The worst B-BBEE certificate I’ve ever seen
Posted by Keith in Accreditation, BBBEE Knowledge, Fronting on March 15th, 2012
This is probably the worst BEE Certificate I’ve ever seen.
Let’s identify the errors and problems on it:
- Produced by Hansie D Labour Brokers – not an accredited agency or approved auditor
- Ownership states “Male owned”. It does not mention any black ownership. (On contacting the company they confirm they have no black ownership)
- The rating certificate is called “Unaccredited Transitional SMME”. There was a transitional scorecard in 2007 ending in 2008, otherwise “transitional” does not make sense. In B-BBEE terms we use QSE, not SMME.
- Spelling: “procerement recognition rating”. Also “Non Complaint Contributor” instead of “Non-Compliant Contributor”.
- It lists the procurement recognition rating as level 2. The procurement recognition is 125% for level 2. However if you add up the points “earned” on the four elements, it comes to 100, which is level 1
- It lists the 7 elements by number 1100, 1200 up to 1700. This numbering methodology was used in the draft codes of 2005. The gazetted codes of 2007 use 802, 802, up to 807
- It lists code 1200 as “equity ownership”. It should be “Management”
- It lists code 1500 as “preferred procurement”. It should be Preferential Procurement”
- It lists code 1700 as “residual”. This is also a relic of the draft 2005 codes, and should be “Socio Economic Development”
- It awards 25 points to ownership because the business is 100% white owned. It should be zero.
- It awards 25 points to “equity ownership” (should be management) because the business is 100% white managed. It should be zero.
- The certificate is unsigned.
- It mentions a date of 01-02-2011 and a validity date of 28-02-2012. Certificates at most can be valid for one year, not 13 months.
- The table “BEE Status Qualification” describes the points to levels table: e.g “Level Two Contributor > 85 but < 100 on the generic scorecard”. It should be “Level Two Contributor >= 85 but < 100 on the generic scorecard”. There is a big different between greater than, and greater than or equal to. This is why the entity apparently earned 100 points but is level 2.
- The points earned for preferential procurement is 25 and enterprise development also 25. Based on the numerous errors we would doubt their calculations.
- Based on the errors identified so far we would doubt that they took into account key principle 2.6: “Any representation made by an Entity about its B-BBEE compliance must be supported by suitable evidence or documentation. An Entity that does not provide evidence or documentation supporting any initiative, must not receive any recognition for that initiative.” We doubt that they have the evidence to support their conclusions.
- Based on the errors identified so far we believe that key principle 2.4 applies: “Any misrepresentation or attempt to misrepresent any enterprise’s true B-BBEE Status may lead to the disqualification of the entire scorecard of that enterprise.” This certificate definitely misrepresents the company’s true B-BBEE status.
New Targets – Clarity?
Posted by Keith in Accreditation, BBBEE Knowledge, Verification on February 13th, 2012
The minister has gazetted an explanation regarding the new targets conundrum, notice 102 of 2012 issued 7th February 2012.
“With effect from the 9 February 2012, the 0-6 year targets will come into operation. However for measured entities whose Measurement Date is prior to 9 February 2012, the 0-5 year targets will still be applicable. But for measured entities whose Measurement Date is post 9 February 2012 the new targets will be applicable.”
The notice of course should have stated “With effect from the 9 February 2012, the 6-10 year targets will come into operation.”, instead of saying 0-6 year targets. We have notified the dti of this typo.
That notwithstanding the dti has clarified the issue to some extent, but it still is going to cause some serious problems.
The intention of this notice is that a company that is using its financial period of say 1st January 2011 to 31st December 2011 will use the “old targets”, whereas a company whose financial year ends on 29th February 2012 will use the new, higher targets for its next verification. We can therefore expect to see new targets being implemented as from about March or April of this year.
The codes, and this notice uses the term “Measurement Date”.
One of the key principles of the codes (statement 000, code 000) states:
2.3 The basis for measuring B-BBEE initiatives under the Codes is the B-BBEE compliance of the measured entities at the time of measurement.
This, presumably is what the minister had in mind when he stated “However for measured entities whose Measurement Date is prior to 9 February 2012, the 0-5 year targets will still be applicable.”
