Article by Jason George (SEESA)
The sub-element Preferential Procurement is important as points are awarded based on procuring from companies having good B-BBEE ratings.
On most scorecards, it is noticeable that a large number of points are allocated to the sub-element Preferential Procurement.
Therefore, the person/s appointed to collect suppliers B-BBEE certificates and/or sworn affidavits must ensure that the information received is correct.
Below are some guidelines to assist your company when claiming points for the sub-element Preferential Procurement.
- Recently issued B-BBEE certificates must reflect the SANAS logo (except EME/QSE Affidavits);
- Independent and competent person reports or ownership certificates are not B-BBEE certificates;
- No B-BBEE points will be awarded where a supplier provides an in-process letter or letter of intent;
- Suppliers stating that they are a particular B-BBEE level by way of an e-mail or website will not suffice. A copy of the certificate must be included in the verification pack to enable the measured entity to claim points for the specific supplier.
- A franchisee can only make use of the franchisor’s B-BBEE certificate if its company details appear as an annexure to the franchisors B-BBEE certificate, failing which the franchisee must obtain its own B-BBEE certificate;
- The above point also applies to subsidiaries in a group structure, where the subsidiary company details must appear as an annexure to the Holding Company’s B-BBEE certificate’s, failing which the subsidiary must present its own B-BBEE certificate;
- Once you receive a supplier’s B-BBEE certificate ensure that the certificate is for the correct company by comparing the VAT number appearing on the certificate with the VAT number on your supplier’s invoice. If the VAT numbers do not correlate you will not be able to use the certificate.
Companies that fall under this sector code are not allowed to make use of a sworn affidavit. EME (Exempted Micro Enterprise- companies having an annual turnover of less than R5 million) must either obtain a letter from their Auditors or a B-BBEE certificate issued by a verification agency.
The reason for this is that the new amended Transport Sector Codes have not yet been finalized and gazette. This means that the old transport codes are still in effect until such time that the amended transport codes are gazette.
BEP (Built Environment Professionals) companies that have an annual turnover of less than R1 800 000.00 (ONE MILLION EIGHT HUNDRED THOUSAND) and Construction Contractors that have an annual turnover of less than R3 000 000.00 (THREE MILLION) are allowed to make use of a sworn affidavit.
All other companies under this sector code must obtain a B-BBEE certificate irrespective of its percentage of black ownership.
3. Be mindful of the following
- The sworn affidavit must be signed and commissioned on the same date;
- As a golden rule the financial period on the sworn affidavit must not be older than 18 months at the date of completing the sworn affidavit;
- Currently, sworn affidavits do not require companies to reflect their VAT registration numbers. It is suggested that your company also request the suppliers to provide their tax clearance certificate to ensure that the sworn affidavit presented corresponds with the VAT number provided for on the tax invoice;
- QSE (Qualifying Small Enterprise) companies generally having an annual turnover exceeding R10 million but less than R50 million with less than 51% Black Ownership may not complete a sworn affidavit.
A supplier providing an invalid B-BBEE certificate or sworn affidavit may negatively affect the points claimed for the sub-element Preferential Procurement as the verification agency may deem such an entity as a non-compliant supplier.
About the author
Jason George is a B-BBEE legal advisor in our Cape Town office. He is an Admitted Attorney holding an LLB degree and has been employed with SEESA (Pty) Ltd since August 2013.