Treasury Promulgates new PPPFA regulations

The National Treasury has promulgated the long-awaited regulations to the Preferential Procurement Policy Framework Act.

We noted in this blog over two months ago that the regulations had been approved by cabinet and now we can happily announce that the regulations were promulgated on the 08/06/2011. According to the Ministers notice though, they will only come into effect from the 07/12/2011. This gives public entities 6 months to make the switch to the new regulations. You can get a copy here .

The new regulations now take into account a  supplier’s BEE scorecard (issued by an accredited verification agency) and no longer focus only on Ownership. This will help combat fronting (and hopefully tenderpreneurship) as suppliers will now have to show what  they are actually doing in terms of transformations in all pillars of the scorecard, e.g. employment equity, preferential procurement, training black staff, supporting small black companies and uplifting black communities and individuals.

In terms of the regulations, tenders above R30,000 and below R1 million will be awarded 20 points based on the supplier’s BEE Scorecard. With a level 1 scorecard earning you the full 20 points and a level 8 only getting you 2 points. Similarly for tenders above R1 million, 10 points area available based on the supplier’s BEE scorecard, with a level 1 earning you the full 10 points and a level 8 just 1 point.

Another welcome change in the regulations is the inclusion of a requirement for locally produced goods and services for tenders issued in certain designated sectors (as designated by the DTI). Those tenders must have a stipulated minimum threshold for locally produced goods.

Sub-contracting

A company that is awarded a tender cannot sub-contract more than 25% of the tender to a company that does not have an equal or better BEE level than it’s own. Also if the tender is issued in a designated sector and the supplier sub-contracts part of the tender, it must ensure that through the sub-contracting the minimum threshold for locally produced goods is maintained.

Specialist Entity Scorecards

To date tertiary institutions and public entities have not readily obtained BEE certificates. The new regulations should change that due to the requirement that any tertiary institution, organ of state or public entity that submits a tender, will be adjudicated for the preference points on it’s scorecard issued using the specialist entities scorecard.

Fronting

The regulations give authority to organs of state to act against companies submitting BEE levels fraudulently obtained or based on fraudulent information. The regulations set out certain actions that can be taken.

About BEE Institute
The BEE Institute provides valuable support, consulting services and training to businesses and practitioners that have adopted the BEE Scorecard and wish to implement Sustainable BEE. The institute’s goal is to bring together all interested parties in the BEE field to enhance the understanding and implementation of BEE. Sustainable BEE is a trademarked Black Economic Empowerment philosophy which allows a company to align BEE actions to business objectives and therefore maximises return on investment (ROI). It includes best practice training, a workable BEE management structure and the required software systems. Sustainable BEE provides the guidelines on achieving maximum return on investment (ROI) from all areas of activity associated with the BEE Scorecard. Specialties B-BBEE Support, B-BBEE training, B-BBEE Software, B-BBEE Consulting

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