There has been some discussion about the concept of “measurement date”. We have always seen the measurement date as the end of the financial period under review. However many verification agencies do not see it that way. They correctly use the financial period for financial information like turnover, net profit after tax, skills spend, ED spend, payroll, SED spend and procurement. However those agencies tend to use ownership data and EE data as it appears on the date of the verification. We have argued that this is not a consistent approach. The purpose of verification is to verify that data as it was on the measurement date. This is consistent with for example an audit where the audit is performed many months after the year-end.
The reason that verification agencies give is that SANAS requires them to interview a selection of employees, and if an employee has left they cannot interview the employee.
In our discussions with the dti, they see measurement date in the same way as we do.
To their credit the dti has promised us that they will fix the “0-6 year” error, and give a more detailed explanation of measurement date.
It does mean that verification agencies that have incorrectly used the verification date as the measurement date will have to change their policies. They will also need to satisfy SANAS that they have sufficient information about an employee who has subsequently left the company to justify having awarded them the points.
We have one more suggestion and that is that the measurement date be included on the verification certificate, clearly showing which target is being used. This information should be included o the verification report that agencies submit to their clients, but is not included on the final B-BBEE Certificate.
PPPFA Fails
Posted by Keith in BBBEE Knowledge, True Empowerment on January 17th, 2012
We were very pleased when the finance minister gazetted the changes to the PPPFA regulations. It brought the PPPFA in line with the B-BBEE act and codes. It made for consistency and ensured fairness and objectivity in adjudicating and awarding tenders.
It was a shock therefore to see that the finance minister has issued an exemption to all public/state owned enterprises for the new regulations. SOEs no longer need follow the new regulations and have pretty much carte blanche on how they will issue/ advertise and ultimately award tenders. The exemption is for a period of 12 months to 7th December 2012. The PPPFA does allow the minister to issue those exemptions notices, but we feel that this has set back the entire B-BBEE process, almost irretrievably.
Who is affected? All entities in schedules 2 and 3(b), (d) of the Public Finance Management Act. This includes ACSA, Telkom, Transnet, SAA, Eskom, Rand Water, Umgeni Water. It refers to a huge proportion of government expenditure.
What is left are only government and provincial departments and smaller organisations like Boxing SA that need to follow the new regulations.
We see this as a huge blow for true empowerment. The only measure of empowerment is your B-BBEE certificate, and yet, the largest SOEs are refusing to implement the new regulations in favour of a different, inconsistent system.
The SOEs do have reasons for wanting to be exempt – ranging from difficulty in implementing the new policies to their feeling that B-BBEE is “too soft”. The Black Business Council feels that the new regulations threaten black business because many white owned businesses have a better B-BBEE level, or can win business by giving a discount of more than 10%. They are asking that certain spend be set aside for specifically black business.
This is inconsistent with the B-BBEE scorecard. If there was a problem with the B-BBEE scorecard being “too soft”, then the route to go should be to change the B-BBEE codes and strengthen the fight against fronting rather than throwing out B-BBEE in favour of the old PPPFA regulations.
We do recognise that some SOEs, e.g ESKOM demand that their suppliers have a valid BEE certificate, level 4 or above, so they are not dismantling B-BBEE totally.
The new regulations have been discussed for 3 years, and were gazetted in June 2011, so there was sufficient time for discussion before it was implemented, rather than the minister have to issue his exemption on the date that the new regulations came into effect. It really makes us wonder why the minister bothered to implement any regulations at all if he is going to exempt probably more than 50% of all state procurement from the regulations.
This is not going to improve peoples’ attitudes around tendering and B-BBEE – rather is will harm them and result in lower compliance. At the moment the dti is trying to get its new B-BBEE Amendment Bill accepted by parliament. This is also a set back for the chances of that bill being approved. We, ourselves have spent nearly two weeks writing up our submission on that bill, giving it our qualified support, and making what we consider are positive suggestions. Based on the failure of the PPPFA, our feeling right now is that the Amendment Bill will never be gazetted or implemented, so why bother wasting time on a submission. If that is our feeling, as the biggest supporters of empowerment and B-BBEE, I’d hate to hear what others are saying.
The New Targets Conundrum
Posted by Keith in Accreditation, Interpretations, Scorecard points, True Empowerment, Verification on January 13th, 2012
The BEE Codes of Good Practice sets variable targets for employment equity and procurement. For all other elements, there is a fixed target e.g 3% of NPAT for enterprise development.
