Not all deviations require National Treasury approval. Different value thresholds determine who must approve a deviation—the accounting officer, National Treasury, or Cabinet. This guide explains the thresholds and what happens when entities exceed their limits.
Who This Is For
- All bidders wanting to understand deviation governance
- Researchers analyzing deviation patterns
- SCM practitioners in government
- Civil society monitoring compliance
Why Thresholds Exist
The threshold system balances two goals:
- Efficiency: Small deviations shouldn't require months of Treasury approval
- Oversight: Large deviations need independent review to prevent abuse
The thresholds have evolved over time and may differ by entity type and specific circumstances. Always verify current thresholds in the latest Treasury Instruction Notes.
PFMA Entity Thresholds
For national and provincial government entities:
National Departments
| Value Range | Approval Authority | Notes |
|---|---|---|
| Up to R500,000 | Chief Financial Officer | May be delegated |
| R500,001 - R10 million | Director-General/Accounting Officer | Report to Treasury quarterly |
| R10 million - R100 million | National Treasury | Prior written approval required |
| Above R100 million | Cabinet/Minister of Finance | Strategic procurement |
Provincial Departments
Provincial departments follow similar thresholds but may have variations based on provincial Treasury instructions:
| Value Range | Approval Authority |
|---|---|
| Up to R500,000 | CFO or delegated official |
| R500,001 - R5 million | Head of Department |
| Above R5 million | Provincial Treasury or National Treasury |
Public Entities (SOEs)
Schedule 2 and Schedule 3 public entities have their own thresholds, typically higher due to commercial operations:
- Thresholds set in entity's delegation framework
- Major deviations still require Executive Authority approval
- Large SOEs (Eskom, Transnet) have board-approved limits
Municipal Thresholds
Municipalities are governed by MFMA and report to Provincial Treasury:
Metropolitan Municipalities
| Value Range | Approval Authority |
|---|---|
| Up to R200,000 | CFO or delegated official |
| R200,001 - R2 million | Municipal Manager |
| R2 million - R10 million | Council delegation / Provincial Treasury consultation |
| Above R10 million | Provincial Treasury approval |
Local & District Municipalities
Smaller municipalities typically have lower thresholds:
| Value Range | Approval Authority |
|---|---|
| Up to R100,000 | CFO or delegated official |
| R100,001 - R500,000 | Municipal Manager |
| Above R500,000 | Provincial Treasury consultation/approval |
The Approval Process
For deviations requiring Treasury approval:
- Entity prepares motivation: Justification, market research, value for money assessment
- Internal approval: Accounting Officer approves request
- Submission to Treasury: Via official channels with supporting documents
- Treasury review: SCM unit evaluates against regulations
- Response: Approved, declined, or request for more information
- Entity proceeds: If approved, procurement can proceed
What Happens When Limits Are Exceeded
When an entity procures via deviation without proper approval:
- Irregular expenditure: Flagged by Auditor-General
- Condonation required: Must seek retrospective approval
- Personal liability: Accounting Officer may be held responsible
- Audit qualification: May affect entity's audit outcome
Contract Expansion Limits
Separate limits apply to expanding existing contracts:
| Expansion Size | Typical Requirement |
|---|---|
| Up to 15% of original value | Accounting Officer approval |
| 15% - 20% of original value | Treasury notification or approval |
| Above 20% of original value | Treasury approval; may require new tender |
Emergency Procurement Limits
Emergency procurement has special rules:
- Duration limit: Maximum 6 months (PFMA)
- Must tender after: Formal tender process required once emergency ends
- Still needs approval: Thresholds still apply to emergency deviations
Staying Current
Thresholds are updated periodically. Stay current by:
- Treasury Instruction Notes: Check for new INs on treasury.gov.za
- Entity SCM policies: Request current delegation framework
- Okhantu updates: We track threshold changes and update our guides
Frequently Asked Questions
Can an entity split a contract to stay under the threshold?
No. Contract splitting to avoid thresholds is a violation. Treasury looks at the true value of what's being procured, not artificial divisions.
What if the deviation is declined but the entity proceeds anyway?
This is irregular expenditure. The Auditor-General will flag it, the accounting officer may face personal liability, and the contract may be challenged.
Do these thresholds include VAT?
Typically yes, thresholds are based on total contract value including VAT. Confirm with the specific entity or Treasury instruction.
How can I find out an entity's specific thresholds?
Request a copy of their SCM policy and delegation framework via PAIA, or check their website. Many entities publish their procurement policies online.
Next Steps
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