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Author Topic: How does BEE apply to the Public Sector

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How does BEE apply to the Public Sector
on: April 23, 2014, 15:15

BEE is applicable to public sector entities, both in terms of:
1. how each public sector entity is rated internally for BEE purposes and accordingly the BEE Status Level that that specific public sector entity has achieved, and
2. how public sector entities must utilise the principles of BEE to measure third party suppliers for procurement, licenses and similar activities.
1. Internal BEE Measurement
S3 of Code Series 000 Statement 000 of the Codes provides that the various public entities are measurable under the Codes.

Code Series 000 Statement 004 specifies that Public Sector Entities are to be measured in accordance with the Scorecard for Specialised Entities. The Scorecard for Specialised Entities is essentially an adjusted Scorecard measuring 6 BEE elements and excluding ownership.
2. BEE principles in relation to third party suppliers

S10 of the B-BBEE Act requires organs of state to apply the Codes when entering into decisions affecting:
• Procurement;
• Licensing and concessions
• public private partnerships (PPP’s);
• The sale of state-owned entities.
Procurement Scoring System
Public sector procurement is governed by the Preferential Procurement Policy Framework Act, 2000 (“the PPPFA”).
The PPPFA provides a scoring system for assessing suppliers in relation to the award of public sector procurement. The score achieved by the supplier is essentially calculated in accordance with 2 components:
1. General Factors (eg. price, delivery time, quality etc.); and
2. BEE Factors
Until recently there has been no alignment between the PPPFA and the BEE Codes. The BEE Factors considered have been variable at the discretion of the body that issued the tender. Historically the BEE Factors that have been primarily utilised have been the black ownership and management credentials of the supplier
As of 7 December 2011 however, new Regulations to the PPPFA will come into effect requiring that public sector enterprises must utilise the supplier’s BEE Scorecard in calculating the score achieved in relation to the BEE Factors.
The value of the tender will affect the allocation of points between the General Factors and the BEE Factors, as follows:
For tenders with a value of below R1 Million:
• 80 points are allocated towards the General Factors; and
• 20 points are allocated towards the BEE Factors.
For tenders with a value of above R1 Million:
• 90 points are allocated towards the General Factors; and
• 10 points are allocated towards the BEE Factors.
The number of points achieved under the BEE Factors component will be calculated in accordance with the BEE Status Level of a supplier, as determined by their BEE Scorecard, as follows:

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