Employment equity and procurement have target that state “Years 0 to 5″ and “6 to 10″. The 6 to 10 target are higher than the 0 to 5. eg. senior management targets for 0 to 5 are 43% and 6 to 10 are 60%.
Since the codes came out there have been debate about when the new targets kick in. It was presumed that codes have a duration of 10 years as per paragraph 13.2 of code 000 and the new targets apply half-way through. The wording has been ambiguous enough for people to came up with various interpretations.
1) New targets apply for all verifications as from 9th February 2012
2) New targets apply for all verification as from 9th February 2013
3) New targets apply after the 5th verification that a company undergoes.
4) New targets apply for companies whose rating period ends after 9th February 2012.
In May 2011 we wrote to the dti asking for clarity and pointing out that if the minister were to issue a new interpretation, it may have be issued in terms of 9(5) of the act giving the public 60 days to comment before the final gazette would be issued well before 9th February 2012. This is no longer possible.
The new targets will have a very serious effecton your scorecard – there can be up to 15 points difference if you use the old targets.
Latest news from the dti is they are looking at option (4) above as their understanding on the codes. This means if your rating period ends after 9th February 2012, then you will use the the new targets. A rating period generally refers to your financial period, or financial year. So, a company that has a financial year that ends in December 2011 will be rated on the old targets, even if the actual verification takes place in October 2012. A company whose financial year ends on 28th February 2012, and uses that as their rating period will be verified on the new targets, even if that verification takes place in June 2012.
Measurement period:
Key principle 2.3 of the codes state:
The basis for measuring B-BBEE initiatives under the Codes is the B-BBEE compliance of the measured entities at the time of measurement.
There has been much debate over the concept of the time of measurement period or rating period. Is it the date on which you are being verified, or the period during which your scorecard is being calculated? Financials form a large part of the BEE scorecard so companies generally use their annual financials as the basis for measurement. It does happen that due to delays a company will submit its 2010 financials for verification in 2012 because its 2011 financials are delayed. In this case the old targets would be used. A more diligent company that produces its financials on time will have to use the new/higher targets.
Another issue is many verification agencies do not respect the rating period for their EE, management and ownership calculations. Your measurement period may be 2010 to 2011, but the agency will insist on measuring you on EE, management and ownership as at the date of verification. Under these circumstances we wonder which target the verification agency will use?
The solution is for the minister to issue a gazette or regulation outlining exactly how the new targets will work. It would have to encompass better interpretations around the measurement period.
PPPFA and Treasury tries to clear waters.
Posted by Keith in Accreditation, BBBEE Knowledge, Verification on December 6th, 2011
The Treasury Dept has issued guidelines to be implemented for the new PPPFA regulations coming into effect tomorrow (7th December).
They have fixed up the errors we identified, and which we had requested them to change – i.e. EMEs that fall into the Tourism or Construction sectors have different EME thresholds. In the original regulations it did not specify that certain sector have different thresholds – it made the blanket statement that EME’s have a turnover of less than R5 million, but did state that the regulations are in line with the B-BBEE Codes.
They have now clarified that an EME is one with an annual turnover of less than R5 million, unless you fall into the tourism sector where the threshold is R2.5 million and the Built Environment Professionals sector where the EME threshold is less than R1.5 million
The second issue relates to acceptable certificates:
The guidelines relating to verification agencies state that certificates will be identifiable by a SANAS logo and a unique BVA number. All certificates bear this logo, other than EMEs, because SANAS has not accredited any agencies to issue certificates for EMEs. No EME certificate issued by a verification agency is allowed to carry the SANAS logo.
The guidelines also do mention with respect to EMEs that “Sufficient evidence to confirm a qualifying EME is a certificate issued by an Accounting Officer (as contemplated in the CCA), a similar certificate issued by a Registered Auditor or a Verification Agency.”
We have spoken to Treasury and they confirm that the intention is for an EME certificate, like all certificates to carry the SANAS logo. While there could well be a legal challenge to the slight ambiguity in the guidelines, there is no doubt that every procurement officer affected by the PPPFA is going to look for a SANAS logo, and if one is not present on the certificate, they will automatically reject it.
Proposed amendments to the B-BBEE Act
Posted by Keith in BBBEE Knowledge, Fronting, Interpretations, True Empowerment on November 25th, 2011
Proposed amendments to the Broad-Based Black Economic Empowerment Act (B- BBEE)
Cabinet approved the publication of the Broad-Based Black Economic Empowerment Act (B-BEE) Amendment Bill for public comment.
