NEW regulations under the Preferential Procurement Policy Framework Act (PPPFA) could prejudice small black businesses by insisting that black economic empowerment (BEE) scorecards are accredited through South African National Accreditation System verification agencies.
The new regulations on state procurement were published by the Department of Trade and Industry and the Treasury last month and are open for comment until next Monday.
Speaking at a briefing to business and the government in Johannesburg on Friday, Paul Janisch, head of public-private partnership advisory services at Siyakha Consulting, said the rigid allocation of preference points would disadvantage the very people it was intended to benefit.
“There are only about 70 accredited verification agencies countrywide and they would need to deal with about 52 companies a day, which is simply not sustainable, and I believe will eventually lead to its collapse,” said Janisch.
“By insisting on an accredited BEE scorecard they will end up prejudicing all those entities that cannot get a scorecard done because there are not enough verification agencies or because an agency does not service an area.
“The press will have a field day when it emerges that some black person in Polokwane gets 80 points for price and functionality and no preference points, and a white- owned business gets more points because they have preference points,” said Janisch.
He said historically disadvantaged individual status and reconstruction and development programme goals were no longer used in determining preference points, and only scorecards issued by agencies accredited by the South African National Accreditation System would be accepted.
The new legislation extends the 80:20 rule for contracts under R1m and the 90:10 rule for contracts above R1m, where 80 and 90 refer to points for price and functionality and 10 and 20 to points for BEE.
The legislation no longer provides preference points for white women and white disabled people.
Janisch said under the new regulations the scorecard had become the only thing needed for doing business with the state. “Black ownership is no longer relevant unless it actually contributes significantly to the scorecard,” he said.
He advised businesses to comment before the deadline.
benjaminc@bdfm.co.za