Why should you bother with BBBEE?

03 Mar Why should you bother with BBBEE?

We have been asked this question on many occasions and the simple answer is that if you undertake any economic activity directly or indirectly with Government departments, you are required to produce a BEE Certificate. This is clearly stated in the PPPFA (Preferential Procurement Policy Framework

Act, No. 5 of 2000).


The question then arises whether your business falls within this category of business or not. The reality is that many businesses do not have any dealings with Government departments, however one of your clients or their clients will be involved with supplying one or more Government entities.

To simplify, below is a diagram showing how most businesses are included in the supply chain of products or services where you would be required to supply a BEE certificate:

pic

As per the picture above you may be a small supplier to an entity who has a client who deals with Government. Each business within this supply chain will request a BEE certificate from their suppliers in order to measure their procurement spend with their own suppliers. In turn their suppliers will request their suppliers for their certificates and so the chain continues all the way down to your business.

Tendering Point System

When tendering for business with Government, entities will be measured on the preference point system. For acquisitions of products or services up to a Rand value of R1 million, tenderers will be awarded points as per the first column below, based on the supplier’s BEE certificate and level of procurement recognition, where the 20 points will be earned purely on the supplier’s BBBEE level of compliance. For acquisitions of products or services to a Rand value greater than R1 million the 90 / 10 preference point system applies and a tenderer will be awarded points as per the second column, based on the supplier’s BEE certificate and level of procurement recognition:

BBBEE Status Level of Compliance

80 / 20 Points

90 / 10 Points

1

20

10

2

18

9

3

16

8

4

12

5

5

8

4

6

6

3

7

4

2

8

2

1

Non Compliant

0

0

 

The table above shows that the 20 or 10 points is based purely on the level of your company’s BEE status and can be the determining factor of whether you attain the tender or not.

Breacking news!

Extension of Transitional Period of Revised Codes

 

The DTI issued a statement on the 18th March 2014, announcing that the Revised Codes will no longer become effective on 11 October 2014, but on 30 April 2015. This means that businesses will be able to apply the existing Codes up until 30 April 2015. Thereafter measurement will be only in terms of the Revised Codes. This means that any entity that is measured after the 30th April 2015, will be scored on the new Revised Codes and the financial period being measured is no longer relevant. According to the DTI, this extension is granted in an effort to allow the Sectoral councils sufficient time to align their sector codes with the Revised Codes.

All businesses therefore have an extra 6 months to realign their BEE strategy in line with the new codes and to ensure that your level of compliance is not negatively affected. SAB&T BEE Services are offering businesses the opportunity to do a Gap Analysis which will establish where your entity falls short of the new targets as well as highlighting the elements requiring attention. It is important to note that a verification is based on a financial period and all businesses whose BEE certificate will expire from 30 April 2015, will be affected by the new codes.

For more information on BBBEE please contact SAB&T BEE Services as we are an IRBA approved Registered Auditor, a full member of ABVA (Association of BBBEE Verification Agencies) as well as an associate member of NAACAM. SAB&T BEE Services can offer our clients solutions to their BBBEE needs, which include:

 

  • BEE Verifications / Certificates
  • Strategy Planning
  • BEE Training
  • BEE Outsourced solutions
  • Consulting

 

We may be contacted on 0860 233 669 or via email: marketing@nullsabtbee.co.za. We service all 9 provinces within South Africa.

 

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