Archive for July, 2009
The aim of verification is to ensure that two different agencies will come to the same conclusion if presented with the same information.
The job of SANAS should be to ensure standards – after all they are an ISO accredited agency whose job is to ensure standards.
In reality we are continuing to see differing standards. We have currently a specific issue where one agency will happily penalize their client by up to 14 points over the decision of another agency. Imagine two verification agencies looking at the same information from the same client: the first one will award 32 points, the second will award 46 points – a difference between level 8 and level 6.
What types of standards are these? We have tried to speak to the dti – they do not respond. We talk to SANAS – they say interpretation is in the hands of the dti. This is not acceptable! SANAS is the organisation ensuring standards are followed. If the codes are not explanatory enough, or are too open to interpretation, then SANAS cannot ensure standardization.
SANAS cannot simply wash their hands off the issue by suggesting the the dti is responsible for writing the codes. Yes, it is true that the dti is responsible for writing the codes, but if the codes are written in such a way that standardization cannot be achieved, then SANAS owes it to the industry by refusing to accredit any agency until such time everyone follows the same calculations to arrive at the same number. SANAS have indicated that their job is to ensure standard methodology, but I think they have forgotten their true mission – to ensure standards in outcomes. If they did their job properly there would not be such a huge discrepancy between agencies.
Sure, SANAS have ensured that all agencies follow a strict methodology – all agencies ask all attendees at a meeting to fill in an attendance register. All agencies worry about filling in al the forms, but SANAS does not care if the agency can do a simple maths calculation or not. SANAS does not care that there is a potential 14 point discrepancy between two agencies, as long as both have a signed attendance register.
As far as I know this is not what ISO wanted to achieve when it was created way back in 1947.
We call on the minister to suspend the verification requirements until such time as there is consistency, and a proper method of obtaining clarity developing a B-BBEE scorecard.
Preferential procurement encourages procurement opportunities to be made available to B-BBEE compliant suppliers. It is the immediate reason for companies and government entities to request B-BBEE scorecards from suppliers and potential suppliers and the B-BBEE cascading effect begins with preferential procurement. The self-regulation of B-BBEE is also centered on this element.
Companies can easily earn and continuously improve their points by preferring to procure from B-BBEE compliant suppliers. However in most cases earning points and calculating the preferential procurement score can be an administration irritation. A quick look at the top 200-empowerment companies on the JSE shows that only 1 company out of the 200 companies earned all the maximum 20 points on Preferential Procurement. According to President Zuma’s recent comments on B-BBEE “Access to government procurement opportunities by black firms has been raised as a serious challenge.” This undoubtedly is happening because enterprises and government departments do not have an understanding of Preferential Procurement and also do not have the proper systems in place.
With an understanding of preferential procurement and a system aligned to BEE initiatives, private companies and government entities can begin the kazien or improvement of preferential procurement and the procurement points. Our upcoming Procurement and Enterprise Development Conference can definitely help you in understanding preferential procurement, overcome the administration irritation and ultimately improve your B-BBEE points.
There is a misconception held by some companies that are Black owned that they do not need to go through the compliance process. Such companies feel that the fact they have a high percentage or even 100% Black ownership and management they have met the B-BBEE requirements.
All companies in South Africa need to work on the B-BBEE scorecard. Ownership alone constitutes 20 points on the Generic scorecard (scorecard for companies with annual turnover of more than R35 mil) and 25 points on the QSE scorecard (scorecard for a company of between R5 mil and R35 mil annual turnover). Earning full points on the ownership element for either a Generic or QSE entity without points elsewhere does not make them B-BBEE compliant. The broadbased nature of the B-BBEE scorecard means all companies have to train their Black employees, buy from B-BBEE compliant suppliers, help other Black owned businesses to grow, donate to charity apart from other initiatives if they are to be labelled as truly empowering. This will speed up the process of emancipating the disadvantaged in South Africa.
What those Black owned companies that feel it unnecessary to work on the B-BBEE scorecard are doing is to drag and frustrate the process towards economic parity among the South African racial groups.
An accredited BEE verification agency, BEE Ratings Solutions put out the following email yesterday:
B-BBEE: SECTOR CHARTERS
(Tourism, Construction, and Forestry)
Dear Business Owner/ Procurement Manager,
The minister of Trade and Industry recently gazetted three sector codes for the Tourism, Construction, and Forestry industries.
This has a major impact on the Exempt Micro Enterprise (EME) thresholds of businesses in these sectors.
