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.
Supply: Electrical accesories 2018-03-01 15:00 GJ11800683
Upgrade Isikhova Park, Supply and installation of water tank at Isikhova Park. 2018-03-02 12:00 SB11800549
Supply of end user computing devices and services 2018-03-02 12:00 REF: RFPUJ 05/2018
Supply and Delivery of Polymer Products and Adaptor. 2018-02-27 11:00 280037
Supply MV Terminations 2018-03-01 15:00 GJ11800687
Repair to paving Harmony Park Resort 2018-02-28 12:00 SB11800553
Skills Program Training of BVM’S Employees 2018-02-26 11:00 280696
Supply: Electrical accesories 2018-02-23 15:00 GJ11800692
Appointment of Service Providers to carry out feasibility studies of proposed sites in Kwazulu-Natal Province for the potential of Social Housing Projects 2018-03-09 11:00 SHRA/RFB/SDT/04/201718
Atmospheric emission consulting engineer required for stack sampling at Maitland Crematorium. 2018-03-02 09:00 SN11800569
Rental, Services of Sani Bins and supply of Germicidal Sanitary Spray for Area 2, From March 2018 until June 2018 2018-02-27 12:00 SB11800543
Supply and delivery of Kiosk Poly 2018-02-26 11:00 280050
Horticultural maintenance: Cleaning, soil preparations & mulching of planting beds at Delft Cemetery. 2018-03-05 14:00 SN11800567
Supply and delivery of Cock Stops 2018-02-27 11:00 280250
Supply and delivery of projectors 2018-02-23 14:00 GK11800463
Supply and delivery of wifi adapter - wifi adapter 2018-02-23 11:00 GK11800464
Provision of Central Printing Units for the Production of Mono and Color Printing 2018-03-09 12:00 CENTRAL PRINT UNIT CPU/2018/01
Appointment of a service provider for the provision of corporate sustainability performance solution for ATNS. 2018-03-19 16:00 ATNS/HO/RFP CORPORATE SUSTAINABILITY PERFORMANCE SOLUTION/29/10/2017 (2)
Invitation to Submit an Expression of Interest in a Strategic Partnership with Atlantis Forge (Pty) Ltd 2018-03-09 16:00 Not Supplied
Provision of Learning and Development Programme Services. 2018-03-19 16:00 ATNS/HO/L&D PROGRAMME 12/17(1)

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
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