consultant at Taranisco Advisory, the proposed framework signals a structural shift in public sector travel procurement.
Davids says, “What we are seeing is a deliberate shift away from opaque pricing structures towards fully transparent, cost-based models. The need for pure, non-commissionable pricing fundamentally changes how travel management companies deliver their offering to the public sector.”
He says procurement standardization will change supplier dynamics.
“By stipulating the use of RFPs and framework agreements, the rules are not only improving governance but also creating a more competitive and fair environment for service providers. However, suppliers will need to rethink their commercial models to remain compliant and competitive.”
Higher compliance requirements in travel services
Davids says the rules extend beyond pricing to operational accountability for travel suppliers.
“Beyond pricing, the emphasis on service level agreements, covering refunds, unused services and emergency assistance, raises the bar for accountability and service delivery. This is where experienced advice and compliance support will become critical,” he says.
Supplier eligibility rules offer purchasing conditions
The draft rules also include provisions that regulate which suppliers can participate in RFP processes.
These include requirements relating to black ownership and preferential purchasing criteria under the framework, which will impact supplier participation in government travel contracts.
The draft General Public Procurement Regulations are open for public comment and are expected to come into force in 2026 after Cabinet approval.
Travel industry stakeholders, including travel management companies and accommodation providers, are encouraged to review the proposals, which are set to reshape government travel procurement structures and supplier relationships.
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