BEE consultant Andile Tlhoaéle explains implication of the new Treasury procurement rules in Q&A format.
What is the New Treasury Procurement Regulaations?
The Preferential Procurement Policy Framework Act (PPPFA) is the Act which government uses to acquire goods and services and gives the Minister of Finance powers to; from time to time publish regulations to promote the procurement PPPF Act. In June 2011, the Minister of Finance gazetted new procurement regulations that contain a new way of scoring suppliers from the 07 of December 2011 onwards.
What are key changes to the new regulations?
- A new procurement point scoring system will now be used that is based on the BEE status level of a company. Companies with low BEE status (Level Eight) are likely to lose if bidding against companies with the highest BEE status (Level One).
- The 80/20 point scoring system is now increased to apply to procurement below R 1,000 000.
What is a BEE certificate?
A BEE certificate is issued by an accredited verification agency after verifying evidence submitted for BEE programmes to comply with the codes. The certificate is valid for a year and must be renewed annually.
What is a BEE status level?
A BEE status level is a compliance status level achieved by a company presented in the BEE certificate. The lowest compliance level is non-compliant contributor with the highest level being Level One Contributor
How does the new procurement point scoring system works?
The system is called the 80/20 or 90/10 for procurement value below R 1,000,000 and R 1,000,000 respectively. Companies will be scored against BEE status level on a scale of 0 to 20 points and 0 to 10 pints for the 80/20 or 90/10 system with the other 80/90 points allocated for price scoring.
Who applies the scoring system?
The scoring system is applied by municipalities, state owned entities; provincial and national government departments when procuring goods and services
What action is required from companies?
Suppliers to municipalities, state owned entities; provincial and national government departments must strive to maintain a level one BEE status or face losing points when bidding against level one compliant companies.
What about companies who do not supply to government?
In order for government suppliers to prove procurement from BEE compliant suppliers, they need valid BEE certificates from their suppliers. Therefore any company supplying to government also need a BEE certificate.
How can government suppliers increase their BEE status level?
Government suppliers are required to procure from BEE compliant suppliers who have higher levels of BEE status to assist government suppliers to achieve level one BEE status and score high in the procurement scoring system.
What is the implication to all business?
All companies must make sure that by the 7th of December 2011, they have a valid BEE certificates and strive to achieve level one BEE status.