Issue Date: 
Monday, August 24, 2015

Code of Good Practice is causing confusion

The government is committed to break the barriers that have been hindering small companies from winning tenders. One of the biggest challenges for small companies was the red tape that often would hinder their tender success.

The amended broad-based BEE Code of Good Practice came into effect on 1 May 2015. It aims to have more small businesses classified as micro-enterprises. It also aims to remove the onus for small, black-owned businesses to go through the BEE audit process. One of the major changes to the Code of Good Practice is that, companies' BEE recognition levels have been boosted to improve opportunities for them in tender bidding.

Previously, level-one Broad-Based Black Economic Empowerment (B-BBEE) status was not being recognised on the procurement system if a company was using an affidavit as proof of company's turnover and ownership. The broad-based BEE codes also classified a company as an Exempt Micro-Enterprise (EME) only when their turnover was less than R5 million.

The newly amended codes have now increased the turnover threshold for micro-enterprises to R10 million. The amended codes also remove the need for a company to obtain an auditor's letter or a certificate from a verification agency. Instead, a black-owned micro-enterprise can provide a sworn affidavit attesting to its turnover and ownership to qualify for EME status.

What do the amendments mean?

These amendments mean more companies, which have a net turnover between the stipulated ranges, can now bid for tenders without having to produce a B-BBEE certificate. This is what most small companies have been struggling with as they were not scoring enough points due to the absence of such B-BBEE certification.

However, the newly amended Code of Good Practice seems not to align with the Preferential Procurement Policy Framework Act. This Act is strictly followed by many tender-issuing organizations. This has caused a lot of confusion and frustration.

According to reports, the new EME requirements are leading certain departments to be more cautious about taking on new suppliers. They believe that the more lenient requirement of just an affidavit makes fraud or fronting prone and easy. Importantly, small companies must be warned that even when they have a sworn affidavit, some companies may require more paperwork as additional proof.

Companies claiming to be 100% black-owned now may be vigorously scrutinized as many tender-issuing organizations fear the risk of fronting. These risks could have very negative effects, especially if we take into account the steep penalties for fronting in the B-BBEE Amendment Act. This can make the organization itself to be found guilty of 'fronting' if the necessary measures are not put in place to weed out the potential fronting practices by its suppliers.

The government is doing its best to enable small and medium businesses to get a slice of the cake. However, don't rely too much on their efforts as it can happen that they forgot to tie the loose ends. Be proactive and make sure you've got your ducks in a row.

Title Closing Date Tender No.
Lease Vehicle 2018-08-10 14:00 CBRTA/HO/0041
Support and Maintenance of the C-BRTA Permit Management System 2018-08-16 14:00 CBRTA/HO/0050
Supply and Delivery of Repair Coupling Cl.16 Upvc 2018-07-23 12:00 B 036/2018/19
To Provider Socio-Economic Impact Assessment (SEIA) for the Operator Compliance Accreditation Scheme 2018-08-15 14:00 CBRTA/HO/0048
Supply and Delivery of Cast Iron Short Collars & CI Saddles 2018-07-23 12:00 B037 /2018/19
Supply, Delivery & Installation of Large Volume Water Storage Tanks to CTICC 1. 2018-08-03 12:00 CTICC 002/2019
Presenter for SAICA’s 2019 and 2020 IFRS Update and the Financial Reporting Update for Executives Seminars 2018-07-31 12:00 SAICA072018
Panel Environmental Professionals for a Period of 36 Months. 2018-08-03 12:00 A043-2017/18
Supply and Delivery of Plumbing Material 2018-07-23 12:00 B038 /2018/19
Presenter for SAICA’s Seminar on the New Leases Standard (IFRS 16 – Leases) 2018-07-31 12:00 SAICA062018
Supply, Lay & Delivery of Slurry Surfacing, Bitume and Emulsions, and Treatment of Road Surfacing Cracks. 2018-08-03 12:00 A054-2017/18
Analysis and Streamlining of CTICC Marketing Collateral 2018-07-27 12:00 RFQ 001/2019
10M3 Tipper Truck 2018-08-07 11:00 MBIZ LM 0007 TIP
Supply and Delivery of Wheelbarrow Concrete with Rubber wheels 2018-07-23 12:00 B041 /2018/19
Management of municipal construction plan. 2018-08-07 11:00 MBIZ LM 003 MMCP
Fuel Tanker Truck. 2018-08-07 12:00 MBIZ LM 0006 FUE
Refurbishment of Relay Room Roofs at Roode, Welgedag, Boekie, Avondsrus, Zesfontein, Slimesdam, Withok and Fuelgridge. 2018-08-07 10:00 RFQ: SIM 18021 CIDB
Provision of Group B hire cars for Outage 223 for Koeberg Operating Unit. 2018-08-07 10:00 KBG1860 & RFP1861
Provision of Driver’s License Learnership Code 10 (C1) 2018-07-24 12:00 12/2018/19
Construction of Lencane to Newtown Access Road. 2018-08-10 11:00 MBH/MIG/0002/2018-19

Pages

Tender adjudication process

The SBD/WCBD6.1 document must form part of all bids invited.  It contains general information and serves as a claim form for preference points for Broad -Based Black Economic Empowerment (B -BBEE) Status Level of Contribution, and explains how tenders or bids are decided.

The document says:

  • The bidder obtaining the highest number of points will be awarded the contract.
  • Preference points shall be calculated after prices have been brought to a comparative basis.
  • Points scored will be rounded off to two decimal places... Read More
Free Keyword search

Search all tender notices for FREE!

No subscription or registration required!

You can also search by the reference of the the tender.

Advanced search

Search by Issuer, Region or Sector, individually, or using any combination of the three.