Fronting and Enrichment – the solution

Original publish date – Fri, 20 Aug 2010 13:57:36 +0000, Keith

Government tenders awarded to tenderpreneurs, and enrichment via dodgy ownership deals causes a lot of anguish for many South Africans.  Currently government tenders are awarded on the basis of many factors: price, performance and “empowerment credentials”. This loosely translates to asking a company for its black ownership and details of its directors.

Section 10 of the B-BBEE act makes it compulsory for organs of state and public entities to take into account the B-BBEE status of the supplier in setting up preferential procurement policies. Virtually no public entity is doing this. Those that do not are in breach of the constitution.  A tender, license or disposal of state assets can only be awarded to a business if government takes into account the B-BBEE status of the tenderer. The act states further “..and as far as is reasonably possible apply any relevant code of good practice issued in terms of this act.”

Although the act does not give a clear definition of “take into account” or ” reasonably possible apply”, and does not state how it should be applied, what is clear is that every state entity MUST at least ask for a valid  B-BBEE certificate, and should give their own reasonable interpretation of how they are going to apply the codes to their particular tender or license.

Any government agency that does not do this is in breach of the act and therefore in breach of the constitution.

The act was signed into law in January 2004, and the Codes of Good Practice were gazetted in February 2007, so government has had more than 3.5 to implement its own policies.

There is no discretion at to whether or not government applies this clause.

Once they do, the affect will be that all organs of state will be asking all suppliers for their valid B-BBEE scorecards. This will result in focusing government on broad-based issues, rather than the old, discredited and annoying narrow-based method that they currently use.  It will result in more compliance and improved transformation.


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