The South African government makes extensive use of a procurement policy to provide goods and services to its citizens. In this article, the use by the government of the preferential procurement policy to deliver low-cost housing is discussed. In addition, the way in which this practice exacerbates the existing housing backlog is explored. The article contends that the Provincial Departments of Local Government and Housing in South Africa are largely incompetent when it comes to implementing the preferential procurement policy. Consequently, the question of how the implementation of this policy could be improved is considered. In the process, the difficulties encountered in implementing the preferential procurement policy in conjunction with the low-cost housing programme are examined.