The proposed amendments to the Act intend to achieve the following objectives:
(a) Align the Act with other legislation impacting on the B-BBEE and with the codes
(b) Establish the B-BBEE Commission to establish an institutional environment for monitoring and evaluation broad-base black economic empowerment
(c) Provide for the regulation of the verification industry by the Independent Regulatory Board of Auditors
(d) Deal with non-compliance and circumvention by introducing offences and penalties
The proposed changes to the B-BBEE codes of good practice:
(a) Enterprise Development (ED) and Procurement to be elevated with each requiring sub-minimum and enhanced recognition for ED targeted at key sectors in IPAP and the New Growth Path
(b) Penalty provision for non-compliance with Enterprise Development and Procurement elements of the B-BBEE scorecard, and discount from overall score
(c) The points of ownership element should be broadened to include designated groups in the main points, creating greater incentives for genuine broad-based ownership such as employee share ownership, co-operatives and community ownership
(d) Setting sub-minimums/threshold for each element of the scorecard save for the adjusted ownership element
(e) The Qualifying Small Enterprises scorecard will be adjusted and certain elements made mandatory.The thresholds for Exempted Micro Enterprises will be reviewed
(F) The Employment Equity element to receive adjusted recognition and to be aligned to the Employment Equity Act (targets, Reporting and Definitions).
(g) Skills Development Element to be aligned to the New Skills development Strategy and the New Growth Path and
(h) Targets in the Ownership Skills Development Procurement and Enterprise Development will be adjusted.
===================
Comments:
In general, EconoBEE welcomes the proposed changes. We need to see the actual bill to analyse it in more detail, but in general, all the recommendations we have sent to the dti and BEE Council have been addressed.
We like that B-BBEE is being aligned with other acts, in particular the PPPFA which comes into effect on 7th December 2011.
More than a year ago we recommended to the minister that he establish an office of the BEE Ombudsman, to handle issues of interpretations, valid certificates, fronting, disputes. This is now being done via the establishment of a commission.
We also welcome IRBA as the overall regulatory body for verification. The verification industry has always had problems, starting with ABVA, and subsequently SANAS has struggled to handle our volume of enquiries and sort out various issues. We hope that IRBA will be fully staffed to handle the increased workload.
We were one of the first companies to raise the issue of invalid certificates, fronting and other non-conformances. We therefore welcome the approach that fronting will be penalised, and that the B-BBEE Commission will be tasked to investigate this.
In principle,we also welcome any proposed adjustments to the weightings and targets of the elements or the definitions. We have always like the fact that B-BBEE stands for “broad-based” implying it affects all aspects of the economy, and not necessarily only narrow based ownership.
We look forward to seeing the proposed bill and will make representations
EMEX Suspended by SANAS
Posted by Keith in Accreditation on November 17th, 2011
EMEX Trust announced on Wednesday 16th November 2011 that their SANAS accreditation has been temporarily suspended.
Their statement, issued by Nicky Grobler, COO of EMEX stated:
===============================
“Please be informed that Emex Trust’s accreditation has been temporarily suspended as of 14 November 2011 pending corrective action from our recent audit. We hereby wish to give you facts pertaining to this suspension and eliminate any rumours that will be going around.
This temporary suspension simply means that there will be a delay in us issuing QSE and Generic certificates until we have corrected all the Non-conformities identified during our audit. Basically, this will affect all QSE and Generic pre-audits, audits and issuing of certificates until the non-conformities have been rectified. We aim to rectify these mistakes within the next two to three weeks.
Non-conformities identified during our audit. Basically, this will affect all QSE and Generic pre-audits, audits and issuing of certificates until the non-conformities have been rectified. We aim to rectify these mistakes within the next two to three weeks.
All QSE and Generic certificates that have been issued to date are still valid.
We regret that this situation will undoubtedly affect some of our valued clients and we offer our sincere apology to those affected. Be assured of our commitment in thoroughly rectifying these mistakes. Once we have done so, we will certainly be better equipped with a state of the art management system that will benefit all our clients.
Please also be informed that during this process of improving our service, we may be required to visit your premises to discuss next year’s targets and the way forward, and possibly obtain any outstanding information that could benefit you accordingly. In this case, you will be informed in advance of the appointment.
