The African National Congress (ANC) has welcomed the new BBBEE tendering laws aimed at empowering Small, Micro and Medium Enterprises (SMME).
It’s no longer business as usual for companies doing business with the ANC-led South African government following the introduction of new BBBEE tendering laws aimed at empowering Small, Micro and Medium Enterprises (SMME).
The ANC has welcomed the implementation of the decision taken by Cabinet for National Treasury to put into practice Preferential Procurement Regulations as an interim measure to radical intervention. The new BBBEE tendering laws came into effect on September 1.
This will be replaced by a new Procurement Bill, which will come into effect by March 2017 with the main aim to create an instruction to all organs of state to set aside a minimum of 30% in all contracts for SMME’s, cooperatives and the township and rural enterprises.
“The revised Regulations in its draft form introduced new key areas to ensure that small businesses get a bigger slice of the pie. It promotes the instruction on how government can procure at least 30 per cent from SMMEs, co-operatives, township and rural enterprises, and other targeted groups”, said ANC spokesperson Zizi Kodwa.
Kodwa attributed the progressive move to ANC policies which aim to grow the economy through empowering SMMEs, especially those owned by the youth and women.
He added that leaving the decision to big companies that have been doing business with government to reserve a stake for SMMEs has not achieved desired results in the past, hence an urgent need for the new BBBEE tendering laws.
Another key proposal of the Preferential Procurement Regulations was to increase the values of the existing 80:20 and 90:10 point systems to below and above R100m respectively.
Further, it proposed that, it will be compulsory to sub-contract a minimum of 30 per cent of the value of the contract for all contracts above R30 million to further develop emerging suppliers.
Even if a tender is not above R30m, the Draft aims to allow organs of state to apply an objective criteria and a pre-qualification in all tenders thus forcing suppliers to sub-contract with SMME’s, cooperatives and the township and rural enterprises.
In the past, the State received criticism that tendering rules and procedures were not always followed. That will also be a thing of the past. The State will now place greater inspection on all tenders in terms of compliance of tender documents to ensure that bidders follow this new direction of public sector procurement.
Companies will face a severe test to find appropriate and capable SMME’s, cooperatives township and rural enterprises to sub-contract with when tendering for government contracts. Also, if successful and companies do find such sub-contractors, they could include it as part of Preferential Procurement and Enterprise Development on their B-BBEE Scorecard.
The Regulations, which are now into effect, were primarily contained in the Draft that was issued earlier this year. National Treasury received around 125 comments and it was given an instruction from Cabinet, to implement the final version by the end of August 2016.
In the new BBBEE tendering system, National Treasury has changed the system to comply with the Regulations and bidders will be forced to start looking around for sub-contractors before they will be considered for tenders.
After the transition from Apartheid in 1994, the government led by the ANC had to take a decision to directly intervene in the redistribution of assets because opportunities were needed to resolve the economic disparities created by Apartheid policies which had favored white business owners. The new regulations are a step in the right direction to enhance economic redistribution.