New draft angers black business
2009/09/28 07:38:00 AM
Johannesburg - Black businessmen are incensed about Treasury's draft preferential procurement regulations and regard them as "insulting" to black enterprises.
The purpose of the regulations is to bring the Preferential Procurement Act into sync with the Broad-Based Black Economic Empowerment (BBBEE) Act.
The regulations also aim to foster government purchases from local producers as part of government's industrial policy.
"The BBBEE Act was promulgated six years ago. The expectations created by the act and regulations that Treasury has eventually come up with are insulting to black business," Sake24 was told.
"I have never sat in a meeting where so much foul language has been used [as in the meeting where the draft regulations were discussed]. Black businesses are livid."
The draft regulations provide for a maximum of 10 out of a total of 100 points to be allocated on the basis of an enterprise's BEE status when bidding for contracts worth more than R1m. The other 90 points are awarded on the basis of price.
For contracts between R30 000 and R1m a maximum of 20 points can count for BEE, and 80 for price. In terms of the draft regulations a business may not be disqualified if it complies with the BEE requirements. A score of zero is allocated in such instances, with tenders still possibly going to these businesses if their prices are low enough.
The BBBEE Act asks that a preferential procurement policy takes BEE into consideration "as far as reasonably possible".
The points that will now be awarded for BEE status succeed marginally in this respect, it is said.
"Black businessmen say that it is much easier for large or international companies to give a discount of 10% than it is for them to comply with the requirement of a 10% empowerment stake."
There is also unhappiness because the draft regulations show no relation between BEE and local manufacture.
Black enterprises' unhappiness with the draft regulations is apparently the principal reason for the postponement of the cut-off date for public comment to September 30.
Treasury spokesperson Thoraya Pandy says the date was held over after requests from parliament and other interest groups.
Sandile Hlophe, a managing partner at KPMG, reckons the draft regulations are fully in line with the BBBEE Act and the BEE codes. "They will therefore stimulate increased sales by BEE firms and be an incentive for businesses doing business with government to improve their BEE compliance."
The new regulations for preferential purchasing will apply to all government institutions and not only to national and provincial departments, municipalities, provincial legislators and parliament.