Is your BEE Certificate invalid? – EconoBEE Newsletter – 07 April 2011

EconoBEE - BEE Points = Business

Dear Name

Is your BEE Certificate invalid?

Our last newsletter had lots of people talking. Many wondered how to tell which certificates are acceptable and which are not for their procurement calculation.

It is particularly difficult for non experts to identify invalid certificates. Now even more so since it emerged that not all SANAS accredited certificates are valid – one of which could easily be yours without you even knowing.

We are often asked “whose job is it to check certificates?”, and if one cannot simply use the certificate that was supplied, if a SANAS accredited agency produced that certificate.

 
 
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Our viewpoint is that there is an onus on you, the measured entity to do at least some checks on the certificates supplied. If you use a certificate that is invalid, then you run the risk of having your own certificate declared invalid or withdrawn once the offending certificate is discovered. Anyone reading our many past newsletters will know that mistakes are made, and many certificates that on face value appear correct have had to be withdrawn or replaced. Even a totally innocent mistake can cause your competitor to query your certificate and it can be withdrawn, which will result at the best in unnecessary admin hassles and at the worst lost business.

It is our contention you should check in-coming certificates, and where you have any queries, ask your supplier for confirmation.

In many cases you know your supplier better than the verification agency so you can pick-up errors, or even fronting indicators better than the verification agency.

The following rules should be applied:

EME

  1. Issued to companies that have an annual turnover of less than R5 million. The exceptions are businesses in the tourism industry where the threshold is R2.5 million and construction industry – built environment professionals is R1.5 million.
  2. Issued by: Auditors or verification agencies or accounting officers.

Typical areas to check:

  • Is the business being verified in the correct industry?
  • Is the company in the service industry? Businesses in the service industry are more likely to be EMEs than manufacturing or retail. Remember that a turnover of R5 million per year is approximately R416 000 per month or R20 000 per day. It would be unusual, but not impossible for a retailer or manufacturer with low margins to be an EME.
  • Confirm exactly how much your own business spends with the supplier. If your own spend is R2.5 million, and you are not the only customer, this is an indicator that the supplier’s turnover may not be less than R5 million.

QSEs and Generics

  1. QSE certificates issued to companies that have an annual turnover of between R5 million and R35 million. The exceptions are businesses in the tourism industry where the threshold is R2.5 to R35 million and construction industry – built environment professionals is R1.5 million to R11.5 million.

Issued by: Accredited verification agencies, currently accredited by SANAS. Visit www.sanas.co.za to confirm that the agency is on the list. The SANAS logo on a certificate is not a guarantee that the agency has been accredited. Some rogue agencies have used the SANAS logo without permission.

Verification agencies with valid pre-assessment letters from SANAS: SANAS will issue new agencies who have been pre-assessed with a pre-assessment letter, valid for 3 to 4 months. NB: This is not a receipt issued by SANAS indicating that the agency has applied to be a verification agency. The dti has a list of agencies that have been issued with a pre-assessment letter. The best is to ask your supplier to ask the agency for their letter.

Sector codes: Four sector codes have been gazetted. You may only use your supplier’s certificate for your own procurement calculation if it was issued correctly and in terms of the right sector code. The sector codes that have been gazetted are construction, tourism, transport and forestry. The property charter is said to be imminent. A company in any of those sectors must use the relevant sector code in order for you to earn points, or at least provide a reasonable explanation as to why they believe they fall into a different sector.

Verification agencies need to have been awarded an “extension of scope” by SANAS in order to accredit entities in each of the sector codes. If the agency does not have the extension of scope then it may not issue a valid certificate with SANAS logo. Accreditation details and extensions of scope of each verification agency are available on www.sanas.co.za.

Typical areas of concern:

  • Turnover: Should be checked in the same way you would check turnover for EMEs.
  • Sector codes: This is currently an area of great concern. Although the sector codes were issued two years ago, many companies are still using the codes of good practice. THERE IS NO DISCRETION for using scorecards in calculating your procurement score.
  • Compare certificates received to an invoice for the supplier – compare the VAT or company registration numbers on the certificate to your invoice. We have often seen one company issue a scorecard for another in their group. This could imply a valid certificate for one company is passed off as a valid certificate for another. This will undoubtedly be disqualified from your BEE Procurement calculation.

