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.
Provision of Professional Engineering Services in Respect of Decommissioning the Radnor Landfill Site. 2019-02-19 10:00 218C/2018/19
Supply and delivery of mill liners -reissue 2019-02-25 09:00 MPGXC005365R1
ICT Infrastructure Services 2019-01-25 14:00 TCTA/2018/IT/ICT INFRASTRUCTURE/024
Construction of Civil Engineering Services - Macassar Housing Project 2019-02-26 10:00 234Q/2018/19
Tender for the purchase, development and management of industrial park on Erven 804, 806, 807, 809, 39202, 39203, 39204, 39207, 39208, 39209, 39210, 39211, 39212, 39213, 39215, 39216, 39217, 39218, 39219, 39220, 45089, 51104, 51105, zoned general industrial 2 except for Erf 45089 which has a general business 4 zoning, bound by Spine Road (South) and, Phumakani Road (West) and Railway Line (East), Khayalitsha 2019-03-11 10:00 219P/2018/19
Provision of Banking Services for a period of five (05) years 2019-03-15 12:00 75 of 2018
Hire of Refuse Truck for a period of 3 years 2019-03-29 12:00 MPO/03/2019
Re-advert for auditing of animal pounds in Elundini Local Municipality 2019-01-22 12:00 ELM-5/006/2018-2019
Facilitation of strategic planning session for budget and treasury / finance section 2019-01-21 12:00 ELM-2/027/2018-2019
Appointment for a service provider for VAT recovery services for a period of three years 2019-02-11 11:00 PSJLM-BTO-2018/19-15
Disconnection, reconnection and inspection/audit of electrical services for a period of three (3) years 2019-02-11 12:00 T01/2019
Supply, installation of wireless internet and wireless access 2019-01-18 11:00 290653
Consulting engineering services for the contract administration for the construction of a pedestrian bridge in Touwsriver. 2019-01-23 11:00 291491
Appointment of a Professional Engineering Service Provider to Carry out the Project Management scope for various Electricity Bulk Infrastructure Projects within KSDLM 2019-02-11 12:00 038/2018/19
Appointment for (02) Electrical Contractors for Electrification of 193 infill Connections in Maiden Farm Township with a CIDB Grading of 4 EP or Higher 2019-02-11 12:00 036/2018/19
Appointment for (02) Electrical Contractors for Electrification of 193 infill Connections in Hillcrest Township with a CIDB Grading of 4 EP or Higher 2019-02-12 12:00 037/2018/19
Bid Specification for Appointment of a Programme Support Unit (PSU) for a three (3) year period to assist the Provincial Department of Education in various aspects of the management of its infrastructure programme. 2019-02-22 11:00 SCMU6-18/19-0007
Supply and Delivery of suction pipes - Honeysucker 2019-01-18 12:00 B424/2018/19
All prospective bidders are hereby invited to submit quotations for accommodation: bed, dinner, breakfast & conference package, supply chain management as specification appear below 2019-01-22 12:00 RFQFIN/01/2018/19
Development of an Implementation Plan and Budget for a Multi-Year History Festival in Plettenberg Bay 2019-01-18 13:00 SCM/RFQ/2019/042/EDP

Pages

Two types of Joint Ventures and Joint Venture agreements 

By W van Rooyen

www.howtotender.co.za

The structure of the joint venture should set out the nature of your partnership. There are two main types of agreements:

  1. If the joint venture is a business in its own right, it will be an incorporated joint venture. This type is not... Read More
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