Tenders and B-BBEE
By Werner van Rooyen
10 March 2014
How important is a B-BBEE rating in the tender process?
The answer is quite simple: VERY IMPORTANT!
In any tender document you will find the Standard Bidding Document 6.2 which deals with Preference Points. In this document you claim your Preference Points according to your B-BBEE status level. The higher your B-BBEE status level the more points you will earn. Ultimately these points will determine the bidders that will be awarded the tender.
The following preference point systems are applicable to all bids:
- the 80/20 system for requirements with a Rand value of up to R1 000 000 (all applicable taxes included); and
- the 90/10 system for requirements with a Rand value above R1 000 000 (all applicable taxes included).
This means that on the 80/20 system your B-BBEE status level will earn you a point out of 20 and on the 90/10 system your B-BBEE status level will earn you a point out of 10.
The way these calculations work is discussed in detail in our Tender Manual which is available at www.how2tender.com.
To earn these points a potential bidder must have a B-BBEE certificate that has been issued either by:
- A verification agency accredited by the South African Accreditation System (SANAS); or
- A registered auditor;
- An accounting officer as contemplated in the Close Corporation Act (CCA); or
- A member of the South African Institute for Professional Accountants (SAIPA).
A point to remember is that the B-BBEE Codes of Good Practice has changed. The new Codes will be implemented on 11 October 2014. This is good news for Exempt Micro Enterprises (EME`s) - their turnover threshold has gone up from R5 million to R10 million. This means that EME`s can easily acquire a B-BBEE certificate from their Auditors or Accountants. They do not need to go through the verification process. The different levels that an EME can be under the new codes are:
- EME`s that is not Black-owned automatically qualifies as a Level 4 contributor to B-BBEE,
- EME`s that has 51% or more (but not 100%) black ownership qualifies as a Level 2 contributor to B-BBEE and
- EME`s that has 100% black ownership qualifies as a Level 1 contributor to B-BBEE.
A 100% Black-owned EME will therefor earn maximum points (either 20 or 10, depending on the value of the tender) on the Preference point system. Furthermore a Black-owned (51% and more) EME only needs to give an affidavit as proof of its B-BBEE status. This is also applicable on Qualifying Small Enterprises (QSE`s) with 51% or more black ownership.
The turnover threshold for Qualifying Small Enterprises has also increased from R35 million to R50 million.
As one can see, a valid B-BBEE certificate is very important in the Tender Process. The higher your B-BBEE status level, the more points you are going to earn. So make sure you get the highest possible score on your B-BBEE certificate.
If you want to learn more about the New B-BBEE Codes, we have a summarized booklet available. For more information email us at email@example.com with B-BBEE in the subject line.
For all other questions regarding the tender process and how to learn to complete a tender correctly and hopefully successfully, please visit our website at www.how2tender.com to find out more.
Until the next time - happy tendering.
Don`t delay, get educated today!