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UPDATE ON THE PREFERENTIAL PROCUREMENT REVIEW

UPDATE ON THE PREFERENTIAL PROCUREMENT REVIEW. Presenter: Henry Malinga | Chief Director : Supply Chain Policy | 08 February 2012. BACKGROUND. The conflict between the PPPFA and the aims of the B-BBEE Act resulted with the revision of the PPPFA Regulations.

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UPDATE ON THE PREFERENTIAL PROCUREMENT REVIEW

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  1. UPDATE ON THE PREFERENTIAL PROCUREMENT REVIEW Presenter: Henry Malinga | Chief Director : Supply Chain Policy | 08 February 2012

  2. BACKGROUND • The conflict between the PPPFA and the aims of the B-BBEE Act resulted with the revision of the PPPFA Regulations. • Preferential Procurement Regulations, 2011 has been brought in line with the aims of the B-BBEE Act using the balance scorecard methodology as prescribed by the B-BBEE Act and its Codes of Good Practice • PPPF Act, 2000, Act 5 of 2000 is still effective and the revised Preferential Procurement Regulations, 2011 has been issued in terms of the section 5 of the PPPF Act, thus repealing the Preferential Procurement Regulations, 2001

  3. BACKGROUND cont. • Regulations promulgated by Minister of Finance on 8 June 2011 – Government Gazette No 34350. • Revised Regulations came into effect on 7 December 2011 • During the period between the 08 June 2011 and 07 December 2011, 47 workshops (1236 attendees) were held with all affected practitioners • Implementation guidelines were issued.

  4. MAIN CHANGES IN THE REVISED PPPFA REGULATIONS • The B-BBEEA scorecard methodology was adopted to be utilised in the evaluation. • Evaluation of bids to determine points out of 10 or 20 for B-BBEE Status Level of Contribution • Points to be awarded to a bidder based on his or her B-BBEE status level of Contribution • Eg. Level 1 contributor would receive 10 points whilst level 4 contributor would receive 5 points out of a maximum of 10 points. • Eg. Level 1 contributor would receive 20 points whilst level 4 contributor would receive 12 points out of a maximum of 20 points. • Calculation of points to be based on the B-BBEE ratings of a bidder as follows:

  5. Calculation of points for B-BBEE RATINGS

  6. MAIN CHANGES IN THE REVISED PPPFA REGULATIONS cont. • Designation of sectors for Local Content • Provides for dti to research and designate sectors for local content • To date, the Minister of the dti has approved 5(five) sectors/sub-sector/ industries for designation viz.; • Textile, Clothing, Leather and footwear 100% • Power Pylons 100% • Buses (Bus body) 80% • Canned / Processed Vegetables 80% • Rolling Stock 65%

  7. MAIN CHANGES IN THE REVISED PPPFA REGULATIONS cont • Through the revised Regulations, Organs of State are compelled: • To establish whether or not goods, services or works for which an invitation for tenders is to be made, have been designated for local production by the dti; • To meet the prescribed thresholds of local production and content for those sectors and sub-sectors so designated; • To ensure compliance with the regulations including the afore mentioned amendments as per the instructions issued by the National Treasury; • To utilisethe two stage bidding process where the first stage involves functionality and minimum threshold for local production and content and the second stage being price and B-BBEE compliance.

  8. MAIN CHANGES IN THE REVISED PPPFA REGULATIONS cont • Applicability • The Preferential Procurement Regulations are applicable to organs of state as contemplated in section 1 (iii) of the PPPF Act and all public entities listed in Schedules 2, 3A,3B, 3C and 3D of the PFMA and municipal entities • The Preferential Procurement Regulations will thus be extended to all organs of state for uniformity purposes

  9. EXEMPTIONS • Due to practical reasons, the following institutions were exempted: • Public Entities listed in Schedules 2, 3B and 3D of the Public Finance Management Act, 1999 (Act No.1 of 1999) • The Provisions of Regulations which Exemption applies: • Regulation 2(2); 3-8; 10; 11(1) –(9); 11(11) to (13); 12-13 • The duration of the exemption is until the 07 December 2012

  10. FURTHER WORK TO BE DONE COMPREHENSIVE REVIEW. • The revised Regulations are an interim measure and the first phase of the comprehensive review. • The terms of reference of the second phase are being finalized, • The technical work around the review will be completed by the end of the 2012/13 financial year. • This process of the review shall be a consultative process which includes all relevant stakeholders.

  11. Discussion

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