Verification Capacity Slows Compliance – EconoBEE Newsletter – 13 October 2011

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Verification Capacity Slows Compliance

In business we have to sometimes take the good with the bad. While the BEE verification agencies are busy they are also under huge pressure to keep up with the demand.

As we had predicted the B-BBEE Verification industry is being hampered by lack of capacity. This time we are only two months away from the anticipated implementation of the new PPPFA (Government Procurement) regulations. Many businesses are now required to submit a B-BBEE scorecard to keep their chances of winning a tender alive.

There are less than 80 accredited verification agencies, and they are unable to handle the volume of work coming in. One agency took over 2 months to adjudicate an appeal, while others are taking in excess of 3 months to finalise certificates for their clients. In the past those same agencies were able to finalise a certificate within a week. Agencies are having to schedule verification sessions further and further into the future, and analysts are often unable to complete their initial site visit due to pressure to perform a site visit for the next client. They therefore are seriously delayed in issuing the certificate. SANAS policy is to have certificates issued within 30 days. Many agencies cannot achieve this target or are using this as an allowed “grace period” to wait further.

This is due to many factors:

More demand: More and more companies are choosing to become compliant, and with less than 80 agencies to choose from, it is causing backlogs. At the same time many companies have not prepared properly for verification making the agencies’ jobs more difficult. Agencies simply don’t have enough capacity to handle the volume of requests and if even the smallest of queries is raised the whole process comes to a grinding halt.

Verification is becoming more onerous: SANAS is putting in place more stringent admin requirements – without really improving the quality of verification. In turn agencies choose not to argue with SANAS over some of the requirements and rather charge clients extra to meet the admin requirements.

Skills of analysts: There is a shortage of skilled verification analysts, delaying the process further.

Charters: The issue of charters and sector codes is also cause for concern. Even today we are still seeing certificates produced by agencies using the wrong sector codes. The whole sector code debacle has cost millions and is not being applied properly, causing SANAS and the dti to have to discipline agencies, and withdraw certificates, causing an even bigger backlog. The proliferation of charters is making the process more complicated. We have been pointing this out for a long time. The dti have been aware of this, but are taking action far too slowly.

The Audit Industry: In January 2011 the minister published proposals that the auditing industry should be able to approve auditors to produce certificates. His deadline was 1st April 2011. In the event, the proposal was only gazetted in September and applies from 1st October 2011. The new gazette further delays accreditation because the minster decided that all verification agencies must complete a higher education course on B-BBEE. This was in response to calls for improving the quality of analysts and ensuring consistency in verification. Unfortunately again the dti has been delayed in its efforts to establish these courses. Now both Wits and Unisa have started the process, but even the dti cannot give us full details of when the first batch of graduates will complete the course. Until then all new accreditation of agencies or approval of auditors will cease. Until now SANAS had been accrediting about 5 agencies per month – since 2010. It had taken SANAS three years from the date of publishing the codes to accrediting the first agencies. If IRBA can cut this down by half, this is still 18 months.

PPPFA: Demand is increasing for verification services, also due to the imminent change to the PPPFA (which is itself 5 years late), whereby government, as from 8th December 2011 will start asking for your B-BBEE certificate and take it into account in awarding any tenders. A large group of businesses that previously did not need B-BBEE certificates are now looking to becoming B-BBEE compliant.

We need to remember that the original act was dated 2003 and signed into law in 2004. In 2011, the dti still cannot even set up procedures to handle disputes, a blacklisting database, or even issue regular interpretations. The minister has issued very few gazettes outlining B-BBEE policies and the BEE Council never seems to meet anymore.

Need a Valid BEE CertificateContact us for more info


 

Government reliance on a B-BBEE Scorecard becoming a reality

With any new activity we expect to see a build up. I remember how it took just a few weeks to fill the streets with flags from all the countries participating in the soccer world cup. It almost happened over night.

I noticed an article this morning on AllAfrica.com. This article issued by the Gauteng Provincial Government is one of the first times I have seen a department announce that they are going to be changing their system to be in full compliance with the new PPPFA legislation. This is obviously a great sign for B-BBEE. Not only is it going to encourage the use of a B-BBEE status as the only measure of empowerment but it is proof that an important government department is going to support the PPPFA .

During our last PPPFA and Tendering Workshop we discovered just how much difficulty government had in correctly adjudicating tenders, and how much additional admin it created. Now a BEE certificate is all that is needed. The trick though is making sure your score is better than your competitors.

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The Gauteng Provincial Government (GPG) is in the process of updating its Central Vendor Database with all mandatory vendor requirements in particular the BBBEE (Broad-Based Black Economic Empowerment) Certificates and Tax Clearance Certificates. Therefore, all business owners and suppliers currently conducting business with GPG are required to be BBBEE Compliant by 7 December 2011.

The aim is to ensure that service providers keep their active status of continuing to conduct business transactions with government.

Suppliers are encouraged to submit their BBBEE certificate or a letter from a professional (i.e. a bookkeeper or accountant) immediately to avoid that last minute rush.

Any South African National Accreditation System (SANAS) endorsed BEE (Black Economic Empowerment) rating company can assist service providers in obtaining a valid BBBEE Certificate. Service providers are therefore requested to update their company profile urgently by providing a valid BBBEE Certificate (only SANAS approved) as well as a valid and original Tax Clearance Certificate.

Exempt Micro Enterprises (EME’s) are not compelled to submit a BBBEE certificate but a letter from a professional (i.e. a bookkeeper or accountant) bearing the professional’s practice number. The letter must confirm that the Exempt Micro Enterprise (EME)’s turnover is less than R5 million per annum.

The implications of not submitting either the letter or the BBBEE certificate is the forfeiture of Preference points and hence, putting the company in a disadvantageous position in both Request for Quotation (RFQ) and Tenders.

The update of information is free and to the benefit of all parties.

All documents must be submitted to the Black Economic Empowerment (BEE) Help Desk, 78 Fox Street, Johannesburg between 08h30 and 15h30, Monday to Friday.

Issued by: Gauteng Finance

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Procurement and Enterprise Development Conference & PPPFA coming into effect

We have now opened bookings for our 4th annual BEE Procurement and Enterprise Development Conference. During the conference we will show you how to maximise your points on those two elements with minimum effort to gain maximum results.

Date – BEE Procurement and Enterprise Development Conference:
8th November 2011 – CPT – Belmont Conference Centre
15th November 2011 – DBN – Makaranga Garden Lodge
22nd November 2011 – JHB – Emperors Palace

Time: 8:30 for 9:00 – 17:00
Price: R3990 incl VAT (R3500 excl VAT).

In addition 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:
9th November 2011 – CPT – Belmont Conference Centre
16th November 2011 – DBN – Makaranga Garden Lodge
24th November 2011 – JHB – Emperors Palace

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


 

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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
13 October 2011

In this issue

  • Verification Capacity Slows Compliance
  • Government reliance on a B-BBEE Scorecard becoming a reality
  • Procurement and Enterprise Development Conference & PPPFA coming into effect

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.


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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.

Complete Managed BEE Service

Tip:

Preparation will speed up your verification and earn you more points – 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.

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