Draft PPPFA regulation disgust (discussed and cussed)

In his 2015 state of the nation giggle session our very competent, intelligent and decisive president made the following announcement.

Government will set-aside 30% of appropriate categories of State procurement for purchasing from SMMEs, co-operatives as well as township and rural enterprises.

We are quite used to this esteemed personage's platitudes and incredible decisiveness so it might be quite strange to the average person when he does actually deliver on his promises.  He has in fact in the new draft PPPFA regulations.  A Bardot delivery had these same regulations sent to me, it would be wrong not to post them up here for your perusal.

Here are a few of some of the features:

1. 80/20 works for R10m to R50m
2. 90/10 for more than R50m.  If you are seeing new QSE patterns emerging you would be on the money
3. 50/50 points' system for less than R10m

The 80/20 and 90/10 systems work on standard BEE points' allocations.  However the 50/50 system is a lot more interesting. This is what it looks like

Points will be allocated in accordance with the table below

No.	Criteria	Points
1	Price	50
2	Specific Goals:
2.1	Individuals who had no franchise in national elections before the 1983 and 1993 Constitutions	12
2.2	51% or more ownership by females	12
2.3	51% or more ownership by persons with a disability	12
2.4	SMME (Small, Medium and Micro-enterprise)	6
2.5	LED (Local Economic Development)	8

This harks back to the 2001 PPPFA regulations. No franchise before the two constitutions effectively includes all black people as defined. Africans had not vote before '83 and '93. Coloureds and Indians didn't have the vote before 1983. The reference to disabled and women includes ALL women and disabled people.

I do rather like the inclusion of SMME and Local Economic Development because the issue with the current regulations is that it didn't favour regional businesses. What Zille and Kane-Berman missed is this paragraph

(2) (a) For the specific goals under 2.2 to 2.5 in the table above, the Minister of Finance (Minister) may, from time to time, prescribe targets that must be procured from certain categories of person or commodity groups. Therefore, the number of points, as well as the groups referred to in the specific goals in sub-regulation (1)

What this says is that Nene may use set asides. Something that the Constitution would not be happy with (as if that has ever been a problem for our literate and competent legislators), and something that Treasury banned in 2006.

Now onto some of the more interesting features of 2.1 above (you will see on page 8 that this requirement may never be removed from any tender). You'll notice the word "INDIVIDUAL", this is a very specific word, it refers to individuals and not classes of people. As I mentioned African people did not have the vote until 1994. This means that only individuals who are over 21 years old and African can qualify. Indians and Coloureds get a rawer deal. They would need to be 31 years and older (as if they haven't been shafted enough under the revised codes). As this regulation gets on in the years so will the age of the black person increase.

This is pure BBC – a subtle attempt at favouring Africans over other black groups.

Another issue which plagues me is the value of the tender. What the 50/50 system does is give certain types of people up to a 100% price advantage. If they tick all the boxes under 2 above and get 1 more point for price they could 51 points which beats the bidder that only offered the best price (cost effectiveness is a vital ingredient of section 217). The rules are that they should win the bid. But this system is only for bids for less than R10m. If that bidder comes in a R10,000,000.01 then they are no longer part of the R10m scheme. In effect this system will only work for bids less than R5m.

The whole system is completely open for abuse. It is absolutely unconstitutional and unaffordable.   Related articles

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