At long last, the Preferential Procurement Act is being brought into line with the Broad-Based Black Economic Empowerment Act.
Government departments at all levels, including parastatal organizations, will be required to comply with revised regulations which incorporate the “balanced scorecard” methodology used in the BBBEE Codes of Good Practice.
Contracts in excess of R1 million will be awarded based on the 90/10 principal, whereby 90% of the points are allocated according to price, and 10% to empowerment criteria, as determined by rating certificates issued by SANAS – approved verification agencies only. Deals worth less than R1 million will be judged by a ratio of 80:20.
Government organizations are notorious for high levels of fraud and corruption, particularly in the management of their supply chains. The discrepancies between these two Acts have contributed to the situation for years. Expect to see government departments under the whip as suppliers and service providers take advantage of the new Act to ensure fair play.