This morning I found myself sending an email to one of my staff members about procurement. This doesn't take into account stupid bolshie bob's new rules that are so ridiculous that he should be brought out of retirement to fix the mess he has created. But no - the ANC rewards uselessness.
Anyway before I head down the bolshie bob bashing route, here's a tutorial on how to go about calculating procurement.
Procurement
This sub element is vital, you have a submimimum of 8 points or you'll drop a level. But it can push you over to another level - so you might as well take it seriously. This is how I go about it
The measurement period is always 12 consecutive months. I move periods around all the time, more often than not the client hasn't done what they should have and so we have to extend the period. I don't believe that you need to use a financial year, even though the draft verification manual says you do. I suppose once the awesome commissioner reads this post she'll write an opinion saying you must.
You will need is an income statement for the measurement period.
You then remove all the things that are not attributable to suppliers or service providers, thinks like commissions, salaries, bad debts and depreciation. This list is referred to as either total measured procurement spend (TMPS) or eligible procurement.
I then send this list back to the client and ask them to break those figures down into suppliers and the amounts spent with that supplier. I always want this in Excel. Often I get the GL which can take hours to sort out. It does happen quite regularly that the description in the GL is a name that is not the name of the supplier. I'm now a little more resolute with my clients. I WANT IT IN EXCEL AND SUMMARISED
At the same time I request the CapEx figures in EXCEL AND SUMMARISED!
I then sort all of this information into largest to smallest, I will then look for the largest suppliers' BEE scorecards here. The Beagle database is quite good. I'll get most of the stuff I want from here. It is a manual and laborious process.
You then populate your spreadsheet with the following columns
Supplier
LEVEL
TOTAL EXCL
Recognition level
TOTAL PROC based on multiplier
QSE
EME
BO
BWO
Designated
Supplier name
Level
Total spend with them excluding VAT
Recognition level, i.e a level 8 is 0.1 and 4 is 1
Multiply the total by the recognition level
If it's a QSE then put the TOTAL PROC amount in the QSE column, this applies to all the divisions
Now onto BEE certificates. There is a simple rule here - if that certificate was valid for one day of the verification period then we can use that certificate. Sometimes the prior, expired BEE certificate has higher black ownership levels or levels than the new one. I'll use that one. This file has annotations in it explaining how to read a BEE certificate
And then you total it all up and put it into the procurement scorecard as a percentage.
OR - YOU COULD OUTSOURCE A LARGE AMOUNT OF THIS
The people at ProcureActiv have been harassing me to review their system. I did use it for a client at verification which helped me a great deal. They don't specifically want once off engagements they will manage all your suppliers and possibly refer you to better performing ones. They do this monthly for a sum per certificate per month. Contact Dijon de Jager at ProcureActiv and tell him I SENT YOU. I'm going to get some commission from all these referrals, which means that I might actually get some money from this blog. In essence I will be a professional blogger - I do depend on you to use the system for me to become independently wealthy.
South Africa is not a country to shy away from incompetence. The ANC government has relished its incompetence, it thrives to promote and encourage incompetence. Think Panyaza Lesufi who wants to bring all the schools in Gauteng down to a level where everyone is academically equal - thereby ensuring that any type of excellence is actively discouraged. This is all in the name of transformation.
Many, especially me, are somewhat amused by the extraordinary incompetence demonstrated by our current public protector. Our busi has taken incompetence to levels that the ANC could only have anticipated in their wildest dreams, she must be the darling of the illustrious movement. In spite of my very strong anti-ANC sentiment, I firmly believe in Cyril. I believe that he can save the country, even after the white monopoly capital has fled with all its monopoly capital leaving Malema and co with monopoly money and plenty of unusable land.
Back to incompetence. Perhaps this is a bit harsh, the BEE Commissioner, the awesome awdoz aka Zodwa Ntuli hasn't been declared officially incompetent but I don't think she's too far away from that allegation. Our transformation traffic warden has now declared that MTN's Zakhele-Futhi Scheme contains "elements of fronting".
as a consequence, the transaction in its current form contains elements of fronting, in that the black shareholders and directors of MTN Zakhele-Futhi (RF) Limited, are restricted or inhibited from participating in the activities of MTN Zakhele-Futhi (RF) Limited, and consequently of MTN Group Limited and MTN South Africa (Pty) Ltd, which are at odds with the requirements of the B-BBEE Act.