The threshold for EME’s in the Tourism sector is up to R2.5 million turnover per annum to qualify as an EME with 100% procurement recognition level. If you are a Built Environment Professional (BEP) in the Construction sector e.g. Architects, Quantity Surveyors, Consulting Engineers, the new threshold is up to R1.5 million turnover per annum. Large Enterprise scorecards for BEP’s will start at a turnover of above R11.5 million per annum.
BEE Rating Solutions is a SANAS accredited BEE Verification Agency, No. BVA 049, as well as a full member of ABVA, No. AM00014, and can assist you with the compilation of an independantly verified scorecard for all these sectors.
For more information visit our website at www.beeratingsolutions.co.za or contact
Bernard van der Walt
Phone: 0861 111 233(BEE)
Mobile: 082 885 0991
Fax: 086 500 2270
APPLY ONLINE FOR YOUR EXEMPT MICRO ENTERPRISE (EME) BEE CERTIFICATE: http://www.beeratingsolutions.co.za/EME%20online.html
REQUEST A QUOTE: http://www.beeratingsolutions.co.za/RequestQuote.html (if your company’s turnover is more than R5 million per annum).
To stop receiving our BEE UPDATES, or if you’re still receiving our updates after having requested to be removed from our mailing list, please reply to this email and request to be removed.
This is obviously incorrect as they have not received accreditation from SANAS to do verification for anything other than codes 100-700 and 801-807. (Look at page 2 of their certificate).
We sent a formal complaint to SANAS, and have just been informed that the said agency will issue a retraction of their previous email. This will not be the first time that this agency has had to put out a retraction.
The situation remains:
1) There are no agencies accredited to verify any of the recently gazetted sector codes.
2) If any one does produce a certificate based no the sector code, that certificate will not be valid and CANNOT be used by any measured entity in its procurement calculation.
3) An entity in any of the three industries concerned: Construction. tourism or forestry is not allowed to unable to choose to use the codes of good practice instead.
This means that no entity in those industries will be able to produce a valid scorecard until the agencies are accredited to do their verification.
4) All companies that procure from those industries WILL loose substantial points on procurement.
We are still waiting for the dti to issue a comment.
What will the detractors of BEE say now that a Black man has been replaced by a White person to head the South African Reserve Bank?
Personally, I see no problem with the appointment as long as she is the best candidate in the market. I have always supported the notion that BEE should make good business sense.
This appointment should send a strong message to those who think BEE is applied blindly on the basis of colour. BEE is about a progressive nation where every race is given an opportunity to contribute towards economic growth.
Tony Leon has written an interesting articles in the Business Day in discussing BEE and Moeletsi Mbeki. Amongst others Leon states:
“The taproot of Moeletsi Mbeki’s discontent is that BEE, as commonly practised, “creates a small class of unproductive but wealthy black crony capitalists” and thus strikes a blow against the emergence of genuine entrepreneurship.”
I wonder if Leon is correct is his assertion that Mbeki’s concern is about “BEE, as commonly practised…”? Either way many people are concerned about the way “BEE is commonly practised”. Does this imply that since some people choose to call their actions “BEE”, but do not practice it as required, then the entire B-BBEE policy is flawed? If Lance Armstrong teaches me to ride a bicycle, but I choose to use a car instead, do we blame Lance Armstrong, or the bike, or myself for not implementing riding bikes properly? Just because a company implements a system that someone dislikes, why blame B-BBEE for that action? If the company says it is taking that action in the name of BEE, does it make that action a proper BEE action? In which case, I’ll bring my car and win the Tour de France, because I choose to call driving a car, “riding the Tour de France”. In the case of me winning the cycle race, the organizers can and will disqualify me. Do we disqualify every company and every person who states that they are BEE compliant, or taking actions in terms of the BEE codes, but end up not doing so? When a company states that a particular position is a quota position do we blame BEE, or the company for doing it wrongly in the name of BEE?
I’m not at all concerned about “BEE as it is commonly practiced”. BEE can only be practiced in one way – the way defined by the concept of implementing B-BBEE – the codes of good practice, and the EconoBEE way of implementing it. I’m concerned about people practicing something (let’s call it “anti-BEE”, but stating that they are in fact practicing and implementing B-BBEE).
Who, or what should we blame? Not B-BBEE because most people, when they understand it do agree that B-BBEE is a good policy. Rather let’s blame those companies that contribute to Mbeki’s feling that it “creates a small class of unproductive but wealthy black crony capitalists” and thus strikes a blow against the emergence of genuine entrepreneurship”.
