The latest amendment to government procurement is that, from now on, the 80/30 principle applies to contracts up to R50 million. It means the BEE component counts for 30% of the criteria. 70% will be determined by the price. The 90/10 principle applies to contracts above R50 million.

Furthermore, 30% of the worth of all contracts (especially where the 90/10 principle applies) must be allocated to black-owned companies.

These ridiculous criteria open a wide window of opportunity.

Why are these criteria ridiculous? Everything about it is wrong.

If price is a deciding factor (70% or 90%) the rogues taking shortcuts are rewarded and the professional operators are penalised. (See presentation.) 

If BEE is a deciding factor (30% or 10%) there is no guarantee of compliance or proficiency as the existing adjudication is hopelessly inadequate and incomplete. (See presentation.)

FURTHERMORE:

Principal contractors score higher BEE points if they buy from higher BEE levels. They are penalised (by lower points) if they buy from a lower-level BEE supplier. This rule increases the risks (of costs and reputational damage) significantly. 

THEREFORE: 

All principal contractors should demand the Q5 Compliance/Proficiency Accreditation for their sub-contractors/suppliers and all the latter should subscribe to the appropriate Contractor Development Programme. For both parties, it is a win-win scenario. 

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