MTN naturally denies this
3.2 MTN Group Limited has in its response to preliminary findings provided for in regulation 15 (13) of the B-BBEE Regulations expressed that it disagrees with the findings to the effect that the MTN Zakhele-Futhi Transaction constitutes a fronting practice or otherwise contravenes the B-BBEE Act, and stated further that it considers the MTN Zakhele-Futhi Transaction to comply with both the letter and the spirit of the B-BBEE Act, the then applicable B-BBEE ICT Sector Codes and the amended ICT Sector Codes promulgated on 7 November 2016.
3.3 MTN Group Limited provided reasons to substantiate their responses, which were further interrogated and discussed in a meeting prior to final findings being issued by the B-BBEE Commission.
This denial, which was bolstered by their legal advisers, was dismissed. I think that we need to understand that the legal advice MTN got is probably the most expensive and competent in the country (unlike Daniel Mantsha who is probably just expensive). It's very unlikely that there are even insinuations of fronting in this scheme. However the awesome chooses to differ.
She's found that there are elements of fronting. How do you get "elements of fronting"? Fronting is fraud, rather like pregnancy - you are either pregnant or your are not, you can't be half pregnant. If fraud is an intent crime then you can't half commit fraud. You are either fraudulent or you aren't. If a small element of what you do (like a massive BEE deal) is based on fraud, then the whole thing is fraudulent. I've written a lot about this - here's a useful overview.
Keeping with her standard MO, the awesome has dictated a number of remedial processes that MTN needs to implement within a short period of time, think of this as some sort of admission of guilt fine. Some of these make sense. However the real issue with the commission is that they are in effect bribing MTN to implement these recommendations, if they fail to do so then the commissioner will consider the following
refer the MTN Group Limited and its directors on the basis of B-BBEE fronting and/or misrepresentation of B-BBEE status to the appropriate division of the South African Police Services or the National Prosecuting Authority
consider instituting proceedings in court to restrain any breach of the B-BBEE Act, including seeking an order to declare the B-BBEE transaction of MTN Group Limited a fronting practice or invalid, declare their current B-BBEE certificate invalid, and/or to obtain appropriate remedial relief, in terms of section 13 J (4) of the B-BBEE Act;
refer findings on this matter to National Treasury for the purposes of invoking processes outlined in the Preferential Procurement Policy Framework Regulations, or enter MTN Group Limited and MTN South Africa (Pty) Ltd, in the register of tender defaulters,
refer the matter to the Independent Communication Authority of South Africa (ICASA) for an investigation of the conduct of MTN Group Limited and its directors and to recommend withdrawal of its licenses through its operating entity MTN South Africa (Pty) Ltd
refer findings to all organs of state and public entities to consider their discretion to cancel and contracts, awards or authorisations awarded to MTN Group Limited
This is illegal. If the commission is of the opinion that MTN has committed the crime of fraud, they MUST lay a complaint with the SAPS. They are now accessories to this crime. The awesome and her crew cannot allege then attempt to bribe their way out of this. This is no different to paying off a traffic cop.
I suspect that MTN is aware of this anomaly. But as Johann Rupert said in response to a statement made by the self righteous and awful Iman Rappetti that he came across as racist, "how do you come back from that". It's a last ditch insult and allegation that you cannot deny because the alleger has stated an irrefutable matter of fact.
This fact cannot have escaped MTN, because fronting allegations are cut from the same cloth as racism allegations. The only option that MTN could possibly have is to call the commissioner's bluff and insist that she lay that charge with the NPA and SAPS.
Herein lies the rub. Does MTN have the corporate balls to do this?BEE Their argument against fronting is inevitably much stronger than the commissioner's allegations of them fronting, they have a greater litigation budget (the commissioner has no budget) and will hire much better lawyers. They probably don't have the balls to do this, they are like most of the large corporates in South Africa who kowtow to arbitrary policy making. If this country is to succeed then we need more Magda Wierzyckas. I am quite sure that Johann Rupert is another person who is willing to stand up to the government - but we've pretty much lost him anyway.