• Uncategorized

Deadline for evaluation of BEE Certificates looming for government – EconoBEE Newsletter – 22 November 2011

You’re receiving this information packed newsletter from EconoBEE
EconoBEE - BEE Points = Business

Dear [Name]

Deadline for evaluation of BEE Certificates looming for government

As from 7th December 2011, rules for government procurement change in terms of new regulations for the PPPFA – Preferential Procurement Policy Framework Act. These new regulations place greater emphasis on a B-BBEE scorecard to win the tender.

Message from the DTI

Message from the DTI about the PPPFA

A MUST from 7 December 2011

Companies that wish to conduct business with government will be required to submit their valid BEE Certificates obtained from an Accredited Verification Agency or Registered auditors approved by the IRBA. Companies with annual revenue of R 5 million or less must get an Exempted Micro-Enterprise Certificate from a registered auditor or Accounting Officer confirming their annual turnover.

Contact EconoBEE on 011 483 1190 or visit www.econobee.co.za to ensure you use an accredited agency or IRBA registered auditor.

Preferential Procurement Policy Framework Act – PPPFA – Summary

Government departments use the PPPFA to issue tenders. The purpose of this act is to ensure consistency and openness in the tendering process. Each tender is calculated out of a total of 100 points where the bidder who has the most amount of points wins. The calculation of the points for tenders are broken into two core sections; Pricing and Empowerment.

The old method

  • PPPFA applies only to tenders worth more than R30 000.
    • Uses a points system to evaluate the winning tender
    • 80/20 preferential point system for tenders less then R500 000
    • 90/10 preferential point system for tenders more than R500 000

The 80 or 90 points are awarded on basis of price. The bidder with the lowest price will earn maximum points for price. Bidders with a more expensive price will earn fewer price preference points.

The 20 or 10 points are awarded on basis of HDI (*) or reaching specified goals
– E.g. Ownership, management
(*) HDI – black, coloured, indian, female, disabled

Problems with Existing System

  • Each organ of state used their own interpretation for HDI points and specified goals
  • Some used B-BBEE certificates but most did not
  • Some used only black ownership
  • Some used only white women (HDIs)
  • Some used local content
  • Generally inconsistent
  • Prone to fronting and created “tenderpreneurs”
  • Harmed transformation
Win Tenders: Evaluating B-BBEE Credentials for the PPPFA – Book Now

The new method

The 90/10 and 80/20 principle still remains however instead of the 10 and 20 preference points being awarded for HDI status it is awarded solely based on a Broad Based BEE Scorecard. The threshold has also been increased from R500 000 to R1 million.

Import information

  • Build up a good BEE scorecard. You are evaluated purely on the score you achieved.
  • Ensure you use a verification agency accredited by SANAS or an auditor registered by IRBA. If you are unsure our consultants can assist you.
  • If you are exempt an auditors letter is acceptable – however your automatic level 4 (level 3 for majority black owned organisations) may not be better than competitors. Consider improving your score to win more tenders.
  • Submit all available information as proof of your B-BBEE status.
  • Compare your B-BBEE status to your competitors.

For the first time all govt agencies, SOEs, organs of state will be required to take into account your good B-BBEE score based on a valid B-BBEE certificate in awarding tenders.

The full conversion of B-BBEE level to PPPFA preference points are as follows:

BEE PointsLevel80/2090/10
Above 100 pointsLevel 1
85-100 Points Level 2189
75-85 PointsLevel 3168
65-75 PointsLevel 4125
55-65 PointsLevel 584
45-55 PointsLevel 663
40-45 PointsLevel 742
30-40 PointsLevel 821
Less than 30 PointsNon-compliant00

It means that companies with a good B-BBEE level stand a better chance of winning the tender. Companies without a B-BBEE certificate will need to discount their prices to win. For tenders worth above R1 million the 90/10 rule applies, where 90% is based on price and 10% on B-BBEE level.

Broad Based Black Economic Empowerment – Summary

BEE, or more accurately B-BBEE refers to Broad Based Black Economic Empowerment is a policy of the SA government which encourages companies to help transform the country. BEE is about broad-based activities that benefit black people.

Definition: Black means African black, coloured or Indian people who are South African citizens by birth or became a South African citizen before 27th April 1994. NB the definition of coloured now also includes Chinese

BEE compliance is measured by means of a scorecard (a broad based scorecard). The scorecard is based on various elements and your company is measured out of a maximum of 100 points (in some cases it is possible to obtain more than 100 points).

The BEE Codes of Good Practice is a government document that describes how the scorecard works.