The whole process is an indication of the level of integrity associated with the Emex Trust certificate that you have received or will receive. Be assured of our commitment at Emex Trust towards you as our client, and your B-BBEE verification needs.
We thank you for your continued support and understanding. We will keep you updated.
Kind Regards,
Nicky Grobler
COO, Emex Trust”
===============================
For the actual statement please click here.
EMEs may have to produce two EME certificates
Posted by Keith in Accreditation, BBBEE Knowledge, Interpretations, Verification on November 17th, 2011
A key principle of government’s economic growth policy is to encourage the development and growth of small businesses and entrepreneurs. One of the initiatives is to reduce red tape for those small businesses. Recently the National Treasury issued new procurement regulations that were intended to reconcile B-BBEE with government procurement via the PPPFA (Preferential Procurement Policy Framework Act).
These regulations stated that the PPPFA would use B-BBEE principles in evaluating all government tenders. It also meant that a small business could obtain one B-BBEE certificate and use it for both their private enterprise customers, as well as for submission with government tenders. Small businesses, with an annual turnover of less than the threshold are defined as Exempt Micro Enterprises (EMEs) and are exempt from all forms of B-BBEE. This means they do not need to go to the effort and expense of building up a B-BBEE scorecard.
If they are in the tourism industry this threshold is R2.5 million. If they are Built Environment Professionals the turnover threshold is R1.5 million. For all other industries the current threshold is R5 million. This is set by the minister of trade and industry and can be changed by notice in the government gazette.
They do need to prove to both their private enterprise customers and government that their annual turnover is below their threshold. The B-BBEE codes state that:
“4.5 Sufficient evidence of qualification as an Exempted Micro-Enterprise is an auditor’s certificate or similar certificate issued by an accounting officer or verification agency”.
Typically an auditor will check the financials of the company and if its turnover is less than the threshold will write a letter to this effect. Most verification agencies will do the same task. These “EME certificates” are then given to the company’s customers, and to government as required by the new regulations. To date there have been some queries about the issuing of these certificates. We ourselves have queried a number of certificates, mainly on the basis that the company was lying about its turnover, or that the auditor or verification agency did not apply the correct industry thresholds. In some cases private enterprises rejected auditors’ or accounting officers’ certificates and demanded that the certificate be produced by a verification agency. It took some harsh words from us to those companies to get them to recognise that an EME certificate issued by an auditor or accounting officer was acceptable. This was based, not only on the codes but correspondence with the dti who confirmed that both auditors, accounting officers and verification agencies could indeed issue EME certificates.
As always there are complications: In 2009 the minister created the concept of “accredited” verification agencies and “non-accredited” verification agencies. In December 2009 and January 2010 we wrote to the dti and SANAS asking them for the definition of a non-accredited verification agency and received an unsatisfactory answer. In 2009 SANAS began accrediting verification agencies. On the letter of accreditation it clearly identified the type of work, i.e for which code the agency was accredited. We picked up that SANAS had not stated formal accreditation for codes 000, 800 and some of the sector codes. At our insistence SANAS re-issued their accreditation certificates formally allowing verification agencies to accredit for example QSEs (codes 800). They never issued formal notification to accredited verification agencies in terms of code 000. Code 000 is the statement that sets out key principles, defines EMEs and even defines specialised entities.
This is why all EME certificates issued by accredited verification agencies do not bear the SANAS logo because officially they do not have rights to produce EME certificates, and they do not have to follow the verification guidelines, which would include site visits and automatically increase costs. However certificates issued by accredited verification agencies tended to become acceptable, even to the extent that some companies even insisted upon it. The dti and SANAS never had a problem with verification agencies issuing EME certificates as it was in line with paragraph 4.5 of the codes above, and they still do not. As recently as 23rd September, in the notice issued by the dti minister regarding accreditation to IRBA, he re-iterated that paragraph 4.5 still remains valid for EMEs.
The new PPPFA regulations issued on 8th June 2011, and coming into effect on 7th December 2011 are intended to ensure that government procurement follows B-BBEE principles. Basically they state that adjudication of tenders submitted will take into account your own B-BBEE certificate issued in terms of the B-BBEE codes. The higher your BEE level, the more likely you are to win the tender. In the case of EMEs, they automatically qualify as level 4 ( a good level) or even level 3 (a better level) if they are more than 50% black owned. For small tenders, with a value of less than R1 million, a level 3 certificate can contribute approximately 16% of the entire tender adjudication, so it becomes essential for EMEs especially to obtain a valid EME certificate.
