Excellent news – PPPFA and B-BBEE

Original publish date – Wed, 19 Aug 2009 09:13:18 +0000, Keith

The National Treasury has issued a draft notice reconciling the PPPFA with the B-BBEE codes. The PPPFA dictates how government should issue, adjudicate and award tenders.  It was based on the 80/20 for tenders below R500 000 or 90/10 principle for above that limit. Using this principle a tender would be evaluated by allocating 80 points to the tender itself – price, product, service, guarantees etc. 20 points would be allocated by using “HDI status and the achievement of the RDP goals”. Effectively it meant that tenders were awarded using the old narrow based method. A company’s  BEE status meant nothing – only ownership and management were taken into account.

The draft regulations now state that those 10 points or 20 points are based only on your BEE level. They have also increased the 80/20 threshold to R1million. So, if a company tenders for government business and it has achieved level 4, then it is automatically allocated 12 points out of the 20. If it is non-compliant then it earns zero points on the tender adjudication. On the other hand if it is level 1 then it earns 20 points on that tender. For tenders above R1million the 90/10 principle applies. The 10 points are allocated based on BEE level. A level 1 company earns 10 points, a level 4 gets 5 points and a non-compliant gets zero points.

With minor exceptions, this is exactly what we have been asking for over the past 4 years. The main difference is that a company’s BEE score is now used in evaluating their tenders, rather than the unscientific and arbitrary manner,usually based on the now discredited narrow based format.

A good scorecard will now become more important, and more useful to businesses, many of which had to try to comply with contradictory requirements.

See draft-preferential-procurement-regulations


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