‘Black business must aim for level one or lose out,’ by Andile Tlhoaele

Black owned companies will no longer receive procurement advantage when the new procurement scoring system kicks in.

From the 07th of December 2011 onwards the new Treasury regulations on procurement come to effect. The regulations include a scoring system that allows companies to score points according to the level of BEE status. A BEE status is an indicator for the level of compliance to BEE targets achieved by a company on a scale of one to eight, with one being the highest compliant and eight the lowest. The status is determined by a matrix of indicators that include equity ownership as one and others depending on the turnover of the business.

The current system which comes to end on the 6th of December allocated the majority of points to black ownership; as a result, black owned companies use to get procurement advantage on black ownership.

It is imperative that under the new system, black companies aim to achieve level BEE one status to maintain this advantage.

The procurement scoring system is based on the 80/20 or 90/10 principle for procurement value below R 1,000,000 and above R 1,000,000 respectively. Companies will be scored against a score of 0 to 20 points and 0 to 10 points for the 80/20 or 90/10 system with the other 80/90 points allocated for price. For example;

• For bids/tenders procurement below R1 million, 20 points are for a company’s BEE status level contributor’s compliance. 80 points are for the tender/bid price.
• Above R1 million, 10 points are for a company’s BEE status level contributor’s compliance. 90 points are for the bid price.

In this case if you are level one you get full 20 full points.

Treasury rely on the BEE certificate for the bidder’s status level. BEE certificates are issued by accredited verification agencies after verifying evidence submitted for BEE programmes to comply with the codes. The BEE certificates are valid for a year and must be renewed annually.

All government suppliers are required to present valid BEE certificate or face being disqualified from government tenders.

Andile Tlhoaéle is a member of the BBBEE Advisory Council Sub-Committee on Instruments to Promote BEE, Verification and charters. He writes in his own personal capacity.

Click HERE to apply or re-new your BEE certificate 24 hours a day throughout the year.