BEE Changes! – EconoBEE Newsletter – 07 December 2011

Government tenders are now finally fully aligned to Broad Based Black Economic Empowerment.

The biggest business news this month are the changes to PPPFA regulations starting 7th December 2011. The biggest impact of this is that government tenders can no longer be awarded to “tenderpreneurs”. It completely changes how government tenders are adjudicated. Eg No more arbitrary sub-contracting because the new regulations only use a Broad-Based BEE certificate (and not Ownership) to evaluate tenders.

The PPPFA explains how government does its procurement. This applies to all  government and provincial departments. Common examples include Eskom, Transnet, Telkom, ACSA, Universities and hundreds others.

The simple reality is ignore new regulations and win no business. As we have always said BEE points = Business!

Read more… The “PPPFA – Regulations” and the “Guidelines to the Preferential Procurement Policy Framework Act Regulations” are available in our downloads section. If you don’t have a BEE scorecard now is definitely the time to start preparing one. Even if you don’t do government tenders your customers might and they will then need a scorecard from you.

Amendments to B-BBEE Act

Earlier this year the DTI began a process to update and amend the BEE codes/act. Salient changes to the BEE codes:

  • Align the Act with other legislation impacting on B-BBEE and the codes
  • Establishment of a B-BBEE Commission to create an institutional environment for monitoring and evaluating broad-base black economic empowerment
  • Provide for the regulation of the verification industry by the Independent Regulatory Board of Auditors
  • Deal with non-compliance and circumvention by introducing offences and penalties
  • The proposed changes to the B-BBEE codes of good practice:
    • Enterprise Development (ED) and Procurement to be elevated with each requiring sub-minimum and enhanced recognition for ED targeted at key sectors in IPAP and the New Growth Path
    • Penalty provision for non-compliance with Enterprise Development and Procurement elements of the B-BBEE scorecard, and discount from overall score
    • The points of ownership element should be broadened to include designated groups in the main points, creating greater incentives for genuine broad-based ownership such as employee share ownership, co-operatives and community ownership
    • Setting sub-minimums/threshold for each element of the scorecard save for the adjusted ownership element
    • The Qualifying Small Enterprises scorecard will be adjusted and certain elements made mandatory. The thresholds for Exempted Micro Enterprises will be reviewed.
    • The Employment Equity element to receive adjusted recognition and to be aligned to the Employment Equity Act (targets, Reporting and Definitions).
    • Skills Development Element to be aligned to the New Skills development Strategy and the New Growth Path and
    • Targets in the Ownership Skills Development Procurement and Enterprise Development will be adjusted

In general, EconoBEE welcomes the proposed changes. We need to see the actual bill to analyse it in more detail, but in general, all the recommendations we have sent to the dti and BEE Council have been addressed.

We like that B-BBEE is being aligned with other acts, in particular the PPPFA which comes into effect on 7th December 2011.

More than a year ago we recommended to the minister that he establish an office of the BEE Ombudsman, to handle issues of interpretations, valid certificates, fronting, disputes. This is now being done via the establishment of a commission.

We also welcome IRBA as the overall regulatory body for verification. The verification industry has always had problems, starting with ABVA, and subsequently SANAS has struggled to handle our volume of enquiries and sort out various issues. We hope that IRBA will be fully staffed to handle the increased workload.

We were one of the first companies to raise the issue of invalid certificates, fronting and other non-conformances. We therefore welcome the approach that fronting will be penalised, and that the B-BBEE Commission will be tasked to investigate this.

In principle, we also welcome any proposed adjustments to the weightings and targets of the elements or the definitions.

We look forward to seeing the proposed bill and will make representations.

Regards
Gavin and the EconoBEE Team
Econoserv SA cc – A Proudly SA Company
info@EconoBEE.co.za
www.EconoBEE.co.za
Tel: 011 018 3200/011 483 1190 Fax 011 483 1195
11b Curzon Road, Bryanston

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