PPPFA and BEE finally reconciled – EconoBEE Newsletter – 10 June 2011
The very long awaited amendments to the Preferential Procurement Policy framework act (PPPFA) have arrived. Well done to the DTI and the Treasury who have been working on this.
These amendments bring the Broad-Based BEE Scorecard requirements into alignment with government tenders. This will have a massive and far reaching impact for any business who tenders for government contracts. Businesses will have only 6 months to produce a BEE scorecard inline with these new regulations.
Tender fraud, corruption and misrepresentation could be a distant memory if the Treasury’s newly gazetted amendments to the PPPFA are effective. Many companies used the loopholes in the tender act to unfairly win tender contracts from government. This further encouraged other forms of BEE fronting which spread as far as the largest of corporates in South Africa to even the verifiers of this information.
Transformation is a long term process, it cannot be shortened into a single year or even confined to one single person. The intention is for as many black South Africans to benefit as possible. The updates will reward companies who comply with Broad-Based Black Economic Empowerment which includes; Socio-economic Development, Enterprise Development, Preferential Procurement, Skills Development, Employment Equity, Management and Ownership.
A company who contributes to the development of a small black owned business will earn recognition on enterprise development. In addition the B-BBEE Act encourages a form of partnership with that business which will guarantee their sustainability but also earn the company profits in the long run. Other examples include staff development. Companies are further rewarded if the skills are of a high standard such as university degrees or diplomas.
The Broad-Based Black Economic Empowerment scorecard is an excellent, world leading method of measuring the extent that transformation has taken place in a business. The tender act (Preferential Procurement Policy Framework act) on the other hand became outdated as soon as the B-BBEE act came into effect. Its method of gauging transformation was based on old outdated principles which allowed loopholes and corruption to seep through.
The implementation of the tender act often resulted in only black owned businesses being awarded a tender regardless of compliance with the Broad Based BEE act.
Many of the problems caused by the misalignment was caused by unclear guidelines and a general unwillingness by tender officials to change their policies. The latter point further complicated the tender process and allowed for additional inconsistencies with each tender. Tender officials always had the scope to use broad based principles in issuing of tenders but never did. They unfortunately decided to only use a black ownership or management figure.
The requirements will allocate tender points based on only compliance with the Broad Based BEE scorecard. If a company has achieved highly they will be awarded maximum points or if they are non-compliant or achieved badly will receive little or no recognition. There is a transitional period of 6 months, ending on 7th December by which time only valid certificates will be acceptable.
Unfortunately problems will still exist;
Training problems of tender officials – tender officials will require a good knowledge of BBBEE in order to correctly implement these requirements.
Black owned businesses will be disqualified without suitable documentation. A short phase in period will be essential – the anticipated end of this phase is 7th December 2011.
Verification capacity – with less than 70 BEE verification agencies the additional companies wanting to be BEE accredited will place huge stress on their capacity.
Consistency – Scorecard fronting (white collar fronting) will need to be watched very carefully. The data applicable to a scorecard will need to become more publicly accessible to avoid irregular scorecards being used.
Regulation issues – once a certificate is found to be incorrect it needs to be removed from the tender process. An investigation will need to be conducted to discover the reason why the scorecard is incorrect. Tender officers will need training to ensure they vet each certificate.
DTI capacity – the dti has a small team of experts. This team will be required to investigate a massive number of invalid certificates. They will also be required to offer leadership and interpretive guidance to the industry.
Time and knowledge. Companies will have a very limited window to improve their current BEE scorecard or prepare from scratch.
BEE Managed Services Saves Time EconoBEE can assist you with your BEE Verification – our consultants will even sit in during your BEE Verification giving you the extra time to work on your business. Learn more about our managed service, contact us on 011 483 1190 or firstname.lastname@example.org.
To win a government tender, a good scorecard will increase your chances.
It takes time to build up a good scorecard – start now, to be ready by 7th December 2011
Fronting issues will become more important, and fronting easier to discover on a B-BBEE certificate.
Existing tenderers often have no scorecard – they will have to get one to stay in the game.
Verification agencies will benefit due to increased requirement for a certificate.
Consultants, like us, will benefit – we will have to help client improve their scores – level 8 means very little if your opposition is level 1.
More and more companies will reach level 1 – this will ensure more meaningful empowerment.
Win tenders with a good BEE Verification
Spending hours collecting the wrong documentation? Unsure of what is needed? Need more points? We are pleased to announce another exciting EconoBEE initiative to help assist you with your BEE Verification.
Expert Advice pays for itself Save time and effort by allowing EconoBEE, Experts in BEE Compliance and scorecard optimisation handle all of your BEE requirements. Contact us on 011 483 1190 or email@example.com.
While there is demand for a B-BBEE Scorecard someone will be taking advantage, shouldn’t that someone be you…
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EconoBEE Newsletter 10 June 2011
In this issue
BEE Scorecards Required for Government Tenders
Win tenders with a good BEE Verification
In other news
EconoBEE is an expert BEE consultancy. EconoBEE helps businesses Become BEE Compliant, prepare for verification, earn maximum BEE Points and ensure that they achieve the BEE Level they need to get more business.