The Building Industry Bargaining Council says procurement processes remain a critical vulnerability, particularly where due diligence and contractor vetting are weak or inconsistently applied.
Image: Leon Lestrade/ Independent Newspapers
Government’s blacklisting of 52 construction companies for poor performance, fraud and contractual failures signals tougher enforcement. But the Building Industry Bargaining Council (BIBC) says it also exposes a deeper issue: a systemic culture of non-compliance across South Africa’s building sector.
While blacklisting may be considered a final sanction, the BIBC says it reflects a deeper problem. Many of the 52 contractors have been barred until 2029 for offences including falsified B-BBEE certificates and invoicing for work not done, but this is not the root cause.
“What we are seeing is a pattern where non-compliance in one area is almost always mirrored across others. It is rarely isolated to non-compliance with the BIBC only,” says Danie Hattingh, spokesperson for business at the BIBC.
By cross-referencing publicly available data, the BIBC identified 68 construction-related companies linked to the blacklist. Of these, only 12 were registered with the BIBC, with 12 non-compliant at the time of assessment.
“This directly supports our contention that non-compliance with one regulation strongly indicates non-compliance everywhere else,” Hattingh explains. “Whether it is labour obligations, tax compliance, or contractual delivery, the same patterns repeat.”
The implications are serious: poor and non-compliance drives substandard work, project delays, site failures and safety risks, while also enabling unfair competition based on the exploitation of labour that undercuts compliant contractors.
The problem is compounded by a system that can enable repeat offenders to re-enter the market. The BIBC says non-compliant contractors often deregister, rename or re-establish entities sometimes using associates and family members as the directors of new companies, to avoid detection.
“The trend towards ‘fronting’ companies is widespread and complex,” says Hattingh. “Even if a new entity has no record of non-compliance, it can still be the same operators making it difficult for clients and procurement officials to know who they’re really dealing with.”
This lack of visibility is especially acute in high-volume public procurement, where scale makes tracking difficult. As a result, problematic contractors can reappear under new guises, continuing cycles of poor delivery and non-compliance.
The BIBC points to procurement processes as a critical lever for change and, currently, a point of vulnerability. Weak or inconsistently applied tender requirements can allow non-compliant contractors to slip through the cracks.
“The role of ‘givers of work’ (government, municipalities, SOEs and private clients) is central,” says Hattingh. “From tender design to contract monitoring, procurement decisions either strengthen compliance or undermine it.”
Where due diligence is robust, the risk of appointing unsuitable contractors is significantly reduced. Conversely, opaque processes, poor contract design, and weak oversight create fertile ground for abuse.
Encouragingly, efforts are under way to better align enforcement and procurement. The BIBC is working closely with the City of Cape Town and the Western Cape Department of Infrastructure to embed compliance into tender frameworks and to strengthen oversight.
In recent and ongoing discussions with the City of Cape Town it is evident that working with organisations like the BIBC, who are committed to stronger compliance-linked procurement, will improve due diligence, contractor vetting and ensure only compliant service providers are appointed.
The focus is expected to be on embedding BIBC registration and compliance in tenders, strengthening supply chain controls, and aligning labour allocation systems, including on Expanded Public Works Programmes (EPWP).
For labour, the crisis is equally severe. “Tender processes face many challenges that undermine efficiency and fairness,” says Luyanda Mgqamqo, BIBC labour spokesperson. “These include retaliation against whistleblowers, political interference and weak pricing skills.”
The scale of the issue suggests that the 52 blacklisted contractors are not isolated, but part of a wider trend. Over five years, several BIBC-registered firms appeared on the list at different times, underscoring the persistence of non-compliance.
If left unaddressed, the risks extend far beyond individual projects. Economic losses, weakened institutions, declining investor confidence, and growing public distrust are all potential consequences of sustained non-compliance.
“Cutting corners for short-term profits creates long-term systemic risk,” warns Hattingh. “It undermines infrastructure quality and the credibility and sustainability of the entire industry.”