Draft law can boost BEE role in state jobs
August 19, 2009
By Donwald Pressly
The government has issued draft preferential procurement regulations which, if approved, will give more weighting to the black economic empowerment (BEE) credentials of bidders than bid prices in government contracts valued at up to R1 million.
Trade and Industry director-general Tshediso Matona said yesterday existing regulations, gazetted seven years ago, gave more weight to the price in the awarding of contracts "and very small points to black empowerment", even though the BEE codes placed "much store" on government procurement leverage.
This created a contradiction between the Broad-Based BEE Act that aimed to encourage black business advancement in the economy, and the Preferential Procurement Policy Framework Act.
The regulations, issued by Finance Minister Pravin Gordhan, seek to bring the state's policy on procurement in line with BEE objectives.
They will also make it easier for small black companies that often could not compete on price with their bigger rivals.
Matona said it had been the intention of his department and the National Treasury to change the procurement legislation, but the parliamentary load had made this difficult.
"There were lots of calls in the black empowerment market for this conflict to be sorted out," said Matona. "We have been engaged in protracted negotiations with Treasury on this matter."
He agreed with Western Cape Economic Development Department chief economist David Kaplan that the draft regulations were needed to encourage local industrialisation, particularly in the context of the huge capital expenditure on roads, rail and harbour, as well as infrastructure.
However, Kaplan, who is also government business professor at UCT, said there was a contradiction in that many established, mainly white, companies would be better placed to carry out some of the jobs.
But, he said, there was also the imperative to encourage black equity advancement.
Gordhan's spokesman, Lindani Mbunyuza, said the new regulations would replace the current method of awarding bids and instead the focus would be on the empowerment scorecard or BEE rating of a bidder, which would be issued by verification agencies.
Thiagaraj Joey Pillay, the Western Cape's chief director of the governance branch that includes procurement, said the threshold value to distinguish between the 80:20 and the more onerous 90:10 preference points system for state jobs was increased. The latter ratio, applying to jobs of more than R1m, placed more emphasis on functionality and the price.
While Pillay did not spell it out, the latter ratio favours established, larger businesses, which win significant points for functionality and established expertise. These businesses tend to be white.
Jimmy Manyi, the president of the Black Management Forum, said black business was studying the document, but a cursory reading through showed it was not terribly exciting.
"It still maintains the 80:20 and 90:10 principle, which is a problem to black business," said Manyi. "This means that with the 90:10 principle you (a company) can score 90 points without even thinking about BEE. This is a fundamental problem. We would have preferred something like 60:40."
|
|