The elements on which you are rated is what make BEE broad-based. It covers various aspects of the economy, society and the company.

  • Ownership – this measures the percentage of shares in the business that are owned by black people (as per the definition above)
  • Management – the directors and top management of the business
  • Employment equity – the employees in the business
  • Skills development – this measures the amount of money spent on training of black employees
  • Procurement – your suppliers and their scores
  • Enterprise Development – your spend on helping other black owned enterprises
  • Socio-Economic Development – your spend on assisting charitable organisations

Once you have calculated a score it gets converted to a level – so we talk about level 8 or level 7 up to level 1 companies.

Above 100 pointsLevel 1
85-100 Points Level 2
75-85 PointsLevel 3
65-75 PointsLevel 4
55-65 PointsLevel 5
45-55 PointsLevel 6
40-45 PointsLevel 7
30-40 PointsLevel 8
Less than 30 PointsNon-compliant

The codes define three types of companies;

  • EME below R5million
    • Exempt Micro Enterprise – a company that has an annual turnover of less than R5 million. These companies are automatically given a BEE score of 65 points (level 4), and if majority black owned, level 3
  • QSE between R5million and R35million
    • Qualifying Small Enterprise – an enterprise with an annual turnover of between R5 million and R35 million. The QSE will need to fill in a scorecard, but must choose only 4 of the 7 elements.
  • Generic above R35million
    • All companies with a turnover above R35 million per annum. They need to comply with the seven elements of broad based black economic empowerment.

The Scorecard

ComponentElementPoints Available QSE *
Points Available Generic
Direct EmpowermentOwnership2520
Human ResourcesEmployment Equity2515
Skills Development2515
Indirect EmpowermentPreferential Procurement2520
Enterprise Development2515
ResidualSocio-economic Development255
Total 100 * select top four elements

No time to manage your BEE scorecardManaged Service.

PPPFA coming into effect – Ensure you understand the new requirements

We have organised a very special half day course for the new government tender regulations. Learn how the new tender process affects your business, gain a competitive advantage and win more tenders.

Date – PPPFA and your Tender:
24th November 2011 – JHB – Emperors Palace

Time: 7:30 for 8:00 – 12:30
Price: R1710 incl VAT (R1500 excl VAT).

Can’t make it contact us and we can arrange a special internal course for all your staff (minimum of 15 delegates (half day) or 10 delegates (full day)).

Book now for the PPPFA and your Tender course.

BEE Managed Services Saves Time
Save time and effort with EconoBEE, Experts in BEE Compliance and scorecard optimisation. EconoBEE’s managed service will handle all of your BEE requirements, collect supplier certificates and prepare all the correct documentation. Contact us on  011 483 1190 or info@econobee.co.za.

Twitter - EconoBEEFacebook - EconoBEELinkdin - EconoBEEYouTube - EconoBEEEconoBEE Blog

While there is demand for a B-BBEE Scorecard someone will be taking advantage, shouldn’t that someone be you…

Want us to manage your BEE Process – Managed Service.

Turnover below R5 million – find out how to get your BEE Exemption.

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

Need a scorecard – produce one yourself – EconoBEE V3.

EconoBEE Newsletter
22 November 2011

In this issue

  • Deadline for evaluation of BEE Certificates looming for government

In other news

About EconoBEE

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.

Our services include BEE Management Systems, Training, EME Pack, Complete Managed Services; consulting and advisory and Procurement Solutions.

As leaders in the industry we are driven to help maintain and develop knowledge in the BEE industry.

Already have a BEE Certificate?

Please send it to us and we will include it in our BEE Procured database.

Contact Us

Tel: 011 483 1190
Fax: 011 483 1195
Email: info@econobee.co.za
Web: www.econobee.co.za

Follow us

We know how useful our newsletters are but you needn’t wait for our newsletters – follow us on Twitter, connect with us on Facebook or stay well informed by reading our BEE Blog.

Forward to a friend

Know someone who might be interested in the email? Why not forward this email to them using [forward].

BEE Points = Happy Customers = Sustainable Business

Gavin and the EconoBEE Team

Executive summary of B-BBEE

Turnover below R5 million per annum – automatic BEE status

Turnover above R5 million per annum – you need a BEE Scorecard. Our workshops, scorecard tools, procurement manager or a complete managed services will be best for you.

Complete Managed BEE Service


Win tenders with a B-BBEE status – managed service.

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.

HomeCorporate ProfileBecome BEE CompliantEconoBEE ServicesBEE ResourcesContact

Copyright EconoBEE – Helping you and the Economy Grow . All Rights Reserved.

You may also like...