A question posed by a verification agency to us is: What is the cut-off date to accept codes of good practice certificates that should be based on a sector code?

Background: The sector codes came into effect from the date of gazetting – 2009. Therefore every certificate issued the day after the sector codes came into being should have used the sector codes and not the codes of good practice. This was problematical: No verification agency had their extension of scope to be able to officially verify against the sector codes, and companies felt that they should be given at least a year to be able to build up their scorecard before being assessed on the relevant code.
In 2009 we saw no certificates based on the sector codes. Nobody seemed to mind – least of all the sector councils. In 2010 we started asking questions as to why the sector codes were not being used. By June 2010, being about a year since most of the sector codes were gazetted many companies continued using the codes of good practice and not the sector codes, notwithstanding they obviously fell into the specific sector.

In November 2010 we started serious questioning of verification agencies, SANAS, the dti and the Sector Councils. It was only after this that action was finally taken and verification agencies forced to withdraw invalid certificates.

Our answer to the question:
In theory every certificate issued to an entity in one of the sectors should follow the sector code. If it does not then it should be rejected, or declared invalid and withdrawn, as we are seeing now.

The dti and SANAS have issued no communication on this question. Verification agencies do not agree with each other.
Our viewpoint: All codes of good practice certificates issued since November 2010 that should have been based on a sector code should be rejected and the agency should withdraw the certificate (or remove the SANAS logo on it). We use the date of November 2010 only because we have successfully managed to get the dti and SANAS to require the withdrawal of certificates issued as far back as that date.

 

 
 
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BEE Procured is EconoBEE’s massive procurement database containing over 20 000 BEE Certificates. Contact us on 011 483 1190 or info@econobee.co.za and have our contact centre collect your BEE Certificates for you.
 

EconoBEE is a BEE consultancy who has prepared a BEE Scorecard database containing over 20 000 BEE Certificates. They have conducted thousands of supplier scorecard audits and discovered various forms of fronting, fraud and misrepresentation. Through their integrated approach to procurement they have successfully assisted clients to achieve higher scorecard ratings and reduce the fronting risk attached to a scorecard. Contact EconoBEE on 011 483 1190 or www.econobee.co.za.


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The Metropolitan Oliver Empowerment Awards for 2011

Congratulations

The Metropolitan Oliver Empowerment Awards for 2011 were held in Sandton recently. Congratulations to the winners, and all companies that entered

Awards recognition …

  • Top Black Businessman: Kamugelo Mmutlana (of Fleet Africa);
  • Top Black Businesswoman: Ashantha Armogam (of Grid Worldwide Branding & Design);
  • Top Black Public Sector Executive: Mike Kgobe (of Denel Aviation);
  • Top Empowered Corporate Award: Maponya Incorporated;
  • Top Empowered SMME: Zanusi Brand Solutions.
  • Top Empowered Government Agency: the South African National Roads Agency;
  • Top Empowered Parastatal: the South African Post Office.

Category winners:

  • Resources: Total SA;
  • Basic and general industrials: Eqstra Holdings;
  • Food and beverages: Tongaat Hulett;
  • Healthcare and pharmaceuticals: Netcare;
  • Retail: Voltex;
  • Travel, leisure and entertainment: Southern Sun Hotels;
  • Media: Grid Worldwide Branding & Design;
  • Support services: KPMG;
  • Transport: Fleet Africa;
  • Financial services: Absa Group;
  • ICT: Bytes Technology Group SA;
  • Education: Nelson Mandela Metropolitan University.

 

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


 

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Use our pre-prepared “Verification Ready” documents and templates in your business – contact us for more.


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

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EconoBEE Newsletter
07 April 2011

In this issue

  • Is your BEE Certificate invalid?
  • BEE Crash Course
  • The Metropolitan Oliver Empowerment Awards for 2011

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


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Regards
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.

 

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