NEW B-BBEE RULES AIM TO BOOST EMPOWERMENT

COMPANIES wishing to do business with organs of state will need to prepare for imminent changes that become effective on April 1.

This follows the issuing of new Preferential Procurement Regulations last month in terms of the Preferential Procurement Policy Framework Act 2000.

The regulations, issued by the minister of finance, were revised to align with certain changes to the broad-based black economic empowerment (B-BBEE) legislation.

They encourage procurement from small enterprises, particularly through subcontracting if a tender is set above the R30-million threshold.

The regulations focus on the need by all organs of state and public entities to specify conditions that only locally produced goods or locally manufactured goods meeting the stipulated minimum threshold for local production and content will be considered for certain designated sectors.

They also afford organs of state the freedom to choose to apply prequalifying criteria to advance certain designated groups.

If applied with the pre-qualifying criteria and subcontracting requirements, the regulations could have the far-reaching empowerment effect that its predecessors sorely lacked.

If not utilised, there will be pressure on organs of state to motivate why these qualifying criteria and subcontracting requirements are not being applied.

Small businesses that have been battling to get government departments to accept their B-BBEE affidavits when tendering will be pleased to note the regulations now clearly stipulate that an affidavit as prescribed by the B-BBEE Codes of Good Practice is acceptable proof of B-BBEE status.

Sworn affidavits and Sanas (South African National Accreditation System) accredited B-BBEE verification agency certificates are the only acceptable form of proof of B-BBEE status.

For instance, all tender documents must stipulate the preference point system applicable and determine whether pre-qualification criteria are applicable.

They must also determine whether the goods or services are in a designated sector for local production and content, and determine whether compulsory subcontracting is applicable as well as determine whether objective criteria are applicable.

One major area of change is the freedom that the regulations afford the organs of state to choose to apply pre-qualifying criteria to advance certain designated groups in the economy.

This will allow them to focus for example on promoting women empowerment, small business empowerment, disability empowerment or black empowerment.

Any tender which does not meet with this pre-qualification will be unacceptable.

A last significant change in the regulations is the requirement to subcontract for contracts valued above R30-million, if feasible, in order to advance designated groups.

All categories of businesses should ensure that they are registered on the National Treasury supplier database.

The organ of state must make available the list of all suppliers registered on a database, approved by the National Treasury, to provide the required goods or services in respect of the applicable designated groups, from which the tenderer must select a supplier.

“Sanas accredited certificates only acceptable form of proof

The Practical Guide to the Amended B-BBEE Codes of Good Practice for Specialised Entities,