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The Preferential Procurement element is one of the three sub elements that is rolled into one element, called Enterprise and Supplier Development (ESD). Procurement is also a priority element on the B-BBEE scorecard, which relates that a measured entity should aim to achieve 40% of the points available on Procurement, to avoid being discounted an overall B-BBEE level. This relates to achieving 40% of 27,00 points on the Generic scorecard. Preferential Procurement planning should take place at the beginning of each financial period to ensure that all indicators are met on the BEE Procurement scorecard. This takes careful monthly monitoring to keep track that all supplier B-BBEE certificates are valid and sworn affidavits are completed correctly in full.

B-BBEE recognition levels is important when considering a supplier as per the schedule below:

For every R1 spent with a Level 1 B-BBEE compliant company = R1,35c recognised spent will be received. For every R1 spent with a Level 8 B-BBEE compliant company = 10c recognised spent will be received on your Procurement scorecard. a Further 15 points can be scored for spending on Empowering Suppliers that are at least 51% Black Owned and 30% Black Women owned. A further 7 points are also available for spending on EME and QSE companies.

B-BBEE Supplier certificates are only required to be valid for one day in your financial period.

Additionally, the B-BBEE Codes also provides enhanced recognition if one of the following criteria are met.

  • is at least 51% Black Owned with direct shareholding

  • a recipient of supplier development contributions from a Measured Entity under Code series 400 which has a minimum 3-year contract with your company.

  • a Black Owned QSE or EME which is not a Supplier Development beneficiary but has a minimum 3-year contract with your company.

Article By:

Edrich Linde: Executive Consultant - Compliance Hub

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