New Tendering Regulations released and drops B-BBEE!
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11-07-2022
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Taranis
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National Treasury has now released the much-awaited new Preferential Procurement Policy Framework Regulations 2022 and it places much strain on both organs of state as well as bidders to comply with it as soon as 16 January 2023.
In essence, it means, that all tenders issued between now and 16 January 2023 will still be done under the framework of the Regulations of 2017, which were declared invalid by the Constitutional Court, earlier this year.
The new Regulations have dropped the contentious clauses like “B-BBEE Pre-qualification”, “Sub-contracting as a condition of tender”, the “Functionality” evaluation criteria as well as “Local Production and Content” requirements, which were never part of the ambit of the Preferential Procurement Policy Framework Act (PPPFA) of 2000.
The major change to the new Regulations is the omission of the requirement for bidders to score points for their B-BBEE status, although the BEE Act of 2003 makes provision for an organ of state to apply to the Minister of the DTIC, to grant it permission to use B-BBEE as a “Pre-Qualifying Criteria” under a specific Sector Code.
The B-BBEE Act of 2003 clearly stipulates that the Minister of Trade & Industry and Competition, may issue Codes, regulating the “Qualification criteria for preferential purposes for procurement and other economic activities” and that every organ of state must take into account any relevant Codes, when “Developing and implementing a preferential procurement policy.”
However, under the new PPPFA Regulations, organs of state will only be allowed to issue tenders allocating points for the “Specific Goals” as listed in the PPPFA and bidders would now potentially have to restructure their shareholding and the make-up of their companies, differently to what the requirements are under B-BBEE.
This will pose a huge challenge for bidders since it would mean that the B-BBEE certificates or affidavits, as it stands, may not count for much within the broader points allocation ecosystem.
Hopefully, further clarification regarding this massive challenge for bidders will be forthcoming in due course since they will be in the dark as to whether their B-BBEE status would count for nothing or not.
A bigger challenge is now thrown at organs of state, which must revise their Procurement Policies before 16 January 2023 from when onwards, it may only issue tenders in line with the instructions of the new Regulations and it may then make no further reference to the requirements of the 2017 Regulations.
According to Gerrit Davids, Lead Advisor at TaranisCo Advisory, tendering agency, “The new Regulations are now in full compliance with the ruling of the Constitutional Court, which declared the 2017 Regulations as invalid and unconstitutional, and it creates major challenges for both organs of state as well bidders for government contracts.”
Davids says, “The challenge for organs of state, is to define as to how their preferential procurement policies could promote the objects of the BEE Act and still conform to the narrow focus of the “Specific Goals” as prescribed by these new Regulations.”
“For Bidders, it would mean that they will seriously be challenged on how to score points under of the “Specific Goals”, which would leave out a large number of companies that are not structured around the required elements, per se.”
“The new Regulations also do not include a B-BBEE preference points table, which means that no points may be allocated to it in a tender, as such”, says Davids.
For more information, contact: Gerrit Davids | Mobile. 082 496 1657 TaranisCo Advisory | E-mail: gerrit@taranisco.co.za | Website: https://www.taranis.co.za
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