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New procurement rules favour BEE firms

Procurement regulations encouraging the use by the government of domestic companies with broad-based black economic empowerment (BEE) credentials have been gazetted. Finance Minister Pravin Gordhan signed the regulations on Monday but they were gazetted yesterday. Willie Mathebula, the Treasury’s chief director of supply management, explained that the local production and content provision allowed for the finance minister – or Trade and Industry Minister Rob Davies – to issue directives to designate a sector for the supply of local goods and services. He gave as an example the possibility that government departments, utilities, municipalities and the state-owned enterprises might be required to source their uniforms from local companies in terms of such a designation. “It could apply to all spheres of government, all public entities including the big state-owned enterprises like Transnet, SAA, and Denel,” he explained. The regulations come into effect on December 7.

Companies with broad-based BEE credentials will enjoy a greater chance of scoring a government contract, through additional points for not only black ownership, but also management, equity and other broad-based considerations. Until now the BEE requirements have focused largely on employment equity – including representation of women and people with disabilities – which Mathebula explained had been abused by fronting companies. The current regulations are based on a procurement points system where 80 points are on price issues and 20 points on BEE and other goal requirements – up to a contract value of R500 000. This has been increased to R1 million apparently to promote small business through the procurement process. A 90/10 ratio will apply for contracts over R1m.

Source: iol.co.za

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New procurement rules favour BEE firms

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