I tweeted
that the DTI and Treasury had just released the new PPPFA regulations for
comment. We have until the 14th of September,
2009 to send our comments to either JAN Breytenbach or HML Malinga. I suppose this post could be regarded as my
opinion. If you want jungle’s opinion
you’ll find it here. I especially love his recommendation for a 60:40
system. He must have been advised by the
person (and I know who she is) who drafted the GPG’s procurement policy all
those years ago.
I was
expecting a lot more from this document.
The hype that has surrounded it over the last five years has set it up
to be something a lot grander than it actually is – all it really is, is an
endorsement of BEE scorecards. A rather
safe compromise that may shed a fair amount of light on the dti’s attitude to
BEE, which is more orientated towards compliance than actual transformation.
The most significant features
- 80:20
rule is extended to all contracts below R1million
90:10
for contracts above R1million
Preference
points are awarded on the basis of BEE score – with different sliding scales
for 90:10 and 80:20 rules
Historically
Disadvantaged Individual (HDI) status and RDP goals are no longer used in
determining preference points
(And
I quote paragraph 13) Bidders SHOULD NOT be disqualified or regarded as
non-responsive for being a non-compliant B-BBEE contributor. Under such circumstances bidders will score
no points for their B-BBEE status
Treasury
wants BEE scorecards and only those issued by SANAS agencies (you know that
drivel)- Paragraph
11(1) provides for local manufacturing – for
specific industries (identified by the DTI) where the award of bids to local
manufacturers are of critical importance, such bids may be advertised with a
specific bidding condition that only local manufacturing products will be
considered. (Keywords to consider
here – blackwashing, code series 1200 and the man from WKRP) - The
regulations state (strangely because the codes don’t) any certificate substantiating the B-BBEE status level of a bidder must
be based on the findings of the previous year’s financial statements of the
relevant enterprise.
You’ll
still need a tax clearance certificate to do business with the government.
What I think
A
scorecard is going to become the thing you need to do business. But that’s all you’ll need. Black ownership is no longer relevant unless
it actually contributes significantly to the scorecard, and we all know that
QSEs can rustle up 100 points without any ownership.
At
best, the state will be able to measure their procurement. They will not be able to target certain types
of businesses – this goes back to section 217 and practice note SCM 2 of 2006 (prohibition
of set asides).
The
rigid nature of allocating preference points is going to have a negative impact
on the people they are intended to benefit.
By insisting on an accredited BEE scorecard they will end up prejudicing
all those entities that cannot get a scorecard done because there aren’t enough
verification agencies or because an agency doesn’t service their area. The press is going to have a field day with
this when that poor black person in Polokwane gets 80 points for price and functionality
and no preference points – and the white-owned business gets a total of 82
points because they got seven preference points.
The solution
Judging by
Rob’s reluctance to insist on only accredited verification agencies we can
assume that he doesn’t believe in them or that there aren't enough to cater for the demand. This means that the two systems need to run
in conjunction until scorecards become more prevalent. Maybe the 2001 regulations should be used for
the 80:20 system exclusively and both for the 90:10 rule.
Broad-based BEE scorecards are extensively
used in Public Private Partnerships – so there is some conditioning in certain
government departments.