B-BBEE Verification Deadline Extended – EconoBEE Newsletter 4 August 2009

EconoBEE – Newsletter August 2009
Helping you and the Economy Grow

Empower your Business

Executive summary of B-BBEE

Turnover below R5 million per annum – automatic BEE status

Turnover above R5 million per annum – BBBEE Scorecard Compliance

EconoBEE Training

Weekly half day BEE Workshop

1st, 8th and 15th October 2009 – BEE Procurement and Enterprise Development Conference

10 Strategic Steps to B-BBEE!

We have prepared an easy to follow guide “B-BBEE in 5 Minutes” and “Crash Course to BEE Verification” which explains BEE in a simple step by step approach.

Breaking BEE News

The minister has listened to us! The many persistent BEE Verification problems have forced the dti into action. The dti’s current Minister Rob Davies has issued a new notice (gazette 32467) repealing the old notice relating to the validity of BEE verification certificates issued by accredited agencies.

The dti minister has issued a notice that extends the period for obtaining a valid verified certificate to 1st February 2010. He states: “All verification certificates issued by non-accredited verification agencies before 1st February 2010, will remain valid for 12 months from date of issue.

The new notice now effectively delays the 1st August 2009 deadline to 1st February 2010.

This also solves the sector code problem that we highlighted a month ago. It means that an entity is entitled to use a non-accredited verification agency until 1st February 2010 to produce their sector code verification.

In effect a company no longer needs to use an accredited agency to do their verification prior to 1st February 2010.

The verification agency industry pushed very hard for this piece of legislation, which would guarantee them business. They rushed this process leaving many vital errors. In the end many of the same agencies actively campaigned to delay the deadline as many of them were unable to become accredited and faced prospects of closing their business down. Worse though is the effect that this has caused on the market, many businesses rushed to get a verification when now it turns out that they did not have any need to do so. This will have unfortunately resulted in many companies achieving lower than intended scores but were unable to argue their case nor able to prepare entirely as they needed their scorecard signed before the deadline passed.

This is also quite disturbing – the original notice was dated April 2009 and gave a four month period before which accredited verification was required. The extension is for a further 6 months – 2 months longer than the original period and nearly a full year after the first batch of accreditations.

Furthermore the minister does not define a “non-accredited verification agency”. Is it one that tries to follow the guidelines for verification, and if so how do we confirm that? Especially since the agency has not yet been accredited? Is it an agency that has applied to SANAS for accreditation, or one that intends applying for accreditation? Is it simply a BEE consultancy that consults and verifies at the same time? Is it a competent independent assessment agency, like an accountant that has verified a company’s scorecard?

The lack of verification standardization left the dti no choice but to repeal the previous notice. We could not have a situation where the dti or SANAS are bending rules.

I do foresee lots of arguments over this – between accredited or non-accredited, in possession of a pre-assessment letter or only applied, a member of ABVA or only a consultant!

Our position remains; we are consultants helping our clients with B-BBEE.

This new notice has far reaching consequences on Preferential Procurement. Join us in October to ensure you are not caught out. More info…

Standards! What Standards?

The aim of verification is to ensure that two different agencies will come to the same conclusion if presented with the same information.

The job of SANAS should be to ensure standards – after all they are an ISO accredited agency whose job is to ensure standards.

In reality we are continuing to see differing standards. We have currently a specific issue where one agency will happily penalize their client by up to 14 points over the decision of another agency. Imagine two verification agencies looking at the same information from the same client: the first one will award 32 points, the second will award 46 points – a difference between level 8 and level 6.

What types of standards are these? We have tried to speak to the dti – they do not respond. We talk to SANAS – they say interpretation is in the hands of the dti. If we receive any interpretation from the dti the verification agency may still ignore this in favour of their own interpretation.

This is not acceptable! SANAS is the organisation ensuring standards are followed. If the codes are not explanatory enough, or are too open to interpretation, then SANAS cannot ensure standardization.

SANAS cannot simply wash their hands off the issue by suggesting the dti is responsible for writing the codes. Yes, it is true that the dti is responsible for writing the codes, but if the codes are written in such a way that standardization cannot be achieved, then SANAS owes it to the industry by refusing to accredit any agency until such time everyone follows the same calculations to arrive at the same number. SANAS have indicated that their job is to ensure standard methodology, but I think they have forgotten their true mission – to ensure standards in outcomes. If they did their job properly there would not ever be such a huge discrepancy between agencies.

Sure, SANAS have ensured that all agencies follow a strict methodology – all agencies ask all attendees at a meeting to fill in an attendance register. All agencies worry about filling in all the forms, but SANAS does not care if the agency can do a simple maths calculation or not. SANAS does not care that there is a potential 14 point discrepancy between two agencies, as long as both have a signed attendance register.

This is not what ISO wanted to achieve when it was created way back in 1947.

Is BEE procurement a pain? Sort it out quick and easy – click here.

Not sure how to get a BEE Scorecard, click here to see a demonstration of how best to produce your own BEE scorecard.


BEE Points = Business

That’s it for the time being.

Keith and the EconoBEE Team

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