ISO (International Standards Organisation) gives this description:
“Why standards matter
Standards make an enormous and positive contribution to most aspects of our lives.
Standards ensure desirable characteristics of products and services such as quality, environmental friendliness, safety, reliability, efficiency and interchangeability – and at an economical cost.
When products and services meet our expectations, we tend to take this for granted and be unaware of the role of standards. However, when standards are absent, we soon notice. We soon care when products turn out to be of poor quality, do not fit, are incompatible with equipment that we already have, are unreliable or dangerous.
When products, systems, machinery and devices work well and safely, it is often because they meet standards. And the organization responsible for many thousands of the standards which benefit the world is ISO.
When standards are absent, we soon notice.”
The relevance? We are still seeing various SANAS (on behalf of ISO) accredited verification agencies that give vastly differing opinions on various aspects of the codes. As a result you cannot be assured that your scorecard will be consistently calculated by different agencies, or even by different analysts from the same agency.
We heard today of an agency that allows a measured entity to choose the inception date of enterprise development spend. The codes are clear, the inception date is the commencement date of statement 700, i.e. date of the publication of the codes (9th February 2007, or up to 5 years before, but definitely not after!).
It means some companies have had to spend twice as much this year to make up for last year’s shortfall, but if they had chosen this particular agency, could have saved their money. Since ED is 3% of net profit after tax, this “saving” could be millions of rands for large companies. On the other hand, any company that chose to use this agency and allow their interpretation stands the chance of their scorecard being declared invalid.
Some standard indeed! It’s about time SANAS, or ISO did something about it.
We spoke recently about QSE certificates that may be invalid after 1st August because no verification agency has been given an accreditation to renders services for code 800.
This resulted in a call from Christinah Leballo from SANAS who informed us that agencies do indeed have accreditation to render code 800 verification. She explained that SANAS did not want to complicate the certificate by adding in the words “Code 800 QSE”. Personally I don’t think that three extra words on a certificate is going to ruin the aesthetics of the certificate. (Look at an example). She did however state that if we considered it confusing that certificates do not have Code 800 QSE on it, they will address it by adding those words onto the certificate. We don’t consider it confusing at all. As far as we are concerned, if an agency does not have accreditation rights to render a specific service, they are not allowed to do so. SANAS is an accredited ISO accreditation agency. Their role is to accredit organisations to do specific tasks, e.g blood transfusion services, medical laboratories, calibration laboratories. The purpose of ISO is to ensure that procedures, methodologies and standards and complied with and followed and of course to remove confusion.
She also confirmed that no agency has been given accreditation to verify on any of the gazetted sector codes. This clearly means that any entity in the tourism, construction or forestry industry will not be able to produce a valid certificate and any certificate they do produce will NOT be able to be used to earn procurement points.
There is almost no chance that the dti will be able to produce an interpretive guide and verification manual for each of the sector codes by 1st August, and SANAS will not be able to accredit any agency by then. We would be surprised to see this happen before the end of the year.
The only alternative is for the minister to issue a notice allowing all entities in those industries to use the codes of good practice, or alternately granting an extension to companies in those industries from having to produce a valid scorecard.
Two weeks ago the newsletter titled “Mbeki wants BEE Scrapped” caused a big stir. It unraveled interesting issues, which disappointingly showed the long and steep climb that lies ahead in the BEE journey. Amongst the many issues raised, was the fact that BEE has allowed room for incompetence.
I’m in no position to judge anyone for the way they feel about BEE – either robbed or benefited. However, for the record there is definitely no part in the BEE Codes that promotes nepotism, incompetence, inefficiency or sub-standards. It remains an important hiring principle, to hire based on merit as opposed to nepotism. In all fairness, hiring an incompetent person, knowingly for that matter, is a nice way of planning for failure, which I believe no one does. This means that talent mining and talent intelligence remain as vital today in the BEE era as they were before.
The Dpt of Labour emphasizes on Employment Equity (EE) and BEE is nothing different. EE as one element that makes up the BEE scorecard emphasizes on policies that recognize race, ethnicity, or gender in an attempt to promote equal opportunities for all. Every leader, in whichever capacity, has a responsibility to assemble a vibrant team that complies with employment equity requirements, exactly what BEE subscribes to. It is absolutely baseless and unjustified to say BEE is the source of incompetence levels shown by some organizations – how about those successful ones? In fact, such incompetence levels to an extent represent that particular organization’s ineffective hiring practices and not BEE.
BEE is not about incompetence and incompetence is not about BEE. All there is in BEE is establishing equality without compromise and actively involving everyone in the mainstream economy.