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Momentum for broad BEE

Oct 09 2011 15:55 Amanda Visser

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Pretoria - New government and municipal tender regulations reflect government's objective of forcing industries to empower across a broad front.

Wouter Scholtz, an independent tax adviser in Cape Town, says this will also mean that the days of “tenderpreneurs” are numbered.

The new regulations come into effect on December 7 this year.

The requirement to take into account all the transformation objectives in the black economic empowerment (BEE) scorecard is in sharp contrast with the practice of focusing on black ownership or co-ownership.

A company will no longer be disqualified for a tender for not having a high BEE score.

Scholtz explains that a new preferential points system will be applicable to tenders of up to and including R1m as well as tenders of R1m and more.

In the case of a tender of up to R1m, the 80/20 preferential points system becomes applicable.

This means that 80 points will be awarded on the basis of the technical explanation and price, and 20 points will be awarded for broad-based black economic empowerment (broad BEE).

In the case of a tender of R1m and more the 90/10 preferential points system is applicable, where the price and the technical explanation count for 90 points and the broad BEE status 10 points.

According to Scholtz, those 10 points can ultimately make the difference.

When two or more companies’ total scores are the same, the one with the highest BEE score will receive the tender.

If they are still neck-and-neck, the companies' ability to execute the project will be interrogated.

This is a new option which was not previously part of the awarding process.

Scholtz says if this does not prove decisive, lots will be drawn.

According to Scholtz, the tender documents will have to set out the criteria for a possible interrogation into the capacity of a company to execute a project.

The tender board will have to ensure that the criteria set are fair and clearly related to ability to do the work.

“They won't depend on whether a company has black control or not.”

Steven Hawes, research manager at the BEE rating firm Empowerdex, said the aim of the new regulations is to promote companies that are competent with a high BEE status.

At the moment only those companies with black ownership are receiving all the attention.

This has to a large extent cast a negative light over BEE and people have begun to grumble about the same parties that repeatedly win the big contracts.

“The aim is to broaden all the elements of empowerment, not only black ownership.”

The elements to which Hawes is referring, according to the generic scorecard, are black ownership (20 points), management control (10 points), employment equity (15 points), skills development (15 points), preferential procurement (20 points), business development (15 points) and socioeconomic development (5 points).

According to Hawes, initial teething problems can be expected in applying the new regulations.

But he believes that if everyone understands how the regulations work and that everyone must comply, the measures will meet with approval.

bee  |  tenderpreneurs
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