The new PPPFA regulations issued by the finance minister chose to use different wording to paragraph 4.5. Their paragraph 10 states:
=====================================
Broad-Based Black Economic Empowerment Status Level Certificates
10. (1) Tenderers with annual total revenue of R5 million or less qualify as Exempted Micro Enterprises (EMEs) in terms of the Broad-Based Black Economic Empowerment Act, and must submit a certificate issued by a registered auditor, accounting officer (as contemplated in section 60(4) of the Close Corporation Act, 1984 (Act No. 69 of 1984)) or an accredited verification agency.
(2) Tenderers other than Exempted Micro-Enterprises (EMEs) must submit their original and valid B-BBEE status level verification certificate or a certified copy thereof, substantiating their B-BBEE rating.
(3) The submission of such certificates must comply with the requirements of instructions and guidelines issued by the National Treasury and be in accordance with notices published by the Department of Trade and Industry in the Government Gazette.
(4) The B-BBEE status level attained by the tenderer must be used to determine the number of points contemplated in regulations 5 (2) and 6 (2).
======================================
We have already highlighted the mistake made by the finance minister in that he defines an EME as being one with an annual turnover of R5 million when that is not currently the case in all circumstances. Their paragraph 10.1 also uses the wording “accredited verification agency”. Effectively 10.1 is incorrect and probably unconstitutional. We had hoped that reading paragraph 10.3 would sort out the problem as it uses the words: “…be in accordance with notices published by the Department of Trade and Industry”. When we wrote to the Treasury Department they told us any interpretations regarding the BEE codes, i.e the entire section 10, should be referred to the dti as they are the gatekeeper.
However, on Tuesday,15th November, SANAS put out the following notice to all verification agencies:
==================================================================
Dear All
Please familiarize yourself with the newly gazetted PPPFA Guidelines, according to these guidelines EME certificates cannot be issued by Verification Agencies, a letter confirming turn over below R5 million per annum must be written by either an Accounting Officer or an Auditor. There is even an attached format of how this letter should be written. Make sure that you do not mislead the public by issuing these certificates as though they will be acceptable in public service because all these complaints will come back and flood my system.
====================================================================
The guidelines of course refer to the entire Regulations, especially section 10. The email above states that EME certificates issued by verification agencies to private companies remains valid. However if the same EME wishes to submit documentation to “public service”, they will need to get another certificate, this time issued by an auditor or accounting officer. The many EMEs that currently have valid EME certficates produced by verification agencies are going to have to pay twice to get a second EME certificate. As noted above some private companies are INSISTING on certificate issued by verification agencies, while govt is now insisting on certificates to NOT be issued by verification agencies. The dti is happy with one set of certificates, while PPPFA is unhappy with it. The only way to win is to spend time and money, and red tape producing the same certificate twice. Apparently PPPFA is now interpreting the codes and insisting both SANAS and accredited verification agencies are following their rules. Even more confusing in our discussions with senior directors at Treasury, their had no idea of the policy as explained in the email above.
The problem could have been avoided if SANAS had issued full accreditation for code 000 to all agencies. It could also be avoided if the dti minister were to issue a ruling that overrides the Treasury’s requirements, or whoever is objecting to verification agencies issuing EME certificates.
At the same time we are well aware that some agencies, and accountants do not perform rigid checks on turnover and simply issue certificates on the basis of a faxed document purporting to be accurate financials. In many cases the company has a turnover of well above the threshold and is deliberately supplying ncorrect information, which is fronting and which the new regulations are trying to stop.
This issues raises more questions than answers.
1) What if a company accepted agency EME certificates in its own verification, and earned procurement points on those certificates. Surely this company’s certificate could not be used by the PPPFA because they used different rules in calculating their certificate?
2) Code 000 also states that all public entities, govt departments, State owned enterprises must obtain their own B-BBEE certificate. The new regulations emphasise this in their conditions by stating that if one agency procures from another the same 90/10 or 80/20 rule comes into affect and each government agency must supply a valid B-BEE certificate. Each government agency must use the specialised scorecard – because they do not have ownership. If the whole reason for excluding verification agencies from verifying EMEs is because they do not have accreditation for code 000, then they also do not have accreditation to verify specialised enterprises either! Therefore, at this point there are no agencies nor auditors able to issue valid certificates for any government enterprise or organ of state.
Changes to government procurement rules
Posted by Keith in True Empowerment on November 10th, 2011
As from 7th December 2011, rules for government procurement change in terms of new regulations for the PPPFA – Preferential Procurement Policy Framework Act.
In terms of the new regulations, government must now also follow B-BBEE principles in its procurement process. For the first time all govt agencies, SOEs, organs of state will be required to take into account your GOOD B-BBEE score based on a valid B-BBEE certificate in awarding tenders. For tenders worth between R30 000 and R1 million the new regulations state that govt will use the 80/20 rule where 80% of the evaluation of the tender is based on price and 20% of the tender will be on the basis of your B-BBEE level. e.g if you are a level 1 company then you get the full 20%. If a level 4 then you get 12 points and so on. It means that companies with a good B-BBEE level stand a better chance of winning the tender. Companies without a B-BBEE certificate will need to discount their prices to win. For tenders worth above R1 million the 90/10 rule applies, where 90% is based on price and 10% on B-BBEE level.
The full conversion of B-BBEE level to PPPFA points are as follows:
BBBEE, PPPFA Tender Points Calculator
| B-BBEE |
PPPFA – Government tender points allocation |
||
| B-BBEE Level | B-BBEE Score Achieved |
80/20 |
90/10 |
| Level 1 Contributor | ≥ 100 points | 20 | 10 |
| Level 2 Contributor | ≥ 85 points but < 100 points | 18 | 9 |
| Level 3 Contributor | ≥ 75 points but < 85 points | 16 | 8 |
| Level 4 Contributor | ≥ 65 points but < 75 points | 12 | 5 |
| Level 5 Contributor | ≥ 55 points but < 65 points | 8 | 4 |
| Level 6 Contributor | ≥ 45 points but < 55 points | 6 | 3 |
| Level 7 Contributor | ≥ 40 points but < 45 points | 4 | 2 |
| Level 8 Contributor | ≥ 30 points but < 40 points | 2 | 1 |
| Non-Compliant Contributor | < 30 points | 0 | 0 |
Transport Charter/Accredited BEE training
Posted by Keith in Uncategorized on October 6th, 2011
Two items caught my eye.
One was about the transport sector code. See here.
The point made in the article is that the transport sector code is not seeing any benefits passed onto the people who were intended to benefit. The report quoted Mr Sam Monareng as saying that the sector code was gazetted in 2009. The report quoted him as saying “Stakeholders were then given a grace period of one year from August 2009, with the five-year time frame effectively commencing from August 2010”. This of course is not entirely true.
The transport charter applies from the date of gazetting, i.e 2009, and nowhere do the codes give any of the sector councils the right to give a grace period. A grace period must be gazetted as part of the codes. In any event the spokesman does clearly indicate that as from August 2010 the sector codes applied.
The report talks about the the usual problems of BEE – the slow pace of transformation.
The sector code came out in 2009, the transport dept does not even know that they do not have discretion to give a grace period, but did so anyway. Now there is a wonder as to why the slow pace of transformation. Even worse is many companies in the transport sector, even after August 2010 did not follow the transport sector codes. We have seen certificates dated way after August 2010, from companies in the transport industry that still use the generic codes. This is wrong and should invalidate their B-BBEE certificate. We naturally report all such instances to the dti, where we identify them. The dti reacts slowly or not at all. In some cases, they have asked the verification agency to withdraw the certificate, but they have no database to store withdrawn certificates, so their efforts are weak at best.
To repeat: Why do people wonder why the pace of B-BBEE implementation is so slow.
The second item was the initiative of the dti that is slow paced is the report that the dti has now launched a B-BBEE Management Development Program to be offered by Universities. We applaud the move to better quality BEE knowledge. However, as usual with the dti, the one arm does not seem to know what is happening with the other. We have tried for a week to get details of the courses, when they start, how long they are, and most importantly when the first batch of graduates will complete the course. This is important because SANAS and IRBA cannot accredit or approve any new agency or auditor until they have completed the prescribed higher education courses. It may well entail yet another delay in implementing the codes.
Recent Comments